It 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??



Background reading

1. Work is important for human well-being.

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

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

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

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

6. Is there a case for a basic income guarantee – Part 5.

7. Employment guarantees are better than income guarantees

Social control motives?

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 – 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.

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.

Apparently:

This 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).

Various uber-rich business types are now being extensively quoted as being in support of a UBI – as a necessity.

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'”.

So necessary for what?

To avoid the “political backlash”!

To maintain social control.

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:

… it will provide a bare minimum of living. Instead, workers will still want to get a higher standard of living by working.

What was that?

Bare minimum – so nothing like the beautiful artistic freedoms that the BIG proponents promise will be delivered. A bare, scratching the floor existence.

And what was that about work?

Which work? Haven’t those robots taken all the jobs? So where will the supplementary income come from? Jobs that robots cannot do?

Feel the contradictions mounting.

Then it opines about who will pay for it.

And even the “bare minimum” payment will according to one commentator quoted:

… far exceed current benefit expenditure …

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.

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).

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.

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.

So in this article we have:

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!

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?

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!

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.

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.

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.

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).

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).

That view of the world was categorically debunked during the Great Depression by Keynes and others.

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).

Search the blog for “Keynes and the Classics” for a more complete discussion of this issue.

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.

Accordingly, BIG payments can be “financed” by taxing workers who enjoy “employment rents”. He said that:

… 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.

He claims that in this way, a BIG enables workers to live a decent, if modest, life without paid employment.

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.

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’.

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.

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.

Recall that Marx wrote in his 1844 work A Contribution to the Critique of Hegel’s Philosophy of Right. that “Die Religion ist der Seufzer der bedrängten Kreatur, das Gemüth einer herzlosen Welt, wie sie der Geist geistloser Zustände 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).

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.

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.

As the hold of religion lessened over time, capital found mass consumption as the next effective way to sustain a docile, compliant working class.

Please read my blog – The mass consumption era and the rise of neo-liberalism – for more discussion on this point.

But that meant allowing the standard of living of workers to increase through real wages growth in line with productivity growth and a more equitable distribution of national income.

As neo-liberalism has become more refined (not in quality but in its ability to attack the living standards of workers), the mass consumption strategy has become more involved.

Capital worked out that it could suppress real wages through labour market deregulation, take the gap generated by productivity growth for itself (redistribute national income in favour of profits), and then maintain mass consumption by pushing massive debt onto households, via the relaxing of credit standards and the corruption of banking, allowed for by the simultaneous deregulation of the financial markets.

Neat.

Major lobbying was expended to make this seemingly perfect solution operational.

Except greed got in the way and the GFC came along because the debt that was being pushed onto households was no longer subject to satisfactory prudential standards and the NINJAs finally couldn’t pay.

At that point, a new form of social control was needed to cope with the mass unemployment that has been created around the world.

Enter the next ‘you-beaut-plan’ – the CEO-advocated BIG.

And the progressives who are pushing for the BIG don’t know what day it is!

So our conception of humanity is of a bare minimum consumption unit – where society only has a responsibility to provide a small capacity to ensure this consumption is enabled.

End of story. We keep people in their boxes with just enough food and other things to keep them alive – just so they don’t rebel and challenge the capacity of the top-end-of-town to go on their merry way pillaging national resources and generated income.

Social control – BIG time.

If they want a better material existence then they can do a bit of work! But haven’t the robots taken all the jobs?

However, the intrinsic social and capacity building role of participating in paid work is ignored and hence undervalued by BIG proponents. It is sometimes said that beyond all the benefits in terms of self-esteem, social inclusion, confidence-building, skill augmentation and the like, a priceless benefit of creating full employment is that the “children see at least one parent going to work each morning”. In other words, it creates an intergenerational stimulus that the BIG approach can never create.

An alternative vision

There was an interesting article published by the Artsy Editorial (February 1, 2017) – What We Can Learn from the Brief Period When the Government Employed Artists.

Artsy is an on-line organisation that aims to bring the beauty of fine arts to the whole world whether you can afford to travel to the grand galleries or not. It is also a highly educational resource.

The article in question reflects on the productive benefits that the US Works Progress Administration (WPA) provided the American people between 1935 and 1944.

Its focus is to recount that “thousands of artists and other creatives” were employed by the US government under the WPA.

The article writes:

That the arts would be funded significantly by the federal government — never mind that it would actively employ artists — may well raise an eyebrow today. But working under a subdivision of the WPA known as the Federal Art Project, these artists got to work to help the country recover from the Great Depression, as part of President Franklin D. Roosevelt’s New Deal … the Federal Art Project’s non-discrimination clause meant that it attracted, and hired, not just white men but also artists of color and women who received little attention in the mainstream art world of the day. These artists created posters, murals, paintings, and sculptures to adorn public buildings. Hospitals, post offices, schools, and airports were decorated with some of the roughly 200,000 artworks created through the program … By 1938, the Federal Art Project existed in 48 states … Only during isolated periods, such as the WPA art projects of the 1930s, had African Americans been given nearly the same opportunities as whites through government programs that employed artists … And crucial to the resulting democratization of culture was a form of expression that addressed the experiences of the working class and was actively shaped by the working class.

The conservatives of the day believed that “the Federal Art Project was a hotbed for Communists” and they fought tooth and nail to retrench it as a result.

Their day would come a bit later as the mad Joe McCarthy purge began.

But the conclusion is that the WPA:

… left a striking legacy. In producing many thousands of paintings, sculptures, murals, photographs, and posters it pioneering new technical innovations in these cultural fields. It gave numerous important artists a leg up in a desperate time … Above all, it turned a generation of young American creatives into career artists.

Which brings me to my final point – one that so-called progressives who buy into the neo-liberal fiscal story and thus support BIG seem to ignore.

Unlike the BIG model, the Job Guarantee model meets these conditions within the constraints of a monetary capitalist system.

The JG 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 BIG advocates.

The future of paid work is clearly an important debate. The traditional moral views about the virtues of work – which are exploited by the capitalist class – need to be recast.

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. BIG advocates think that their approach provides exactly this dynamic.

Clearly, there is a need to embrace a broader concept of work in the first phase of decoupling work and income. However, 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 BIG recipients who creep around our streets living their “bare minimum” existence.

Conversely, the Job Guarantee provides a 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’ would become considered to be ‘gainful’ employment.

So I would allow struggling musicians, artists, surfers, Thespians, etc to be working 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 etc.

Further, relating to my earlier remarks – community activism could become a Job Guarantee job. For example, organising and managing a community garden to provide food for the poor could be a paid job.

We would see more of that activity if it was rewarded in this way.

Start to get the picture – we can re-define the concept of productive work well beyond the realms of “gainful work” which specifically related to activities that generated private profits for firms.

My conception of productivity is social, shared, public … and 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!

It is highly likely that the introduction of the Job Guarantee would also place pressure on private employers, particularly in the low-skill service sectors to restructure their workplaces to overcome the discontent that their underemployed workers feel.

A full-time Job Guarantee position at wages not significantly different from the low pay in the private sector service industries would appear attractive relative to a private job that rations the worker hours.

In this regard, the Job Guarantee would offer flexibility to workers. Some would prefer part-time jobs while others would require full-time jobs within the Job Guarantee.

It should be obvious this flexibility can accommodate virtually any requirement of workers. Further, it is very easy to design the program in such a way that child care services will be provided by Job Guarantee workers, to accommodate parental needs.

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.

Conclusion

In summary, I don’t think humans should be treated as meagre “consumption units” and I oppose the use of a Basic Income Guarantees as the primary means of poverty reduction.

Supporting a Job Guarantee is also tantamount to maintaining a view that it is the government’s responsibility to create full employment rather than abandon that responsibility and dish out minimum consumption bundles to the population who become jobless because the fiscal deficit is too small relative to non-government spending and saving decisions.

The advocacy by CEOs for the BIG is a reflection of their desire to maintain social control.

A Job Guarantee, by distinction, assists workers to gain a greater voice while being able to earn a socially-inclusive and stable income.

It should be a no-brainer for progressives.

That is enough for today!

(c) Copyright 2017 William Mitchell. All Rights Reserved.