In recent months, discussion of basic income proposals have become fairly mainstream, but not so mainstream that most people know what the phrase "basic income" means. With that in mind, here are the basics (get it?) of the idea, in eleven questions.…
There are a number of different names this idea has gone by over the years. "Universal basic income" and "basic income guarantee" are used frequently. "Guaranteed minimum income" and "negative income tax" are generally used to refer to versions of the plan that also impose a tax that gradually eats up the cash transfer, as a means of reducing the cost of the policy. "Demogrant" was popular in the '70s, and "citizens' dividend" and "social wage" get used from time to time.VOX
Basic income: the world's simplest plan to end poverty, explainedDylan Matthews
10 comments:
Dylan does not seem to distinguish between a UBI and a means tested BIG. Either could be made to work but there is a huge difference in the economics and in the politics.
Bergmann notes that there are certain benefits that liberals think everyone should have access to, such as education, health care, childcare, housing, and the like. A government cannot afford to finance both these and a basic income, she concludes.
Randall Wray asserts that it would "add just about two or three zeros to all prices and wages in the US
To Wray and Bergmann I would respond that any BIG proposal has to be evaluated as part of an overall budget and that the deficit would have to be "right-sized" as per functional finance principles.
Given the slack in our economy, a $250 billion means-tested BIG could probably be "paid for" with deficit spending, while a $2.5 trillion UBI would probably require a huge tax increase to avoid inflation.
Whether a BIG (or JG) would replace other safety net programs is a whole 'nuther issue and I suggest evaluating those programs on a case by case basis. For example, a $250/week means-tested BIG could replace a $250/week SSDI benefit. I suggest leaving the SNAP program in place but far fewer people would be poor enough to qualify for SNAP. It would be more difficult to eliminate housing assistance since housing costs vary so much in different parts of the country. Unemployment insurance could go either way -- I suggest letting a means-tested BIG replace UI, but if you wanted to keep the existing UI program in place, that could work, too.
A BIG is a Job Guarantee, where the job is "Spend the money I'm given".
That is an unacceptable job for the money to the majority of the population and they therefore politically agitate to remove the money from the 'slackers'.
The evidence for which is legion - 'contributions' unemployment benefit cut to a pittance, ever increasing age at which state pensions can be drawn, cancellation of 'universal' child benefit, elimination of student grants.
All on a 'not worth the candle' basis.
An Income guarantee comes from the same neat, plausible and wrong camps as monetarism and laissez fair free market dogma. It's hardly surprising Milton Friedman was in favour.
@Neil, the only two countries in the world that are anywhere near democratic at the moment -- Iceland and Switzerland -- have generous safety nets and neither has been cutting benefits.
I suggest that the biggest obstacle to full employment policies and a humane safety net is not the political will of the people but rather the political will of the oligarchs.
It is a given that we cannot fix our economic problems without also fixing our political problems (or visa versa).
In our oligarchies there is zero political feasibility for MMT's voluntary living wage JG with a safety net available for those who refuse the JG, as MMT claims to advocate. There is zero political feasibility for functional finance budgeting. There is zero political feasibility for peacetime Keynesianism. The only job programs that the oligarchs will support are military Keynesianism or "workfare" gulags. Kalecki explained all this in 1943.
If we are going to limit our discussion to economic policies that are acceptable to the oligarchs then we might as well forget about MMT and join the Tea Party. :-)
In Spain the left radical party who has risen a lot in the last elections "Podemos" had a BIG amongst one of their policies (all this came from internal democracy process btw) but this was strongly opposed by a majority of people (probably even amongst their voters), both on moral and economic basis. I don't see a BIG possible, socially speaking, until we reach a "the end of work" scenario where the majority of the population is unemployed or underemployed. By this I mean until we can't keep producing useless 'service jobs' and inventing bullshit (burocracy or smoke services) industries with increasing unnecessary complexity to make up for the lost jobs in industry and non-bullshit services and "black market survival economy" and the robots have taken over most of the jobs. I don't expect this happening soon, it will probably take a few decades still, so it's possible we will see 'intermediate' steeps being implemented when the status quo reaches a point where is about to break up (should happen soon enough in Europe IMO with the current moron-fest driven policies).
After some economic studies they have backed up (I'm sure they will keep increasing in votes if they keep narrowing down their most idealistic ideas) from BIG as they say it's impossible to implement nationally, and only would be possible if it's done in all the EU (maybe they forgot to say it would be maybe possible if we were not in gold standard bis aka the euro). Still a JG is better than increasing child malnutrition, even if it still is some sort of pseudo-slavery in an age where productivity and output capacity should be enough to allow the population to gain more degrees of real freedom, but we will eventually get to something like that or there will be revolution (in fact, is southern Europe revolution is slowly already happening and TPTB are starting to get scared).
UBI is probably a better terminology, but Matthews follows the literature in using "BIG" for the universal version.
To repeat ad nauseam: A universal, inflation-indexed as proposed Van Parijs big UBI BIG without a JG is both unjust and authoritarian, and obviously hyperinflationary. It is more powerful than any possible "right-sizing" and functional finance.
It cannot work in any economy resembling much anything on Earth today. It could only work something like an oil state like Kuwait with an ineligible underclass doing all the work, or if the state ran everything and paid everyone the same amount - a caricature socialist state. These aren't reasonable possibilities.
The means-tested variants fall to Neil's criticism, which is not why the big BIG doesn't work, though. They're just old fashioned 1960s "Keynesianism". Just the 1% giving the 99% table scraps. Been there, done that. Better than nothing, but inflation-prone, revocable and will be revoked.
Thankfully all of these Bright Ideas from the comfortable classes have never convinced the poor, the needy and the unemployed who are far better economists than these ivory tower intellectuals. What they rationally want, have always wanted and preferred, is a job. A JG.
Ignacio: Still a JG is better than increasing child malnutrition, even if it still is some sort of pseudo-slavery in an age where productivity and output capacity should be enough to allow the population to gain more degrees of real freedom
The BIG (without a JG) is the authoritarian, top-down alternative. The bottom up alternative that allows for the possibility of more real freedom is the JG.
Getting this backwards is perhaps one reason why so many BIG supporters stridently oppose the JG, while MMTers, JG supporters are basically all OK with some kind of BIG.
But the plutocrats understand money. That is why they like BIGs, which they can make "degrading". While they loathe the JG, as they know will destroy them. Would that well-meaning, ignorant liberals/ leftists understood money and history as well. The knowledgeable but malicious manipulating the well-meaning but naive may be a reason why one sees a lot about BIGs these days.
@Calgacus, I have never desired a minimum wage job picking up litter. What I have always wanted is a job that uses my skills and that fits into my career plans -- which the MMT JG would not do.
Regarding the semantics of a BIG -- a basic income guarantee means that you are guaranteed a basic income of $X, it does not mean that you are guaranteed a check for $X in addition to your other income. But I find it helpful to specify "means-tested BIG" vs. UBI.
@Calgacus, you (and many MMTers like Randy and Pavlina) claim a BIG would be inflationary but you don't back up your claim with facts or explanations?
Why would spending $X on a BIG be more inflationary than spending $X on bombs, $X on MRAPs for your local police department, or $X on a JG to pick up litter?
@Calgacus, if your claim that What they rationally want, have always wanted and preferred, is a job. A JG. is true, and if we offered the poor a choice between a minimum wage job picking up litter or else a BIG, then 100% of the poor would choose to pick up litter and nobody would choose the BIG, so how would a JIG be inflationary, and why would you oppose a JIG?
@Calgacus, you claim the plutocrats loathe the JG, as they know will destroy them. So you are admitting that a JG is not politically viable in our plutocrat-controlled world?
What I keep picking up from the comments is that much of the MMT community (with the usual exception of Tom Hickey) is still in denial about the subject of political viability. I think this is a weakness of MMT. Mind you, I don't claim to have any simple solutions to our political problems, either -- it may take a revolution to bring about substantial change.
The BIG is really a replacement of other forms of welfare, which is why both a BIG and a UBI are popular on the right. As Calgacus says, it's basically a subsistence amount in their eyes, and that is all anyone ever gets — end Social Security and other social insurance, and shut down the safety net as no longer needed. This is the sine qua non of getting the support of the right to pass it politically.
The essence of the JG, and why the right hates it, is that it provides a modicum of free choice in job selection and economic liberalism is based on being forced to take the going wage or "prefer leisure," that is, voluntarily starve. It's just because markets ensure that everyone is compensated at their marginal productivity. If you don't have a job offer, it's because you are unwilling to work for the wages offered.
What many people don't get is that this is not chiefly an economic issue. It is a social and political one. It's about the tension between freedom and power. The powerful have always sought to restrict the freedom of the less powerful in order to force the outcome they prefer. Liberalism is about increasing freedom and this is only possible through distributing power, which is what popular sovereignty is all about.
Individual sovereign is an illiberal hoax dressed up to look like the ultimate in liberalism where every individual is completely free. However, it allows "sovereign individuals" to sell themselves into slavery, since they own themselves and can do whatever they want with themselves. In a liberal economy in which power gets concentrated, this exactly what happens to a large cohort in order to survive.
The JG is about freedom. The UBI and BIG are right wing traps designed to limit the welfare state, recognizing that an exclusively market state is politically unfeasible — so just provide the absolute minimum and dress it up to look like a good deal for the rubes.
In a properly functioning welfare state that was a liberal democracy under popular sovereignty — a government of the people, by the people and fore the people, there would be distributed prosperity, adequate safety nets and social insurance, and a guaranteed job offer at a living wage (not merely a subsistence wage) as the right to work.
There is no reason that a JG is not compatible with a BIG as part of the safety net, comparable to the earned income tax credit and welfare payments (corporate subsidies) paid to those not being paid a living wage. But a BIG that ends all other welfare payments would be the wrong way to go in improving the safety net.
I personally don't think that neoliberal capitalism can work without immiseration of a significant cohort, and a JG, UBI, BIG, etc., won't fix this, however, well they are designed. Neoliberalism is based on rent extraction through social status and political power, which are both a cause and a result of concentration of real and financial resources toward the top. This prioritizes money and machines over people and the environment, so the result is predictable. The rich get richer.…
So even if there were the political will and power to pass a UBI or BIG that would be satisfactory to the left, I would say that this is a distraction from the type of reorganization that is needed to fix the situation. Otherwise, over time, they'll be baaaack, just like always. Keynes had it right. It's necessary to euthanize the rentiers and this can only be done in a lasting way by taking away their privilege and power, which means clawing back rents.
Calgacus, considering is well done, designed and executed an UBI/BIG is more free and less degrading than a JG (which is "work for me doing what I want or starve", so pretty much like it is right now, just changing who the capitalist is, from a private corporation to the state). And there is no freaking way in a million years unless is externalized or increased in size and scope to include other forms of capital formation, that a lot of people would be put to work on meaningful tasks for their skill sets (may as well ask for nationalizing some industries and put them to work with public capital and create jobs in those industries).
We are talking that for a BIG to happen it would have to be widely socially accepted, it's a requirement, so it would not be a social stigma to be "just on BIG".
Right now, neither the JG nor the BIG are a possibility, for any of those to be a possibility there must be a change in the current paradigm, including of class conscience and empathy. Under the current paradigm both policies are abusable and would not be much about more freedom or justice, but about pure survival (of the system we live in), so don't expect a well run and socially accepted JG program any time soon.
Anyway, both policies are NOT mutually exclusive (if you buy into "buuuut no one will woooork, inflation everywhereeee" narrative) and would depend much on the implementation of the programs how inflationary it would be/not be. The case for increasing 'wage inflation' specially for the people with less income and increasing liabilities marked-to-fantasy (which is what currently both a JG or a BIG would do) in a deflationary world can be made easily, so the matter is more complex that and hyperventilating about hyperinflation does not make anyone look better than nut goldbug, but is getting too late for me here to discuss it.
In the current stage, both the JG and the BIG are traps and when/if implemented is what they will be (a tool of the status quo to impede any sort of revolution).
Some selectively forget that both programs would have to be deployed under the same paradigm by the same people. The is no 'zeitgest' in one program over the other, it won't propel any more social change or whatever by itself just because is one type or the other. The change must happen ex-ante, not because of, because the programs do not have any implicit causality. So is prejudices talking here.
Anyway, I guess anything would be better than what we currently have (apparently not, some sort of basic income would be worse for people already starving, ohwell!), I'm not too mad over one or the other. But all this argumentation looks like pure fallacy and ideology to me, and all made with the narrow view of implementation within the current frame (as usually happens with the politically naive MMT). Which, anyway, will never happen: the most likely capitalist solution to the problem will be the solution that has always been implemented by the ruling classes: violence (through fascism and jingoism) and war (both civil and external).
P.S: I posted too fast and after reading I see Tom views are similar to mine regarding this whole issue.
In few lines: neither will fix anything in the current paradigm and both are open to abuse of all sort and form. I add that any of both programs would be only implemented if there was no other alternative (this includes violence) against impeding revolt, and both in poor conditions (probably made to fail and/or open to dismantling after status quo stabilization).
Both programs are not incompatible, and as always, the devil is in the details (regarding the economics of it).
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