The Growing Precariat: Why We Need a Universal Basic Income

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There is an adage in economics known as ‘the lump of labor fallacy’. It is that technological change is destroying jobs and generating rising unemployment. It rests on an image of a finite number of jobs. In 1809, the Luddites destroyed machines seen to be putting them out of work. Ever since, their action has been cited as disproving the unemployment effects of technological progress.

To be fair to the Luddites, their actions should rather be interpreted as a protest against the destruction of a way of life that had generated social stability and community respect for traditional forms of workmanship.

Today, we have something similar. Technological innovation is more rapid and broad-based than in any previous industrial revolution, much of it linked to Silicon Valley and the entrepreneurial dynamism of its denizens.

Jobs are indeed being destroyed. The jeremiahs are out in force. “The end of work,” they shout. “Jobless growth!”

This is nonsense. What is happening is more subtle and potentially liberating, but also potentially generating a dystopia of socially unsustainable inequality, in which a growing share of the population will be mired in chronic insecurity, through no fault of their own.

This is not a time for smug libertarian mantras about meritocracy and the bracing effects of competitiveness. If what is happening is allowed to continue without imaginative new social policies, our society will be blighted by millions of people living wretchedly insecure lives and reacting accordingly.

Globalisation, technological change, and government policies have produced a class structure with a tiny plutocracy of billionaires coexisting with a dwindling salariat, with employment security, pensions and paid vacations, and a rapidly growing precariat, living bits-and-pieces lives, without occupational careers and experiencing declining real wages. Telling the precariat that they must obtain more schooling and training is disingenuous. Millions are currently over-qualified for the labor and work they can expect to be doing.

The reality is that the income distribution system of the 20th century has broken down, and it will not come back. Real wages in the US and in other rich countries will continue to stagnate and fall. More people, however hard they try, will earn incomes that will not enable them to avoid poverty and insecurity. They will find it impossible to insure against that insecurity.

Do not think they will be underemployed in the conventional sense. An irony of recent labor market developments is that the precariat has to do more and more work, much of which is unrecorded, unrecognised and unremunerated.

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One aspect is the converse of automation, which should be called, rather ungainly, heteromation. We understand we live through electronic gadgetry, but it generates time uses like nothing ever before. Some of that is play and entertainment. But for the precariat in particular, much of it is hard work. It includes networking, retraining, upgrading skills, seeking paid work opportunities, keeping up to date in one’s own field of work, and regularly applying for benefits or services needed for survival.

Most of that activity is not desired as leisure; it is necessary work.

This is why it is ludicrous to say that the new technology is destroying work per se. One challenge is to identify ways of limiting the imperative to be wired up in activities that are distracting and destructive of the reflective self. We need a ‘politics of time’. Those electronic gadgets are wonderful and should not be criticised for the fact that so far most of us remain dominated by their incessant demands on our time.

The politics of time must include measures to enable people to feel more in control of their time, which means they must feel less insecure. Chronically insecure people easily become irrational. This is why the politics of time should include moves toward a society in which everybody, in principle, should have a universal basic income as a right. This means every man, woman and child should have a modest monthly basic income, without imposing arbitrary behavioral conditions and not being dependent on marital, sexual or work status.

It is affordable, especially in a society in which billions of dollars are spent on giving affluent folk subsidies for which they have done nothing. There should be a bonfire of such subsidies; they distort market mechanisms, promote inefficiency, and are regressive.

A basic income would help people be more rational, more long-term in their outlook, and more prepared to take entrepreneurial risk.

It would not reduce labor supply. This was shown by our pilots in India, in which we were able to provide over 6,000 men, women and children with a basic income for 18 months and monitor what happened by comparison with a larger number not provided with one, through a randomized control trial. It has also been shown in experiments in the US, Canada and several European countries.

shutterstock_93945211The simple fact is that people with basic security work harder and more productively, not less.

A basic income would also modestly reduce income inequality. It would strengthen individual bargaining capacities and thus reduce exploitative pressures. Basic security has also been shown to induce a greater sense of altruism and to make people more tolerant of those different from themselves.

A basic income would not be a panacea to all our social ills. That is why it should be part of a Precariat Charter, as argued in my recent book. It does recognize that it is practically the only way to provide basic (not total) security and reduce income inequality while promoting that most precious of objectives, republican freedom, the freedom to be undominated by bureaucrats or figures of autocratic authority.

We must realize that the growing structural inequality is socially unsustainable and increasingly immoral. We must change that if we are to produce a Good Society fit for the 21st century, in which all of us have a life of dignity, freedom and self-control. People with basic security are likely to have the confidence to defend and enhance freedom not only of themselves but their relations, friends and neighbors.

That great proselytizer of America, Alexis de Tocqueville, would have liked that.

Guy Standing is Professor of Development Studies at the School of Oriental and African Studies (SOAS), University of London, UK. He has previously been Professor of Economic Security at the University of Bath, UK, Professor of Labour Economics at Monash University, Australia and Director of the Socio-Economic Security Programme of the International Labour Organization. He is co-president of the Basic Income Earth Network. His recent books include The Precariat: The New Dangerous Class (2014), Work after Globalization: Building Occupational Citizenship(2009) and Beyond the New Paternalism: Basic Security as Equality (2002).

Images courtesy Shutterstock

Discussion — 52 Responses

  • andarot March 30, 2015 on 8:30 am

    Excellent article. It made me think that we have to establish a new culture of wealth. Yes we need to encourage enterprise and risktaking – and allow people who do so, considerable wealth as a reward.

    But we need to make the superwealthy cultural pariahs. We need to make the Gates and the Buffetts of the world realise that they are *deeply immoral* – robber barons. It is not permissible for anyone to have an obscene slice of the social pie, or for an individual like Gates to own as much as a country.There is no way they deserve that. And no amount of “we’ll give it back when we die”, or “look at our charitable funds”, should offset that. They should give most of it back NOW.

    It is also politically unacceptable because the super-rich wield super-disproportionate power.

    In a world teeming with billions of people, and evermore basically egalitarian – with, as this site continually demonstrates, the everincreasing technological means to empower individuals and the masses alike, we must have a new culture of wealth that, while realistic, is also morally egalitarian.

    • Vr Darshana andarot April 2, 2015 on 6:27 pm

      I strongly disagree. The Gates Foundation – and charitable trusts in general – can do far more by themselves than if their wealth was absorbed back into the world at large.

      it comes from the focus that happens with the money. Without the professional structure, management, and concentration of talent associated with the Gates Foundation, there would have been no eradication of polio in india. Gates is also spearheading efforts to rethink sanitation in backwards countries, leading the fight vs third-world diseases like malaria and tuberculosis, providing incubation to financial services for the poor, and encouraging other billionaires to do the same – including, ironically, Warren Buffet.

      I think you should modify your dogmatic beliefs somewhat. Give billionaires a choice – either go the charitable route vis-a-vis Mr. Gates, or have your wealth taxed heavily on your death and have it sent to the public coffers.

      In any case, I think its a mistake to try to lump everybody together. We need the same drive and fanatical zeal being focused at social ills that we currently have towards the accumulation of wealth, and there are so many moonshots out there to make our lives substantially better that everyone could get involved.

      As for those who hoard their wealth and try to retard development (nicotine producers, oil developers, coal), well there should be no mercy.

      • bashrc Vr Darshana April 4, 2015 on 11:48 am

        I think you’re right that we need more drive and zeal focussed on the social ills of our time. The oligarchs whose wealth is purloined from the work of others need to be held in check, and corrupt organisations such as the Gates Foundation need to be subject to far closer scrutiny than the uninformed sycophancy which they often receive.

        • Quantium bashrc April 4, 2015 on 1:35 pm

          And tax police aren’t corruptible? Do people who earn money really “purloin” it? Or are people who take it by force using political and legal tricks somehow not stealing it?

          I don’t think there are easy answers here.

          I do think something radically new is needed to resolve social ills. It needs to be very different to present methods of charities and taxation. The foundations of hyper-rich industrialists may not be the ultimate solution, but they are an attempt to try something different to old “solutions” that have been demonstrated not to work, or at least work only inefficiently and inadequately.

  • Omar Gatti March 30, 2015 on 8:52 am

    How can we support universal basic income? Are there some movement that work to advocate it?

    • Curt Welch Omar Gatti March 30, 2015 on 9:43 am

      Yes Omar — millions of people and groups are supporting it and advocating for the idea. The movement grows stronger every day. Google “Basic Income” to find what is going on and to read about the long history of the idea.

  • descorcio March 30, 2015 on 9:49 am

    In Brazil there is a very recent basic income program called Bolsa Familia. It is seen with lots of prejudice by the economical elite. However, to obtain the benefit, your kids must be enrolled and present at school (which in rural areas was a challenge before its implementation). It has reduced extreme poverty and helped to develop poor regions. When it comes to labor force, however, at least in here that are places where certain low qualified positions are very difficult to fulfill. In general, benefits overcome disadvantages, but technology hasn’t yet created viable solutions for most of these jobs.

    • SingularitySavanna descorcio March 31, 2015 on 11:27 am

      Part of the problem is that that income is not “universal”, so it’s still framed as something for poor people, rather than as something that everyone gets just for being a citizen.

      A basic income should be both universal and unconditional (beyond a citizenship requirement, and perhaps some age requirements).

    • Jim Gravelyn descorcio April 5, 2015 on 8:16 am

      Brazil might not be the best example of policy since they are currently rioting in the streets for the impeachment of their corrupt communist president.

      • Eri Ka Jim Gravelyn April 8, 2015 on 8:41 am

        First of all, the current government is not communist. Second, corruption exists in many governments. The most important point here is that, all things considered, the “bolsa familia” is a GOOD IDEA and it serves the purpose in question. Perhaps if it is adapted by a country where corruption does not run so freely, it would get the job done.

      • descorcio Jim Gravelyn April 8, 2015 on 9:18 am

        Hello, Jim.
        Sorry to disagree. At first, country is not rioting. Brazil had 1 day of peaceful protests (march 15th). Another is scheduled for april 12th. The target of the protests is mainly corruption in the big national oil company called Petrobras. Nothing to do with Bolsa Familia.
        In fact, Bolsa Familia implementation helped former president Lula to be the most popular one of Brazilian recent history. Also helped to elect an almost anonymous economist (Dilma Roussef) for his succession. Their party is the Labour Party (in Portuguese, Partido dos Trabalhadores), as well as there are Labour parties all over the democratic world. Indeed, some of its members were involved with corruption and had involvement with communist ideas in the past, including president Roussef. One of the parties that composes the Governmental coalition is the Brazilian Communist Party (PCdoB), that despite its old-fashioned ideals, has no antidemocratic claims in the Brazilian political scenario, and has even helped to fight the violent Military Dictatorship that took place a few years ago.

  • Quantium March 30, 2015 on 9:52 am

    The only way I can see this actually working is for each wealth creating machine to generate some form of tax as well as value for its owner. That is to say it is the machine that pays the tax, not the owner/creator.

  • jakmang March 30, 2015 on 10:18 am

    This would be a positive step. It is difficult for me to see great change without closing the education gaps in this country.

    • Eri Ka jakmang April 8, 2015 on 8:45 am

      The budget for education needs to be increased. We can’t have quality education with 50 students in a classroom!

  • Chris Dew March 30, 2015 on 11:45 am
    • adamtoo Chris Dew April 3, 2015 on 5:37 am

      Working for the government sounds like a nightmare….which is all socialism is.

  • rabar March 30, 2015 on 2:55 pm

    Economist Theobald saw it coming fifty years ago:
    Wikipedia:
    Robert Theobald (June 11, 1929 in England-November 27, 1999) was a private consulting economist and futurist author. In economics, he was best known for his writings on the economics of abundance and his advocacy of a Basic Income Guarantee. Theobald was a member of the Ad Hoc Committee on the Triple Revolution in 1964, and later listed in the top 10 most influential living futurists in The Encyclopedia of the Future.
    Theobald questioned and criticized conventional confidence in economic growth, in technology, and in the culture of materialism – all of which he considered to be damaging to the environment while failing to provide opportunity and income for many of the world’s people. He warned against trying to maintain, and to spread or mimic worldwide, the American standard of living of the late 20th century.
    Despite his criticism of some aspects and effects of technology, Theobald saw tremendous potential in communications technology like on-line, personal computers (which in the 1980s he termed “micro-computers”), seeing these as tools for pooling the thoughts and opinions of very large numbers of individuals spread widely, geographically.
    Theobald was an expositor and popularizer of such now-accepted concepts as “networking,” “win/win,” “systemic thinking,” and “communications era.”
    In 1963, Theobald published the book “Free Men and Free Markets”, in which he advocated a guaranteed minimum income (the origin of the modern version of the phrase). He got it right!
    http://en.wikipedia.org/wiki/Robert_Theobald

    In his final book “Where Do We Go from Here: Chaos or Community?” (1967) Martin Luther King Jr.wrote[3]
    I am now convinced that the simplest approach will prove to be the most effective — the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.
    —from the chapter titled “Where We Are Going”
    Modern advocates for a Guaranteed Minimum Income include Hans-Werner Sinn (Germany), Ayşe Buğra Turkey), The Green Economics Institute (GEI), and Andrew Coyne (Canada).
    In 1988, France was one of the first countries to implement a minimum income, called the Revenu minimum d’insertion. In 2009, it was turned into Revenu de solidarité active (RSA), a new system which aimed at solving the Poverty trap by providing low wages workers a complementary income; thus encouraging activity.

    • adamtoo rabar April 3, 2015 on 5:48 am

      Why do we always see arrogance, science and socialism lumped together? From what I can gather Theobald is so arrogant he believes individuals aren’t smart enough to care for themselves, he also believes there’s no way around solving problems related to population growth other than to impoverish the world. And he claims all this based on his scientific research which my gut instinct believes he’s an arrogant fool. There are many other economists who probably also believed networking would be a great thing prior to the 90’s that believe capitalism is the single most beneficial means for society to succeed.

  • adamtoo March 30, 2015 on 5:02 pm

    Wow is this dangerous and smells of extreme political bias. Giving money to the otherwise healthy and able will destroy motivation in an already struggling workforce. The more the U.S. government extends unemployment the worse labor participation becomes, the more social welfare is extended the deeper the empoverished sink. The belief that fair outcomes can be guaranteed is a myth created by those who want control and believed by those that don’t understand that power corrupts et al founding fathers. A small and limited safety net is always necessary to help those whom are victims of circumstances beyond their control, but going down the path of the precariat will turn the U.S. into another Soviet Union, Cuba, Venezuela…Rome!

    • Giovanna Argueta adamtoo March 30, 2015 on 9:48 pm

      What about Zurich Switzerland?

      • adamtoo Giovanna Argueta April 2, 2015 on 5:57 am

        Ever wonder why all the talk in town excludes dreams of moving to Switzerland or northen Europe? Tax and regulations are so high there that there is zero disposable income! You can move there and enjoy their clean streets and safe cities but when it comes time to do a little shopping or saving up for a family vacation, forget it….you are a member of the collective and their governments are the only ones deemed smart enough to spend your income.

        • Eri Ka adamtoo April 8, 2015 on 9:31 am

          The world can not be perfect but it can be a little better… One needs to choose what is best.. To have a society full of people who are poor, unemployed and uneducated and to have a high crime rate, but that are nevertheless “individuals” or to have a “collective” where most people have a decent life. Know that the Swiss and northern Europeans do enjoy a lengthy vacation and that they travel a lot more than Americans do.

          • Jim Gravelyn Eri Ka April 8, 2015 on 9:57 am

            Eri, your comment assumes something that is clearly contradicted by experience. You assume that in a “collective… most people have a decent life.” How absurd. The human race spent the 20th century learning the exact opposite, with every form of “collective” engaging in mass murder, starvation, and tyranny. And we still have plenty of examples of dysfunctional collectives if we are dumb enough to forget: North Korea, Cuba, Zimbabwe, Red China, etc. If we do not learn from the past…

    • Matt Fry adamtoo April 1, 2015 on 5:00 pm

      I notice you provide no evidence for these assumptions, against recent studies that show that better benefits help more people into work. Social instability does not encourage entrepreneurialism. You have completely managed to avoid the issue.

      • adamtoo Matt Fry April 2, 2015 on 6:01 am

        I’ not a paid reporter so I don’t care to spend hours tracking down the facts I’ve spent my life observing, however I do retain the general wisdom from them and am glad to share my OPINIONs;)

    • bashrc adamtoo April 4, 2015 on 12:02 pm

      I agree that welfare spending needs to be kept in check and the vast majority of current welfare spending is on the military and various subsidies and tax breaks for large companies. That kind of spending is wasteful and discourages productivity, with money being diverted into useless financial instruments, offshore havens or wars which are by definition the opposite of productive.

      So we should divert welfare spending away from such things and instead concentrate our efforts upon ensuring that every citizen has at least a basic income level. As Guy Standing correctly points out, a growing body of evidence indicates that when basic income is introduced then many positive indicators rise – education, health and productivity. People who are not starving and who do not have to worry about the most basic necessities of life can do more than they would be able to otherwise, and that should come as no great revelation. How many Einsteins never fulfilled their true potential because oligarchs stole and squandered their resources? How many scientists or artists could stop chasing grant money and just do great work, knowing that they could at least feed themselves in the process?

      • adamtoo bashrc April 4, 2015 on 9:58 pm

        You’re killing me with your evil corporate welfare talk…jeez, wake up, the most corrupt, wasteful user of public funds is our BIG government! And does everyone deserve a minimun income, I mean really, why? Let’s take an extreme example in a place where it’s just you and me….and you do all the work while I smoke dope on the beach, but I demand that you share all of your food, shelter and resources with me because I deserve a minimum guaranteed income. Does that situation motivate or dissuade me from contributing to our little two person country.? You don’t need a Phd to realize that giving people stuff without having earned it is only a means to reaching the lowest common denominator rather than motivating people to achieve success. IMO this article and research are total and complete socialist PR funded by who knows, the UN, N. Korea, The Apollo Group, Code Red, George Soros etc…common sense will more than often lead you to the truth.

        • Quantium adamtoo April 5, 2015 on 2:31 am

          This comment is supported by this film:
          http://www.imdb.com/title/tt0387808/?ref_=nv_sr_1
          If the world had two couples, (and no cure for ageing) one of which worked and the other didn’t, then the couple that didn’t work would have more children and eventually the entire world would be populated by people that didn’t work, and they would starve unless motivated by hunger to hunt and gather.

          • adamtoo Quantium April 5, 2015 on 6:33 am

            Sounds interesting, will have to check it out

          • Eri Ka Quantium April 8, 2015 on 9:19 am

            This is true. I have seeing something similar to this happening. In a previous comment I said that the “bolsa familia” of Brazil was a good idea – but I think that it might not be such good idea after all. I remember that in some poor villages, where most people were on “bolsa familia”, people just kept on multiplying because the more kids you had, the more money you got from the government. There, the man just sit around drinking the whole day while the women took care of the house and their many children…

    • Eri Ka adamtoo April 8, 2015 on 9:08 am

      Do you have another solution?

  • Ultraviolet March 30, 2015 on 7:07 pm

    “It is affordable, especially in a society in which billions of dollars are spent on giving affluent folk subsidies for which they have done nothing.”

    That’s it? That’s the argument for affordability, to just say it’s affordable and vaguely refer to some purported subsidies for the affluent?

    That’s not nearly rigorous enough to establish that something like this is affordable. He seems to think “billions of dollars” is a lot in the context of government spending. It isn’t. The US federal budget is close to $4 trillion per year. The current year’s deficit alone is >$500 billion.

    Of course we have no idea what he’s referring to because he doesn’t tell us. This is all far too vague and sloppy to take seriously.

    The cost of a universal free money program would be enormous: Since he says wants free money for children too, let’s take the entire US population of 320,000,000. Multiply by $20,000 per annum (it’s skewed down to account for the presumably smaller allowance the US government would give to children – I assume we’re talking about $25,000 to $30,000 or so for adults.)

    That comes to $6.4 trillion. Offset it with whatever other welfare programs you think you’re replacing, trim the annual payout, and this will still add at least $2 trillion to the US budget per year. None of the evidence he presented accounts for the effects of the massive tax increase that would be necessary to implement a universal free money program.

    And that’s before we get to the moral question. Why would we want to do this? What is wrong with income inequality? Why is less variance in incomes desirable? Why would we even have a preference for any particular income distribution? Assuming that there is something unjust or immoral in variance on a variable like income is a huge assumption. It needs to be established, argued coherently. People on the left tend to take it for granted, but a lot of other people don’t (and probably some leftists don’t take it for granted.) The word “equality” doesn’t make something inherently desirable, and the word “inequality” doesn’t connote something bad in any and all contexts on any and all variables.

    • PRBennett Ultraviolet March 31, 2015 on 11:36 am

      Yes, income inequality will always exist, so asking “What is wrong with income inequality?” is deceptive. We’re not talking about generic income inequality. We’re talking radical income inequality. It’s disingenuous to say that some income inequality is OK therefore any amount of income inequality is OK. It is also important to realize that even radical income inequality would be fine as long as those with extreme income didn’t use their resources to keep others in poverty. When the Koch brothers wage war on the minimum wage and on unions, they are abusing the resources they have to the detriment of others. If they didn’t have so much income, dropping a billion dollars on the 2016 election wouldn’t even be feasible, and they wouldn’t be able to purchase entire state legislatures to do their bidding (like repealing laws that keep Koch industries from polluting the environment the rest of us have to live in).

      The other problem with the radical income inequality we are seeing today is really the level of poverty it is generating. Poverty effects people psychologically. A guaranteed level of income would dramatically reduce the level of mental and emotional disability, as was found in a study of an Native American tribe before and after they started a casino and used the proceeds to provide basic income to their members. The study found that children who grow up in the stressful environment of extreme poverty are prone to significant mental issues which effect them throughout their lives.

      A guaranteed minimum income would also dramatically improve health since people who can eat decent food have fewer health problems, and who use preventative measures to deal with health issues have fewer serious health problems as they age. Medical costs for everyone would go down because demand would go down. We’re already seeing that with the effects of Obamacare (though you wouldn’t know it if you listen to the corporate media owned by the radically wealthy like Rupert Murdoch, or even public media who are now cowed by the amount of money they would loose if the Koch brothers withdrew their “charitable giving”).

      Also on the economic front, demand for goods would increase dramatically and the economy would stabilize. Those in poverty are not participating in the consumer economy, while those who are in extreme affluence are taking money out of the economy, or are using their money to gamble in markets in ways that don’t benefit the economy as a whole and often actually damage it (commodity speculation, derivatives, and high frequency transactions come to mind).

      • adamtoo PRBennett April 5, 2015 on 6:53 am

        I couldn’t even get past your first couple sentences without having to respond…the Koch Bros are not waging war on the minimum wage by fighting the unions, they’re saving jobs and particularly jobs in the United States! Do think the people of Detroit who used to have gainful employment would prefer to still be employed with a fair market wage versus losing their jobs to foreign factories and foreign competitors because guys working the line were earning as much as people who graduated from college with masters degrees? Why don’t you pick on Tim Cook, CEO of Apple, over two thirds of Apple factories are outside of the U.S….know why, because labor is too costly in the US relative to the rest of the world. And if we are to buy into your Koche Bros evil empire theory, which BTY is fabricated liberal PR paid for by Democrats who don’t like the Koch Brow political donations going to Republicans, the Koch Bros don’t operate in a monopoly swaying our economy, they are countered by socialist liberals like George Soros, The Gates Foundation etc….unions had their time and now they’re a left over relic and ruining our country, which explains their slow but inevitable decline. And the Koch Bros are some of the biggest philanthropic donators in the US, go and look it up!

  • Mike Hall March 31, 2015 on 2:01 am

    I think the counter arguments offered by MMT economists are very significant and valid. In the +macro+ context, and with a fiat, free floating currency (which most countries now have), taxation is not needed to ‘pay’ for anything, as such (or Gov ‘borrowing’ – by the currency issuer, what a stupid idea..)… rather what really matters is the total aggregate goods and services available, being produced.
    In an impoverished society like much of Africa, a small amount of currency will go an awful long way & there is vast scope & motivation for people to improve their lives. Even with minimal increases in ‘capital’, production has massive scope for increase. So, of course they will still work – and likely even harder. But the same is not true in a developed society.
    It seems to me obvious that developed societies will shift their work/life balance away from work. Particularly for couples with children, whereas as now two full time jobs, or at least one full, one part time have become the norm, research shows a considerable desire to work fewer hours between them. A basic income will initially enable them to do just that.
    And it is highly likely that rather than give up work (or never start), most people will opt to reduce working hours and persue other interests. Again, research shows a considerable desire to do this.
    Well, ok, the labour ‘market’ in the present neo liberal jackboot economics system ensures lots of unemployment slack that would likely be taken up. So far, so good…. but in relation to exactly how much extra aggregate income & money in circulation? I think it’s obvious that this would very soon far exceed any extra production of goods and services. Once this new ‘maximum’ capacity has been reached, price inflation will result. Ok… by Abba Lerner’s (and MMT’s) Functional Finance we can tax some money out of existence to balance actual productive capacity. And we can apply that progressively, higher earners first…
    But consider again the effect of that… some of those higher earners, if taxed at high marginal rates, will simply shift their own work/leisure balance toward more leisure… and the effect will continue on lower down the income scale…
    The net effect of all this is that over time, all incentives for a developed society – so long as progressive politics can hold out – will be toward producing less real goods, wherever the ‘value’ of money ends up. (And just to be clear, inflation is not a ‘linear’ function vs money supply, rather it begins at the inflexion point of maximum productive capacity.)
    It’s highly unlikely that society will find the politics of that declining real income acceptable for very long. Over time then, the value of that basic income will reduce – likely to the point of being even less than currenct unemployment benefit levels.
    But we will have already got rid of all those benefits and supports & all the infrastructure to assess and deliver means tested supports. At which point, the most vulnerable in society will be even worse off than they are now – and every last damn support will doubtless have to be fought over tooth and nail against all the same sociopaths and selfish people who begrudge them now.
    In my opinion, the thinking behind a Basic Income has not been remotely thought through properly in terms of the never-in-equilibrium dynamic system of the macro economy. God knows most in society don’t even begin to understand that macro economics is not household budgetting! (And that includes most economists too…)
    Far, far better in my opinion, is the MMT style, minimum income Job Guarantee, which provides a pretty good income floor, whilst at the same time providing incentive (as a higher wage) for greater aggregate productive activity, from which we will all benefit. And there is no boubting the social value (in both directions) of JG activities themselves in the voluntary/community sector.
    Nor does the JG preclude adjustments to scale down working hours as /when desired. Indeed, such a wage floor provides an excellent mechanism to make such adjustments, and in a step by step way, as society may decide – hopefully thru’ an actual democracy, rather than the elite rule & MSM propaganda sham we have now.
    Finally, politically, think how much easier it would be to sell a something for something plan, than a something for nothing plan, especially to a society that thru’ little fault of its own, even in our newly minted ‘information age’ still amply qualifies as the ‘bewildered herd’?

  • Jim Gravelyn March 31, 2015 on 7:29 am

    “The simple fact is that people with basic security work harder and more productively, not less.”

    NO. I don’t know how you set up that experiment in India, but common sense says the conclusion is wrong. We see generation after generation of welfare recipients who slouch back and take their benefits rather than look for work. In the UK they can show you families on their fourth generation with nobody in the family ever having a job. Now you’re going to declare that we shouldn’t believe what we see with our own eyes, and we should ignore common sense? I call BS. Pay for work is an incentive — look up the meaning of the word in a dictionary if it will help. To suggest as you do in this article that removing the incentive to work will have no effect on work ethic is not just intellectually dishonest, it’s silly.

    • Matt Fry Jim Gravelyn April 1, 2015 on 5:06 pm

      I’ll take the results of a well planned study over ‘common sense’ any day. That’s the point of study, to find out what is actually correct, rather than just assuming. ‘Common sense’ used to tell us that witches were lighter than water, remember. Do you still stand by that?

      • Jim Gravelyn Matt Fry April 2, 2015 on 6:10 am

        “I’ll take the results of a well planned study over ‘common sense’ any day.”

        That’s the problem with too many people nowadays. Article after article documents the rampant fraud in the “science paper” racket, and yet people remain unwilling to use their own grey matter to weed out the nonsense. We have the president and the secretary of state talking about “97% consensus” (http://www.jpattitude.com/140222.php) on AGW, a consensus which is utter fabrication and stems from a decade-long scientific fraud. But too many people, instead of laughing, are like you: they have abandoned their common sense. I guaran-dam-tee you, whatever they did in India to arrive at the conclusion that giving people welfare makes them work harder, it wasn’t science.

        • adamtoo Jim Gravelyn April 3, 2015 on 5:34 am

          Nicely said!

        • bashrc Jim Gravelyn April 4, 2015 on 12:24 pm

          I take it by this statement that you don’t believe in scientific method. Consensus is not the same as truth, but if we abandon peer reviewed scientific results then superstition and folly is all that awaits.

          • Jim Gravelyn bashrc April 4, 2015 on 12:38 pm

            Nobody said abandon peer reviewed results. But you don’t have to abandon them to realize many “peer-reviewed” papers are nonsense. Seriously, you haven’t seen what’s in the news in the last week? (Here: http://english.cri.cn/12394/2015/04/04/3801s872894.htm) The Chinese are using so-called peer-reviewed publications as a racket to advance their careers. A few months ago a legitimate researcher was so alarmed by the rampant nonsense in peer-reviewed publications that he used a random word generator on his computer to create a nonsense paper, gave it an impressive sounding title, and then mailed it off to various publications. Almost every one of them was willing to publish it. And of course during Climategate we all saw how the peer-reviewed process was used by the AGW crowd to silence and ruin anybody who dared to disagree with them.

            The only way to combat this nonsense is to view every “scientific” study with a critical eye. Notice that I mentioned the worst abuses were coming from Asia… and where did the study mentioned in this article happen?

    • commandersprocket Jim Gravelyn April 2, 2015 on 10:33 am

      We ignore common sense with our beliefs on a regular basis. Common sense says the earth is flat, the sun revolves around the earth, and “solid” objects have no space within them. If we have evidence for things that don’t work the way our common sense and cognitive biases say they should, we should pay attention to that evidence. Pay and work (productivity) have been disconnected since the early 1970’s (http://www.epi.org/publication/ib330-productivity-vs-compensation/). Pay for work has stopped working, ATMs have displaced tellers, most grocery stores have lines without checkers, all mail sorting is done by machine, soon robots will drive cars and do most of the work in factories. have you seen “Human’s need not apply”? https://www.youtube.com/watch?v=7Pq-S557XQU
      The rational for a basic income is not a dislike of work, it’s that the foundation of work, jobs, seem likely to disappear en-masse over the next decade. In looking for solutions, so that vast numbers of people are not thrown unnecessarily into abject poverty, a basic/guaranteed income seems like a sensible approach. That basic income could come with “strings” where people need to continue their education or help non-profits with work that machines can’t do. Can you see the other side of this issue?

      • adamtoo commandersprocket April 2, 2015 on 6:28 pm

        So who is going to develop, market, sell and repair all that automation?…hint, not robots. Did the laserjet printer kill all those publishing and printing jobs or create an entire new industry filled with 100s of thousand new jobs…engineers, marketers, sales jobs on and on. The greater the development of automation the greater the need for jobs to foster and maintain it.

        As for your liberal rhetoric regarding us totally ignorant science haters….here is something you should think about. Don’t just accept facts given to you, analyze them, question them, challenge them, use your own brain. This article lays out ONE set of facts that just don’t add up, so look for other facts…I guarantee you this isn’t the only study done on this topic. And lastly always consider the source, because this smells of liberal government PR. Liberals are so willing to put more and more of their lives under government control, until they get it and realize it really sucks!

      • Jim Gravelyn commandersprocket April 3, 2015 on 8:30 am

        To add to what Adam said, you list a very common myth in your list of common sense errors. The notion that everybody thought the Earth was flat is just plain silly. Some people did, sure: generally people who lived in places with obscured horizons. A round planet was accepted theory by the Greeks centuries before Christ even though they didn’t have the math to support it. Even cavemen could look out at the ocean and tell it wasn’t flat. When you see a boat appear to sink over the horizon, what does that tell you? COMMON SENSE tells you the surface of the world is not flat.

    • bashrc Jim Gravelyn April 4, 2015 on 12:16 pm

      Unfortunately common sense is a poor guide to what actually happens, and this is why science trumps superstition. I would rather base policy decisions on evidence from experiments rather than just trusting someone’s “common sense”.

      On the slouching and not working we also see people in the financial sector who are similarly parasitic, and who do no productive work. Also, under your characterisation I assume that you have no truck with the disabled or the elderly, who may not be able to work.

      Instead of pernicious moralising and non-empirical hunches I think we should just try to ensure that people can live with dignity and maximize their potential. A basic income would not solve all problems, and the level would need to be debated, but it could go a long way towards alleviating many of the social ills which bedevil us today.

  • ourdatguy April 1, 2015 on 5:25 pm

    Although I am glad that this topic is getting needed attention. I feel compelled to say that the solution being proposed is completely absurd.

  • failcake April 3, 2015 on 1:30 am

    On the point of a subsidies bonfire, hear hear! As for guaranteed income: probably not. You’re talking about band-aids. What is the actual SOURCE of the problem? Too many people for too few jobs. Any fair long-term solution to this problem should result in there being a balance between the number of people and the number of jobs (with some slush). The implied premise that a population of unlimited size can be bankrolled by soaking the people who actually do work, and the retired wealthy, is both incredibly unfair, and mathematically impossible. If you want to get a sense for how much wealth you could ever extract (ever) from all the richest people and corporations, enjoy this video: https://youtu.be/jboTeS9Okak

    • Quantium failcake April 3, 2015 on 3:20 am

      Quite agree. A civilisation based on theft, extortion or taxes or however one might describe it won’t work for ever. The fundamental problem with democracy is that people who want to be elected demonise a minority with few votes and then expect everyone else to vote them in in order to do the “redistribution” “fairness” or whatever else they want to call it.

      In the UK at present there is an election. There was a debate on TV last night with a panel of party leaders. They were all on about what they wanted to do, and all with ideas about how they would take the money from “them” (minority hate figures) not “you” (the majority of voters). I would fall in with the “you” by the standards they were quoting, but I realise that they only way they could possibly fund their plans would be to put up the basic rate of taxes for everyone. None of them will do this because it would not be popular. Therefore they borrow money stoking up the next economic melt-down.

      Remember that if the way of funding government is by taxing minorities, one day you could wake up and discover that you are in one of the minorities.

  • Deflationthecure April 4, 2015 on 10:20 pm

    Do you really expect us to believe some of the nonsense you wrote? Do you know how wealth, capital and money are created? Come on, tell us if you can. You of all people professor should know that technology is DEFLATIONARY which means that things should be cheaper to purchase and in a free market with monetary stability. Ones capital or money should purchaser more goods and services. We don’t have that today because all those Harvard and Ivy league, socialists for the rich, monopoly crony capitalist, inflationary producing cumbas are protect their hardon fantasy wealth by printing money, taxing the middle class and goosing up the game to prevent a collapse of their assets at the expense of everyone else. When people finally realize the Ponzi scheme game robbery perpetuated by these criminals, the last guy standing won’t be the moneychangers!?!?!

    • Quantium Deflationthecure April 5, 2015 on 8:18 am

      I couldn’t agree more about technology being deflationary. My parents built a house in the mid 1960s and paid so much for imitation gold bath taps. When they sold in the 1990s, the same taps were more or less the same price in a trade catalogue, but the solicitor who handled the conveyancing charged nearly 100 times as much.

      From this one may conclude that lawyers retire fabulously wealthy, but in reality, although lawyers have a cushy life, it is people who preside over deflationary industries such as computers who end with comparable wealth to small countries.

      From another list:

      Once a new technology rolls over you, if you are not part of the steam roller, you are part of the road — Steward Brand.