The "social foundation" for modern monetary theory, a job guarantee, is divisive and elitist when compared to universal basic income, writes John Maycock.
WHEN INDEPENDENT AUSTRALIA columnist John Passant replied to a comment on one of his articles, revealing that he was ‘… not a fan of Modern Monetary Theory’ (MMT), he was asked by other commenters to clarify this “criticism”.
This is understandable, as there are a number of reader/commenters here who appear quite versed with MMT. Also, there have been quite a few IA articles dealing with MMT and/or its “social foundation”, the job guarantee (JG), and the apparently competing notion of a Universal Basic Income (UBI).
Now, I am not an economist and so I cannot speak to the economics of MMT – or UBI for that matter – but I was reminded of a piece by economist and IA contributor Dr Steven Hail 'Full employment: Starting a national conversation on jobs and inequality', where Dr Hail contrasts the pitfalls of a UBI in relation to the labour market against the merits of a JG. (Please note: I am also not, of course, answering on behalf of John Passant.)
For Dr Hail, to introduce a UBI would be:
‘…to accept that the division between the "haves" and "have nots" in the labour market is permanent and inevitable….’
That is, the full-time part-time (underemployed) unemployed and unemployable divide.
He argues that a
‘... UBI… would require significantly higher taxes on people who don’t see themselves as particularly affluent…. It would be seen as a replacement for welfare programs. It would be portrayed as "the lifters" supporting "the leaners". It would be subject to all the discourse which vilifies people who need support at the moment.’
Dr Hail believes that those “employed” under JG schemes would not be subject to such vexatious discourse.
Now I found the notion of a UBI reasonable when I came across it, although I did wonder about just how it would be funded and also what the “more affluent” would think of it.
From a non-economists perspective, the first answer is easy enough, or at least a step in the right direction — nationalise the resources. From where I stand (ideologically), the resources belong to everybody, not just the few. From there, I would talk about taking back the public utilities and other privatised entities… but I digress.
As for the discourse from those blind to their affluence, I figured that the idea of paying a UBI to everybody regardless of wealth – which people I spoke to found problematic – was more for appeasement. In that, it would be a bit hard to vilify others for receiving payments that you also receive.
However, what I found most appealing is the suggestion that a UBI would free people up from the “grind” of the “hated” dead end job that not only does not suit them, but also robs them of the time to pursue what really interests them (if we’re not working, we do not have the resources). A “living” payment frees us up to seek extra (taxable) income through avenues that better reflect our talents and desires; we would take up jobs because we wanted to, rather than accept what comes because we “need” to.
So then, would a JG achieve those two aims – liberate the working class from the grind of unsuitable employment and shield them from vexatious vilification – as Dr Hail suggests?
Let’s look at Dr Hail’s JG:
‘Federally funded, but locally managed… work opportunities… determined by local authorities. Most… would be service sector jobs: working on environmental restoration and protection.’
This would be similar to the pre-neoliberal practice of local council/state employment — a point I will get back to.
‘People could… be paid… to work in not-for-profit organisations, or while in training.’
This sounds much like the forced volunteering and work for the dole of the current punitive welfare regime (as commentator Kaye M. pointed out):
‘…extend job guarantee roles to support artists, writers and musicians.’
Well okay, I would love to be paid a basic wage to write, but seriously: auditions at Centrelink or a council committee to decide who qualifies, those who don’t, go back to point one or two?
‘Those providing care for family members… [or] … on the aged pension or disability support… paid at the job guarantee rate.’
In the first instance, we would be talking about carers’ pensions, perhaps inferring an expansion of the definition of “carer”. However, there is no suggestion of expanding the definition of “disability” or re-adjusting the “retirement age”.
In reality, all of this is mostly about increasing existing welfare to liveable standards, bringing me back to point one, which runs the risk of pushing people into that soul destroying existence that a UBI seeks to liberate us from. Or at the least creates a two tier labour market: the well paid private and the basic pay publicly employed.
We have had something like this before, as John Passant constantly points out – the Keynesian era – government/councils as employers of last resort. And I can recall the vilifying discourse levelled against such workers. Indeed, in a work in progress I have this to say about that discourse:
‘…council workers standing around leaning on shovels – station porters leaning on brooms – public works and services employing too many people….’
The publicly employed became the bludging overpaid underserving! I go on to suggest that:
‘Perhaps with our [working class] solidarity already “sliding” it was downward envy that allowed us to abandon our support for the publicly employed.’
Downward envy — the emotion ripe for the “red meat” sold by the conservatives and that which drives the discourse Dr Hail suggests would be perpetuated by a UBI. However, in light of what has been said, surely that same discourse would be levelled at those on JG payments.
Consider, when Dr Hail talks of finding more types of:
‘…work which can be recognised by society as being worthy of paid employment…’
He is talking about changing people’s attitudes — specifically downward envy, which is alluded to when he talks of the [IA emphasis]:
‘…division of society into those who have secure jobs (who are at the moment wrongly encouraged to think of themselves as carrying everyone else) and those who have not (who at the moment are often unjustly regarded as shirkers, or as having something wrong with them).’
To be fair, this is not an argument from an economic perspective – just that the JG would be more acceptable to the downwardy envious than a UBI would be. However, even here we have to change our thinking in order to make a JG acceptable — and that change in thinking negates Dr Hail’s argument.
Indeed, it is downward envy and those who drive it that needs to be re-assessed by society – along with what society accepts as a reasonable gap between the economic haves and have nots – before you can start talking about the labour market divide.
And then, perhaps, the gurus of MMT may discover their formulae lend themselves as much or more to a UBI as they do to a JG.
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Finland is experimenting Universal Basic Income by giving people up to $600 per month. Canada also want to adopt it pic.twitter.com/YMObp57RJQ— Economist Facts (@EconomistFacts) May 9, 2017
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