Since UBI is essentially an optimisation of existing welfare, the historical precedent for it is Newstart and the Unemployment Benefit before it which also goes back to 1945. (And Austudy, Youth Allowance, etc.) The concept is more about smoothing rates and administration, integrating it with income tax, and stopping the pointless whipping of the unemployed.
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I meant legally. Hiring less people for less hours costs less and iâm not sure what is meant to be legally required among benefits. If businesses skirt benefits then they can easily undercut a government program that isnât.
There has hardly been enough basic income tests to make any conclusions âoverwhelmingâ and your conclusion that people need a boss/work replacement is itself disingenuous. Sure, many people will have a hard time in what is a major lifestyle change from a way of living where their life is structured for them to one where they need to compose their own lives but the idea that they wonât be able to get through that transition is patronizing and paternalistic.
This needs to change. I donât understand why this party is ok with UBI being set at minimum wage or less, UBI should be a dividend of the entire nationâs production. The richer the nation the richer itâs citizens.
Australian GPDpc is around 65k AUD, even using just half that for redistribution is already a guaranteed minimum wage amount for everyone. Add monetary creation policy to that and everyone is more than covered for living expenses without even touching employment yet.
Yeah I donât buy it. UBI and JG have the exact same funding proposals, redistribution and creation. The difference is UBI decreases bureaucracy, JG expands it. The difference is UBI is a narrowly focused and specific redistribution policy, JG is a wide-ranging stopgap-redistribution policy + government labor policy allowing for many vectors of attack for exploitation, under-performance and potential for breaking down completely.
If it was as well-practiced and obviously successful as you make it out wouldnât we be already doing it well and successfully? Instead you sarcastically cough at the implementations that have been tried and didnât work.
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Yes and no. I agree that it is an improvement and an optimisation of existing welfare, and support the existing policy for this reason. But in 1945 its intention was not supposed to be providing people a substitute for full employment and guaranteed jobs - it was implemented so in the very brief time in between jobs (frictional unemployment) e.g. 1-2 weeks, people would have a safety net of income support. No one has ever introduced mass income support for all people simultaneously as the primary safety net. Alaska has resource rent dividends which are supplementary income, but not a guaranteed and sufficient safety net. Other BI trials have been done, but not on a significant macroeconomic scale which avoids the bias of being a demand injection into a single locality.
However just because there is not a historical precedence of this nature and size does not mean we shouldnât implement it as policy. My comment on this was referring to the allegation of supposed wider spread of political support and âless divisiveâ nature of a BI compared to a JG i.e. the politics.
Although a better way to settle this question would be to conduct polling.
Regardless, from as far as Iâve observed the PPAU are not beholden to populist opinion polls in how we shape our policy. We are specifically unconstrained by the Overton Window and are supposed to be expanding it.
Businesses are more than welcome to try and undercut the JG. The JG makes legal enforcements of the minimum wage and conditions obsolete given any worker unsatisfied with their employer can quit and enter the JG immediately. Hence employers will be pressured to match at least the JG standards, if not entice workers out of the JG with better pay, conditions or other perks.
So people who want jobs and not income support should just lump it and get stuffed? Leave them to their fate and misery?
You are more than welcome to submit your own modelled and costed proposal to the PDC.
This is problematic because a BI has no inflation anchor as opposed to a JG. A JG prevents inflation firstly by being counter cyclical - expanding (the govt deficit i.e money creation) during busts and contracting during booms. Secondly it suppresses wage demands and related inflation by expanding the amount of job ready and skilled workers available to private employers. If workers get too gun-ho, employers can just turn to other JG workers can hire them. Finally during cost-push inflation shocks e.g. the OPEC oil shocks, the JG can be used as a form of incomes policy to adjust real wages without mass unemployment and subsequent stagflation.
A BI does not have these advantages since the amount of welfare paid is constant. The system relies solely on income changes and marginal tax rates to impact aggregate demand, which will not prevent mass job losses and the subsequent labour market hysteresis when the next financial crisis hits.
A JG is far more cost effective since the only people you have to pay for are the unemployed/underemployed who want to be hired at MW - people who need wage income but do not have access to it. Whereas a BI involves insane costs due to the expanded number of recipients, and the vast number of wealthier citizens who will inevitably take the money and pump up asset prices further.
I really donât see how you can argue that a UBI is more narrow compared to a JG when a UBI is by definition universal, while a JG is only a relevant safety net for people currently on minimum wage or less (including no wage).
Yes it is a labour policy. And I suppose a BI without any labour policy just allows private employers to exploit workers at below minimum wage due to enforcement issues, allowing law-abiding businesses to be undercut by less scrupulous employers.
Arguing these programs canât be done and break down is nonsensical, when they have been and continue to be (at least at smaller scales) done. I can point to a number of historic and contemporary examples:
Australia CDEP, Argentina Plan Jefes, India National Rural Employment Guarantee Act, USA New Deal Programs, South Africa EPWP I&II, UK Jobs Fund, Community Jobs Scotland, Mexico Programa de Empleo Temporal, Peru Programa de Apoyo, Indonesia Padat Karya
This is also not an argument against trialling such a program in Australia, which is what the current policy proposal states.
Yes, we were doing it for indigenous Australians in rural communities via the CDEP until the Conservatives in the LNP abolished the program for ideological reasons; against all evidence and public sector advice because âthey werenât market created jobsâ. Ever since then indigenous unemployment has sky rocketed to 50% in some places and all of the social ills which come with that. You can read more in some of the previous comments above.
We were also doing it from 1945-1975 via a variety of public bodies and enterprises e.g Metropolitan Board of Works, Utilities (now privatised), Parks and Gardens etc. At which point it was against undone by the Neo-liberal counter-revolution in the 70s which was dead set on doing away with Governments using fiscal policy to maintain full employment.
You misquoted my points multiple times to fit your own repetition so Iâm not going to bother responding to those.
We have inflation numbers, we can measure it. The government controls the money taps and can see the inflation numbers⌠why would we need an âinflation anchorâ? Create money through UBI when youâre below the inflation target, it goes over, stop.
Because redistribution is zerosum.
Youâre the same guy posting all those MMT resources and youâre measuring things in made up paper money?
UBI only costs the price of tax enforcement and some minimum management of the redistribution.
JG costs the price of tax enforcement, a massive bureaucracy of management (at least as big as current welfare programs), the time and effort of anyone in the program who is not meeting their potential in the program and because the program is a âguaranteeâ the government cannot guarantee the program will adhere any sort of budget⌠while UBI canât really distribute what it doesnât take in taxes (except money creation as an inflation tool), a JG would have to take on debt if it overused itâs tax allocation and it was decided unwise to create new money.
How does an employer exploit someone who isnât worrying about their day to day survival??? You donât need minimum wage laws with UBI because everyone starts from the position where not being employed is a perfectly valid choice. If someone wants to work for peanuts theyâre not being exploited, itâs an actual choice. In fact I would say employment today is defacto slavery because the employer benefits from the whip of necessity lashing at the backs of labor such that labor doesnât have a real choice today.
They kinda have a point, isnât the idea of the program that it will be a stop-gap until private employers take an interest? If you have a rural community that has little to no outside private business interest precisely because itâs a rural community, how is this program a stop-gap for unemployment rather than just a regular old welfare program being made more inefficient? Bureaucrat jobs are wasted capital, preparing people for jobs that arenât coming is wasted human capital and the idea that you need bureaucrat means-testers acting as bossman to make sure something productive comes out of the investment in regular folks is downright insulting.
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I donât claim to be the expert, but having read what the experts produce there is evidentially a need for an inflation anchor. You canât run substantial deficits (money creation) and a tight labour market without inflation risk, unless you have an inflation anchor.
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1722991
Itâs not zero sum redistribution if additional resources in employing people results in more output than otherwise.
When I say costs I refer to real resources. We can attempt to measure things in dollars to reflect that, but ultimately the main constraint is inflation and capacity of the economy - not money. There are still constraints, theyâre just not financial.
No, the real resources that all the additional purchasing power demands for a UBI drives up the cost in real resource terms of the program.
To use a crude analogy relying purely on real resources and not money: pretend all resource output produced in the economy were represented by apples. The total apples produced initially at âlooseâ full employment is 100, and there are 20 people. Each person needs 3 apples to be above the poverty line - currently 5 are on less than 3 apples due to unemployment/underemployment. Guaranteeing everyone has at least 3 apples by giving initially 3 apples to everyone requires at least 60 apples be appropriated by government and then redistributed by very high levels of taxation.
The alternative is the government uses a JG to generate âtightâ full employment by offering to employ those 5 people in producing more output i.e. apples. Say total apple production rises to 105. The Government only needs to redistribute at maximum 25 apples to run the JG, and probably less if some of the people were already on 1-2 apples. In effect the total redistribution of apples is only 5-25 apples, but if an additional 5 are generated through the JG, this falls to 0-20 apples required for redistribution. Hence the total real resource cost and thus tax take required is much lower.
Some of this can be outsourced to the social enterprise sector, and involve the employment of promoted JG workers to the conventional public sector. When these programs are run, the bureaucracy involved has not been excessive.
Itâs not supposed to adhere to a budget in the traditional sense because itâs intentionally a fiscally expansionary program. Costs of capital can be kept even lower if integrating the social enterprise sector. Estimations for the program size range around 1.5-3% of GDP, which depends on the business cycle.
This is a misunderstanding of MMT. All federal govt deficits are in effect money creation, including bond issuance. Bonds are just interest bearing money created for the management of interest rates and corporate welfare for investors. We could cease issuing them tomorrow without consequence for the RBA or the government. Itâs a false dichotomy to think of money creation as something you can constrain via a central bank, to do that you would have to prevent the federal government from running deficits period - an impossible task given tax receipts and welfare expenditure (and subsequently deficits) are predominantly endogenously determined by the business cycle.
Assuming youâve actually got a BI high enough to make that a reality.
Additionally I would still call it exploitation if a person on BI seeking additional income via work can only find work (if any at all) in sweat shop for $5 p/h. Employers can still exploit people if they pay them sub-optimal wages relative to their productivity - marginal productivity theory is bogus.
If you then argue that a BI is going to cause workers to refuse to work, which in turn drives up wages very high, then you end up with cost push inflation driven by a collapse in participation and spiralling labour unit costs. This in turn then erodes the purchasing power of the BI.
Itâs not a choice if thatâs the only way to get further ahead than the BI. At least with a JG workers develop employability, training and skills to meet skill shortages and employer underinvestment in worker training. So the potential for workers to move into higher paying private sector employment with subsequent boosts to productivity and output is far greater. The problem with existing worker training programs is they churn workers through without adding any useful human capital. Given beneficial human capital is overwhelming developed on the job, the apprenticeship model of the Metropolitan Board of Works, utilities, rail yards etc. was vastly superior. Giving people money is not a substitute for that opportunity.
Labour has never had a âreal choiceâ - this isnât Star Trek. There however have been times when labour has faired better and when it has faired worse. In better times labour has received its contribution to production, and in worse times far less. Doing away with the need of labour is all well and good if you can devise such a practical scheme, but even then it does not do away with the want of labour for social reasons or for profit. Perhaps one day BI will be substitutable for a job, but to the unemployed a BI is not a substitute for their non-income well-being. The empirical studies repeatedly show this - people without jobs (even if not income poor) are more miserable and disadvantaged socially than those with jobs. Until society radically changes this will remain the case for the foreseeable future, and until that time a BI will never address the social costs of unemployment.
Okay I am now appalled by your response here. What you are implying is that these communities should live in social blight with mass unemployment purely because the market fails to create enough jobs due to low export capacity. There is no private labour market in these communities, so the idea that cutting jobs and replacing it with income support is somehow providing a future for these communities is nuts.
Income support and welfare for these communities has never been a substitute for a job.
The CDEP was never a âstop-gap programâ, it was a long term community development program which empowered indigenous communities. Without it people have spiralled into alcohol and drug abuse. Income support even when generous does not fix those social problems created by unemployment.
There is a reason why rural/remote indigenous communities (rightly or wrongly) have far more work requirements in WftD and the bastardised replacement âCDPâ than people elsewhere. When questioned in senate estimates, it was found that the work requirements were (attempting and) partially reducing social blight associated with unemployment - the very same unemployment and social blight created by scrapping the CDEP.
Here is an article in ARENA which explains the situation
Economists arenât experts on inflation either, top economists in charge of reserves of top economyâs have had their ideas of how they thought inflation works come completely unraveled in practice.
Hell, thereâs still alot of weird ideas around about hyper-inflation even though itâs been pretty well evidenced to only happen with dramatic price instability being continually exerted on the economy such as through war decimating assets or massive amounts of new currency being continually pumped into the real economy such as through (once again) war when paying for soldiers and warmachines the economy canât afford. The equivocating of UBI to these types of things is just incorrect.
And as far as high but not hyper inflation, we have one well documented case of high inflation during (relatively) peace time in the 1970s which economists have gone and drawn all sorts of different conclusions from but itâs only one data point and one that wasnât allowed to continue to a real market conclusion because the neo-libs stepped in to legislate away the issue (as it impacted industry) with new trade agreements ultimately ending the inflation along with the era of national economies in favor of todayâs global supply chains⌠being stopped short like that itâs not really enough data to draw a complete conclusion about how inflation functioned then and even if it had it likely wouldnât inform us about the function of inflation now because of how different the economy is.
And itâs important to remember the first people to lose out when inflation rises incrementally isnât regular folk, itâs the lending industry. What did the banks do in the 80s right after the neo-liberal reset? They pushed credit cards like crazy. What are formally middleclass people all over the western world most financially burdened by? Debt. My feeling is that the neo-liberal reset happened so quickly (by representative democracy standards) because the inflation rise hit the people who mattered most to politicians.
That is to say, Iâm not even sure I buy the underlying assumption that âhighâ inflation is a bad thing. What i see is potentially a correlation between inflation and the middleclass, they went up together, they went down together.
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Yes there are positive economics to redistribution which is why we both want it but that has nothing to do with what we were talking about, that was a response to government costs. How much the government redistribution doesnât matter to the cost-effectiveness because +X -X sums to zero. Itâs not polite to just chop off a byte of my statement and make it seem like i was arguing something completely different.
You forgot to include the government in your analogy.
In both UBI/JG appleconomies one of the 20 people is the apple taxer who canât do apple production because heâs busy gathering apples from the most applerich appeople (weâre both still under progressive taxation of course). In both the UBI/JG you have one person allocating out the taxed apples to those owed by the program. But with JG we need to keep going to the person whoâs job it is to be waiting around at applejobguarantee recruitment office for new unemployed who sets them up and tracks them to the strategist of apple production who makes sure the AJG employees are working effectively to produce more apples⌠theyâre going to have to because that now 20% of the population in government jobs not directly producing apples⌠and no one in those government jobs has actually considered very deeply whether or not they even need more apples, youâd need some sort of pricing mechanism to really gauge that, which theyâve been completely skipping by deciding amongst themselves what should be produced⌠maybe they should hire an applconomist to figure out how many apples they should be producing to prevent runaway appleflation. 25%
No it isnât. Everything youâre describing only works for today, right now where the assets of the economy are underleveraged. Iâm talking about when those assets are overleveraged, which is the logical outcome of shooting for guaranteed real full employment (real as opposed to current full employment which ignores demoralized labor in the statistics), youâre not just guaranteeing employment when businesses are self-interestedly contracting at the detriment of everyone, youâre also guaranteeing for when the entire economy is in a real actual downturn⌠it happens: war, the government of a large country we are heavily economically entangled with deciding to go into default, lagging in a big technology leap, the rich plundering the world economy to go make their libertarian cloud city.
UBI canât magically solve an economy-wide downturn either but it has less operating overhead and being tied to GDP it will contract as the full economy contracts which gives everyone a clear indicator of whatâs happening rather than pretending everything is peachy during a worst-case scenario or completely shutting down.
It isnât⌠has all these thoughts you have of government run employment made you forget that businesses are actually made by people? The biggest hurdle today for a person to put their talents to use in their own business is that their time is all wrapped up operating other peopleâs businesses.
The successes of entrepreneurship are always what drives growth in the economy, if you want more and bigger successes you need to invest in more entrepreneurship, plain and simple. Think of it like the stockmarket, which stocks are the safest place to put your money? All of them via the index funds, because the wins of the index always make up for the losses, youâre riding the long-term growth of the economy that inversely wouldnât be possible without the index funds being socialist company funders.
Iâve mentioned this before that the JG program is tying up labor into training for what government thinks is needed, tied up on working on what government wants, until they can move on to some established business in the future⌠if it ever comes. Itâs really the biggest problem, the expectation that some narrow group of people are the most intelligent arbiters of how these resources should be managed for future payoff when the most intelligent arbiters of financial investment as a group canât outperform index funds.
I already responded to this earlier, correlation =/= causation. You donât know that no job leads to miserable any more than miserable leads to no job. And i dont really care one way or the other, itâs not government policys job to insure everyone is loved and popular and whatever else you mean by socially disadvantaged. Nannystate.
I didnât imply any of that, I pointed out that youâre outright saying that these people need government bossman overseers for them to do anything productive because theyâre obviously all do-nothing alcoholics.
âŚkeeping in mind there is empirical evidence that alcoholism and short-sighted behavior is a direct runoff from low and/or unstable incomes. I for one trust that with a continuous income of meaningful value, such that these people arenât worrying about survival, that they will make some of the same choices these programs push them towards and some that these programs would never think of, doing self-directed work that benefit themselves and their communities⌠or hasten their communities exit from rural living⌠unlike these programs i admit that i have no idea what they want given a real choice, only theyâll know this when they have that choice.
Of course none of this is to say that the government shouldnât be out in rural communities, training/employing locals to work on government projects for the benefit of those communities⌠they absolutely should be given I hear many communities still donât have the fucking-essential-to-interact-with-the-world modern infrastructure of broadband yet. But dressing that up as welfare is dishonest bullshit done half seriously or nannystate bullshit full seriously.
Iâm concerned about the implication that increasing unemployment should be a strategic mechanism of government. I understand thereâs a balance between employment statistics and inflation, but with rising automation shouldnât we be encouraging as low unemployment as possible in the short and mid term?
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Doesnât seem like you meant it this way but we should absolutely be reducing labor market saturation⌠to encourage automation. Investment in technology innovation typically only occurs where labor is the most expensive/difficult to acquire - and those same technology investments end up resulting in production growth. And the more people you free up time for the more potential innovators you have.
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This is true to some extent. However we know that Keynesian Pump prime and governments trying to boost aggregate demand by competing with the private sector at market prices, is inherently more inflationary. The unemployed have no price because nobody wants them, so when you buy them off the bottom of the labour market you are directly achieving Full Employment of labour without interfering with the private wage structure. Rather than trying to boost economy activity through demand side policies which have more inflation risk attached to them, in the hope of the spending âtrickling downâ into jobs, we can directly buy the unemployed by directly created the jobs.
Buying labour off the bottom is far less inflationary than trying to copy and compete with the private sector by buying from the top.
Additionally, buying off the top does not address labour market hysteresis from long term unemployment, nor does it help the most disadvantaged in the labour market who are hired last and fired first during the business cycle.
There are many environmental services that are not priced by the market. Are you saying that because these services arenât priced by the market they have no value? That is a very narrow concept of efficiency and value. The point of the JG is broaden that concept of efficiency and work to transition to a Post-Employment society.
As for the resources consumed in administrating the JG itself, it is a fair point, but arguably the amount of wasted/underutilised labour in the system being brought back into use greatly exceeds those administration costs.
A JG prevents mass unemployment and people flowing into the program during a recession, because as soon as people start entering the program the deficit rises to pay JG wages - subsequently it starts operating as a counter cyclical fiscal stimulus better than anything Wayne and Rudd could implement during 2008. So the numbers growth during a recession are not as dire as you are suggesting, whatâs more they can be managed a lot better if planning is put in place years before hand. Let us also not forget the New Deal Programs managed far more difficult numbers of unemployment during the depression, so it doesnât hold water to say this isnât feasible. Even plan Jefes in Argentina was implemented in a recession, and it worked very well.
External shocks do not limit the governmentâs capacity to employ people. It only limits the real resources and incomes people employed can ultimately maintain. Letâs say a JG was in place during the OPEC oil shocks and stagflation. What wouldâve happened under a JG framework is the JG wouldâve absorbed the unemployed, but then enforced wage discipline and real wage/income cuts to account for the fact GDP drops by x% due to higher energy costs and thus lower output. It wouldâve insulated the inflation shock and prevented the snowball effect. This is why practically all MMT Economists are in favour of a JG, itâs because conventional Keynesianism (creating money to stimulate demand via gov deficits) is vulnerable to real income shocks.
You can get some insight on that here.
MMT proponents came up with these policy prescriptions to fix the weaknesses of post-war Keynesianism to shocks resulting from no stable inflation anchor (among other things). Yet what you are proposing (money creation to stimulate demand and partially âfundâ UBI) is just a return to post-war Keynesianism - except worse. Back in the post-war period we had some public institutions attempting to act as employer of last resort, but without any coherent macro coordination, or fixed price (wage) and floating quantity (vacancies) rule. Now most of those institutions are privatised. So if we try to go back to that policy framework it will carry even more difficulties in managing inflation.
There is no simple equation some mystical central banker can deploy to come up with how big the deficit (money creation) in the economy should be to avoid excessively high inflation - it depends on unknown fluctuations in private spending, the current account, and where the government chooses to spend (both geographically and in terms of sectors). In fact some areas may need more spending due to having too much slack (regional/rural/remote areas, construction industry during a housing bust) while others need less and are overheating (inner cities). Hence why a JG is beneficial because it passively directs the spending to where it is most needed - areas with the most labour market slack. UBI does not have this quality.
Employers tell the government what they need in skill shortages surveys. The government is just giving the employers what they donât want to pay for - skilled workers with on the job experience and training.
As for the ones who never get private sector jobs, is this somehow worse to being stuck on Newstart or UBI for life if you want to work? A job with additional income is better than no job, especially if it can involve meaningful contributions to the community e.g. community gardens, environmental restoration, running a soup kitchen or domestic violence shelter, running after school activities for school kids, tackling food insecurity etc. Some people may never be suited to private sector work, but still want to work for income. I donât see why we shouldnât pay them a living wage for providing basic community services. Or do you expect these people to work for free out of the goodness of their hearts, or toiling in some private sweat shop for $5 per hr the rest of their lives?
Hence why I support giving them that choice through both a Job Guarantee and a BI - itâs up to them if the want to work in the JG, and given the evidence of the Rangers programs and Green Army I suspect many of them will. One thing I am certain of, it is not our place to dictate to these communities whether they need jobs or donât need jobs and should be content with welfare. We should provide them with both, and the jobs themselves be targeted at assisting and developing their own communities.
I shouldnât have to say this, but there will be no room for make work in any JG program. Make work will be prohibited, itâs better to just pay the JG worker their full JG wage until useful work has been found/created, potentially even by the worker themselves if they propose projects. We could probably employ JG workers to come up with work for JG workers if necessary.
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This is why a JG enforced minimum wage is useful. You can use the de facto JG MW to drive up unit labour costs in certain industries to incentivise automation and the elimination of bullshit jobs - jobs that only utilise enough labour productivity to pay workers below poverty line wages. The JG workers then can direct their efforts at producing public goods/services in areas the market does not value or price and improve the community. This will help broaden our concept of efficiency and work, and allow us to help shift the cultural views of our society on what is and what isnât work, and what is and isnât a meaningful or beneficial job.
FYI the current policy text draft reads as follows:
Pirate Party Australia advocates the following reforms:
Reinstate the Commonwealth Employment Service (CES)
- End rent seeking in the employment services industry by replacing Job Active with the CES.
Trial a Federally Funded Job Guarantee scheme
- Trials shall commence for residents in remote, rural and regional communities experiencing severe/chronic levels of unemployment and underemployment.
- Adopt local control in each case, with local communities empowered to find the jobs they need done.
- Evaluate the program during implementation, with the intention of improving and expanding the program nationally.
- Employment shall pay the national minimum wage, and contain all of the existing benefits and expectations of private employment, including superannuation, sick leave, annual leave etc.
- Incorporate and encourage optional vocational and other training and upskilling of workers into the program, for continuous improvements in employability and to target skill shortages.
- The program shall be funded through expansionary fiscal policy and run on the principles of functional finance.
I am considering putting in something about targeting youth, long term unemployed, refugees etc. first. However if we are rolling it out for all residents in certain communities I donât see why it is necessary to say we are targeting these demographics given they are already included. Also that demographic prioritisation is already mentioned in the policy preamble.
On a bit of a tangent, I was recently blown away by just how bad unemployment and participation rates are for refugees. They must really struggle to integrate into the Australian labour market and wider society. At least a JG would end criticism from the right that theyâre coming here to free-load off welfare.
Thatâs a really weird wording/definition of âDemandâ you have there. Are you saying that UBI is demand side and JG is supply side? From my understandings of economics and economic-politics, the government canât ever be on the âsupply-sideâ which is why âsupply-side economicsâ solutions are always to do with tax cutting.
JG is functionally almost identical to the dole and I dont think anyone considers the dole âsupply-sideâ.
Iâm not sure how that is more or less inflationary⌠im getting the assumption here is that itâs inflationary because youâre artificially driving up the price of already expensive labor? But really that means youâre employing people to do things you donât actually need, thatâs the only way it can be an âartificialâ price change. I donât see how that could be any different from the bottom - you employ excess labor to do things you also donât need to artificially increase the price of that labor - but that somehow wonât cause inflation? In either case you are distorting price signals, in either case you are promoting market inefficiency. I donât get how one gets a free pass out of causing inflation.
And there is evidence to the opposite, the US fed after the 08 crash let the banks borrow at no interest to what amounted to being a trillions of dollars welfare program⌠and all they had to do was keep working as banks⌠almost like some kinda job guarantee exclusively for the top. There was no big inflation that came from doing that. Itâs assumed the reason why it had no inflation effect was because it didnât really enter the real economy, only involving a relatively small number of actors. Welfare programs that service a much larger amount of actors who all directly interact with the real economy should be far more inflationary.
No, Iâm saying theyâre inefficient. Bringing the needs of the environment into the efficiency of the market was the entire argument for a carbon tax. Big polluters were so scared of that they had to spend billions on convincing regular people that they were going to have to pay to breathe to get rid of it.
Whoa what? This is the first time youâve mentioned POST-EMPLOYMENT SOCIETY. How exactly does JG do that? I mean, thatâs completely counter to everything about using it to keep society at full-employment. And youâve specifically been theorizing how people NEED employment or theyâll go anti-social.
Oh, i get why you said supply-side earlier now⌠you mean to say you want the government to be in control of all employment until government can supply everything and then weâll be in one of the versions of a communist utopia where government is involved in every part of a personâs life. Seems a bit at odds with the PPAUâs stance on liberties.
Except thatâs completely not what i said. I specifically refuted this whole spiel youâre giving already because youâre talking about under-leveraged labor.
The New Deal Programs worked because their simply wasnât enough liquidity in the system and banks were too scared to loan and the government up to then was doing the exact opposite of what they needed to. There was plenty of production just sitting, waiting to go but wasnât used because they had no one to sell to. he constriction of the money supply was artificially reducing demand. The ridiculous thing about the Depression is that a UBI funded almost if not entirely by money creation could have ended the crisis within months whereas the New Deal programs ended it very very slowly.
That type of crisis doesnât really exist today precisely because we have welfare programs. The only times and places that type of issue approaches is when a government is extremely callous and stupid, like with Austerity backers.
Meanwhile, i was talking about the opposite type of crisis, an easy example is a trade embargo where we are unable to import (and not able to produce) some products that people really need. (If you think this scenario is far-fetched, look into Venezuela.) This is a situation where thereâs no internal government program that will give an answer to this, the root issue is what needs to be dealt with⌠but internal government programs can sure send it spinning out of control even faster (once again Venezuela) and the JG would absolutely be the opposite of what should be done in that scenario as obviously if thereâs simply not enough to go around thereâs no amount of working that can fix that, but people will self-interestedly attempt it anyways. JG would be encouraging people to literally work to death. Thatâs why i saidâŚ
The best thing JG could do in this scenario is shut down.
UBI doesnât need this quality. Youâre coming from a full-employment model which assumes labor market slack is an inherently bad thing (while also contradicting this earlier with talk of a post-employment world) whereas the UBI only has the core assumption of all types of welfare programs, that letting poverty exist in a rich high-production society is inherently bad. Being focused on strictly the core problem and solving it directly in the simplest way possible has proven to be extremely effective. We all see Americaâs health care problem clear as day from the other side of it, give people healthcare. Pilot programs that have tested solving the core problem of homelessness by giving people homes has worked better than all the attempts to solve the runoff problems. K I S S works.
JG would make sense if the core problem was not having a job but the core problem to poverty is not having an income.
The government listening to what business has to say and using that as their guide to how they treat the poor⌠what a revolutionary program, really bucks the status quo.
Once again, the government absolutely should pay people to do important services that the private industry has neglected. Thatâs a basic function of government. Youâre actually denigrating those jobs value⌠the government essentially has a monopoly on those understaffed jobs, now you want the government to also have a monopoly on the application of the time/attention/effort of the unemployed too⌠which is why you have the audacity to say the government should pay the MINIMUM livable wage for these jobs. Itâs a clear conflict of interest. A needed and understaffed job in a fair context warrants an enticing wage not a minimum wage even if the employer is the government.
You want both??? Haha, thatâs⌠youâre basically taking money out of peoples pockets to have a bunch of bureaucrats just sit around and do nothing. I mean really whatâs the point of guaranteeing jobs if itâs not even supposed to fill in welfare? âHey weâve guaranteed you can do a job (that we really actually need done) for minimum wageâ âno thanks i have UBI to cover me while i look to do something with my life i enjoy and doesnât pay shitâ. Consider ditching the âguaranteeâ and just proposing an expanded scope of government works and increased funding to local governments for those works⌠everything youâve been describing as itâs function is literally what local government does.
Weâll call them âideacratsâ and i will acquire a firearm and blow my brains out.
Youâve said like a dozen times that you donât want JG to compete with private but now you do. And government blowhards shouldnât be picking and choosing industries to bully like that because theyâll be wrong about whatâs possible half the time and instead of spurring new technology, the industries will potentially just completely shut down and let government take over.
UBI would dramatically shrink the labor pool of every undesirable job in the economy. Undesirable employers can only respond in two ways to that, technology or better incentives. Problem solved across the board without the government choosing winners and losers.
A JG is both supply side and demand side, because it eliminates labour market hysteresis associated with discouraged workers dropping out of the workforce and losing skills due to significant periods of unemployment:
If the government is trying to stimulate employment by increasing aggregate demand by either competing at market prices or giving money to individuals to do likewise, you have a higher inflation risk. Say a private firm needs to hire a new electrical engineer and pay them $80k. If the government comes along and bids for that engineer at $81k to steal them from the private firm, the private firm needs to then bid $82k if the want to try and poach an engineer back from the government or any other firm. Same thing applies with boosting private demand. If consumers demand more goods which indirectly drives up the demand for electrical engineers, private firms have to start a wage bidding war for those engineers, which drives up unit labour costs and thus price inflation.
Whereas if the government is buying unemployed from the bottom of the labour market, by definition the private sector does not want those workers - hence why they are unemployed. As such the private sector is not affected by the poaching of those workers. They are not forced to compete for the unemployed at market prices like workers in the previous instance, if they want those workers they merely needs to offer them employment at the bottom of the labour market e.g. out of the unemployment line or out of the JG.
So when government directly hires the unemployed, it does not threaten wage breakouts in the private sector by creating a scarcity of demanded workers. On the contrary, it can help suppress inflation by creating a pool of ready to work workers who can replace other workers who try to demand higher wages. We know this because the long term unemployed have no effect on reducing inflation.
QE is a completely different can of worms and why it doesnât cause inflation is not related to money creation in of itself. You canât cause inflation if you arenât putting money into the hands of consumers who bid for real resources. Additionally financial asset purchases are asset swaps - they do not result in a increase in total financial assets. We can start a whole new thread on how QE works and why it is meaningless to the real economy. Let me assure you here though, injecting money to pump into financial markets has vastly different inflation consequences to injecting money into the real economy via increasing aggregate spending. This comparison is apples with red herrings.
It wouldâve ended with any sufficient demand based stimulus, be it JG or UBI. However the point I was making is the feasibility of running the programs is without question, not whether they were the standard by which to judge policy responses to the great depression.
Yes, because we use a bufferstock of unemployed people so when private spending collapses, the government increases net spending by providing income support when people lose their jobs. Yet forcing people into the unemployment line is somehow a superior system providing people with public sector jobs in the same counter-cyclical fashion when they lose their jobs?
We are not trying to fix Venezuela here. Iâve never stated that somehow a JG is going to solve all the worldâs problems or would fix the structural problems in Venezuela. I agree you canât fix property rights problems with employment programs. There a plenty of things I would change in Venezuela, but that is not relevant to the discussion here. What we are talking about in the Australian context is a systemic failure of the system to provide enough aggregate demand, in the right compositions, to provide full employment. The policy I am proposing is the most effective means to address this.
A voluntary job offer of up to 35 hrs per week at minimum wage, is somehow encouraging people to âwork to deathâ, as opposed to live on below poverty line Newstart or even BI in our case? Well people such as yourself are more than welcome to shun/boycott the program if itâs not their cup of tea.
Are you advocating pro-cyclical fiscal policy? Because thatâs what it sounds like to me⌠Utter madness.
You are more than welcome to move to Greece if youâre into that sort of thing.
Why should the government pay more than what is necessary to get the job done? That sounds like a waste of public money. An enticing wage only needs to be set if no one will work for less in that job, and the public sector is providing a ongoing service which cannot fluctuate with the private labour market.
The reason why a JG should be set a minimum wage is firstly it provides the necessary safety net for people. Secondly it needs to act on the bottom of the labour market as to not interfere with the private wage structure. Finally it is a better outcome to have more lower wage jobs and more employed people, than a few people in higher wage jobs and mass unemployment. These jobs are created for the benefits of workers with and without work, and then the public.
Firstly no, money will not be taken out of peopleâs pockets because it is a program which relies on counter-cyclical fiscal policy. It will be funded by new money injections (expanding the deficit). As the economy improves the program naturally shrinks and thus the funds spent on it shrinks, which prevents inflation.
Secondly as Iâve said â(that we really actually need done)â is not applicable because the JG is not a replacement for conventional and essential public sector work, despite it adding to the provision of public goods/services.
As for people not wanting to take up the JG program, by all means! They are more than welcome to subsist on a UBI - it will make the program even easier to run. However I doubt many people will opt for living off $14k p.a. Surveys generally show when people have a choice between income support and a job they opt for the job. So I donât see how this is an argument against the provision of jobs for those who want them.
This can be part of the JG program. The so long as the federal government is providing the funding via new money creation to facilitate job creation for all who want a job then we have achieved the goal of this policy.
Works for me. If theyâre creating useful community work for people wanting to work I donât see the problem here. Once there is enough work then they can be redeployed to jobs they came up with.
I said you can use the de facto JG MW to drive up unit labour costs, not that it should be done. I am not advocating that in the policy for the PPAU, although there are others who do so elsewhere. I am like you, weary of using the JG to drive private firms out of business through a high MW wage floor. Personally I think it would be enough of a shock to the system to just enforce the existing minimum wage we already have properly via a JG. So Iâd rather err on the side of caution and see how things settle after it being initially rolled out via trials and then national implementation. If people want to then increase the MW JG wage afterwards thatâs a separate discussion.
I doubt this, Iâve not seen any evidence to support this claim. If people want more income and bullshit private sector jobs are all thatâs going around, then they will continue to exist. Especially if BI is below the poverty line, and we have no solid proposal which does not. The other issue for this is in effect you create labour market hysteresis and reduce the total size of the labour force, which puts pressures on unit labour costs and inflation. As if the ageing population werenât a big enough problem for the participation rate.
The government already creates winners and losers by having uneven enforcement of working conditions and minimum wages. Yet no doubt you would demand these be eliminated, so we can reopen sweat shops as a normal part of our economy.
Please donât quote numbers like itâs a fact. UBI should not be some concrete number you pull out of your ass. 2016 GDPpc was $55670, if the UBI is set at 25% yes thatâs ~$14k for that year but if itâs set at 50% its double that and as the GDP grows the absolute amount grows. Youâre choosing to make the number a poverty UBI. Thatâs not a good choice for people who would rely on it and not a good choice for the programâs politics if not even the people receiving the net benefit of the program feel itâs working for them.
All of your arguments hinge on this bad choice.
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I believe Jesse is using about $14k because thatâs the number weâve had the BI sitting at for some time now (about as long as Iâve been in the Party, come to think of it). The PDC consensus Iâve seen is that yes, that is on the low side, but itâs about what Newstart is now and still worth doing for the poverty-trap removal alone.
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PPAU has a bad case of shooting low. When you attempt to achieve something, 9 times out of 10 you end up lower than the bar you set for yourself so the smart thing to do is to set it higher than what you want.
And especially if you want to do something in friction with the status quo, idealism trumps practicality every time.
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Well sorry if public policy requires tangible ballpark numbers to substantiate and assess its feasibility. We do not just make stuff up at the PPAU. Our policies exist within the realm of what is feasibly possible, although may be currently outside the Overton Window.
Trying to use GDP per capita numbers as a gauge of potential BI is pretty fanciful when you account for this is the entire value of domestic production per person in Australia before any existing taxation or government spending requirements, returns on capital investment to maintain the capital stock etc. You canât just take arbitrary portions off GDP per capita in isolation and expect it to have a realistic policy meaning for running government distribution programs.
You do realise that once accounting for the existing government portion of ~33% of GDP, you are now adding an additional 50% portion from GDP for this UBI - more than doubling the existing levels of taxation from all 3 levels of government combined (even if you scrapped all federal welfare expenditure which is <10% of GDP).
What taxation are you proposing to achieve this redistribution program? It is worth noting that in order for this to go ahead we are looking at levels of taxation not even seen in Nordic countries which have vastly superior safety nets, universal public goods and arguably a far better and more cost effective (in real resources) alternative to what you have suggested.
Contrast this to the JG Iâve been drafting policy for, which is estimated to be between 0.5-1.5% of GDP - 50 times less than the 50% of GDP you are demanding for UBI. Yet somehow the former is unreasonable whereas the latter is not.
FYI I did not create the BI policy for the PPAU. However from the recent review of the policy it was considered while the BI could be increase slightly by maybe up to a couple of thousand, that this was already pushing marginal income tax rates into unreasonably high territory. Our BI proposal is costed, and while you could argue there is some scope to use money creation, the most youâd plausibly be able to suggest to add is no more than 5% of GDP. Hardly a dent into the 50% of GDP you are proposing. Nor are you considering the opportunity cost of what could be done with that spending otherwise.
Once again, I point out you are more than welcome to submit your own modelled proposal of a BI to the PDC for review, but it is not good enough for you to say:
I may as well say itâs not good enough that we donât have 100% renewable energy in Australia already, but pigs may as well fly. You canât just make up aspirational demands without then providing some sort of basic outline or plan on how you intend to achieve them.
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