Guaranteed work or guaranteed income?

As an alternative to a basic income scheme a commentator on Medium is proposing universal guaranteed work.  This writer has put a lot of thought into his proposal and deserves to have it given some consideration.  I have a strong commitment to a guaranteed income scheme and I have some heavy-duty concerns about his work plan.

My first concern is a belief that we do not have enough energy and mineral resources to provide employment for all the people who inhabit this planet.  There are still lots of resources but we have cherry picked the most accessible and those which are left will require lots of inexpensive energy to extract.  Even if the cost of solar energy continues to drop there may not be enough other resources to maintain the economic growth required to provide work for everyone. Topsoil is a major resource which may deteriorate and restrict growth.

The proposal for guaranteed work is probably based on a belief in economic growth and a long tradition that people must “do their share” and work to support themselves.  It may be that some people see a basic income scheme as a way of distributing goods and services rather than as an economic necessity.

Technology has been changing our economy at least since an ancient farmer discovered he could increase his production by using a horse with a collar instead of an ox with harnesses.  This development and all those that  followed allowed fewer people to work the land and more people to do other things such as fight and prey.  (In medieval times there were three classes of people – those who prayed, those who fought and those who worked to support the first two.)  My professor of European economic history spent a lot of time talking about agricultural developments which increased productivity.

Modern technology is an extension of this trend releasing more people to do things other than work to provide food and shelter.  A major question is what is this free time going to be used for.  There are many choices beyond preying and fighting including making more electronic gadgets and performing or listening to music.  Another question is who is going to make the decision about what to do with this time.  I believe individuals should be able to make the decisions for themselves.

My third concern is that a guaranteed work scheme is a continuation of the work ethic which allows a few people to tell the rest of us what to do.  We should consider the agricultural surplus and the benefits of technology an inheritance for all of us rather than a right which can be expropriated by a few.  We should be able to decide for ourselves what we want to do with the free time we have inherited from our ancestors.  That could be drinking beer or creating great works of art.  Who is to say one activity is better than another? We need a leisure ethic rather than a work ethic.

Sadly there are some people who feel they should be able to tell others how to live their lives.  A universal guaranteed work scheme is an open invitation to these people to practice this dark business.

Our civilization has to deal with some serious economic problems.  I fear the work program as proposed would make a lot of those problems even worse.  A guaranteed income program would not be enough to solve all the problems but it would be a start and needs a lot more thought.

 

 

A grumpy old man in favour of a basic income scheme

The “free money” giveaway or basic income or universal income scheme being proposed by a few people is a great idea but one that is probably impossible to implement.  However it is nice to dream and fun to think out how to solve economic problems; so here goes.

The basic questions are where does the money come from and how to give the money to people?

The simple answer to the first question is that with a universal income scheme there will no longer be a need for subsidies to producers.  A more difficult answer is that the introduction of an income scheme would be the ideal time to reinvent money.

Generally subsidies (sometimes as tax exemptions)  are given to firms to encourage them to establish plants and provide employment or to save the business and save jobs.  This is great for those who get the jobs or whose employment is saved but it leaves a lot people with nothing.  Subsidies also distort prices so that when we make purchasing decisions based on price we are not necessarily getting the item that was cheapest or most efficient to produce.

Money is something most of us use daily and is probably the least well understood of all the things that are a part of our economy.  When central banks were doing quantitative easing there was some disbelief that they could create money out of nothing.  This is because we have for so long associated money with gold that we think of it as a commodity with value in itself.  It might be better to think of it as a tool with which to facilitate the exchange of goods and services.  It represents purchasing power.

Most of what we use as money is created by bankers making loans.  How this works is explained at numerous locations throughout the world-wide web.  My own version along with some of the problems with fractional reserve money is included in the essay “LETS go to market: Dealing with the economic crisis” on this weblog.

One way to reinvent money and implement a universal income scheme would be to take the concept of “local exchange trading system”  and expand it to the national level.  A good part of the essay talks about how this could work and again  I refer you to the essay.  There are many details to be worked out and many problems to be overcome.  The mechanics of the money supply would be easy.  Getting people to accept new ways of thinking about money would be extremely difficult.   Getting people to accept that others should be allowed to do as they wish, whether that be creating art works or drinking beer, would also be difficult.  Getting people to change their vested interests would probably be impossible.

One of my concerns is that our economic order is going to return to something similar to what existed before the industrial revolution in which there was a small group living in relative luxury and the balance of the population lived at a subsistence level. (The ultimate inequality)  I am concerned because I think our economy is possibly going into an extended period of decline.  While there are lots of energy and mineral resources left on this planet the energy required to extract them is becoming more and more excessive to the point it will be less viable.  Without resources it will difficult to maintain everyone at what has been the North American standard of living.

An income scheme would make it a lot easier to cope with an economy on a downward slope.

More and more I am getting to be a grumpy old man.  My generation has been very lucky in the time and place we have lived out our lives.  More and more I am recognizing the next generations, including my grand children, are going to have to deal with a lot of economic pain.  I hope I am wrong and if not I hope I won’t have to see it.

 

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The opportunities and challenges of unemployment

 

For most people their job is their life, their identity and their future.  Therefor the future of employment is a major issue especially for those young people who, through no fault of their own, are finding the job  scene difficult.  It is both an opportunity and a challenge,

It is an opportunity because most if not all of us can be freed from the drudgery of daily life to soar in the enjoyment of our humanity.  It is a challenge because to achieve this we will have to reorganize our economy and cope with limited resources.

The opportunity comes from the huge agricultural surplus which has allowed us to build an incredible civilization.  Only a few people are required to do the work to provide all of us with food and shelter.  This leaves open what the rest of us do, how is the surplus distributed and who makes the decisions.

Up to this time the rest of us have been making goods and providing services for each other, the surplus has been distributed via employment and it is not clear who has been making the decisions.  Bankers are probably deeply involved as they create money when they make loans and this control over the money supply gives them a lot of power.  We like to think we make our own decisions but there are limits.  We can make decisions so long as they are politically and/or economically correct.

This system is now breaking down and it is not clear there will be a recovery in the near future.  Our civilization is very precarious with numerous threats ranging from a breakdown of the food factories through disease pandemics to an electro magnetic pulse from the sun (or a nuclear bomb) which could knock out most of the electric power grids and all computer chips.  A major source of current economic problems could be that we have used up the most easily accessible energy and mineral resources.  There are lots left but they will require excessive amounts of energy to extract them.

This crisis is being felt most strongly by the “lost generation” of young people who are finding employment difficult.

This breakdown in employment provides opportunities to use the agricultural surplus in new and hopefully satisfying ways but we will also have to make changes in how the surplus is distributed.  One way would be some sort of universal income scheme – the “free money” giveaway which a few people have been talking about.  This would also spread the  decision-making power to more people.   As subsidies distort prices  they should be given to consumers rather than producers.  An income scheme would set a minimum wage and those who like fast food would have to pay enough to attract workers.

The opportunities are great but the challenges are even greater.  A lot of people have vested interests which would be crushed and even more people have religious-like beliefs and faiths in the current economic system.  Some people believe with  committment  that everyone should work and support themselves.   A lot of us who are comfortable now will not worry about those who are less comfortable and will not want to make sacrifices.  But if we don’t make changes in how our economy is organized, a lot of people will probably live poor and miserable lives.

What do we want the future to look like.  There  is a lot of potential for the future and lots of visions.  But overcoming the differences of opinion will be a major challenge.

 

If you liked this post your are invited to comment, press the like button and/or click  one of the share buttons. If you disagree you are invited to say why in a comment.  While I like the idea of sharing this platform, my personality is such that I don’t reply to many comments.

 

 

 

 

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Wages on Labor Day

This being labor day it may be a good time for some observations on wages.

People and their wages are subject to  supply and demand. Thus when there is overpopulation then somehow or the other wages will decline.  For example there has been contracting out or  importing of goods made in counties with cheaper labor,

The exception (so far)  is in fields where there is a strong union providing a monopoly service which includes most civic employees.

Jobs versus the environment

There has always been some conflict between environmental concerns and the need for people to have a job. With the current economic uncertainty this conflict is becoming more of an issue. For example see the article “Soaring emissions” in The Economist of June 4th, 2011 which deals with the politics of this issue in the United States.

We tend to treat employment as a motherhood issue. Jobs are important because they provide us with a standard of living – food, shelter and leisure activities – and because they provide a means for self identification (sometimes)..

But if we were to see the problem as one of providing food and shelter in an age of incredible agricultural and industrial efficiencies, there may be other solutions. One option might be some form of a guaranteed annual income

Jobs and the environment

It may be that in order to solve environmental problems we first have to get over a hang up on jobs.

Jobs are important because they provide economic well being and psychologically because they provide us with a self-identity. But so long as society must provide everybody with a job, there is a need for development and economic growth.

The real problem is to ensure everyone has a reasonable standard of living food, shelter and toys. With the production technology currently available, this should be easy if we can get away from our devotion to jobs. Perhaps a guaranteed annual income scheme would work. The problem is one of distribution rather than production.

Self-identity should come from the non-economic things we do. One could be an artisit, an actor, a writer, a ski bum or a beach bum.

If we could make this shift in thinking, then it would be easier to deal with environmental problems, especially when they are in conflict with the need for jobs.

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