Be Careful What You Wish For: The Political Economy Has Big Problems, but a Basic Income Guarantee Is Not the Solution

This is a response to “Let’s stop being bored, and start living our lives!”, which advocates for a basic income guarantee to improve quality of life.

I sympathize with Alice’s sentiment. The idea of a 9-to-5 job where I do nothing meaningful just to pick up a paycheck is … well, it’s far from the worst of the human condition, but it’s still unappealing to me. And I agree that it does not advance the overall social good, though my cynical self thinks that some people benefit from having the middle class spend much of their week engaged in busywork and stressful commutes. For example, car companies and mechanics benefit from the long commutes, and this stressful, vapid lifestyle may make people inclined to spend money to ‘consume’ conveniences than people who had more control over their lives would – this is the argument of “Your lifestyle has already been designed”.

Alice cites advances in technology as being a reason why less work needs to be done, and that the surplus created should be distributed by a guaranteed income. In the past year I’ve become much more weary of ‘but technology’ arguments. For example, there is lots of socially beneficial work – such as cleaning up the environmental – which isn’t being done enough. Also … perhaps some technologies, such as computer technology, create as much drudgery as they eliminate. I can’t help but think of this section of “Of Flying Cars and the Declining Rate of Profit” (note: if you are going to read only one link in this post, make it this one):

Just as the invention of new forms of industrial automation in the eighteenth and nineteenth centuries had the paradoxical effect of turning more and more of the world’s population into full-time industrial workers, so has all the software designed to save us from administrative responsibilities turned us into part- or full-time administrators. In the same way that university professors seem to feel it is inevitable they will spend more of their time managing grants, so affluent housewives simply accept that they will spend weeks every year filling out forty-page online forms to get their children into grade schools. We all spend increasing amounts of time punching passwords into our phones to manage bank and credit accounts and learning how to perform jobs once performed by travel agents, brokers, and accountants.

Someone once figured out that the average American will spend a cumulative six months of life waiting for traffic lights to change. I don’t know if similar figures are available for how long it takes to fill out forms, but it must be at least as long. No population in the history of the world has spent nearly so much time engaged in paperwork.

Furthermore … wouldn’t a guaranteed income reduce wages even further, much as Walmart and similar businesses are subsidized by food stamps and Medicaid? Are workers at businesses like Walmart better off because they get food stamps and Medicaid, or would they be better off with an effective union which ensured a living wage?

Sometimes people advocate for a guaranteed income, not out of concern for the working class, but to ensure that consumption, and thus corporate profits, stay sufficiently high without having to increase wages (in other words, they are trying to outsmart Karl Marx).

I delayed writing this until I read Yves Smith real life example of a basic income guarantee, which turns out to be Speenhamland system. I don’t necessarily agree with all of the conclusions – for example, though Yves Smith claims that the rural poor were worse off because of the income guarantee, there is no control group for the universe, and it is conceivable that, without the Speenhamland system, there would have been a famine in rural England.

Nonetheless, I think the Speenhamland System does indicate that a basic income guarantee increases social inequality and cause the poor to lose power over their lives unless there are countervailing forces.

I’m not against income guarantees per se. I do think they might do more harm than good if they are the centerpiece of a policy. At a minimum, I don’t think an income guarantee should be put in place without a very progressive taxation system (including, ideally, some form of maximum income – such as taxing 100% of all income above a certain level).

What I think would be even better than income guarantee + progressive taxation is a jobs guarantee. The income guarantee offers workers a little bargaining power – workers can walk away from a totally abusive boss and not starve – but a jobs guarantee would offer stronger bargaining power, since employers would have to match the wage offered by the jobs guarantee program or else not find any willing workers.

A jobs guarantee could provide jobs like childcare, eldercare, environmentcare – work that isn’t profitable, but increases social well-being.

But the biggest advantage of jobs guarantee over income guarantee is that it offers much more meaning to people’s lives.

Take for example my father. He practically has an income guarantee – social security plus rent from inherited property (his tenant is a Fortune 500 corporation) with Medicare to pay his medical bills. Yet he feels dissatisfied, and that he felt better when he had a job, and that sometimes he thinks of finding a job again. Why? He says that he doesn’t feel productive. I’ve suggested that if he doesn’t particularly want the money, he can volunteer for a worthy cause, and he’s considering the idea, but it doesn’t seem to be the equivalent of a job to him.

People want to matter more than they want to live. Jobs, at least jobs which increase social well-being, make people feel like they matter. An income does not.

Whereas the Spennhamland system raises serious concerns about the effects of an income guarantee, real-life examples of jobs guarantee programs, such as Argentina’s Plan Jefes de Hogar have very good results.

Again, I suspect a minimum income + jobs guarantee would be fantastic. But I’ve become wary of minimum income alone.


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4 thoughts on “Be Careful What You Wish For: The Political Economy Has Big Problems, but a Basic Income Guarantee Is Not the Solution

  1. It’s important to note other oppressions/privileges here. This is especially for people that straight-up need money and have no savings to turn to–not to someone who has inherited money and is financially secure. That’s a different scenario. This is ultimately focused on making sure no one is starving, homeless, dying of curable illness, etc. due to lack of money.

    As for a jobs guarantee, some people are unable to work for any number of reasons, disability among them, and shouldn’t be required to.

    • This is why I think it is possible that the Speenhamland system might have prevented a famine in rural England – even though inequality rose during the time the Speenhamland system was in place, that might have been because of industrialization, not the Speenhamland system, and it did allow the rural poor to get grain at a time of grain shortages in England.

      However, it is possible that such as system would cause inflation, particularly with things like food. According to MMT (many MMTers support Basic Income Guarantee) the way to address inflation is to increase taxes – and if you don’t want tax increases to hurt the poor, the taxation needs to be very progressive, which goes back to my proposal is a income guarantee must, at a minimum, be accompanied by very progressive taxation.

      As for people with disabilities and others who shouldn’t work, where in this post did I say people should be forced to work?

  2. Pingback: Response to Sara C – on basic income and economic inequality | Alice's Rainbow

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