Is there a case for a basic income guarantee – Part 4 – robot edition

This is Part 4 in the mini-series discussing the relative merits of the basic income guarantee proposal and the Job Guarantee proposal. It is the ‘robot edition’. The march of the robots is the latest pretext that basic income proponents (including the IMF now) use to justify their policy advocacy. There is some truth in the claims that the so-called ‘second machine age’, marked by the arrival of robots, is not only gathering speed, but is different from the first period of machine development with respect to its capacity to wipe out human involvement in production. But the claims are somewhat over the top. Further the claims that these trends are inevitable are in denial of the basic capacities of the state to legislate in the common interest. While the innovations in technology will free labour from repetitive and boring work and improve productivity in those tasks, there is no inevitability that robots will develop outside the legislative framework administered by the state and overrun humanity (even if the predictions of robot autonomy are at all realistic). We will surely need to develop a coherent adjustment framework to allow these transitions to occur equitably and where they are not possible (due to limits on worker capacity) alternative visions of productive work are developed?
Further, the Job Guarantee is a better vehicle for handling these type of transitions and creating new forms of productive work. Adopting a basic income guarantee in this context just amounts to surrender.

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Is there a case for a basic income guarantee – Part 3

This is Part 3 in the mini-series discussing the relative merits of the basic income guarantee proposal and the Job Guarantee proposal. While there is a lot of literature out there on the merits of introducing a basic income guarantee very rarely will you read a detailed account of the macroeconomic implications of such a scheme. It is inescapable that the basic income proposal lacks what I call an inflation anchor. That is, to provide an adequate stipend and generate full employment (ensure there are enough jobs for all who want to work), the basic income guarantee is inherently inflationary and sets in place destructive macroeconomic dynamics which make it unsustainable. To suppress the inherent inflationary bias of the proposal, the stipend has to be so low that the recipients are freed from work but not poverty. The Job Guarantee, by way of contrast, is designed to provide an explicit inflation anchor and allows the government to continuously maintain full employment and provide a decent wage to those who from time to time will be in the Job Guarantee pool. It does not rely on poverty wages or unemployment to maintain price stability. That alone is a fundamental advantage of the Job Guarantee over the basic income guarantee – it is sustainable.

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Is there a case for a basic income guarantee – Part 2

This is Part 2 in the mini-series discussing the relative merits of the basic income guarantee proposal and the Job Guarantee proposal. The topic of a basic income guarantee seems to evoke a lot of passion and in all the discussions I rarely read anyone going carefully through the macroeconomic implications of bringing in a scheme. I get lots of E-mails accusing me in varying degrees of politeness of being on a moral crusade in my opposition to basic income proposals. I wonder how much of my work over the years such correspondents have read. Not much is my conclusion. Whatever you think of the morality of having a system where some people work while others are supported in one way or another without having to work, even though they could (so I exclude the aged, sick, severely disabled here), the fact remains that a policy proposal won’t get much traction from me if it has a deep inflation bias and adopts neo-liberal explanations for economic outcomes like unemployment. I will also never support a proposal that absolves the national government from taking responsibility for providing enough work via its currency capacities and treats individuals expediently as ‘consumption units’ – to be maintained at minimum material levels. Anyway, we explore a few of those issues in this blog.

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Is there a case for a basic income guarantee – Part 1

This is Part 1 in my mini-series on my version of the debate between employment guarantees and income guarantees. An earlier post rightfully belongs in the series as Part 0 – Work is important for human well-being. This discussion will form part of the Part 3 of my next book (with co-author, Italian journalist Thomas Fazi) which traces the way the Left fell prey to what we call the globalisation myth and started to believe that the state had withered and was powerless in the face of the transnational movements of goods and services and capital flows. Accordingly, social democratic politicians frequently opine that national economic policy must be acceptable to the global financial markets and compromise the well-being of their citizens as a result. In Part 3 of the book, which we are now completing, we aim to present a ‘Progressive Manifesto’ to guide policy design and policy choices for progressive governments. We also hope that the ‘Manifesto’ will empower community groups by demonstrating that the TINA mantra, where these alleged goals of the amorphous global financial markets are prioritised over real goals like full employment, renewable energy and revitalised manufacturing sectors is bereft and a range of policy options, now taboo in this neo-liberal world, are available. Wherever one turns these days, a so-called progressive pops up with a megaphone (conceptual) shouting that a basic income guarantee is the panacea for all manner of evil – starting back some years ago with unemployment and moving more recently, as that rationale was exposed, to the need to counter the expected ravages of the second machine age. As regular readers will know I am a leading advocate for employment guarantees. I consider basic income proposals to represent a surrender to the neo-liberal forces – an acceptance of the inevitability of mass unemployment. Further, the robot argument doesn’t cut it. Anyway, in Part 1 – Work is important for human well-being – I considered the need to broaden the definition of productive work. I also emphasised the importance of an on-going availability of work for human well-being. In Part 2, we sketch the arguments that have been advanced to justify the basic income proposal and find them inconsistent, illogical and deficient.

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Work is important for human well-being

I am now in Kansas City for the next several days, so blogs might come at odd times. I am getting close to finalising the manuscript for my next book (this one with co-author, Italian journalist Thomas Fazi) which traces the way the Left fell prey to what we call the globalisation myth and started to believe that the state had withered and was powerless in the face of the transnational movements of goods and services and capital flows. Accordingly, social democratic politicians frequently opine that national economic policy must be acceptable to the global financial markets and compromise the well-being of their citizens as a result. In Part 3 of the book, which we are now completing, we aim to present a ‘Progressive Manifesto’ to guide policy design and policy choices for progressive governments. We also hope that the ‘Manifesto’ will empower community groups by demonstrating that the TINA mantra, where these alleged goals of the amorphous global financial markets are prioritised over real goals like full employment, renewable energy and revitalised manufacturing sectors is bereft and a range of policy options, now taboo in this neo-liberal world, are available. One proposal that seems to have captivated so-called progressive political forces is that of the need for a basic income guarantee. As regular readers will know I am a leading advocate for employment guarantees. I consider basic income proposals to represent a surrender to the neo-liberal forces – an acceptance of the inevitability of mass unemployment. In that sense, the proponents have been beguiled by the notion that the state can do nothing about the unemployment. It is curious that they think the state is thus powerful enough to redistribute income. I also consider basic income proposals demonstrate a lack of imagination of what work could become and a very narrow conception of the role of work in human well-being. This blog will be the first in several (probably about four) where I sketch the arguments that will be developed (but more tightly edited) in the final manuscript.

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Australian Treasurer embarrasses himself

The Australian Treasurer gave his first major statement in Sydney last week (August 25, 2016) since being barely re-elected in July. The speech – Staying the course – strengthening our resilience in uncertain economic times – was before an invited gathering of the business world who sat their listening to total nonsense from a man who disgraces the role he holds. Australians have always lagged behind developments in the rest of the world in many ways. It used to be blamed on the ‘tyranny of the distance’ (geography) but that excuse can no longer be used in this digital age. You realise how far behind the times our Treasurer is when you read articles such as this one in Foreign Policy (August 26, 2016) – The Stimulus Our Economy Needs. In that article, we read that “Now, the idea that governments, with or without the help of central banks, should spend substantial resources on creating jobs, both directly and through private sector incentives, is widely accepted among economists across the political spectrum”. Sound advice but lost on the Australian Treasurer. Bad luck for us. He is an embarrassment.

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Modern Monetary Theory – what is new about it? – Part 2 (long)

In yesterday’s Part 1 of this two-part blog – Modern Monetary Theory – what is new about it? – I introduced the idea that a major new contribution of Modern Monetary Theory (MMT) to economic theory was in its treatment of inflation and the Phillips curve. This is part of a keynote presentation I will be giving at the International Post Keynesian Conference – which will be held at the University of Missouri – Kansas City between September 15-18, 2016. The keynote presentation is scheduled for Friday, September 16 at 17:00. The topic of my keynote presentation will ‘What is new about MMT?’ and will challenge several critics from both the neo-liberal mainstream and from within the Post Keynesian family that, indeed, there is nothing new about MMT – they knew it all along! I contest that when they say this they are lying and doing so to cover up the inadequacies of their own failed analytical frameworks whether they be mainstream or Post Keynesian.

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Why Uber is not a progressive development

A few weeks ago, I was waiting for a flight at the airport and during a conversation with a person who often travels the same route and schedule that I use on a regular basis (we are now sort of ‘fellow travellers’ and share stories of delays, diverted flights etc), he asked me whether I use Uber. My reply was in the negative – I do not use the service and do not think it is a positive labour market development. He then said something like “but it is a flexible service and drivers can choose their hours”. To which I said something like “flexibility is just the latest buzz word for low-pay, casualised employment” except Uber takes that trend even further in the direction of capital. Uber is a replay of old models of worker exploitation jazzed up in Silicon Valley hype to appear to be ‘cool’. The ‘gig economy’ just layers additional disadvantages for workers and takes us back to the days following slavery. Progressive should avoid using the service for many reasons. There are also other issues relating to the commodification of our lives that also apply to services like Uber. Interestingly, a few weeks after that interchange, the Financial Times published an article (August 11, 2016) – Uber hitches a ride with car finance schemes – which reinforced my views on the scheme. And just yesterday (August 15, 2016), there was a very terse Letter to the Financial Times about this article – An economic model from the feudal age – which summarises why progressives should boycott this type of labour market trend.

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Seattle workers better off after significant minimum wage rise

I recently wrote about minimum wage principles in relation to a progressive manifesto and the desire to reduce income inequality, which has risen sharply in the neo-liberal era where mainstream ‘free market’ economics has been the dominant narrative. Please see – Reducing income inequality – for that discussion. That blog considered some evidence that refutes the mainstream economics mantra that implementing minimum wages undermines the employment opportunities for low-wage workers. The standard lie that is rammed down the throats of economics students is that whenever governments impose minimum wages the market retaliates and minimum wage workers are worse off as a result. There are layers of erroneous concepts embedded in that orthodoxy, which I have dealt with many times before. But a significant point is that the real world is doing a good job to expose the lies of the ‘competitive’ model without recourse to any deep theoretical debates about whether ‘marginal productivity’ can be identified (it cannot), or whether the labour demand curve is downward sloping (it isn’t), which also includes a debate about whether productivity declines with extra employment (it doesn’t!). An interesting research paper released July 2016 by researchers at the The Seattle Minimum Wage Study Team based at the University of Washington in Seattle – Report on the Impact of Seattle’s Minimum Wage Ordinance on Wages, Workers, Jobs, and Establishments Through 2015 – provides further evidence to contest the veracity of the mainstream economics myths.

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The struggle to establish a coherent progressive position continues

There was an interesting article from Spanish political scientist (and economist) Vicente Navarro (August 4, 2016) – Is The Nation-State And Its Welfare State Dead? A Critique Of Varoufakis – which contested the former Greek finance mininster’s claims that the “nation state is dead” and so pan-international movements are required to restore democracy and provide a bulwark against global capitalism. I have a lot of sympathy for Navarro’s argument given that the topic is closely related to current book manuscript I am working on with Italian journalist Thomas Fazi on the reasons that the Left have vacated the progressive space and adopted neo-liberal economic positions that guarantee its steady demise as a political force. So in that context, the work of the former finance minister in trying to revive a Left narrative is admirable but, as Navarro notes, is misguided. DiEM25 is not likely to form a basic of a progressive manifesto for the future.

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Reforming the international institutional framework – Part 2

This blog is the second part (now of three) where I discuss how the international institutional framework has to be reformed to serve a progressive agenda where rich countries (and the elites within them) do not plunder then pillory poor countries. In this blog I detail why we should dissolve the World Bank, the OECD, and the BIS, all of which have become so sullied by neo-liberal Groupthink that they are not only dysfunctional in terms of their original charter but downright dangerous to the prosperity and freedoms of people. The third part will consider what a new international institution might look like and the role it can play in aiding poor nations, particularly those who are reliant on imported food and energy. We will also discuss reforming the foreign aid system.

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Reforming the international institutional framework – Part 1

This blog continues the unedited excerpts that will appear in my new book (with Italian journalist Thomas Fazi) which is nearing completion. This material will be in Part 3 where we present what we are calling a ‘Progressive Manifesto’, which we hope to provide a coherent Left philosophy to guide policy design and policy choices for governments that are struggling to see a way beyond the neo-liberal macroeconomics. In this blog I examine how the international institutional framework has to be reformed to serve a progressive agenda where rich countries (and the elites within them) do not plunder then pillary poor countries. Central to this new framework is the abolition of the World Bank, the IMF and the OECD, all of which have become so sullied by neo-liberal Groupthink that they are not only dysfunctional in terms of their original charter but downright dangerous to the prosperity and freedoms of people. Former World Bank chief economist Joseph Stiglitz told journalist Greg Palast in an interview in 2001 that the IMF “has condemned people to death” (Source). I will propose a new international institution designed to protect vulnerable nations from damaging exchange rate fluctuations and to provide investment funds for education, health and public infrastructure. We will explore how new institutions protect themselves from developing the sort of dysfunctional Groupthink that has crippled the existing institutions. We will disabuse ourselves of notions that are popular among some progressive voices that a fixed exchange rate, international currency system is required. This will be a two part blog and will also have context for other blogs where I discuss reforms to the global financial system.

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Brainbelts – only a part of a progressive future

Last week, the US Republican Party held an extraordinary convention in Cleveland, an old rustbelt manufacturing town. I say extraordinary because I guess you have to be American to understand how grown adults can systematically humiliate themselves for several days with the rest of the world looking on wondering WTF was going on! Anyway, just down the road from Cleveland is Akron, Ohio, which is being held out as a model for the new era of prosperity in advanced nations. I caution against believing that hypothesis. It was proposed in a book I have just finished – The Smartest Places on Earth – written by two Dutch writers (published 2016). It carried the subtitle “Why Rustbelts are the Emerging Hotspots of Global Innovation”. I do not recommend anyone purchase it even though it is getting rave reviews around the place. I see it as a sort of replay of the 1990s ‘New Regionalism’ mania that emerged as part of the Third Way movement, which the now discredited Tony Blair promoted as the entrepreneurial solution to turn regions into sub-national export centres to replace the ‘nation state’, that had been (according to the narrative) rendered powerless and irrelevant by globalisation. The book introduces the notion of the “Brainbelt”, which the authors claim are revitalising the “former rustbelt areas” and “bringing new competitiveness to the United States and Europe” – a sort of counter-strategy to foil the jobs lost to the low-cost nations such as China and the Asian economies in general. The problem is that the growth strategy seems to leave the worker behind!

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The case for re-nationalisation – Part 2

There was an interesting article written in the London Review of Books (September 13, 2012) by regular contributor James Meek in – How We Happened to Sell Off Our Electricity (you need to subscribe to read it). It discussed how the obsession with privatisation in Britain, which was meant to reduce state control of this sector, has led to the state still being dominant in electricity production. The only problem for the British is that the French government now owns a large swathe of the ‘privatised’ British electricity industry. The outcome demonstrates the absurdity of the whole privatisation debate. This example is not unique. State-owned enterprises have eaten up inefficient privately owned firms all around the world as governments sell off public assets in the belief that prices will fall, services will improve and costs will be lower. The reality now some 35 years or so into the privatisation experiment is that none of these claims have been realised. In many cases, costs are higher and the privatised firms rely on higher public subsidies than was the case when the operations were completely in public hands. Prices are no uniformly lower after privatisation. Profit-seeking firms seek to gain by cutting costs and under investing in essential infrastructure, which leads to poor outcomes for Society (blackouts, poor repair times etc). And, millions of jobs have been lost in this cost-cutting mania. As a result, we argue that a ‘Progressive Manifesto’ must include the case for re-nationalisation of many sectors, which are intrinsic to advancing the well-being of Society. Progressive parties should start researching and demonstrating how this policy will take us into the next century where green, sustainable production is the norm and there are high levels of public service available from these key sectors, rather than allow critics to argue that the re-nationalisation agenda is just a return to the dark old days of inefficient state enterprises where cronyism, nepotism and corruption was rife.

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Towards a progressive concept of efficiency – Part 2

This is Part 2 of my discussion of how a progressive agenda can escape the straitjacket of neo-liberal thinking and broaden how it presents policy initiatives that have been declared taboo in the current conservative, free market Groupthink. Today, I compare and contrast the neo-liberal vision of efficiency, which is embedded in its view of the relationship between the people, the natural environment and the economy, with what I consider to be a progressive vision, which elevates our focus to Society and sees people embedded organically and necessarily within the living natural environment. It envisions an economy that is created by us, controlled by us and capable of delivering outcomes which advance the well-being of all citizens rather than being a vehicle to advance the prosperity of only a small proportion of citizens.

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Towards a progressive concept of efficiency – Part 1

Before I present the second part of my discussion about the relevance of re-nationalisation to what I would call a truly progressive policy agenda, we have to take a step backward. I note after the first part – Brexit signals that a new policy paradigm is required including re-nationalisation – there were a few comments posted (and many more E-mails received – apparently readers are happier berating me personally rather than putting their ideas out in the public domain) that I was advocating a return to the ‘bad’ old days of nationalisation where cronyism, inefficiency and trade union bastardry were the norm. The obvious next point was – how can I claim that is progressive and part of the future. In this two part blog (the second part will come tomorrow), I offer a framework for assessing these claims. Today’s blog foscuses on the neo-liberal vision of efficiency and reveals how narrow and biased towards private profit it is. In Part 2 (tomorrow) I will present the progressive vision and how it conditions the way we think of efficiency. Once we break out of the neo-liberal constructs and refocus our attention on Society rather than the individual then the way we appraise policy options also changes – it becomes enriched with new possibilities and understandings. We enter the progressive world and leave behind the austerity nightmare that neo-liberalism has created. We are then able to see how our old conceptions of nationalised industries or public sector job creation are tainted with these neo-liberal biases. And we are then able to see how policy initiatives that invoke scorn from the conservatives and many so-called modern progressives (obsessed with post modern constructs) have a vital role to play in a truly progressive manifesto. I split the discussion into two parts because the blogs are too long as they are.

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Brexit signals that a new policy paradigm is required including re-nationalisation

With the new British Prime Minister now indicating that she will push ahead with Brexit and free the nation from the undemocratic imposts of the increasingly dysfunctional European Union, a view that is apparently ‘poisonous’ to some so-called progressive writers, several pro-Remain economists or economic commentators have realised that the game is up for neo-liberalism in Britain. There have been several articles recently arguing (after bitching about the loss of the Remain vote and repeating the catastrophe mantra) that a new economic paradigm is now called for in Britain, based on its new found sovereignty (after it finally exits). It could, by the way, exit through an Act of Parliament without all the Article 50 palaver if it wanted to. That is just a smokescreen. This idea of a new paradigm being required is exactly what Thomas Fazi and I are working on as part of our current book project which is nearing completion. Today, I consider briefly our view that nationalisation has to return as a key industry policy plank for any aspiring progressive political party.

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Australia now on negative watch – so what!

I am here to report that the sky is still up there in the sky although a little cloudy today. The power is still on. The rivers are still flowing. And as far as I can tell, the Australian continent isn’t looking like sinking into the ocean on either side. But we have to be warned – that bastion of sagacity and purity Standard & Poor’s put our AAA government bond rating on negative watch last Thursday. The Government is claiming it has to increase the intensity of its austerity plans, economists are being wheeled out for their moment in the media claiming government borrowing will ‘cost more’, and the media is having a picnic on the predictions of chaos and despair. It reminds me of the panic that followed the War of the Worlds broadcast on American CBS radio on October 30, 1938. That broadcast suggested to ‘weak minds’ that there was an invasion from Mars underway and precipitated panic. Similarly, the media is trying to whip a sense of gravity over the S&P decision. The reality is that nothing has happened nor will. The rating is irrelevant and the media should just ignore any press release these corrupt organisations put out. They are only designed to advance the profitability of the agency and should be subject to tight product quality scrutiny. The resulting fines for incompetence would put the companies out of business. It would be better if the government just legislated them into outlaw status immediately.

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Why capital controls should be part of a progressive policy

I am in the final stages of completing the manuscript for my next book (this one with co-author, Italian journalist Thomas Fazi) which traces the way the Left fell prey to what we call the globalisation myth and started to believe that the state had withered and was powerless in the face of the transnational movements of goods and services and capital flows. Accordingly, social democratic politicians frequently opine that national economic policy must be acceptable to the global financial markets and compromise the well-being of their citizens as a result. In Part 3 of the book, which we are now working on, we aim to present a ‘Progressive Manifesto’ to guide policy design and policy choices for progressive governments. We also hope that the ‘Manifesto’ will empower community groups by demonstrating that the TINA mantra, where these alleged goals of the amorphous global financial markets are prioritised over real goals like full employment, renewable energy and revitalised manufacturing sectors is bereft and a range of policy options, now taboo in this neo-liberal world, are available. Today, I discuss capital controls.

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Australian election outcome resonates with the Brexit dynamics

Less than two weeks ago, Britain sent a bombshell into the conservative, neo-liberal policy agenda and the narrative that supports it. I have read a lot of comments that the Referendum result was a reflection of racist attitudes towards minority immigrants. While it is no doubt that the open borders policy that allows firms to batter down wages growth and keep a constant excess supply of labour as a threat was an important part of the debate and vote, that in itself, was a reflection of the underlying tension that people and their communities have with the neo-liberal policy agenda. There would be much less concern about migration if there was full employment. The same sort of tensions that pushed the majority of British voters to support the Leave campaign have been apparent in the Australian Federal election which was held on Saturday (July 2, 2016). Australian voters have rejected a first-term conservative government. It is a rare event for us to reject any first-term regime of either persuasion. The conservatives in Australia are now in tatters without credibility and the unstable situation that has arisen as a result of the political uncertainty provides a great opportunity for the Australian Labor Party, who did very well in the poll on Saturday, to refresh their outlook and reject their neo-liberal tendencies to reflect the big shift in sentiment in the Australian electorate. A similar opportunity exists in Britain and I hope Jeremy Corbyn takes it and expunges the Blairites from his own Party.

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