NEP’s Pavlina Tcherneva speaks with Bloomberg’s Joe Weisenthal about Basic Income Guarantees. You can view the segment here.
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It’s not a very good argument. UBI is countercyclical in the same way that that a capacitor smooths out the ripple of rectified AC in a power supply circuit, or the lake behind a dam smooths out water flow — it’s a buffer stock. People with low income are more likely to spend it and stimulate production (and employment) and flow while people with more money are more likely to save it, which is counter-inflationary. For the wealthy, the amounts of increase to their incomes is not significant.
Throw your dog in the swimming pool and there is hardly a splash, but toss him in the bathtub and there will be water going everywhere and little left in the tub, because the total volume of water displaced nad the size of the containers are so different. UBI counters people ‘falling of the edge’ which is destabilizing, and even leads to debt deflation. It increases the total money supply and ‘size’ of the economy while reducing the proportions of wealth differences.
Trying to target (micromanage) specific sectors of the economy, however, will be quite hard to manage, especially fairly, and will introduce ripples and ‘cracks to fall through’ which can easily get out of control, as well as failing to handle time lags for inflation, unemployment from outsourcing, and other changing circumstances. Targeted programs can be useful if in addition to UBI, but they are not a replacement for them.
“People with low income are more likely to spend it and stimulate production (and employment) and flow while people with more money are more likely to save it, which is counter-inflationary.”
They are not more likely to save when prices have risen by that same amount. What would be the policy response in the case that inflation were to happen under UBI despite your predictions?
A BIG is morally justified since workers have been disemployed by automation and outsourcing with what is, by virtue of extensive government privileges for depository institutions and the rich, the most so-called creditworthy, their own legally stolen purchasing power.
Moreover, a JG replaces wage slavery to the private sector with wage slavery to government. When does freedom arrive? Where is the end game whereby we all get to work without needing a job? Or is that only for the rich?
Correction:
Moreover, a JG replaces wage slavery to the private sector with wage slavery to government.
Should be:
Moreover, a JG supplements and subsidizes (via disciplining and training workers) wage slavery to the private sector with wage slavery to government.
These are some very good points and I think it’s important to guard against a BIG being used as a trojan horse as you suggest and actually decreasing safety net programs.
I agree that a JG is preferable to a BIG. I would like to see a JG at a living wage or about twice the current minimum wage in the US or about $15/hr. There is lots of useful work to be done and everyone who wants to work could be employed and this would put pressure on private industry to meet this minimum rather than a minimum set by a BIG.
I would also like to see a BIG at the current minimum wage level and made unconditional. This would help pay for ‘reproductive’ type jobs such as people who provide meals, childcare, eldercare etc at home. This would also give people a chance to opt out of the JG for various reasons and not become a ‘bag person’.
In ‘The Precariat’ Guy Standing talks about a life insurance study in the US which found that 90% of American women felt financially insecure and nearly half said that they had a ‘tremendous fear of becoming a bag lady’. This is in large part due to a high level of insecurity or precariousness in the current job market.
The more relevant point is she endorses a guaranteed job program which does make abundant sense.
One thing which should be scrutinized is the linking of two human needs: need to consume, particularly enough for survival with dignity and a reasonable standard of living, and the need to work with adequate levels of freedom and satisfaction. These two needs do not have to be linked when there is sufficient resources and productive efficiency — that’s an ancient concept of of a particular religious tradition of ‘earning bread by the sweat of one’s brow’.
Historically, many of our greatest innovations and much of our knowledge was from people not of the working class, but of the leisure class who had the time and energy to devote to thought and developing ideas, as well as access to good education and current information, instead of having to scrabble out a living at mere survival level, and often dying at a young age or living in poor health because of bad financial circumstances. Consider also those whose work was compromised because of the need to produce things of commercial value (the ‘starving artists’, as classic examples).
One thing found where an unconditional basic income has been tried is that often people can produce innovations or work on entrepreneurial projects which increases productive efficiency. This is something a job guarantee will not do.