\t\t\t\tIt does not quite add up. But then why should it. Spin is spin. On the one hand, we are being constantly told that the world has entered a new era of secular stagnation, driven by an ageing population and a fall off in productive innovation, and we just have to get used to the elevated levels of unemployment that come with that. Yet, other spin doctors are talking about the innovation revolution, the second machine-age, where the march of the robots who will be embedded with AI that will make them smarter than us, big data, automation, the Internet of Things, and more will render work obsolete. In both cases, apparently, the introduction of a guaranteed income is recommended. Suspicious? Then there is more. When CEOs of big companies start advocating a policy that they claim will improve the lot of workers I become immediately suspicious. And why would people with a progressive bent advocate policies that are part of the continuing conservative ambition to achieve social control and which essentially amount to an abandonment of responsibility that government has for maintaining employment for those who cannot otherwise find jobs? So what is with this rush of support for a basic income guarantee (BIG) from all sides of politics??
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1. Work is important for human well-being<\/a>.<\/p>\n 2. Is there a case for a basic income guarantee – Part 1<\/a>.<\/p>\n 3. Is there a case for a basic income guarantee – Part 2<\/a>.<\/p>\n 4. Is there a case for a basic income guarantee – Part 3<\/a>.<\/p>\n 5. Is there a case for a basic income guarantee – Part 4 – robot edition<\/a>.<\/p>\n 6. Is there a case for a basic income guarantee – Part 5<\/a>.<\/p>\n 7. Employment guarantees are better than income guarantees<\/a><\/p>\n The US media company CNBC reported in an article (February 21, 2017) – Tech CEOs back call for basic income as AI job losses threaten industry backlash<\/a> – that CEOs in the big IT companies are beginning to fear “a backlash when it comes to jobs” as they introduce new technologies that wipe out jobs.<\/p>\n Yes, we are back to the ‘robots are coming to take all your jobs’ story, which has become one of the distractions that conservatives and progressives alike have fallen prey to further distance the issue of unemployment from government responsibility.<\/p>\n Apparently:<\/p>\n \nThis portrayal of the future is one tech executives are keen to avoid and has driven a growing chorus to support the idea of a universal basic income (UBI).\n<\/p><\/blockquote>\n Various uber-rich business types are now being extensively quoted as being in support of a UBI – as a necessity.<\/p>\n It is not just a preference they are claiming to be advocating but a change that will be “necessary” to absorb the “digital refugees” because “tech firms could be in ‘firing line'”.<\/p>\n So necessary for what?<\/p>\n To avoid the “political backlash”!<\/p>\n To maintain social control.<\/p>\n The article in question gives the game away in several ways. First, it repeats what everyone knows that the BIG proponents claim it won’t introduce disincentives to work because:<\/p>\n \n… it will provide a bare minimum of living. Instead, workers will still want to get a higher standard of living by working.\n<\/p><\/blockquote>\n What was that?<\/p>\n Bare minimum – so nothing like the beautiful artistic freedoms that the BIG proponents promise will be delivered. A bare, scratching the floor existence.<\/p>\n And what was that about work?<\/p>\n Which work? Haven’t those robots taken all the jobs? So where will the supplementary income come from? Jobs that robots cannot do?<\/p>\n Feel the contradictions mounting.<\/p>\n Then it opines about who will pay for it.<\/p>\n And even the “bare minimum” payment will according to one commentator quoted:<\/p>\n \n… far exceed current benefit expenditure …\n<\/p><\/blockquote>\n Which for a Modern Monetary Theory (MMT) proponent presents no problems. As long as there are real resources available for purchase in the currency of issue, the national government that issues that currency can purchase them and bring them into productive use.<\/p>\n In this context, funding a “bare minimum” BIG would be straight forward for such a government so what is the issue? For an MMT proponent the issue is the inflationary-bias (see blogs linked to above).<\/p>\n But the average progressive has bought the neo-liberal line that governments have to raise taxes and\/or issue bonds to fund its spending. That is one reason they advocate a “bare minimum” BIG because they think that will stand some chance of being accepted and seen as being fiscally responsible – misguidedness has no bounds.<\/p>\n The entire BIG literature is full of whacky ‘funding’ proposals by proponents exactly because they do not understand the currency issuing capacities of the government and the macroeconomic implications of those capacities.<\/p>\n So in this article we have:<\/p>\n 1. Government setting up sovereign wealth fund by buying shares in “all the publicly listed companies in the country and earn money in that way.” – and prop up the share market and the top-end-of-town!<\/p>\n 2. “taxing super profits” – which are? Economists call super profits any net income return above that required to keep the resource in its present use. Who is going to work that out?<\/p>\n 3. A “robot tax as a way for governments to get more money in the future” – what more than the about infinite capacity to spend they already have!<\/p>\n In addition to these whacky ideas, there have been a plethora of ‘funding plans’ proposed in the past many of which betray a fundamental misunderstanding of why mass unemployment arises in the first place.<\/p>\n For example, in the early literature, Belgian economist Phillipe Van Parijs, a leading BIG advocate, presented both an explanation of unemployment and a related model of BIG financing. <\/p>\n Drawing from mainstream economic theory, Van Parijs considers that unemployment arises because wage rigidities impede competition and prevent the labour market from clearing. The mainstream think that if wages could fall enough in the face of the excess supply (represented by the unemployment) then firms would have an incentive to employ them.<\/p>\n Various explanations for the wage rigidities include trade union power and minimum wage legislation, which cause a departure from the competitive outcome that would otherwise restore full employment, are proposed by the mainstream (and Van Parijs).<\/p>\n So according to one of the most vocal of the BIG proponents (and his accolades), unemployment is caused by the departure from competitive equilibrium rather than any macroeconomic failure (that is, a lack of jobs caused by a deficiency in overall spending on goods and services).<\/p>\n That view of the world was categorically debunked during the Great Depression by Keynes and others.<\/p>\n It was demonstrated beyond doubt that cutting wages will not increase employment at the macroeconomic level. Wages are both a cost and an income. So while firms might enjoy lower costs (assuming that productivity doesn’t fall as worker morale collapses as wages are cut), they also suffer from lower sales because people have lower incomes (due to the wage cuts).<\/p>\n Search the blog for “Keynes and the Classics” for a more complete discussion of this issue.<\/p>\n But, that issue aside, Van Parijs then proposed a rather bizarre, and very neo-liberal solution in terms of a redistribution of the ‘property right’ represented by the alleged existence of ’employment rents’, associated with scarce jobs. He said that we should give each person “a tradable entitlement to an equal share of the jobs that are available at any point in time.<\/p>\n Accordingly, BIG payments can be “financed” by taxing workers who enjoy “employment rents”. He said that:<\/p>\n \n… these rents are given by the difference between the income (and other advantages) the employed derive from their jobs, and the (lower) income they would need to get if the market were to clear. In a situation of persistent massive unemployment, there is no doubt that the sum total of these rents would greatly swell the amount available for financing the grant.\n<\/p><\/blockquote>\n He claims that in this way, a BIG enables workers to live a decent, if modest, life without paid employment.<\/p>\n But the implicit full employment concept that the BIG advocates construct is unacceptable, because it is engineered through an artificial withdrawal of the available labour supply, so that some of the unemployed are reclassified as not in the labour force. There are insurmountable problems with this representation of income insecurity and the BIG financing model.<\/p>\n Apart from all the other issues I have discussed in the blogs cited at the outset, the BIG literature presumes that this ‘modest, life without paid employment’ or the “bare minimum” existence, depending on who you read, that is to be enjoyed (endured) by the BIG recipient should be paid for by the employed worker who is living the ‘good life’.<\/p>\n So scarcity of jobs is the problem. But while jobs might be scarce at present if we rely on purely market forces for job creation, it is clear that there are endless useful activities in which the unemployed could be engaged if someone was willing to pay their wages – the march of the robots notwithstanding.<\/p>\n Which brings me back to the original point – why are all these CEOs now advocating a BIG? The reason is not to be found in any particular concern for the unemployed.<\/p>\n Recall that Marx wrote in his 1844 work A Contribution to the Critique of Hegel’s Philosophy of Right<\/em>. that “Die Religion ist der Seufzer der bedr\u00e4ngten Kreatur, das Gem\u00fcth einer herzlosen Welt, wie sie der Geist geistloser Zust\u00e4nde ist. Sie ist das Opium des Volks” (Religion is the sigh of the oppressed creature, the heart of a heartless world, just as it is the spirit of a spiritless situation. It is the opium of the people).<\/p>\n Religion was a major vehicle for social control used by capital to divert attention away from what they were up to – suppressing wages and worker autonomy and advancing their own interests.<\/p>\n Think about the role the Roman Catholic church played in Latin America as stark examples of the more subtle processes that operate in more advanced nations.<\/p>\n As the hold of religion lessened over time, capital found mass consumption as the next effective way to sustain a docile, compliant working class.<\/p>\nSocial control motives?<\/h2>\n