Over at RealClearMarkets Richard Reeves argues for a universal basic income:
The labor market continues to work pretty well as an economic institution, matching labor to capital, for production. But it is no longer working so well as a social institution for distribution. Structural changes in the economy, in particular skills-based technological change, mean that the wages of less-productive workers are dropping. At the same time, the share of national income going to labor rather than capital is dropping.
This decoupling of the economic and social functions of the labor market poses a stark policy challenge. Well-intentioned attempts to improve the social performance of the labor market – through higher minimum wages, profit-sharing schemes, training and education – may not be enough; a series of sticking leaky band-aids over a growing gaping wound.
pointing to a project in the UK.
IMO the policy problem with a universal basic income resembles that of reparations: who pays the income to whom and why? If the money needed were to be raised by increasing taxes, the policy might result in a small increase in growth and a decrease in poverty. It’s equally likely to create a positive feedback loop in which the guaranteed basic income chases goods and services that rise in price to meet it, increasing the concentration of wealth and having little effect on poverty.
If the program is paid for simply by extending credit to ourselves it might have greater growth effects but it’s also risky. It will work fine as long as confidence in the dollar is maintained but once confidence is lost it could prove disastrous. Feel lucky, punk?
I’m also skeptical that any plan, however effective on an island with relatively high degree of social cohesion, can be effective in a country that shares a 2,000 mile land border with a country where the per capita income is 10% what it is here and notoriously low social cohesion. As has been the case with most social programs in the United States (Medicare, SSDI, AFDC) costs will outstrip projections by orders of magnitude, the number of people claiming the benefit will be truly astounding, and the funds expended due to welfare fraud will be alarming.
There are other policies I’d much rather see tried before a universal basic income, e.g. taking a devaluation-export strategy, workplace enforcement of immigration laws, abolishing the payroll tax, or a system of wage subsidies.
If there were a guaranteed basic income, I’d just stay home and remodel my series of ever-larger mansions. Once everyone catches on, there won’t be food, beer or cell phones around to enjoy.
Anyone who would use a basic minimum income as an excuse not to work (assuming work was available) was probably in no danger of contributing much to begin with.
In fact I had a somewhat OT idea the other day. Question: is there a way to express the effects of incompetence on society? My off-the-top-of-my-head guess is that no more than 10% of employees in any occupation are actually competent. How much does society lose overall because of chefs who can’t cook, lawyers who can’t understand a contract, teachers who don’t know their topic, taxi drivers who don’t know where the airport is, etc…?
I have a sneaking suspicion we’d be better off paying a significant percentage of the work force to stay home, and raising the pay of the competent.
A basic income would have to endure sustained attack from conservatives who will label it another handout to the lazy; it isn’t well-compatible with American culture. What’s being proposed is purely a consumption subsidy so it’s non-productive.
A jobs guarantee doesn’t have these problems, raises living standards, allow workers to keep their bosses in line and eliminates the need for unions and a legal minimum wage.
Lastly, a JG means no more justification for government to prop up failing businesses and industries.
Ben:
But do we really want incompetent, uninvested workers? Put it this way, if you drop your car off at the dealership for repairs, would you wish it to be serviced by guys who are there holding down a guaranteed job, or guys who actually care about the job and have devoted themselves to improving their skills?
How about the team at the emergency room? Or air traffic controllers? Or food inspectors? A guaranteed job guarantees mediocrity, and that imposes serious costs.
Personally I’d far rather pay the worst workers to stay home.
Dave,
Why are you assuming a JG must provide work to the incompetent? If a person is so bad at their work they can’t hold down a job in an employment program then unemployment isn’t that person’s problem.
Er, not Dave but Michael.
Ben, maybe I’m not understanding what you mean by a guaranteed job. I assume you mean that anyone physically capable of work will be required to work in order to earn a salary sufficient to sustain life. Do you mean this to apply only to government jobs? Is this basically an “employer of last resort” plan?
I’ve run or partly run a couple of small business operations and my experience is that an unmotivated worker is worse than useless, he drags the entire operation down to his level. The good employees end up working harder just to compensate for the idjits. I can’t imagine that I’d want to work for a government agency largely staffed by people who were there solely because they were required to be.
On the other hand the prospect of millions of people doing nothing all day isn’t attractive, either.
Why are you assuming a JG must provide work to the incompetent?
The question is, why does he think the lack of a JG means the incompetents aren’t working now? Apparently, everyone with a job now is completely competent. That has fun implications….
Michael- I would say the large majority of people in most professions are competent. (Not sure about banking.) That 10% is probably true for those who are outstanding. That said, I would put the not competent percentage at higher than we would like. Of course, I also think the Peter Principle applies a good deal of the time, especially in management. (I had little trouble getting my guys to work hard when i was in the military. Granted, I didnt quite follow the book, I pissed off a few people and I had the CO on my side due to his golf addiction.)
Steve
“I’ve run or partly run a couple of small business operations and my experience is that an unmotivated worker is worse than useless, he drags the entire operation down to his level.”
Clearly you needed to pay them In-N-Out wages so they would have been happy and productive.
The ease with which Rahm Emanuel got a top job as an investment banker without much more than a Rolodex makes me wonder.
I’m not sure steve knows the difference between investment banking, commercial banking, merchant banking, piggy banking………
I could be wrong (snicker) but I don’t think Rahm was hired to determine what kind of warrants to attach to bonds. Clearly a Rolodex hire.
Be prepared for universal to be defined as anyone who can get across our border.
Sure I do Drew. First, the honest ones who make sure they have ethical products which they deliver at a good price are the…uh…uh…ok, I give up. I don’t know how to tell the difference.
Steve