Earlier this week (April 25, 2023), I saw a Twitter exchange that demonstrated to me…
The Job Guarantee misinformation campaign – UBI style
Apparently the British Left is “fizzing with ideas for a smarter economy” according to the UK Guardian article (May 12, 2019) – The zeitgeist has shifted. Now the left is fizzing with ideas for a smarter economy – written by Will Hutton. I can’t say I sensed an outbreak of fizz. But in the colloquial language from where I come from, the term fizzer means “Something that promised excitement but instead was a disappointment”, Yes, Hutton’s fizzers include promoting the insights of a long-standing (pun intended) critic of employment guarantees, who prefers people to be propped up as consumption units by a UBI, and, yes, surely, if Hutton is involved, reversing the “tragedy” of the democratic choice the British people made to exit the EU. Apparently, “Remain” is the “great progressive social force of the moment” and if Britain was to leave the EU it would “stand in the way of any of it ever being implemented”, where “it” refers to all these ‘left’ fizzers. It is hard getting one’s head around this logic. A restoration of democracy and sovereignty apparently disables the elected government from using its currency-issuing capacity to deliver a progressive program aimed at advancing well-being. But, staying in a corporatist cabal which has embodied neoliberalism in the core legal structure of its existence and allows corporations to sue governments which threaten their profits and is unaccountable to the people is the exemplar of progression. This stuff is in the world of the pixies!
Although Hutton is skeptical himself about the viability of a UBI (“it will be cast as an unearned handout, far too modest if it is to be remotely affordable”, which means he doesn’t understand the capacities of the currency-issuing government), he praises the British Labour Party Shadow Chancellor (John McDonnell) for commissioning a report by Guy Standing – Basic Income as Common Dividends: Piloting a Transformative Policy – which was published in May 2019.
I don’t intend to examine the whole Standing report – we have been arguing with him for 20 or more years now. See this paper – A comparison of the macroeconomic consequences of basic income and job guarantee schemes – as an example.
His construction of a UBI has remained consistent with his early views critiqued in that paper and several other articles we published around that time.
1. He has a neoliberal conception of government fiscal capacities – for example, the UBI would have to be ‘paid for’ by taxes and as “Britain is undertaxed” it is affordable.
2. Within that misconception, he rehearses the ‘tax the rich to pay the poor’ myth that so many progressives have fallen prey to.
3. He is happy for the government to give the “rich” the UBI and claw it back via the tax system, which a few paragraphs earlier he argues is rorted by the rich who don’t pay their fair share.
4. He doesn’t think governments would junk other “welfare state” benefits under a UBI, yet later, when he rejects the Job Guarantee he claims the government would reduce it to workfare (abandoning other benefits).
So in this Chapter on “What are the objections?” he ignores some of the main objections that we have continually raised.
He fails to consider that the primary cause of poverty is lack of work rather than lack of income (which is related to the cause).
Further, UBI advocates passively accept the neoliberal assertion that unemployment is inevitable and governments can do little to alleviate it.
The fact that unemployment is just a shortage of jobs which reflects the fact that the net spending of the government is too low relative to the spending and saving decisions of the non-government sector, is ignored by him.
Further, he fails to consider the inflationary potential of the scheme and the fact that the buffer stock mechanism that governments would retain in an inflationary episode would be to increase the unemployment pool.
So while the UBI increases the inflation risk in the economy, the costs of the policy response to any inflationary pressures would be borne by those who preferred to work.
Later on, he attacks the Job Guarantee for being inflationary because workers would get bolshie having a guaranteed wage to fall back on if they chose.
He fails to consider the unworkability of the scheme if there is huge take-up. He has no idea how many people might opt for a UBI and stop working altogether. Scalability of government programs is an important consideration.
If a huge number of people abandon their jobs, especially in societies where the dependency ratio is rising, then the scheme will undermine general prosperity.
He fails to consider the vast array of sociological literature that tells us that work delivers massive ‘intrinsic’ benefits in addition to the ‘extrinsic’ rewards (income).
And, inevitably, we read about the “Advancing Robots” and uses people like Elon Musk as an authority on why there will be no jobs in the future. Spare me!
He also claims that the “politically frightening giant is the rise of right-wing populism” is due to a “combination of chronic insecurity and precarity” yet ignores the fact that the overwhelming proportion (approaching 100 per cent) of those without work want to work. They identify their insecurity with a lack of jobs and unstable incomes that result.
So just more of the same from Standing really.
But he produces an “Appendix B: Why a Job Guarantee would be no alternative” which is a lame attack on the desirability of employment buffer stocks.
In this blog post, I will address some issues in that Appendix in more detail.
I note that some self-styled MMT experts (who should never be considered to be representing the core MMT ideas despite their claims otherwise) are still claiming that the Job Guarantee is not intrinsic to Modern Monetary Theory (MMT).
They simply fail to understand the role the Job Guarantee plays in the conceptual MMT framework. As I have explained often, it replaces the Phillips curve that is central to the mainstream macroeconomic theory.
It provides a more effective (lower real resource cost) buffer stock mechanism for achieving a base-level (‘loose’) full employment and price stability.
The alternative buffer stock mechanism, that mainstream macroeconomics posits, is a pool of unemployment, which is very costly both in terms of real income losses and the damage it confers on those unfortunate enough to be enduring unemployed.
So there is a tendency for people to claim they represent our views but then pick and choose what they like and expunge the core elements they dislike for one reason or another.
Anyone can have whatever set of ideas they like. But it is simply dishonest to claim one is an MMT proponent yet eliminate much of the core architecture of that body of work.
Before I consider Standing’s attack on the Job Guarantee (Appendix B), I note in the conclusion that he claims that:
1. The UBI will “not ‘abolish poverty’ or ‘abolish unemployment'”.
That is clear from his suggested payment of “£100, with £50 for each child” per week. Another model he proposes would provide “basic incomes of £70 per week for working-age adults, and £20 per week for children”.
Even worse, is Model C “a tax-free £50 per week for one year that was not taken into account in determining access to means-tested benefits”.
He rehearses various versions all of which would deliver a pittance and hardly transform the lives of those at the bottom of the income pile who were struggling with unemployment.
The MMT literature developed by the core team indicates that the Job Guarantee would pay a wage that was socially-inclusive and in that sense would abolish poverty derived from unemployment.
Poverty derived from non-work factors – mental illness, etc – should be addressed by appropriately designed safety nets.
Material poverty can be eliminated.
2. He also wrote (and this is significant given his later attacks on the Job Guarantee) that:
It is also vital to emphasise that a basic income system would enhance the prospects of a more ecologically and socially sustainable form of ‘growth’, via elevation of the value of care work, community work and participation in the life of the commons, and by allowing government to pursue more effective fiscal policies to curb greenhouse gas emissions.
This is an astounding demonstration of neoliberalism and its promotion of the virtues of ‘volunteerism’, which is a smokescreen designed to lull us into accepting that services that were previously provided on a paid-work basis by the state have been scrapped and their continuity relies on the free work of citizens, which impinges on our non-work time.
Much of the ‘work’ that he thinks will be elevated has previously been done in a paid work environment.
And this type of work is an ideal focus for the Job Guarantee because it requires skills that can be relatively easily developed and will not be provided by profit-seeking capitalists.
Standing thinks it is valuable work yet later on considers it (under a paid work Job Guarantee) to be dismal, Soviet-style imposition on people who would rather be doing something else.
Note also the neoliberal view that fiscal policy is so constrained that the government cannot ‘afford’ to provide adequate social services while also mounting climate action.
I note that once again, a critic of our work, chooses not to cite any of it.
His Appendix B sources various people including Larry Summers and Richard Layard as authorities on the Job Guarantee but chooses not to draw on any of our work.
For example, I dealt with Gregg and Layard’s claim they were promoting a ‘jobs guarantee’ in this blog post – When is a job guarantee a Job Guarantee? (April 17, 2009). There proposal was straight neoliberalism.
That in itself is the exemplar of dishonesty and has been a repeating theme in Standing’s UBI advocacy against employment guarantees.
It allows him to avoid inconvenient issues which he knows are complex yet go to the heart of why a UBI is unworkable.
Standing starts his attack on the Job Guarantee by questioning the entire pre-neoliberal, post WW2 consensus that employment is a human right that governments ultimately are responsible to maintain and protect via their fiscal capacities.
Indeed the UN Charter of Human Rights and various International Labour Office statements confirm this association with human rights and employment.
I have written about that in the following blog posts:
1. Employment as a human right (June 29, 2017).
2. Work is important for human well-being (September 14, 2016).
But for Standing “the vast majority of people would have found that a very strange ‘human right’.”
So when people march in the streets demanding work in times of high unemployment what are they actually protesting about.
Young and old and in-between.
He then attacks the notion of a Job Guarantee which (quoting a UK Guardian article – The Guardian view on a job guarantee: a policy whose time has come’ (May 3, 2018) – in support of our proposal) would offer jobs that are not likely to be offered by profit-seeking private employers and would focus on:
… ‘environmental clean-up’ and ‘social care’.
Think back to where he claimed that UBI would spawn a green revolution of caring for people and the environment.
But in the context of his attack on the Job Guarantee, making those paid-work activities would:
… represent a narrow and unattractive range of jobs to be offered. They also bear more than a passing resemblance to the menial jobs convicted offenders are obliged to undertake under ‘community payback’ schemes.
Conclusion: the guy (pun intended) is losing it!
Then there is the usual litany of objections:
1. What jobs?
2. Who provides them?
3. Who would qualify for them?
4. What would they pay and how many hours would they offer?
6. Bureaucratic nightmare.
All of these points have been done to death in the vast literature we have produced over more than 25 years.
He might like to read our 300-page Report – Creating effective local labour markets: a new framework for regional employment policy (published November 28, 2008) – where we answered all those questions in detail.
Other authors, such as Pavlina Tcherneva have produced many detailed analyses of these issues.
One might disagree with our conclusions and logic but to pretend, as Standing does in this report to John McDonnell) that these questions have not be addressed and, that, as a result, the concept of a Job Guarantee is hazy and undeveloped, is a sickening piece of dishonesty.
He claims that Job Guarantee proponents:
… never suggest the guaranteed jobs would match people’s skills and qualifications, instead falling back on low-skill, low-wage jobs they would not dream of for themselves or their children.
First, the Job Guarantee is not a solution to skills-based underemployment. We have never held it out to be otherwise. The pool of jobs is largely designed to be accessible to the most disadvantaged worker.
There is a reason for that.
1. The burden of unemployment typically falls disproportionately on the unskilled.
2. Skilled workers typically adopt what we call ‘wait’ unemployment when they lose their jobs because they have the protection of redundancy payouts etc, which the low-skill workers do not enjoy. Higher skilled workers usually prefer ‘wait’ unemployment because they feel it is better not to take a lower skill job and they expect (and are correct in doing so) that their spell of unemployment will be relatively short.
Second, the Job Guarantee is a buffer stock and not designed to offer permanent jobs to those with the skill advantages in the labour market that typically see them maintain secure employment even in times of economic stress.
The British data covering who endures the unemployment burden is unambiguous and replicates the results across all nations.
The British Annual Population Survey produces this report – Unemployment by qualification level (most recent publication October 5, 2018)
The following graph shows the burden of unemployment for 2012 and 2016 by educational cohort.
The aim of the Job Guarantee is to ensure those in the far right (pun not intended) category in the graph can contribute productively at times when the private market excludes them.
Despite, earlier, waxing lyrical about how transformative a UBI would be with people rushing around on their £50 quid or whatever unleashing their creative and empathetic souls to help each other out and the like, when it comes to discussing the Job Guarantee, any activity that is not ‘validated’ in the private market (that is, generates profits) is considered to be ‘make work’.
This is the standard neoliberal line.
If guaranteed jobs are providing desired services or goods, and are subsidised, there must be substitution effects …
The operative descriptor here is “desired”.
So if all these transformative activities that would emerge under a UBI are “desired” and he is against a government program undermining private sector employers, why would he be happy that the ‘free’ labour (on the UBI) would undercut existing private suppliers?
One cannot have it both ways.
But the important point is that our research has shown that there is a vast array of socially-useful activities that will not be provided in if the criterion is net private benefits (profits).
In my talks in Britain over the last week I differentiated between a private accounting of benefits and costs and a social accounting.
The private ‘market’ only allocates resources according to net private benefits. It does not provide goods and services that create net social benefits but no or small private profits.
Standing’s version of ‘desired’ in relation to his Job Guarantee discussion refers to those with private firms can profit from.
However, the number of jobs that fit into the category of producing net social benefits but no or small net private benefits to capitalists is really only limited by our imagination.
The Job Guarantee thus allows us to redefine what we mean by ‘productivity’.
His only reference to inflation comes when he claims that the UK Guardian’s reference to the price stability feature of the Job Guarantee “contradicts generations of research”.
Yes, neoliberal research based on a Phillips curve framework is now incapable of explaining why, with low unemployment, wages growth and inflation are languishing.
Further, his lack of citation of our work, reveals his version of “research” excludes the work on buffer stocks, which clearly provide price stability mechanisms, that have been successfully implemented in primary commodity markets for decades.
And he reveals his neoliberal ignorance when he comes to consideration of cost:
If the government guaranteed the minimum wage in guaranteed jobs, those in jobs paying less (or working fewer than the guaranteed hours) might quit or find ways to be made redundant, so they could have a guaranteed job instead. Social democrats might like that, as it would mean better-paying jobs for more of the underemployed and precariat. But the fiscal cost would be daunting. For example, in the UK, over 60% of those regarded as poor are in jobs or have someone in their household who is … Would they all become eligible for a guaranteed good job?
One could easily say what would happen if the same cohort he is worried about moving from low-pay, insecure, underemployed jobs in the private sector to the Job Guarantee, instead opted for a UBI in his world.
But that is not the point here.
First, anyone is eligible for a Job Guarantee job. It is an unconditional job offer at a socially inclusive wage with additional non-wage benefits such as health care, child care, training allowances, holiday and sickness benefits, transport subsidies, and superannuation entitlements.
That is, it is a real job with the proper conditions attached.
Second, Standing is acknowledging that the main group who would be attracted to taking a Job Guarantee job are those who are currently disadvantaged but working but who would like to have a stable income and transit from their current precarious situation.
Third, there is no financial constraint on the currency-issuing government prohibiting that transition. By invoking so called “fiscal cost”, Standing is just rehearsing and perpetuating the standard neoliberal myths.
And he holds himself out as a progressive person. That demonstrates why the neoliberals have dominated the public debate.
Fourth, he claims the Job Guarantee “would be a recipe for perpetuating low productivity” yet he opposes a scheme that will entice people out of low-wage, low-productivity jobs.
The fact is that the Job Guarantee would force private employers who are offering jobs below a socially inclusive minimum wage (and conditions) to either restructure through investment to lift productivity or go out of business.
It would also force employers who wanted to expand their workforce to pay above that Job Guarantee minimum and that would, in many cases, require new investment.
In that sense, a fully employed economy with a Job Guarantee promotes dynamic efficiency.
There is a lot more to discuss but this is long enough.
The final attack that Standing mounts, which he says he considers to be “the policy’s worst feature” is that:
It would reinforce twentieth-century labourism, by failing to make the distinction between work and labour. Those who back guaranteed jobs typically ignore all forms of work that are not paid labour. A really progressive agenda would strengthen the values of work over the dictates of labour. It would seek to enable more people to develop their own sense of occupation.
This is from a person who has not cited piece of our work.
It is an absurd criticism.
I have written extensively about the how the Job Guarantee can provide a transformative and radical framework for an inclusive society.
Around the world there are several trends that challenge the traditional notions of work and income:
- There rise in part-time and precarious employment.
- Elevated and persistent levels of unemployment.
- Growing and significant underemployment.
- Increasing polarisation of income distributions and rising income and wealth inequality.
- The impacts of the ‘second machine age’.
The traditional moral views about the virtues of work – which are exploited by the capitalist class – clearly need to be recast.
A progressive vision cannot embrace a capitalist labour market where a rising number and proportion of workers are finding it difficult to get sufficient work and/or pay rises in line with productivity.
In many countries, real wages growth has been flat or going backwards for a few decades now as the top-end-of-town capture an increasing proportion of the real income produced.
Something has to give. The Job Guarantee can become part of a progressive pathway that allows for the transition away from the destructive dynamics that characterise the neo-liberal labour market.
Clearly, social policy can play a part in engendering this debate and help establish transition dynamics. However, it is likely that a non-capitalist system of work and income generation is needed before the yoke of the work ethic and the stigmatisation of non-work is fully expunged.
The question is how to make this transition in light of the constraints that capital places on the working class and the State.
Basic income guarantee advocates consider their approach provides workers with the necessary options to reject the capitalist ‘gainful’ worker approach by breaking the nexus between surplus value creation and income receipt at the individual level.
The UBI proponents argue that the introduction of an income guarantee would thus be liberating. But paying a pittance to maintain some minimum consumption level is hardly likely to be liberating when the vast majority of people want work and who during recessions cannot get it.
But, Job Guarantee proponents argue that there is a need to embrace a broader concept of work in the first phase of decoupling work and income.
However, they argue that trying to impose this new culture of non-work on to society as it currently exists is unlikely to be a constructive approach. The patent resentment of the unemployed will only be transferred to the “surfers on Malibu” (using Van Parijs’ conception of life on basic income!
The Job Guarantee provides a superior vehicle to establish a new employment paradigm where community development jobs become valued.
Over time and within this new Job Guarantee employment paradigm, public debate and education can help broaden the concept of valuable work until activities which we might construe today as being ‘leisure’ (non-work) would eventually be considered to be productive employment.
For example, imagine we allow struggling musicians, artists, surfers, Thespians, and the like to be able to be employed within the Job Guarantee.
In return for the income security, the surfer might be required to conduct water safety awareness for school children; and musicians might be required to rehearse some days a week in school and thus impart knowledge about band dynamics and increase the appreciation of music to interested children.
Reciprocity is clear in these cases. The surfer receives income security because he/she is employed to surf but is productive because they also provide value to society beyond their own hapiness. Win-win.
A surfer who has no reciprocal responsibilities under a basic income guarantee provides nothing to society in general.
Further, basic income advocates like to hold out community activism as something that would increase under a basic income guarantee.
But why not declare these activities to be a Job Guarantee job. For example, organising and managing a community garden to provide food for the poor could be classified as a paid job. We would see more of that activity if it was rewarded in this way. What might be a selfish activity under basic income could become a society-enriching and productive activity if the gardeners were required to redistribute their produce.
By gradually re-defining the concept of productive work well beyond the realms of “gainful work” which specifically related to activities that generated private profits for firms, a Job Guarantee sets us up for the future.
The conception of productivity (and efficiency) as a social, shared, and public outcome is then only limited by one’s imagination.
In this way, the Job Guarantee becomes an evolutionary force – providing income security to those who want it but also the platform for wider definitions of what we mean by work!
Social attitudes take time to evolve and are best reinforced by changes in the educational system. The social fabric must be rebuilt over time.
The change in the mode of production through evolutionary means will not happen overnight, and concepts of community wealth and civic responsibility that have been eroded over time, by the divide and conquer individualism of the neo-liberal era, have to be restored.
The Job Guarantee provides a strong evolutionary dynamic in terms of establishing broader historical transitions away from the unemployment (and income insecurity) that is intrinsic to the capitalist mode of production. The Job Guarantee provides a short-run palliative and a longer-term force for historical change.
The basic income guarantee is found lacking in this regard on all counts.
I sincerely hope that John McDonnell rejects Standing’s deficient report.
I oppose the use of a BIG as the primary means of poverty reduction for the following reasons:
The Job Guarantee is a far better vehicle to rebuild a sense of community and the purposeful nature of work. It is the only real alternative if intergenerational disadvantage is to be avoided.
It also provides the framework whereby the concept of work itself can be broadened to include activities that many would currently dismiss as being leisure, which is consistent with the aspirations of some basic income advocates.
The point is that over time, activities that basic income advocates think represent freedom (surfing) would become jobs under the Job Guarantee as out attitudes to work evolve in a progressive way.
For detailed analysis and answers to all the questions you might have about the Job Guarantee please consult the following work.
- Creating effective local labour markets: a new framework for regional employment policy.
- Mitchell, W.F. (1998) ‘The Buffer Stock Employment Model and the NAIRU: The Path to Full Employment’, Journal of Economic Issues, 32(2), June, 1-9.
- Several blog posts available from this – Job Guarantee – archive
- Type in Pavlina Tcherneva and Job Guarantee.
And my plane landed in Sydney and so I finish.
That is enough for today!
(c) Copyright 2019 William Mitchell. All Rights Reserved.
This Post Has 28 Comments
Superb summary of the whole JG-UBI debate with the UBI argument found severely wanting!
The JG contains within it a truly radical vision of cultural/psychological/spiritual change in the way we perceive social relationships.
The fly in the collective ointment will be housing costs which is now baked into the rentier system over the last 40 years. This has created an almost perpetual motion rentier, wealth extraction machine that seems unstoppable even if LVT were introduced now. The Land/housing bogeyman needs to be dealt with and this still seems to be a solution-free zone. The genie is out of the bottle.
If house prices fall too fast then we have negative equity-is there are place for the Central Bank to step in with a bailout? The details would be complex.
I’ve met Standing at events to which I was invited by John McDonnell (he’s a member of our Labour Land Campaign). I responded to his talk on UBI – the only voice of dissent. He insisted that it was nothing to do with the ‘march of the robots’ and told me to read his book, which I didn’t. (He still hugged me when we next met:o) . I’m disappointed that the FT did not publish the letter I sent last week in response to Chris Giles article – from a despairing LP member: https://www.ft.com/content/cf63e08e-725f-11e9-bbfb-5c68069fbd15, copied to Giles.
As a member of Labour’s National Policy Forum I will ask John Mc to read this blog when we meet tomorrow – John should be there as Co-ordinator.
Part of me almost wants to see a UBI implemented…. so that it can be conspicuously seen to fail after two or three years, and be summarily abandoned – never to be mentioned again. (Wasn’t the Finnish experiment… finished, due to lack of success? Similarly, one in Montreal(?)).
Unfortunately, a UBI would almost certainly be accompanied cuts in benefits, which would be unlikely to be reinstated following its inevitable failure.
Sorry couldn’t make Birmingham, thanks to a last minute freelance Job – an increasingly rare event these days – but I think that was a fair, and appropriate, reason!
Very glad it was a success.
Maybe his report was sponsored by Uber Eats.
The link cited above, http://www.fullemployment.net/publications/wp/2004/97-05.pdf, is giving me a 404 Not Found error.
Hutton once had some good insights and ideas pre-Blair. Then he didn’t and continues not to.
A while back I skimmed Guy Standing’s ‘Basic Income: And how we can make it happen’ (published in 2018) and two clearly ridiculous things stood out.
First is the section entitled ‘Basic Income as Automatic Stabilizer’. Standing acknowledges that a ‘traditional Keynesian argument in favour of welfare states, and social insurance systems in particular, used to be their stabilizing role over the economic cycle’, but that the ‘capacity of existing welfare systems to act as automatic macroeconomic stabilizers is now much reduced’.
He claims that a ‘simple basic income would be a form of automatic economic stabilizer, since it would ensure more spending power in recessions’. But he wants more than a simple system and proposes a ‘multi-tiered system, which would add a “stabilization” component on top of a modest fixed basic income’. The value of the additional ‘stabilization grant’ would be set by an ‘independent basic income policy committee, along the lines of the Bank of England’s Monetary Policy Committee’.
I suspect that Standing has added the ‘stabilization grant’ to his UBI model in response to criticism that UBI doesn’t act as an automatic stabilizer in the same way that a Job Guarantee does. But I am completely flummoxed by his claim that a committee-driven policy is in any way ‘automatic’. But then it’s all of piece with the New Keynesian’s Fiscal Councils and Positive Money’s Money Creation Committee, so it’s hardly surprising that Standing has come up with his own way to take away power from elected and accountable politicians.
Oh, and Standing uses the Australian government’s response to the GFC of handing A$1,000 to disadvantaged people as an example of how such a ‘stabilization grant’ has worked in the past.
The second thing to stand out in the book is the claim that Basic Income has received the blessing of the Pope. In the section called ‘Religious Rationales’ Standing quotes a 2015 Encyclical in which Pope Francis says the ‘earth is essentially a shared inheritance, whose fruits are meant to benefit everyone’ and that ‘each community can take from the bounty of the earth whatever it needs for subsistence’. Standing uses these quotations to claim that ‘Basic Income may thus be justified in religious terms’.
This struck me as dubious and, of course, Standing’s argument falls over when you read ‘Encyclical Letter: Laudato Si’ of the Holy Father Francis on Care for our Common Home’ (available online). It does indeed contain the lines quoted by Standing. But then it also has a section entitled ‘The need to protect employment’ (page 92) which states that ‘men and women have the capacity to improve their lot, to further their moral growth and to develop their spiritual endowments’ and that:
And that ‘it is essential that we continue to prioritize the goal of access to steady employment for everyone’. The Pope goes on to say that:
It seems to me that the Pope is more of a Job Guarantee man than a UBI man.
As a heretofore “sceptical well-wisher” in regard to the JG, I’ve been comprehensively convinced by this blog. Not least because of Standing’s outrageously question-begging and disreputably tendentious attack. I’d hate to have to consider myself as being even on the remotest fringes of the same camp.
Thanks yet again, Bill, for an exemplary piece of advocacy.
There’s nothing for it but to ditch all doubts and quibbles and march resolutely onward. What’s to lose? In the words of the song (sung, as I remember it anyway, by “the Groaner” Bing Crosby)
“Ac-Cent-Tchu-Ate the Positive
Bill, I’d go light on the JG being part of the fundamental architecture of MMT. It is not. MMT is a lens for seeing and understanding the dynamics of economics. JG is an application of MMT. First help people to understand and accept. Other things will fall into place naturally.
And Bill – you haven’t fixed the link!
This is not Bill’s link, but google found me this, which appears to point to the same paper (though no guarantee it is the latest/current version):
I think Bill deserves a break considering he’s flown across the world and back to further educate us Brits in the deeper truths that MMT reveals.
Thank you very much, and also to Warren and Martin. It was great to hear you in Birmingham, and sorry that I could not make it to the training session on Monday for unavoidable reasons.
“The Job Guarantee thus allows us to redefine what we mean by ‘productivity’.” THIS is what is most frightening to neoliberalism (and capitalism in general)–that we, the people, might come to view as “productive” the kind of work primarily directed to improving the health of people and planet, instead of that which generates private profit or maintains the public architecture which facilitates private profit. Here lurks perhaps the most basic and profound of existential questions: What are we here to “produce” with our ephemeral earthly lives? For at least some of us, the JG and other possibilities of human agency revealed by MMT move beyond economics into much higher, much deeper territory. THERE, I believe, lies its potentially universal appeal and its ultimate victory.
Emphasizing the macroeconomic effect of a JG makes it clear that it isn’t a social program. We have to raise the level of economic literacy of the public.
My main problem with UBI is how conservative and unimaginative it is. It accepts the status quo of our woefully inadequate public programs instead of proposing a vast expansion of education, health care, home care, daycare, environmental services, parks, public transit, intercity transportation (e.g. high speed rail), social housing, etc. Millions of new jobs would be needed for decades to provide those services and to build all the associated infrastructure. Unemployment would disappear. Why in the world would you want to pay people not to do all these urgently needed things? Simple. If you don’t believe in public programs and only want for-profit goods and services your preference would be to provide as few public services as possible, put the unemployed on a UBI, a form of dole, keep recipients isolated, hopefully pacified, and forever at the mercy of the whims of each new government. Perhaps one day, when a Star Trek world is a reality and the press of a button will manufacture all our physical needs from a bit of dirt, UBI will be needed.
Currently UBI is usually sold as a panacea for technological unemployment and underemployment, a very old and recurring fear (e.g. ”automation” fears in the 1960s). It is ironic that smart neoliberal thinkers are using the fear of unemployment as a way to advance their privatised future. Personally I welcome the disappearance of unpleasant jobs due to tech change. Good riddance.
But to advance our society, social forces will need to be harnessed to demand all the things I listed above and doing that is difficult. An example: I live in Quebec where we have had a quite brilliant system of publicly funded daycare for over 30 years. Yet it exists nowhere else in Canada. Quite amazing really! There aren’t even big capitalist interests pushing back against it yet Canadians in the other provinces have been unable to have such a no-brainer introduced. But waving the flag of basic income is easy, no tough on the ground slogging is required for that.
Dear Yok (at 2019/05/15 at 11:27 pm)
I did fix the link as advised. But in my tiredness I gave out the wrong link – the blog post had the correct link http://www.fullemployment.net/publications/wp/2004/04-05.pdf
Dear Yok (at 2019/05/15 at 11:25 pm)
At its inception, the Job Guarantee is a theoretical device based on a buffer stock mechanism and replaces the Phillips curve, which is the so-called missing equation in the mainstream macroeconomics framework.
It is essential to understanding why MMT provides a superior lens. Note your use of the term “understanding” – which has to go beyond description and visibility.
We cannot understand why MMT is a superior lens unless we can ‘explain’ – which requires theory.
The Job Guarantee is central to MMT as a body of work and I don’t really care if people find that difficult to swallow (given their prejudices) – that is what it is.
So, I am not going light and nor should you or anyone else that wants to challenge the orthodox theory based on the alternative buffer stock mechanism.
I support 100% land value tax and basic income as well as a Job Guarantee to solve the hosuing crisis.
The case for 100% land value tax and basic income:
Labour should embrace a land value tax and basic income.
A land/location value tax (LVT), also called a site valuation tax, split rate tax, or site-value rating, is an ad valorem levy on the unimproved value of land. Unlike property taxes, it disregards the value of buildings, personal property and other improvements to real estate, only “location, location, location” value remaining. A land value tax is a progressive tax, in that the tax burden falls on titleholders in proportion to the value of locations, the ownership of which is highly correlated with overall wealth and income.
Bearing this in mind, can it really be right that land owners (from the largest to the smallest, and including indirect landowners, i.e. the banks who collect land rents via mortgage lending) are allowed to enjoy or collect all this rental value for little or no payment, even though it is clearly the whole of society which creates rental values – whether directly or indirectly, whether through their own presence, the work they do or the taxes they have deducted from their earnings?
A tax on land values is merely a user charge and largely voluntary – if you want to live in a nice house, you pay more, and in return for that payment you get a direct tangible benefit in return, which you would have to pay for anyway, with or without LVT.
So if it is acceptable for private landowners to collect land rents, it is more than acceptable for “society as a whole” to collect those rents. The current tax system just boils down to welfare for the wealthy, paid for by taxes on the middle (who also have to pay for welfare for those at the bottom).
The owner of a vacant lot in a thriving city must still pay a tax and would rationally perceive the property as a financial liability, encouraging him/her to put the land to use in order to cover the tax. LVT removes financial incentives to hold unused land solely for price appreciation, making more land available for productive uses. Land value tax creates an incentive to convert these sites to more intensive private uses or into public purposes.
The selling price of a good that is fixed in supply, such as land, decreases if it is taxed. By contrast, the price of manufactured goods can rise in response to increased taxes, because the higher price reduces the number of units that are made. The price increase is how the maker passes along some part of the tax to consumers. Land tax incidence rests completely upon landlords, although business sectors that provide services to landlords are indirectly impacted
Assuming constant demand, an increase in constructed space decreases the cost of improvements to land such as houses. Shifting property taxes from improvements to land encourages development. Such infill of underutilized urban space also combats sprawl.
LVT is less vulnerable to tax evasion, since land cannot be concealed or moved overseas and titles are easily identified, as they are registered with the public.
The Canadian experiments with UBI were in Gimli, Manitoba in the 1970’s and last year in 3 cities in the Province of Ontario (originally intended to be a 3 year pilot program, but eliminated after one year after the Conservatives defeated the incumbent Liberals in an election last October).
@Bob, I first heard of UBI from georgists – and spoke against at a CEJ meeting many years ago. I’m surprised you don’t cite the Alaska Permanent Fund as a great example of resource rents funding UBI. Alaskans got so used to receiving their $2000 per annum they were upset when it was reduced and for a while the State had to supplement it from other sources. Now it’s down to about $1500. It never did cover their health insurance premiums.
This is absolutely inspirational stuff. I’ve dreamed for years of a world in which value is given to contributions other than purely mercenary, where providing care is valued, where being creative for its own sake is not seen as self-indulgence. But it’s always felt like a pipe dream – like hoping that John Lennon’s Imagine could actually be implemented.
Of late, my primary inspiration and hope for humanity has come from pre-1788 Australians, who had no currency and no individual possession yet everything was shared, all were fed, all were valued, everything had spiritual value.
Rarely do I come across anyone who even has the audacity to speak their dreams out loud (for fear of being labelled “just an idealist”) and here is Bill not only with an economic foundation on which it might work, but which uses basically the economic infrastructure we have right now! All that’s required is a change of thinking.
I also have a gut feeling that a new thinking which recognises the intrinsic value in these social roles will also recognise the wholesale gouging and rent-seeking that goes on in this world for what it is – a crock. Maybe one day excessive material indulgence will be looked down upon?
I thank you from the bottom of my heart.
The problem is what do we do NOW seeing that land/housing costs are often undermining well-being and creating wealth transference on such a scale? LVT alone applied NOW cannot solve this, we will need credit controls and massive social house building and maybe the Central Bank buying up parts of or whole properties as values fall so mortgages get reduced to acceptable levels as values decline. There will also need to be complex rules so that the more vulnerable don’t lose out.
Very tricky stuff but ‘late-in-the-day’ LVT can’t do it alone.
Putting on the Marxist hat, the issue with the UBI is it still allows capitalists to define work, or discipline workers. Or, another way to look at it, work or the productive basis/reproduction of society is outsourced to private interests, which is often just a cover for unaccountable power.
I think in this aspect, the JB is quite revolutionary, as it allows work to be defined democratically. But this is the sting in the tail for those who wish to see the JB become policy (myself included). When people are confronted with their true freedom, they often baulk, wishing for a master to relieve their anxiety. I suspect this is at the heart of the UBI support: keep the capitalist running the show while UBI supporters get to play the good guys.
As an engineer, I have explained myself the place of JG in core MMT simply as a “parameter” that is right now “set to zero”. This could be changed anytime in economies where MMT is applicable.
Regarding Bill’s post and the BIG vs. JG discussion and as a bit of an idealist/humanist, I would actually support a BIG/JG -combo. Nobody asked to be put in this world and shouldn’t be forced to give up lifetime for currency. I’d find it fair if the BIG is set at the minimum level to ensure the dignity of an individual and JG-Jobs pay out e.g. 2x that amount. After all, as Bill points out, most unemployed actually want to work.
At the risk of sounding a bit marxist, I see the current BIG vs JG discussion as the next round in the fight over the means of production and the power that resides in owning them. The JG would transfer a lot of it to a (hopefully) democratically elected government and provide a much stronger bargaining chip to lower skilled workers and the plutocrats ain’t having any of that. Guy Standing’s position is just another iteration of the modern liberal bullsh*t that actually sees the current political/economical system as the rigged gig it is, but lacks the courage(?) to rock the boat, nevermind actually change it meaningfully. MLK referred to this kind of individuals, albeit in a slightly different context and minding the significant historical differences, as follows:
“I must confess that over the past few years I have been gravely disappointed with the white moderate. I have almost reached the regrettable conclusion that the Negro’s great stumbling block in his stride toward freedom is not the White Citizen’s Counciler or the Ku Klux Klanner, but the white moderate, who is more devoted to ‘order’ than to justice; who prefers a negative peace which is the absence of tension to a positive peace which is the presence of justice […]”
Substitute “white” with “liberal”, “Negro” with “worker” et voilà.
Hermann, no-one asked to be born, but during our time here, unless we are hermits hunting and gathering naked in the wilderness, we all depend entirely on the hard work of others – for our upbringing, our food, clothing, housing, health, education, and leisure.
You can employ a defector strategy if you like, but if everyone did the same thing, life would most likely be even nastier, more brutish, and shorter, than it is already.
There is no Phillips curve in reality it cannot be replaced.
There is yet to be a job guarantee let alone one along MMT lines .
Its effectiveness as an inflation control mechanism is conjecture.
What are the buffer stocks currently mitigating inflation in UK USA Japan?
The price of oil will have more impact on inflation than either UBI ,MMT JG
or unemployment rates for most countries.
Personally I am in favour of a JG as a right humans can and should legislate for.
With or without JG or UI the right will seek to cut back on not just income welfare
but state spending on health education or anything that does not advance the wealth
and power of the few.
There really is plenty to go around and it would take a very large number of “defectors” for the supply chain to collapse. Of course, at some point it would and if ever such a point was reached, I could see the moral case for “motivating” the idle. However, there are many who are incapable of doing even menial workt and I would wish they retain their dignitiy despite of it. Even if it means a couple* of “freeloaders” take advantage of it.
However, I very much believe that most humans have an intrisic drive to feel valuable to their communities/families and that in modern societies that value is derived frome ones work/employment. Denying people the means to follow that drive is both cruel and idiotic.
Just to make it clear, I’m unequivocally in favor of the JG and consider it by far the preferable option for individuals who can work.
*Fun fact: In Switzerland people were asked if they would stop working if they were entitled to a guaranteed 2500 Francs a month tax free and 90% responded they wouldn’t. Asked if they believed other people in that position would stop working, 80% said the they would 🙂
‘In Switzerland people were asked if they would stop working if they were entitled to a guaranteed 2500 Francs a month tax free and 90% responded they wouldn’t’
Indeed-most people want to work. When I became ill after years in secondary teaching, I discovered how ‘hard’ not working was with significant psychological strain and issues of meaning and purpose.
On the issue of ‘defectors’ that Mr. Shigemitsu raises, I’d argue that we need plenty of them as significant numbers of jobs are (to quote Graeber) ‘bullsh*t jobs’ and often worse than bs jobs, jobs that do harm like the useless wealth shufflers Bill refers to often.
HermannTheGerman, Simon Cohen and Mr Shigemitsu:
I think it is worth noting Keith Newman’s comment (16th, 4:37) that actually we need far more workers for
“a vast expansion of education, health care, home care, daycare, environmental services, parks, public transit, intercity transportation (e.g. high speed rail), social housing, etc. Millions of new jobs would be needed for decades to provide those services and to build all the associated infrastructure.”
I wrote a couple of satirical posts on UBI – note they are deliberately exaggerated to convey the message, but reality would not likely be that extreme.
Bob, (16th, 9:43): as a conservationist by training, this is precisely what worries me about a land value tax: “Shifting property taxes from improvements to land encourages development. Such infill of underutilized urban space also combats sprawl.”
Our cities need more green spaces, not fewer. I’d rather see unused lots including those with derelict buildings restored to green space than filled with more concrete.
We do need more houses and associated infrastructure. For this I would suggest the careful planning of garden cities, towns and villages. This would require some building on greenbelt land but unfortunately building on land that nature needs is inevitable unless we kill off a proportion of our population to fit our housing supply! I speak as someone whose home village had a council estate built next to it in the 1960s and is very likely to have a garden village built next to it in the next few years, so I’m not a total nimby. The location of building therefore needs to be determined in a democratic manner, considering both the national and local scale, and not by the interests of individual people.
Presumably when you say, “if you want to live in a nice house, you pay more”, you mean people living in nicer locations. But then what is a nice location? Would not the suburbs be the highest value, promoting the very urban sprawl (uncoordinated, inefficient development) that we both deplore?