Technology Paves the Way for Basic Income More than a Job Guarantee

Regular readers will be aware that I would support either a basic income guarantee (BIG) or job guarantee (JG) as standalone programs, whichever happened to be on the policy agenda, but ideally would prefer a program that combined the positive elements of both into some form of ‘job or income guarantee‘. Much of my reasoning to date has been outlined in previous posts archived under the category Job & Income Guarantee. I won’t revisit those considerations in this post. The present focus is instead on which of the two programs — a BIG or JG — should be seen as primary.

To the extent JG advocates are open to some form of combined program — and my impression is that there is little such support — they clearly regard the JG as primary and any BIG component as secondary. Conversely, if BIG advocates are open at all to an option of guaranteed employment alongside a BIG — and my impression is that they don’t seem to be — they would clearly regard a BIG as primary and JG as the secondary component. My own view is that a BIG would be primary, but a JG nonetheless worthwhile, albeit as a component that probably would become increasingly minor over time. One reason for this is the trend in technology and its social and economic implications. (For more on the opportunities opened up by technological progress, see Approaches to the Reduction of Aggregate Labor Time and Unearned Income and its Distribution.)

The policy debate is taking place in the context of ongoing mechanization. One recent study suggests 45% of American jobs could be computerized within the next twenty years. To propose a JG as the primary policy response to these developments is akin to trying to wind the clock back three quarters of a century. It requires employing some people to oversee the activities of other people who may or may not want to participate in the program to begin with, and who may or may not contribute more to society than they could if provided with a basic income and the freedom to spend their time as they saw fit. To the extent a JG would require capital equipment and raw materials in excess of what a BIG recipient would employ in individual or cooperative productive activity, there would be an additional use of real resources for purposes that may or may not be more socially beneficial than activities individuals could decide upon for themselves.

But that is not to say that there should be no place for a JG. It seems to me that the main case for a JG has nothing to do with how socially productive it is. Personally, I would not care if the JG position was completely useless provided the individual, in spite of the availability of a BIG, actually *wanted* the job (and the job itself, even if useless, was at least not socially harmful). The most important justification, in my view, for providing such individuals with a JG position is so that they can participate in society in a manner nearest to their preference. JG advocates point out that the poor themselves often claim to prefer a job to cash benefits. That’s perfectly fine. They should be given that option, irrespective of productiveness of the actual role. If they want a job — even a useless one — we are wealthy enough as a society to provide them with it.

There are many reasons such individuals might want a JG position even alongside the availability of a BIG. They might, correctly or otherwise, believe that they personally will be of greater service to the community by taking such a position. Or they might dislike the social stigma they feel goes with non-participation in formal employment. Whatever their motive, we can afford to enable their preferred mode of activity.

But it would be absurd to keep creating such jobs in cases where the individuals affected would be happier without them if given a guaranteed basic income or at least a guaranteed option to one. Technological development is creating the potential for free time without preventing continued high-paid employment for those able to obtain it or the creation of JG roles for those who can’t otherwise find a job but want one. The more people begin to opt for free time, the less the social stigma of opting out of the labor force will persist in any case, and the less need there will be to employ some people to manage other people who, for now, would not feel comfortable opting out of the labor force.

A BIG is a simple, administratively efficient — I would say, elegant — response to the historical and technological trajectory that we have created for ourselves. A JG, by comparison, is a reactionary response seeking to turn back time and withhold the potential benefits of progress.

In response to BIG proposals, JG advocates sometimes appeal to “politics” or “popularity”. A BIG, in this view, is supposedly impossibly unpopular compared with a JG. I don’t see at all where this confidence derives from when it comes to a JG. Right-libertarians hate the JG, yet are somewhat open to a BIG. Left-libertarians mostly hate a JG and probably would prefer a BIG. Support amongst liberals is not obviously stronger for a JG than a BIG, though it might be. Unions hate the JG, but also hate the BIG.

The natural ally of JG advocates would appear to be some (though certainly not all) conservatives. But to a conservative of this bent, some countries already have the ideal JG. In Australia, it’s referred to as “work for the dole”. And, yes, some conservatives favor that policy, but they already have it in the form they want it. They have no desire — and would undoubtedly strongly oppose — the implementation of a genuine JG program, just as they would oppose a BIG.

Some appeal to “resentment” in support of a JG. The idea, here, appears to be that people will refuse to recognize the legitimacy of individuals receiving a BIG when not in the labor force. It is far from obvious that this factor will be the decisive one. For starters, it doesn’t seem to be decisive for the aforementioned groups (right-libertarians, left-libertarians, some liberals) who favor a BIG over a JG. And it doesn’t seem to work decisively in favor of a JG in the case of groups typically opposed to both policies (unionists, some conservatives). It may well be decisive in the case of a subset of conservatives, but it has already been acknowledged that this group seems to be the natural ally of JG advocates. If some of the poor who claim to prefer a job to cash payments have absorbed the mindset of these conservatives, they also would fall into this category.

Arguments to the effect, for example, that existing welfare programs are under attack and this therefore, supposedly, proves that support for a BIG is impossible, may as well be applied to public education, publicly provided healthcare, public infrastructure and so on, all of which are under attack, proving, by this logic, that support for further improvements in these areas is “impossible”.

Clearly, there is opposition to a BIG. Formidable opposition. There was also formidable opposition to ending slavery, to universal suffrage, to the eight-hour work day. There is also formidable opposition to a JG. What’s new?

Even for those prone to “resentment”, there are other factors working the other way. For instance, Scott Santens notes in a recent post that a BIG of $12,000 per annum in the US if introduced alongside a 40% flat tax rate would, in net effect, leave 80% of Americans with a smaller tax bill than at present. So for eighty percent of potential “resenters”, the lure of more nominal income might soften their resistance. Santens also mentions other tax options that could leave income taxes untouched and probably leave more than 80% of Americans with more in their pocket than at present.

The likelihood that some support for a JG would come from the right, including “resenters”, is not a mark against the policy. It means the policy finds some common ground across the political spectrum. But the same can be said — I would say more so — for a BIG, support for which also seems to cut across the political spectrum. No doubt, there is a considerable danger of right-libertarians getting small government as quid pro quo for a BIG. But this danger is not obviously greater than the risk that conservatives will succeed in reducing a JG to “work for the dole”.

In all likelihood, a combined job or income guarantee would help to safeguard both the basic income and guaranteed job components against such right-wing attack. But I won’t labor that point because I’ve discussed it in the past (here and here).

In themselves, a BIG or a JG would be steps forward. Ensuring an overall step forward will take social and political struggle, as always. But, over time, circumstances will increasingly favor a BIG rather than a JG. In my view, that’s a good thing.

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9 thoughts on “Technology Paves the Way for Basic Income More than a Job Guarantee

  1. To the extent JG advocates are open to some form of combined program — and my impression is that there is little such support Diametrically the opposite of the easily ascertainable truth. There is no MMT / JG advocate that I know of that does not support “some kind of combined program”. In essence, the “JIG” is just a renaming of the “JG”. Also, it is clear from your description of the JG proposal that you simply do not understand the JG proposal, and have replaced it with a common misperception.

    they clearly regard the JG as primary and any BIG component as secondary Because they understand monetary economics and do not subscribe to an inhuman code of morality. People who understand monetary economics and follow an inhuman code are called “plutocrats”. They far prefer a BIG to a JG, because they now how a JG-less BIG will and won’t work, and know it would keep them in the saddle. At best it is a temporary lifting of their boots off of everybody else’s throats. But just to reposition them to stamp harder later. Naive BIG supporters tend to have their thinking rotted by the insults of the plutocrats against those they deem their inferiors = the whole human race.

    Plutocrats know a JG = socialism = communism. And basically, the BIG is a joke, that they can play at making as degrading as they want.
    Why was there recently propaganda for a BIG at Plutocrat Pete Peterson’s site, but no cheerleading for a JG? So sure that Pete doesn’t know what he is doing?

    Fundamentally, the BIG is a fascistic, tyrannical, authoritarian top-down idea. Not that there is anything wrong with that 🙂 There is a place for such things, like authoritarian prohibitions against murder, torture and cannibalism. “Paying taxes for” public goods like national defense or a clean environment is another ftat-d idea most people support.

    Fundamentally, a JG – not the common distorted caricature – is a libertarian, pro-freedom idea that allows for the possibility of increased individual freedom in a rational society, in a way that childish, absurdly fantastic, often anti-social ideas like a BIG cannot. Poor people and even some deep thinkers have always understood that.

  2. Why was there recently propaganda for a BIG at Plutocrat Pete Peterson’s site, but no cheerleading for a JG?

    Link?

  3. (Calgacus’ comment in blockquotes)

    To the extent JG advocates are open to some form of combined program — and my impression is that there is little such support Diametrically the opposite of the easily ascertainable truth. There is no MMT / JG advocate that I know of that does not support “some kind of combined program”.

    To my knowledge, the MMTers do not call for an unconditional basic income. Most appear to agree that programs such as unemployment insurance *should* coexist with a job guarantee, though I’m pretty sure Bill Mitchell does not fit into this category. Some, such as Randall Wray, have explicitly acknowledged that a basic income *could* coexist with a job guarantee, but this does not necessarily make clear that they think it *should* coexist, and my impression is that they don’t think it *should*.

    In essence, the “JIG” is just a renaming of the “JG”. Also, it is clear from your description of the JG proposal that you simply do not understand the JG proposal, and have replaced it with a common misperception.

    I’ve never claimed the JIG is a new idea and have often explicitly pointed out that it is not. I think my understanding of the JG proposal – and its surrounding rationales – is sound. In the present post, I am considering the political likelihood that opponents of a JG would attempt to reduce it to workfare. The main reason I considered political considerations in this post is because, in response to my numerous posts in favor of a BIG and/or JIG, some commenters raised “politics” and “resentment” as insurmountable obstacles to a BIG.

    they clearly regard the JG as primary and any BIG component as secondary Because they understand monetary economics and do not subscribe to an inhuman code of morality. People who understand monetary economics and follow an inhuman code are called “plutocrats”. They far prefer a BIG to a JG, because they now how a JG-less BIG will and won’t work, and know it would keep them in the saddle. At best it is a temporary lifting of their boots off of everybody else’s throats. But just to reposition them to stamp harder later. Naive BIG supporters tend to have their thinking rotted by the insults of the plutocrats against those they deem their inferiors = the whole human race.

    To play devil’s advocate for a moment, I would say that it is just as easy to make a case that JG proponents have allowed their thinking to be “rotted” by neoliberal mantras in service of plutocrats. Their ready acceptance of the supposed “impossibility” or infeasibility of enforcing taxes on corporations and the wealthy and implementation of redistributive tax-transfer measures in general is one example.

    Their paternalistic attitude toward the poor is another. They, after all, are the ones who think the poor are too irresponsible to act in their own interests if provided with cash.

    The implicit equating, by JG advocates, of work with job is another. The claimed “nominal price anchor” advantage of a JG over a BIG that supposedly partially justifies a JG relies, among other things, on this illegitimate equating of work with job. A public sector academic economist solving irrelevant puzzles is no threat to the currency because his or her salary counts in GDP, a JG worker with one fifth of the income is no threat because his or her wage counts in GDP, but giving one tenth of the income to a home parent, since not counted in GDP, would bring value of currency crashing down to zero. The claim that a JG would be a superior nominal price anchor to a BIG (and certainly to a JIG, see here) is unconvincing IMO, and dependent, again among other things, on ignoring that work – a great deal of worthwhile work – occurs outside the labor force, while at the same time a lot of useless or worse work occurs in the labor force. It could be argued that, all in all, it is the JG advocates who are far more captured by neoliberal “morality”.

    Plutocrats know a JG = socialism = communism. And basically, the BIG is a joke, that they can play at making as degrading as they want.
    Why was there recently propaganda for a BIG at Plutocrat Pete Peterson’s site, but no cheerleading for a JG? So sure that Pete doesn’t know what he is doing?

    A BIG draws some support from left and right. Same with a JG. That’s good, not bad. Of course it is bad, from our perspective, that the right will want to cripple either policy by reducing them to something unrecognizable. But, then, they think it’s bad we will resist their efforts. As stated in the post, any social progress will take struggle. It’s nothing new.

    Fundamentally, the BIG is a fascistic, tyrannical, authoritarian top-down idea. Not that there is anything wrong with that 🙂 There is a place for such things, like authoritarian prohibitions against murder, torture and cannibalism. “Paying taxes for” public goods like national defense or a clean environment is another ftat-d idea most people support.

    Fundamentally, a JG – not the common distorted caricature – is a libertarian, pro-freedom idea that allows for the possibility of increased individual freedom in a rational society, in a way that childish, absurdly fantastic, often anti-social ideas like a BIG cannot. Poor people and even some deep thinkers have always understood that.

    A BIG is bottom up, and in all likelihood more so than a JG. Both a BIG and JG are bottom up in the effect of getting income into the hands of low and middle income individuals. But the JG is more top down than a BIG when it comes to who decides how time will be spent by the recipient of the income, except if the JG is in its absolute ideal form in which workers entirely shape their own role, in which case a BIG and JG pretty much become indistinguishable.

    Of course I agree that a JG could be implemented, and improved upon in time, in a way that enhances freedom. And I agree, as mentioned, that a JG would help safeguard a BIG but also insist that a BIG would help to safeguard a JG. That is why I prefer a JIG (with basic income requiring no participation in the labor force) to a standalone BIG. But what really matters, long term, for the safeguarding of a BIG is simply that an individual always has the option of taking a JG position even if, in the future, very few actually choose to do so. It is important for individuals to have that choice because of its positive impact on wages in the broader economy.

    And I hope it is obvious, despite devil’s advocacy to the contrary in the counter-argument regarding the mindset of plutocrats, that the depiction there is not at all how I perceive MMTers’ mindset. I would hardly have started a blog largely devoted to MMT if that was the case.

  4. As usual, Peter and I think alike. I agree with everything he said, other than I could have lived without the mention of a 40% flat tax to “pay for” a BIG.

    Why does no one call for a 40% flat tax to “pay for” a JG, or to “pay for” the Mosler FICA cut or the Mosler health care proposal?

    Let’s recall that from a functional finance point of view, federal taxes serve two purposes — 1) to maintain the value of the fiat currency by creating a demand for the fiat currency and by throttling aggregate demand, and 2) social purposes such as reducing inequality. It seems to me than an 40% flat tax does not serve either purpose well?

    Progressive taxes also throttle aggregate demand (since the rich dominate American consumption, see the Citigroup Plutonomy Memos). In any event most of us who support Functional Finance would like to move beyond fixed tax rates and instead index tax rates to unemployment.

    Alternatively you could index federal spending to unemployment, but that is politically difficult since each spending program has a political base who would object to their pet program being cut. Also, many government functions like roads, health care, education, etc.. need to be performed continuously regardless of economic circumstances. Hence it makes more sense to me to use a combination of indexed tax rates and safety net programs that function as automatic stabilizers.

    I agree with Peter that neither the BIG or the JG are a political slam dunk. Passing and sustaining any sort of program that helps the poor will be a struggle since our capitalist culture looks down on the poor and blames the victim, so to speak, and since the oligarchs who control the world have an incentive to maintain a large pool of struggling poor people (as Kalecki explained.)

    It may take a revolution to bring about meaningful changes. Positive changes may never happen in my lifetime. But if I had been living in 1776 I hope I would have spoken out against slavery even though it was not “politically viable” to end slavery at that time. My job as a citizen is to advocate for what I think is best, not to advocate for what is politically viable in a dysfunctional system.

  5. I am considering the political likelihood that opponents of a JG would attempt to reduce it to workfare.

    I wouldn’t call it a “political likelihood.” TPTB would do their utmost to convert any JG proposal to workfare and to privatize it, however long it took it the MMT JG were to get by them and become law. Just as they successfully dismantled many New Deal programs already (Reagan, Thatcher) and are now going after the rest with a vengeance, in the US at any rate. And they are winning.

    There is no way to get a lasting fix of neoliberal capitalism or any other form of “capitalism,” or any “ism,” that prioritizes money and machines ahead of people and the environment. Those priorities have to reversed culturally and institutionally for lasting change that actually increases freedom and advances liberalism toward the goal of real freedom and equality of person for all.

  6. BTW, I am not saying not to go for any solutions within the existing system such as a JG. I am just sayin’ let’s not be naïve about this politically. Trillions of buckaroos are on the table here, which means keeping your sixshooter on your lap.

    Change takes place both in small steps and in big jumps. The big jumps usually happen as an outcome of crisis. The TPTB are well aware of this and aren’t above manufacturing crisis, as Naomi Wolf has shown in Disaster Capitalism.

    These are not nice people. “They” control the system so the system is not on the side of “us.”

    Small steps are fine as far as they go. But as Calgacus has pointed out, an effective JG is a dagger in the heart of capitalism. “They” are fully aware of this. So even if passed into law, an MMT JG is far from a final solution. They’ll be baaaack!

  7. Progressive taxes also throttle aggregate demand (since the rich dominate American consumption, see the Citigroup Plutonomy Memos).

    No, no it doesn’t. And this is where MMT regularly goes off the rails since it can’t be bothered with things like distribution because TAXES DON’T FUND THE GOV. There really are alternatives to a perverse economy that consists of yacht services for the rich and dollar stores for everyone else. In fact, there’s a fiscal mechanism called redistribution via progressive taxation where you move demand from one area of the economy (booming luxury markets) to boost demand in other areas without “throttling aggregate demand”. No really, it exists. Even the Citigroup Plutonomy Memos (not a great place to get your economic policy from, btw) cites redistribution as one of its main existential threats.

    Further evidence: Some people call themselves tax/spend liberals for a reason, you may have heard of them. And since MMTers will now run around with their hair on fire because GOV SPENDS FIRST, feel free to insist they call themselves spend/tax liberals so the rest of us can laugh at you. Or better yet:

    ((Just-Credit-“Bank”-Accounts / “Move”-Resources-“From”-Private-Sector-To-“Public”-Sector) Liberals™).

  8. Very much agree with you, Trixie, on the positive demand effects of a more equal distribution of income. Bill Mitchell frequently discusses the need for wages to keep pace with productivity and the impact on demand of inequality. But I do think MMTers have a tendency to accept the plutocrats’ self-serving claim that it is impossible/infeasible to enforce taxes on the wealthy. I like Piketty’s take on this here:

    Is it possible to fight tax evasion? Yes, if you want to, you can. When modern governments really want their decisions to be respected, they succeed in getting them respected.

    When Western governments want to send a million soldiers to Kuwait to prevent Kuwaiti oil from being seized by Iraq, they do it. Let’s be serious: If they are not afraid of an Iraq, they have no reason to fear the Bahamas or New Jersey. Levying progressive taxes on wealth and capital poses no technical problems. It is a matter of political will.

    Just as a BIG or JG, or any policy change, requires the political will. At a guess, there’s currently more political support among the 99% for higher taxes on the wealthy than either a BIG or JG.

  9. One “reform” policy that BIG advocate Guy Standing mentioned somewhere (can’t remember the reference) that I will agree with, despite my more pro-employment stance, is that people who actively look for employment should be paid simply for doing so.

    This is part and parcel of his case for redefining work as something broader than activities performed in the course of employment.

    This blog should discuss this particular possibility.

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