Another ABC article about basic income today as well:
There’s quite a lot of confirmation like this, of our economic strategy in relation to automation.
I worry that it’s a necessary and yet insufficient solution.
Economically, as the ranks of the unemployable increases, wealth disparity, even with basic income will continue to increase to levels way beyond current levels, even as productivity and efficiency in industry continues to increase. To continue supporting the increasingly unemployable portion of the population, we have to tax the employed people more. Those people would also be the most economically mobile, and so they would have strong incentive to move elsewhere. Even if they stay, any incentive to advancement would be crippled by taxation. There’s a similar problem with taxing businesses more. Lots of incentive to just go do business elsewhere. Businesses are happy enough to pay tax to support social welfare, to the extent that it produces a stable environment to do business, but there comes a point where they just add up the cost benefit and say no. I think this applies regardless if whether it’s a land tax or other more direct profit/revenue/transaction based taxation.
In short, social welfare is great, but we can only afford it under current economics, if we don’t kill the golden goose of business and concurrent employment.
Culturally (and therefore politically), ballooning levels of unemployable’s is a disaster. It produces a kind of existential crisis for entire generations.
"What’s my purpose? What am I supposed to do with my time? How can I get out of this basic existence when everyone around me seems to be stuck in it too? Life sucks and there’s no way out."
At a personal, individual level, this turns into crime, drug & alcohol abuse, increasing suicides, increasing violence, or they turn to gangs to create at least some semblance of belonging etc.
Politically, this is what Trump just tapped into to win the US election. It’s total BS. He can’t deliver, but people all across the mid-west that were experiencing exactly what I describe above were prepared to vote for that buffoon, just on the basis that he was the only one talking about their problem. Arguably, it’s the same thing.
I guess what I’m saying is that this problem is beyond just economics. People also need a way to find meaning and purpose in their lives, and that’s hard to even broach when you’re living day-to-day on a minimum income with no opportunities.
Now, it doesn’t escape me that there are already a lot of people in that situation, but the difference is scale. There’s a tipping point to these things, beyond which everything gets chaotic, revolutionary etc, and history suggests that doesn’t end well.
So, what’s the solution?
I don’t know yet, but I’m reading widely, and I think that being the political party that presents a credible solution to this would be just great. It’s of core strategic value. It requires vision. That’s what really drew me into that huge discussion about monetary theory a while back. We need a new economics model that allows us to engage the whole population in fruitful purpose, while maintaining compatibility with current economics because revolutions suck for everyone.
I have a weird inkling that being left/libertarian puts us in a unique position to address this.
I haven’t heard much discussion about the relationship between left and libertarian. We’re clearly there, and yet we don’t talk much about how they relate. What’s going on with that?
Brendan’s party rename proposal revealed that people tend to associate ‘left’ with authoritarian left, and ‘libertarian’ with libertarian right, leaving ‘libertarian left’ an oxymoron in their minds.
I’m well aware of the image issue, but more concerned that we haven’t really had the explicit internal discussion to tease apart what it really means to us, to be both left and libertarian at the same time.
In my mind:
The reason “authoritarian” and “left” are often though of together is that leftist governments are generally bigger; they have more social programmes; you have to comply with their social mandates (they have social agendas); if you’re earning lots of money, then you have to expect they will take a lot of it away from you to pay for these social programmes. Essentially, they are using government authoritae to mandate structured generosity.
In turn, “libertarian” and “right” are often associated, because they both favour small government that doesn’t interfere much with its citizens, but for different reasons. The libertarians, because “Fuck you, I won’t do what you tell me” (bonus points for identifying the song that lyric comes from), and the right, because they believe the “invisible hand” of economics will fix everything if you just stop screwing with it.
So, what are we doing that cuts through all this?
Firstly, it’s the freaking 21st century. Government doesn’t need to be anywhere near as big to implement reasonable social programmes. We have the inter-webs, and lots and lots of data. and computers. Really fast computers. Also, stop being so political with your social programmes. I mean, stop structuring them to generate votes. It’s a mess. Social security is almost incomprehensible today. There’s massive opportunity to provide a vastly simpler, more efficient but equivalent level of social security with a lot less overhead and a lot more predictability and less authoritarian nonsense (just go look at NIT policy).
Then there’s the the holes in the “invisible hand” that the right don’t like to talk about. Monopolies and rent seeking. We don’t buy that shit. When that happens, it’s like a massive private tax on everyone, but we’re not supposed to notice that.
Along with that comes a preference for more direct participation in democracy, further eroding whatever authoritarian stank may still be attached.
Then there’s all our cultural policy, particularly as it relates to intellectual property. Liberty is not just economic; it’s cultural too. Freedom to share culture and ideas and use them for collective good empowers everyone. It’s monopolies again, but encroaching into the cultural sphere.
and privacy too. Don’t forget privacy.
In summary, we can have smaller less intrusive government, more citizen engagement, eliminate monopolies and rent-seeking, have less oppressive social security, and less reasons to rage against the machine (Oh, what a giveaway).
Did I miss anything?
I touch on various issues discussed here in the first strategy paper which I am waiting on more of the NC to sign off on before I post. I will try not to double up on stuff I cover there too much, but I don’t think it can be helped.
Sometimes I can’t help but think we are living at the other end of the process of the spread of capitalism that Karl Marx outlined in the Commie Manifesto. Capitalism has spread to cover the globe, it has brought most of the world into modernity and the relationship between capitalist and worker (or in Marx’s words, bourgeois and proletarian) has become the most common class relationship. What Marx didn’t predict was just how far automation would go. He thought the only jobs left would be the mundane machine operator jobs, where the surviving jobs after automation seem to be a lot more interesting than the mundane routines of industrial capitalism.*
Companies being able to move to more competitive areas only works when there are places that aren’t already being exploited. If people can’t afford to buy things capitalists can’t sell what their companies produce. The thing is that production gets cheaper and cheaper and providing the means of survival for everyone becomes easier and easier from a purely economic perspective (climate change might have something to say about food production, but time will tell). Corporate leaders are going to have to come to terms with this, which is why people like Bill Gates and Elon Musk are pushing for a basic income. The alternative to providing a basic income for all is:
I think there are a couple of paths that will remain open to people in an automated world to find meaning. Some jobs like nursing aren’t likely to ever be fully automated because a lot of providing care is the human contact. Same with some aspects of teaching. However I think the big change will be in the growth of cultural production. With virtually unlimited spare time everyone can participate in and create art, philosophy, sports and other cultural activities. Art is very rewarding from a personal worth perspective, just poorly financially compensated at the moment. Think Greek or Roman citizens with machines replacing slaves.
There are whole schools of thought that sit in the libertarian left quadrant of the political compass. The trouble for us is that many are overtly revolutionary utopians who tend not to do a great deal because it would ruin their ideological purity (I came from this tradition before the Pirate Party existed). There are the various threads of Anarchism, from Anarcho-Communism to Anarcho Individualism, there is Libertarian Socialism, Autonomous Marxism etc. @MarkG and @BillM are both fans of Henry George who is influential on our economic policies, in particular his critique of intellectual property and proposal for a broad based land tax.
The way I see it is left means wanting social equality (rather than big government) and libertarian means wanting freedom from coercion (rather than a purely economic freedom).
I generally agree with this stuff:
*I am not a Marxist, but I recommend that people read chapters 1 and 2 of the Commie Manifesto sometime. It has a great descriptions of the rise of capitalism and the relationship between workers and capitalists. Chapter 2 outlines the basis of ‘Communist Parties’ and that gives some insight into how and why the official Communist movement became so authoritarian. Marx didn’t understand that there is a class relationship between governors and the governed, which was the Anarchist criticism of the Commie Manifesto at the time it was published.
Sounds dramatic, but we know what communities look like where everyone is on social security, then scale that up by understanding that around 50% of current jobs probably won’t be around in 10 years.
We’ll end up with a social security class separating from the working class, and they won’t live in the same suburbs. Kids will grow up never knowing people who have jobs and a non-basic income. I know we have that today, but imagine when it’s half the population.
Then realise that there’s around a 0.54 correlation of income inequality to most forms of violent crime (look up Gini coefficient). The working class will have a strong preference for walled communities.
Under these conditions, Australia won’t be the country we know today.
I really don’t think what we propose as a basic income is anywhere near enough, but our policy is for today not ten years time. We should probably do something about that, but it will require some thought.
I don’t think of basic income as the same as welfare though. The safety net should be enough to provide funds for activities, which in the English speaking world is a dream for people currently on welfare.
Beyond providing a basic income, there should be a lot more money for the arts, invention, education, sports etc. If a creative impetus is encouraged and rewarded through income and kudos, there won’t be the social isolation and the feeling of a lack of self worth, because people will still be useful.
If large groups of people get marginalised and left behind there will be serious social problems, so we need to try and stop this from happening. If we all don’t win from technological progress, we may all lose.
Equating “meaning in existence” with “having a job” is the curse of our current civilisation.
Treating “meaning in existence” as, approximately, “doing things that matter, with people who I respect”, would be a better baseline (however each individual interprets “matter” and “respect”).
This places meaning orthogonal to money, which (IMO) is bloody well where it should be
The difference is scarcity or lack thereof.
Capitalism produces automation which reduces scarcity.
We’re discussing the bumpy transition along that path.
Huge inequality is a very modern phenomena. It only happens when one group is able to monopolise natural resources and exclude others. This arrangement—the earth “owned” by some particular primates, and everyone else forced to pay them for access—that doesn’t exist in nature. It has never existed in traditional indigenous societies either.
It can only happen with a state, and only then when that state has been co-opted. When a person can utilise the “commons” (which in the past meant land, but in the modern age also means digital and cultural commons)—that person is harder to impoverish. It is hard to exploit someone who can, at any time, choose to go and live in a traditional lifestyle instead. The lockout of the commons was a calculated deployment of state power. It ended the traditional way of life for most British people and forced them to work for others to survive. The privatising of the commons created the proletariat.
What a basic income and land tax would do is correct that manipulated imbalance. People cannot control the commons without a state. A land tax turns monopolistic control of natural resources into a form of mutualism. It says you can monopolise a part of the earth, but you have to compensate those who miss out, and you have to pay for the service you are getting from the state (i.e., defence of the property you are claiming). If you don’t want to enter that arrangement you don’t have to: land tax is like voluntary dues to join a club of land owners, not a compulsory taking of money like income tax.
Basic income and land tax fit together. How much land tax you pay will depend on how much of the commons you want to privately control; but since everyone is excluded from the commons equally, the basic income is equal for all. This is the modern equivalent of the historical relationship between normal people and natural resources. The resource may now be locked away physically, but the value of it is shared.
But the key here is that basic income is not just a correction for historical injustice; it is also a hedge against potential future injustice (wage labour drying up for all but a few). How unequal would a society be if both inequality-drivers are allowed to operate at the same time? How unsafe and unstable would it be, what sort of authoritarian measures would be required to maintain such a rigged game?
One of the problems we have is that parts of the left want to go further in the direction we have been going. We need to remove, not increase, income tax. Taxing wages and letting privilege like land ownership go untaxed is unjust, partly on moral grounds and partly for the reason Andrew noted: it drives jobs and businesses away, exacerbating all the problems automation is likely to cause us. If it was up to me I would abolish income tax entirely along with all the snooping and surveillance that the income tax system generates. It is none of the state’s business what an individual earns. If rent-seeking is curbed and land rent is socialised then the idea of letting people keep what they earn from their own labour shouldn’t trouble us. I don’t care if people get rich so long as the system in which they operate is competitive and fair.
I’ve been ploughing through this. It is interesting how well Marx identifies the problem. It seems timeless. The cure is worse than the disease in the case of Marxism but clearly there has been a problem for a long time.
This is THE key. Basic income alone isn’t the answer. Nor is the job guarantee concept, which has deep flaws. Throwing more money at specific activities judged fitting by the state might work in some measure, but it’s paternalistic. More instutitions for mixing and higher learning could be part of the answer, but we are so early on in addressing this issue it is difficult to conceptualise what the eventual answer would even look like. We should think about this though, because so few people are.
Noice. I’m with you.
Only 23.78 million Australians to go.
Or, as someone put it in the 17th century:
The law locks up the man or woman
Who steals the goose from off the common
But leaves the greater villain loose
Who steals the common from the goose.
The law demands that we atone
When we take things we do not own
But leaves the lords and ladies fine
Who take things that are yours and mine.
The poor and wretched don’t escape
If they conspire the law to break;
This must be so but they endure
Those who conspire to make the law.
The law locks up the man or woman
Who steals the goose from off the common
And geese will still a common lack
Till they go and steal it back.
There’s some discussion going on about job guaratees. I’m going to put my take in here because JGs are often portrayed as another way to deal with automation and job loss. Under a job guarauntee the state hires anyone who wants a job. It sets itself up as an employer of last resort for the whole country.
This idea has various benefits and one huge problem. The huge problem is working out what the jobs would actually be.
They can’t be skilled jobs, because a JG pays minimum wage. Hiring skilled workers to work in their areas of expertise for minimum wage would pull wages down in that profession. It would undercut other workers.
They can’t be jobs that communities and businesses depend on, because the jobs have to be able to come and go without disrupting anything. Even basic jobs like park maintenance and weeding have to be done consistently to be useful: you can’t only maintain your parks when unemployment is high.
JG places can’t replace state jobs or private sector jobs, but they also shouldn’t replace volunteer and community work. To do that would be effectively nationalising volunteerism, forcing the state where it doesn’t belong and putting structures over people who don’t want or need them. Incorporating volunteer work into the JG as paid labour would disrespect the urge to do good for its own sake.
You can’t have JG workers building infrastructure. Modern infrastructure projects are uniformly done with heavy machinery. It takes skill and precision, and expensive training. You can’t simply turn untrained people loose on a building site with shovels. They would just get in the way. Even small stuff like installing handicapped steps or park facilities takes skill and pays well above miniumum wage. You don’t want to create things that are dangerous to use.
So, what jobs would we end up with? Relatively unskilled, relatively unnecessary, and relatively labour intensive. The risk of bullshit jobs is clearly going to be high, but we can’t let that happen either, because that would mean total wages were rising but production wasn’t. And more dollars chasing the some number of goods would be inflationary.
IMHO the risk of bullshit jobs is a real problem. But if we can manage it there would be good outcomes from a JG. We would have another shield against poverty, and the greatest benefit would go the poorest (and most poorly maintained) communities. Extra spending in poor regions would encourage private sector jobs to build up around the subsidised ones. There would be a cushion against recessions, since unemployment wouldn’t rise in a downturn. And it would help to address insecure employment and underemployment.
And, yes, there are some useful jobs that could be done-- especially in the environmental sphere. I know someone who taught themselves to do environmental rehabilitation on sheer cliff faces. She would love for there to be a job guarantee so she can do that instead of having to clean windows for a living. I’d love to see people coming up with new jobs to benefit the community, and having a way to do them.
We would need to find $15-20 billion a year to fund it. And we’d need trials and data collection to work out whether it’s possible to employ large numbers of unskilled people in useful ways.
Having a dedicated JG policy seems like overreach at this point, but we could advocate for trials and data collection. Given the volume of policy material we already have, I’d suggest any JG material should be short and folded inside an existing policy.
I can’t quite see it being a flagship issue for PPAU.
The right to work is both a collective right and a common right in two different senses. In the common sense people have the right to apply their labour to land, whereas in the collective sense people have a right to sell their labour in exchange for a state issued currency. Dan Sullivan explains common vs collective rights here:
It is not necessarily a bad thing to have the right to work as a collective as well as a common right.
We created private property in land to overcome the tragedy of the commons and improve efficiency. We also created state currency monopolies to eliminate the double coincidence of wants and improve efficiency of commerce.
Just as land monopoly forces us to compensate those locked out from such a monopoly to maintain fairness, currency monopoly should also obligate us to implement counter measures to ensure people aren’t denied their basic rights.
The imposition of a currency monopoly requires those under that monopoly to be compensated for being systemically locked out of the labour market by it. When people collectively hoard the currency (net save), nominal demand deficient unemployment arises - Say’s Law does not apply in a Monetary economy since loans create deposits. Savings are not “loaned out” or mediated by some “natural rate of interest” or market mechanism to solve mismatches in nominal demand. This unemployment only exists because people are looking for work which pays in that monopoly currency being hoarded, since their rent and taxes require them to acquire it.
This results in the government deficit automatically expanding via an endogenous process, the automatic stabilisers - tax revenues fall and welfare spending rises as the economy tanks from deficient demand. This deficit expands until the injections sufficiently meet the amount people want to hoard out of the system.
A Job Guarantee is automatic mechanism for maintaining the right to work under these conditions. It is a replacement for the automatic stabilisers, so we don’t need to wait for people to go through this heinous process of being forced into mass unemployment until the government’s injections are of sufficient size. We used to have a de facto Job Guarantee in Australia from the post WW2 period until the mid-70s. During and after the war we realised government fiscal policy and its monopoly currency issuing capacity, had the power to end labour underutilisation and ensure everyone who wanted to work could get it:
We then carried this on into peace time through institutions like the Metropolitan Board of Works, which would take in unskilled young people the private sector didn’t want as apprentices, train them up on the job, and let them keep a job doing socially useful public goods production until the private sector wanted them. The 1945 White Paper on Full Employment reflects this: http://www.billmitchell.org/White_Paper_1945/index.html
A UBI or rent dividend does not resolve this issue of deficient demand induced labour underutilisation, since BIs and rent dividends aren’t counter cyclical payments. They do not expand in times of deficient demand or shrink in times of excess demand. In fact they are pro-cyclical. As land rents fall in a tanking economy the rent dividends also fall, which then perpetuates a spiral of falling spending and austerity conditions that give rise to demand deficient unemployment.
The UBI is also guilty of this given it lowers “Effective Marginal Tax Rates” (while a good thing in a microeconomics sense) which means for each dollar an individual’s income falls the government’s net spending responds even less to the changes in nominal income, which hamstrings the automatic stabilisers. Those counter cyclical automatic stabilisers are what prevent a recession like the GFC turning into a depression like the 30s. On a Macroeconomic level these policies in isolation are very problematic, with the exception of rent dividends like the Alaskan Perma Fund, which can operate even on a currency using state level.
Do not get me wrong, socialising the rents is imperative to ensure economic justice and maximum utilisation of property rights on land and other monopolies, but it does not guarantee the Right to Work outside of a barter economy.
Also regarding your two criticisms MarkG:
Firstly the funding is not an issue. The federal government is a currency issuer and funds it by expanding the deficit, preferably through Overt Monetary Financing via the central bank. This is non-inflationary given the unemployed have no price since the private sector doesn’t want them, so buying them up at or below minimum wage doesn’t compete for existing private sector resources.
Secondly arguing there are no jobs available for these people in the public sector demonstrates you haven’t read any of the vast academic literature on the subject. I refer you to here:
This one is a specific one on that:
If you don’t want to read academic literature this is an easy to digest video which talks about Argentina’s small scale Job Guarantee scheme called Plan Jefes:
This blog post (http://bilbo.economicoutlook.net/blog/?p=36071) also goes into a bit on how the Job Guarantee functions with a core structural component and a smaller cyclical component, the author of which (Prof. Mitchell) has written and co-authored many of the academic papers on the Job Guarantee which are available in the section “Job Guarantee/Full Employment” via I linked previously pasted on MMT scholarship.
We might have to talk this one out over a beer, Jesse. But let me quickly point out that you attributed a statement to me:
… that I didn’t actually say. My points were:
I’m still comfortable with those points. I don’t disagree with the piece from Uni of Newcastle - actually it seems to raise some of the same issues I pointed out, and even seems to support my approach of having the concept trialed. Where it falls short is in describing what jobs people would be doing. (It is not enough to say “public works”… give us the details!)
Also, the rather insouciant dismissal of inflation within MMT has always raised red flags with me. But that’s possibly another topic for Melbourne.
Jesse has told me that he was unable to reply because he has been limited to 3 replies due to being a new user. So I have relayed his comment.
“the vid actually lists real examples of jobs provided in the plan Jefes program” Jesse also mentioned that " Hopefully I’ll see him (you) at the PPAU’s congress/AGM and talk about it there." But if you want to continue this discussion about a JG you can find Jesse here: https://www.facebook.com/groups/mmt75/
But what I want to know is, why you would be under the assumption that JG jobs would replace state jobs? the JG isn’t meant to replace state jobs but to be as stabiliser between boom and bust cycles.
I said the opposite to that, though. I said a JG can’t replace traditional state jobs. Some JG supporters claim that the unemployed could be put to work in jobs like park maintenance, or filling in potholes, or being carers in aged care centres. But actually these can’t be done by a JG because they are not jobs that you can stop and start abruptly or fill with minimum-wage workers.
Let’s talk further at the pub.