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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Not Even Economic Roommates?

I could say a lot about ace admiral’s recent post Living Alone vs. Being Alone, just as I could say a lot about solitary life in general, but for now I will focus on one part which initially surprised me.

For example, I’m struggling with my job right now because there’s an assumption of dual-income that make my bosses feel like the amount they pay me is peachy keen*. And it’s true; if I could find any other being with an income to live with me, then I could stretch my salary and afford rent. But, that involves the commitment of some level of cooperative living, and I don’t have anyone in my life I want to make that commitment to, or, indeed, anyone who would make that commitment to me.

The idea that nobody would want to share a living space and rent with ace admiral seems really odd to me.

Then, I remembered, I grew up in San Francisco, one of the most expensive places in the USA.

Among the people I’ve known in San Francisco, in spite of my affluent background, homelessness is more common that living in a housing unit by yourself.

When I was a young child, my family had a roommate because they paid rent. Since our home only had three bedrooms, and my parents didn’t want to share a bedroom with each other, than meant I was either sleeping in my mother’s bedroom or my father’s bedroom. Actually, one our our ‘bedrooms’ was designed to be a dining room, but most homes in my neighborhood have converted dining rooms into bedrooms because bedrooms are more needed. My father never liked having an outsider in his own home, and eventually he reached a deal with my mom to stop accepting roommates.

The first time I lived outside of my parents’ home – granted, that was not in San Francisco – I also rented a room from a married couple, and lived in their ‘single-family’ house.

Of course, a unit being split among roommates is far more common than a roommate living with a family. It is also far more common than one-person-one-unit living arrangements. I would have no trouble finding a group of people splitting an apartment who want another roommate, nor, if I were a main resident, would I have trouble finding people who want to move in and split rent (whether we would be compatible is another question).

Housing in San Francisco is so expensive that many people have problems affording rent even when they do split it with roommates. In some parts of San Francisco, it’s not unusual for 4+ people to live in a single room.

Thus, the idea that it is not possible to find even economic roommates seems strange to me.

Of course, economic roommates comes with many disadvantages. I prefer to live with my family, and I expect that is what I will be doing for at least the next few years.

Ily has discussed solitary living and asexuality a lot: I present the living situations and singlehood tags at her blog.

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On the Student Debt Crisis

I’ve been watching some of the ‘major in debt’ stories on Youtube.

One of my reactions to the stories is what did you expect?

Even when I was in high school, the idea of taking on $30,000 or more in debt to pay for an undergraduate degree seemed risky. I knew that the ‘magic of compound interest’ works against debtors, and even though the economy was doing better then than now, I was skeptical that someone straight out of college could make enough money to really support those kinds of debts.

Take this video for example.

That is an extreme example … but even in high school, I thought that almost all for-profit colleges were sleazy, and I find it incredible that he belived the 90% placement rate without asking basic questions which would have revealed those were unpaid internships before enrolling.

So, part of me thinks that it’s these students’ fault for being innumerate, finanncially illiterate, and plain naive.

But whose fault is it that they are innumerate and financially illiterate? If it were just a small group of people, I would say it’s the individuals’ fault. But this is millions of people, which means that there is something wrong with our society.

And why are we making it so easy for innumerate and financially illiterate people to take on so much debt? Well, it benefits the financial predators … which I suppose is the point.

Then there is peer pressure.

Aside from my parents, I felt very much alone in my stance that student loans were bad, that it would be better to not go to college if loans were the only alternative, and that going to community/state college was way, way, way better than going to a private school with student loans. Nobody else really thought that taking on student loans to pay for college was a big deal. I even remember a conversation like this:

Person: Why not go to [expensive college]?
Me: It’s really expensive!
Person: You can get loans.
Me: Loans have to be paid back with interest.
Person: You can get the loans deferred if you go to graduate school.
Me: That doesn’t solve the problem.
Person: Debt doesn’t matter, everybody owes everybody else money nowadays.

And even in high school, I did not fully appreciate:

* how much fraud and lies there are in student loans
* that students loans cannot be discharged in bankruptcy

… so they are more evil than I had thought they were.

I support student debt jubilees because, while I find the naivete of many of these students incredible, young people ARE naive, and we had not created the environment to make them sufficiently numerate and financially literate to repsonsibly take on such debts … not to mention the fraud. Student debt jubiliee is good for the economy, and it is the humanitarian thing to do.

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