Tech Titans Promoting Basic Income Guarantee as a Way to Shrink Government, Kill Social Programs

Some readers are very enthusiastic about the idea of a basic income guarantee.

Be careful what you wish for.

An important article in Vice discuses why Silicon Valley’s elite, which is dominated by libertarian thinking, has become keen about providing a minimum level of income to everyone.

The purported reason is to allow their favored class, “creatives,” have a greater ability to support themselves while they are coming up with the Next Big Thing. From the article:

One might not expect such enthusiasm for no-strings-attached money in a room full of libertarian-leaning investors. But for entrepreneurial sorts like these, welfare doesn’t necessarily require a welfare state. One of the attendees at the Singularity meeting was HowStuffWorks.com founder Marshall Brain, who had outlined his vision for basic income in a novella published on his website called Manna. The book tells the story of a man who loses his fast-food job to software, only to find salvation in a basic-income utopia carved out of the Australian Outback by a visionary startup CEO. There, basic income means people have the free time to tinker with the kinds of projects that might be worthy of venture capital, creating the society of rogue entrepreneurs that tech culture has in mind. Waldman refers to basic income as “VC for the people.”

In other words, the idea is to have the government act as a first-line incubator. Notice that the government does a lot of that already by funding health care and military research, as well as the national labs like Sandia. And as readers pointed out yesterday, private companies also used to fund a tremendous amount of basic research, with Bell Labs and Xerox Parc once the pride of their corporate parents, and later shuttered or considerably cut back when they came to be perceived as corporate luxuries.

And another big contributor to the risk of going out on your own is the weak labor market. It used to be that if you were a college graduate and took a year off to develop an idea, you could get a job again. You’d probably pay a cost for the career interruption but you wouldn’t be at risk of survival.

But who wants to be an entrepreneur? Seriously. If you can hold a job with any stability and you don’t mind the work and get on with your boss and co-workers, it’s a vastly better deal than running your own show. Now admittedly, situations like that are increasingly scarce. But being in business for yourself is almost a roll-back for the whole rationale of advanced economies: that of specialization. In a larger organization, the really good sales guy can mainly do sales, plus the unavoidable internal politics and bureaucratic tasks. The accountant can mainly do accounting, and so on.

By contrast, starting a business requires lots of skills, including selling, negotiating, having common sense about priorities, being able to size up potential backers and employees, being able to budget and manage funds. It’s a drag if you are really good at one particular thing to have to do all that other stuff, even if you are capable of it. Partnering up is one way of addressing that issue, but my observation across a very large sample of friends and colleagues is that it is remarkably hard to make partnerships work.

The payoff curve for entrepreneurship looks a lot like that of lines of employment that most parents would tell their kids to avoid: acting, playing sports, writing novels. Remember, 90% of all new businesses fail within three years. And like J.K. Rowling, A-list Hollywood stars, and football pros, the lure of the huge payoffs at the top end masks the steep falloff after that.

Admittedly, Silicon Valley has spawned a lot more fabulously and moderately wealthy than the entertainment industry, but the idea that a certain class of people might have more success in creating ventures with income guarantees is a stretch. The world has been awash in angels chasing people with promising tech ideas; they are even being courted at colleges. So this looks like a means to get the government to subsidize private sector activity that is not in any apparent need of subsidies.

And here is the real objective, to shrink government. Again from Vice:

Chris Hawkins, a 30-year-old investor who made his money building software that automates office work, credits Manna as an influence. On his company’s website he has taken to blogging about basic income, which he looks to as a bureaucracy killer. “Shut down government programs as you fund redistribution,” he told me. Mothball public housing, food assistance, Medicaid, and the rest, and replace them with a single check. It turns out that the tech investors promoting basic income, by and large, aren’t proposing to fund the payouts themselves; they’d prefer that the needy foot the bill for everyone else.
“The cost has to come from somewhere,” Hawkins explained, “and I think the most logical place to take it from is government-provided services.”

This kind of reasoning has started to find a constituency in Washington. The Cato Institute, Charles Koch’s think tank for corporate-friendly libertarianism, published a series of essays last August debating the pros and cons of basic income. That same week, an article appeared in the Atlantic making a “conservative case for a guaranteed basic income.” It suggested that basic income is actually a logical extension of Paul Ryan’s scheme to replace federal welfare programs with cash grants to states—the Republican Party’s latest bid to crown itself “the party of ideas.” Basic income is still not quite yet speakable in the halls of power, but Republicans may be bringing it closer than they realize…

If we were to fund basic income only by gutting existing welfare, and not by taxing the rich, it would do the opposite of fixing inequality; money once reserved for the poor would end up going to those who need it less. Instead of being a formidable bulwark against poverty, a poorly funded basic-income program could produce a vast underclass more dependent on whoever cuts the checks

I promised readers a write-up of a historical example of a nation-wide, two generation long basic income guarantee program this week, but you might not get the long-form treatment till next week. Without giving too much of the story away, its main results were to drive wages lower, since employers treated the income guarantee as a reason to pay workers less. Instead of having just WalMart and other employers who rely on government programs to bring inadequate wage rates up to a survival level, that type of corporate welfare would be extended and institutionalized. And another result was a widening of the gulf between the rich and poor, with the lower orders pauperized and deskilled and the rich and merchant classes regarding them with contempt. When this system was dismantled, the new laws put in place were draconian and turned large swathes of the public that had depended on support into beggars.

As Lambert points out, a basic income guarantee simply subsidizes consumption. It does not allow for democratic influence over the labor market. If you think any income guarantee level, even if it starts out as adequate, will remain so for any length of time, I have a bridge I’d like to sell you. Just look at how Social Security, which can easily have any long-term funding issues fixed with relatively minor tweaks like raising the cap on income subject to tax, is instead being stealthily gutted with ruses like chained CPI.

Ironically, the feature we often decry about indirect subsidies or housing programs, like food stamps or Medicare or subsidies for housing for the poor, that they too often do more for the corporate beneficiaries than their intended recipients, provides them with political support outside the sections of society that believe in social safety nets. Straight up transfers are much more vulnerable to being slashed quickly, as opposed to being reformulated over time to increase the looting-to-service-content ratio.

What the remnants of the American middle class fail to realize is how rapidly the gears of unfettered capitalism can grind down entire sections of society. As Karl Polanyi wrote in his The Great Transformation of early industrial England:

It was deemed an established fact that the masses were being sweated and starved by the callous exploiters of their helplessness; that enclosures had deprived country folk of their homes and plots, and thrown them into labor markets created by Poor Law reform and that the authenticated tragedies of the small children who were sometimes worked to death in mines and factories offered ghastly proof of the destitution of the masses….

Actually, a social calamity is primarily a cultural phenomenon not an economic phenomenon that can be measured by income figures and population statistics. Cultural catastrophes involving broad strata of the common people cannot be frequent; but neither are cataclysmic events like the Industrial Revolution – an economic earthquake which transformed within less than half a century vast masses of the inhabitants of the English countryside from settled folk into shiftless migrants. But if such destructive landslides are exceptional in the history of classes, they are a common occurrence in the sphere of cultural contact between different races. Intrinsically, the conditions are the same. The difference is mainly that a social class forms part of a society inhabiting the same geographical area, while cultural contact occurs usually between societies settled in different geographic regions. In both cases the contact may have a devastating effect on the weaker part. Not economic exploitation, which is often assumed, but the disintegration of the cultural environment of the victim is then the cause of the degradation. The economic process may, naturally, supply the vehicle of the destruction, and almost invariably economic inferiority will make the weaker yield, but the immediate cause of his undoing is not for that reason economic’ it lies in the lethal injury to the institutions in which his social existence is embedded. The result is a loss of self-respect and standards, whether the unit is a people or a class, whether the process springs from a so-called culture conflict or from a change in the position of a class within the confines of society….

The condition of some native tribes in modern Africa carries an unmistakable resemblance to that of the English laboring classes in the early nineteenth century…The description recalls the portrait Robert Owen drew of his own working people….telling them to their faces, cooly and objectively as a social researcher might record the facts, why they had become the degraded rabble that they were, and the true cause of their degradation could not be more aptly described than by their existing in a “cultural vacuum” – the term used by anthropologists to describe the cause of cultural debasement of some of the various black tribes in Africa under the influence of contact with white civilization.

Think of the core assumptions of what it means to be middle class in America, or the variants in other advanced economies. Among the beliefs were that education and hard work would be rewarded, that you had defensible property rights and could deal safely with merchants if you took reasonable precautions. If you attained a modest level of success, which included ownership of a home (except in Germany where by policy rentals have been kept affordable), you could also carve out a measure of security and form lasting social bonds in your community, and that local government was generally responsive to the needs of the community (yes, some corruption was inevitable, but it would not rise to the level of doing meaningful damage).

Readers can no doubt improve on this list, but you can see where I am going. When you hear Elizabeth Warren say how she is fighting for middle class families, some of her patter sounds anachronistic. That’s a sign that some of what she is trying to restore is irretrievably gone. For instance, she may succeed in stopping specific tricks and traps, but she can’t stand in the way of one-sided contracts that put consumers (notice, not “citizens”) in “heads you lose, tails I win” deals. And we can already see signs of deep dislocation in the widespread use of prescription medication, both anti-depressants, as well as performance-enhancing drugs like Adderall.

And the erosion of trust, in having good odds of getting a payoff from self-development and hard work, of being treated fairly at the workplace and in commercial dealings, is far more corrosive than you imagine. As Cathy O’Neil pointed out:

I’ve long thought that the “marshmallow” experiment is nearly universally misunderstood: kids wait for the marshmallow for exactly as long as it makes sense to them to wait. If they’ve been brought up in an environment where delayed gratification pays off, and where the rules don’t change in the meantime, and where they trust a complete stranger to tell them the truth, they wait, and otherwise they don’t – why would they? But since the researchers grew up in places where it made sense to go to grad school, and where they respect authority and authority is watching out for them, and where the rules once explained didn’t change, they never think about those assumptions. They just conclude that these kids have no will power.

With the gap between the super rich and everyone else only getting larger and larger, it’s a safe bet that corruption will be an even bigger growth industry than it has been in the last ten years and that the victimization of the lower orders will rise in lockstep. And the loss of trust and the loss of community have stripped many people of the faith and networks that would enable them to fight back, or at least considerably delay the march of what some choose to call progress.

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120 comments

  1. Ben Johannson

    Basic Income Guarantee: first choice of those who walk between the raindrops, those so disengaged from society they don’t mind losing the bargaining power of witholding their labor and those who want to be permanently marginalized with the epithet “parasite”.

    1. digi_owl

      Withholding labor only works if there is a support network in place.

      The simple imbalance is that while corporations are in it for the profits, the workers are in it for basic survival. This means that corporations have a stronger position from the outset.

      As for parasite, bah.

      1. Ben Johannson

        As for parasite, bah.

        Yes, the common BIGot is a societal misfit, one so alienated from others they don’t mind permanent exclusion resulting from life on the dole. “Tune in and check out” is their motto, for if their fondest wish became law, we’d never hear from them again.

        For the vast majority of Americans, being thought of as a freeloader is insulting. Not so for BIGots.

        1. Ulysses

          “For the vast majority of Americans, being thought of as a freeloader is insulting. Not so for BIGots.”

          Your unkind comment does reveal an important truth about American culture. Many of us are filled with self-loathing whenever we receive any kind of help from anyone else. The ideal is to be a rugged “self-reliant” individual, roaming the plains on a horse– all alone like the Marlboro Man.

          I never realized just how strong that Marlboro man propaganda was until I went to Rome to study Italian in a small language school. One of the students there was a Danish truck driver. Turns out he had gone through a tough break-up, and other emotional issues, and was deeply depressed for a time. The Danish government, acting in coordination with his employer and his (state-funded) psychotherapist, decided that a change of scenery might do him some good. They gave him a six-month paid vacation, throwing in extra money to cover his expenses in coming to Rome and studying Italian at my school!

          I can well remember my shock, even outrage at this crazy generosity. I think I even suggested to him that Danes must be getting tired of paying the huge taxes necessary to subsidize stuff like that. His response?

          ” I am so happy I came here to Rome. I feel now that when I return home in a couple of months I will be able to get back to being my old self. I am proud to pay enough in taxes so that if someone else in my country needs some extra help they can get it too!”

          I’m very thankful that he didn’t take offense at my initial, insensitive, reaction to his story, and that we managed to become good friends!

          Maggie Thatcher was wrong: there really is such a thing as society, and if a society is humane most individuals within that society will work hard– not just for their own good, but also for the common weal.

          1. bruno marr

            …that’s because they don’t listen to Dylan:

            May God bless and keep you always …

            may your wishes all come true

            May you always do for others …

            and let others do for you

            May you build a ladder to the stars …

            and climb on every rung

            And may you stay ……… forever young

        2. James Levy

          Most people would still work and pay taxes because they wanted more than the paltry sum these Tech clown would deem adequate for their survival. What they are interested in is a sum large enough to keep overwhelmingly male young unmarried people in Cheetos with some form of a roof over their heads and a computer to play with. You can just imagine what they’d want to give a family of four with the parents in their forties.

          And throwing stones and saying nasty things about people isn’t a valid form of argument. You are making normative claims about the wonders of work and the evil of “freeloaders” that are just that–normative claims, which by their very nature cannot be proven. Some work is noble, some neutral, some degrading, some murderous (think using the unemployed to clean up Fukushima). And some people lack the mental, physical, or social tools to be effective workers. Society should, I think (although I can’t prove it) provide for such people, as it once did for widows, orphans, and the lame. Modern research on the Elizabethan Poor Laws shows that they were often, not always, administered fairly and even in some places generously until the later part of the 18th century, when instrumental thinking and cost accounting replaced the basic notion that they were a form of Christian charity and a public duty of those who had to those who did not (i.e. a shift in ideology towards what we would call Liberalism). Your attitude implies a strong belief in the “undeserving poor” and a tacit support for the Poor Houses; perhaps you haven’t noticed that, but you might want to consider it the next time you ridicule someone you disagree with here.

          1. Yves Smith Post author

            Historically, the result was to suppress wages and the effect was to make working even less attractive and viable. Why pay a living wage when the government is doing it for you?

        3. diptherio

          Uh…you do realize that your negative stereotyping of people who support the Basic Income policy proposal is pretty much the definition of “bigot”, right?

          big·ot, noun \ˈbi-gət\
          : a person who is obstinately or intolerantly devoted to his or her own opinions and prejudices; especially one who regards or treats the members of a group with hatred and intolerance .

          There’s no competing with unintentional self-parody…

          1. MyLessThanPrimeBeef

            Thank you, Diptherio, for that great comment.

            Life is messy and we have to deal with people we disagree and compromise to, for example, get a spending bill through Congress.

            And we all are tempted with the promise that ‘government can spend as much as it want’ and therefore, why is the need to compromise? There is money for everything, including drones.

            Unfortunately, or fortunately, we must realize, the government is a household because we set it up that way implicitly more than 200 years ago.

            The only entity entitled to unlimited spending is the Little People. All new money belongs to the Little People, directly and immediately, which is a more generalized form of Basic Income Guarantee.

        4. jrs

          Well I suggested a compromise position. JG for 20 hour a week jobs that provide a living wage (enough to live on at 20 hours, yes that’s what I’m suggesting) for everyone? Because unlike full time work, even though it requires one to work, it would allow people time to actually be creative and social and connected and political and educated and …. everything that is actually desirable about human existence and not just nose to the grindstone. It would produce enough, we’re drowning in the excess of groath at this this point, we don’t need any more.

          1. Yves Smith Post author

            All you do is drive wages lower. Why pay a living wage when the government is doing it for you? And the lower wages make it less attractive to work.

            The key to prosperity AND better work is forcing higher wages. At the beginning of the Industrial Revolution, there were also all sorts of fear that there would be no jobs since machines were displacing workers.

            And we are seeing now that when wages are seen as too low, people won’t work. From the New York Times:

            Frank Walsh still pays dues to the International Brotherhood of Electrical Workers, but more than four years have passed since his name was called at the union hall where the few available jobs are distributed. Mr. Walsh, his wife and two children live on her part-time income and a small inheritance from his mother, which is running out.

            Sitting in the food court at a mall near his Maryland home, he sees that some of the restaurants are hiring. He says he can’t wait much longer to find a job. But he’s not ready yet.

            “I’d work for them, but they’re only willing to pay $10 an hour,” he said, pointing at a Chick-fil-A that probably pays most of its workers less than that. “I’m 49 with two kids — $10 just isn’t going to cut it.”

            Working, in America, is in decline. The share of prime-age men — those 25 to 54 years old — who are not working has more than tripled since the late 1960s, to 16 percent. More recently, since the turn of the century, the share of women without paying jobs has been rising, too. The United States, which had one of the highest employment rates among developed nations as recently as 2000, has fallen toward the bottom of the list….

            Many men, in particular, have decided that low-wage work will not improve their lives, in part because deep changes in American society have made it easier for them to live without working. These changes include the availability of federal disability benefits; the decline of marriage, which means fewer men provide for children; and the rise of the Internet, which has reduced the isolation of unemployment….

            “They’re not working, because it’s not paying them enough to work,” said Alan B. Krueger, a leading labor economist and a professor at Princeton.

            http://www.nytimes.com/2014/12/12/upshot/unemployment-the-vanishing-male-worker-how-america-fell-behind.html?_r=0&abt=0002&abg=1

            Corporate profits are at a record share of GDP, at an 11% level when Warren Buffett deemed higher than 6% to be unsustainable. They can clearly pay more for workers. But there is no countervailing pressure to make them do so.

            1. Chmee

              But for how much longer will the corporations be able to keep wages low before they run out of people able to buy what they sell? Will they simply target the products they sell to people offshore, where the jobs went to make those products anyway?

          2. Ulysses

            That sounds very reasonable, as long as it was coupled with far stronger labor unions– that advocated for the interests of both part-time and full-time workers.

            An ideal situation would be where young, ambitious people could work longer hours if they so desired, dropping down to 20-hour weeks, as they matured and felt the need to devote more time to community, politics, family, creative pursuits, or whatever.

            To push even further into utopian territory, robots might someday allow us all to live like the leisured class of the ancient Roman senatorial elites. No need to kill thousands to establish and maintain an oppressive empire. No need to employ slave labor on vast latifundia or at home.

            The difficulty we run into, with any utopian scheme, is that too many people seem to enjoy lording it over other people. Would they get the same satisfaction from lording it over robots?

        5. OkinKun

          You really don’t understand Basic Income, or why it is needed, if you think that.
          This has nothing to do with being a freeloader or parasite.. and EVERYTHING to do with where our economy/society is headed.
          We ARE losing jobs to automation.. And this time there wont be enough new jobs created by those technologies, to give everyone a job capable of surviving on.
          Instead of calling us all parasites, how about you come up with a better solution, to the problem!
          In order to justify being against Basic Income, it seems most people simply have to deny the reality of technological unemployment. That is not an option.. Someday YOU TOO will find yourself out of a job thanks to automation.
          Our goals should be to eliminate poverty, and improve the quality of living for everyone… And that is reason ENOUGH for UBI.. But the bigger more important reason that people like YOU should focus on, is how people will survive, when the vast majority of traditional “jobs” are gone..

          1. Yves Smith Post author

            I do understand it and as I will write this week or next, historical precedents show it was socially destructive. It will not produce the magic bullet results you attribute to it. Plus it would be very inflationary and thus would either never be implemented or would be swiftly cut back.

            A job guarantee with other social safety nets is a much better policy (and contrary to the way it is routinely misrepresented here, a job guarantee is not a job requirement). It provides for higher wages and better quality of work, and reduces inequality. Lower inequality leads to vastly better results on social welfare indicators.

            1. OkinKun

              It’s actually more that people don’t understand the way technology will soon be advancing.. And the results that will bring.
              History has no example to give us, which can compare to what we’re headed for.. This is a new development of modern technology, which simply hasn’t existed before. Sure, we can look at the industrial revolution, but there are some severe differences which will cause hugely different results this time.
              At the rate technology is advancing, a job guarantee (which I’d also support) would only be a temporary solution, at best. Technology isn’t going to stop, when we reach a certain point.. Eventually so many jobs will be automated, that solutions like that just won’t work, unless we start making up useless busy-work jobs.
              I really don’t see a properly implemented UBI system causing any of the problems you assume.. But the problems that could occur when it is improperly done, are indeed bad. We will need to address the serious problem with greed, and people who screw society over for their own private benefits.

              1. flora

                I do understand technology and where it’s headed and how it can be used and used to displace workers. I’ll say, for example, that while advanced computer communications (email, skype, etc) remove the need for owners and upper level managers to be physically present “on the floor”, so to speak, that alone does not explain out sourcing and off shoring. Those are political issues, as much a tax law issue as a technology issue. Don’t assume that technology is self-directing, free of the tech titans biases, and disconnected from the political process. Technology creates tools. That’s all. The tools do not, or should not, decide tax law and the like. And I will say that at a certain level of automation of processes things just get crapified. Code does not have agency (despite what futurists assure us is just around the corner.)

                1. OkinKun

                  Don’t be so quick to doubt the capabilities of AI.
                  We’re maybe 2 decades, at most, from human level AI.. Or at least AI that is very convincingly human, and capable of reasoning on the level of humans (and as soon as we get there, we will advanced even further past that). This is not a fictional prediction.. It is a very obvious trend, and EASILY within the realm of possibility.
                  Our “tools” will soon be able to think/reason for themselves.. Just as we offloaded manual labor to machines, so too will we offload certain thinking and reasoning tasks to software automation, AI. Even people who assume they understand, and can see where AI is going, often underestimate it’s future abilities, and how quickly we will get there.
                  When the intelligence of machines matches that of your average human.. What then? It will be so much cheaper to employ human level AI and robots, than real people..
                  “And I will say that at a certain level of automation of processes things just get crapified.”
                  Go ahead and assume that if you want.. But I think it’s extremely foolish. History is filled with examples of people thinking technology would never be able to do ‘something’, only to be proved wrong soon after. It’s not science fiction.

            2. jrs

              It’s probably exactly as much as job requirement as the current system. But there’s no law forcing anyone to work (says some libertarian :)). Nope, but most people need the money. And even those privileged enough to have saved enough to take off a year or so if they really wanted to, are scared of what this will do to their careers and long term employment prospects. And I don’t see a JG changing that unless the JG jobs were good enough and paid well enough that few would mind ending up doing them for life.

              I do see a BIG reducing the economic and social/economic (ie fatal on a resume) stigma of not working (even not working for a period). And I think that’s a good thing.

    2. diptherio

      You actually think that most of us have bargaining power vs employers??? I want some of what you’re smokin’, ’cause that sh*t must be awful strong.

      When there are 100 other people waiting to fill your place at your job, withholding your labor provides exactly zero power.

  2. cwaltz

    My personal feelings are that a basic income guarantee could be utilized as an adjunct to social programs. It would actually mean that “minimum wage” jobs could be part time as the right always insist they were meant to be. Considering the average person is working 60 hour work weeks I could see harnessing the idea of a basic income guarantee to fix things so that people might be able to have more personal time and maybe only have one job instead of two. To me, the problem is, that more often than not the left loses control of the narrative. There are too many out there that don’t seem to realize that completely dismantling the social safety net leaves the most vulnerable even more vulnerable. After all, the check isn’t going to be mailed out to the under 18 set(sorry kiddie born to mom and dad with addictions no food for you) and we already know that there are more than a fair share of charlatans that prey on the elderly’s social security.

    The thing is that the basic income guarantee has to be sold as something that EVERYONE gets regardless of whether they work or not. It needs to be sold as something that people can use as an adjunct to a social safety net to help secure their golden years or as a means to help pay for college for that young person. It could potentially be the means to get money into the hands of people instead of bankers if the left managed to sell it right and could be used to deleverage those that have debt. Yes, it could potentially fund consumption, however it also could be used to deleverage. Again, the problem is that the left always seems to lose control of the *&%$@ narrative.

    There’s an opportunity if they managed to control the narrative for once. I’m not holding my breath though.

    1. digi_owl

      As long as deep pockets buy more ad space and lobbying hours, the right will always capture the narrative.

      1. cwaltz

        I disagree that the problem fits into the left-right paradigm completely. There are people on the right side of the aisle that genuinely believe that we should care for poor children or that understand that some of the problems we have today stem from the fact that wages are not enough to feed a family.

        The problem is that the oligarchs have -with the help of a corrupt and incompetent government- managed to bevery adept at painting government as the problem.

        Our side does not do nearly enough to point out how smaller government can actually mean more inefficient and dangerous to citizens. The problem with the government has less to do with size and more to do with accountability or I should say a lack of it.

    2. Sam Adams

      It starts with refusing to bag your own groceries, refusing to use self-check out or refusing to pump your own gas at self-serve stations or to do any other job that has been foisted on the retail consumer as time-saving and cost-cutting. Demand your groceries be walked out by the baggers. These are jobs. It’s in these basic jobs that change might happen, not simply a basic wage.

  3. Demeter

    What mechanism would exist to keep the government from reneging on a “guaranteed income”, just as they have (repeatedly) on Medicaid for the poor, unemployment compensation, WIC, ADC, labor protections, and are now working on Social Security, Medicare, and PRIVATE pensions?

    If this government thinks it’s hunky-dory to violate contracts simply because they were between corporations and private individuals, or the government and private individuals, then there is no guarantee expressed or implied.

    Only a fool would think this wasn’t another con game. We need a different governmental structure, one that doesn’t follow the money.

    1. cwaltz

      That would be one of the reasons it would need to be a universal guaranteed income. If you made it a program for the poor then the con would be used to downsize the government safety net and then once that was accomplished to pull funding like they’ve done with programs like Medicaid or food stamps.

      Of course, part of the problem is people are willfully stupid and for some reason never seem to question that we NEVER HAVE ENOUGH to feed the young, elderly, disabled or poor but we ALWAYS HAVE ENOUGH to buy guns, bombs, and anything else that is needed to plunder places that don’t have governments willing to toss their own citizenry to the wolves to further our oligarchy.

    2. diptherio

      A Universal Basic Income, unlike means-tested welfare programs, would enjoy broad support since everyone would be receiving it. Middle class families, as well as us po’ folks, would be benefiting directly and so it would become very hard to dislodge, politically, at least directly. Social Security enjoys bi-partisan support–at least among the voting public, if not on Capitol Hill–and is something of a third-rail in American politics.

      The problem is not that the people would insufficiently support the subsidy, but that the corrupt politicians would fail to act in the interests (and according to the will of) the people–which is always the problem. That’s why we’ve got both Dems and Repubs in Washington, doing their level best to roll-back Social Security, while also mostly disclaiming their desire to do so. In this light, the infamous TEA party protest sign–“Keep Gov’t Hands Off My Social Security”–actually makes some sense.

      This is one reason why I like the idea of Universal benefits, not just needs-based ones. When you only give something to one segment of the population–whether it be the poor or the elderly–you inevitably create resentment in other segments of the population (the middle class, the young and middle aged). By distributing equally to all, you get wider buy-in to the program. Additionally, you don’t put people in the perverse situation of having to get poorer to get help, which is what happens to many people right on the cusp of the needs-based programs’ cut-offs. I know of more than one person who has been faced with the “if you take this job, you will lose your medicaid” dilemna (the ACA supposedly addressed this problem, except not). These kinds of catch-22s are pretty much inevitable with needs-based programs, as the definition of need is always, to some extent, arbitrary.

      1. Brett

        Exactly. There’s a lot of talk about cutting welfare programs, but you know what program has faced the least cuts and the staunchest political opposition to cuts? The income transfer one that cuts across class boundaries – Social Security.

    3. Tim

      That’s one reason I prefer the job guarantee– because the very mechanism of intervention is an organizing force.

  4. Northeaster

    Looks like someone read:

    “Law, Legislation and Liberty, Volume 3: The Political Order of a Free People” by Hayek.

    For a minimum income (not wealth distribution) to survive, and not be bought by political classes/elites, along with denationalization and monopolization of government over money creation.

    Of course, in a country where there is no equal rule of law, I’m in Hayek’s camp – the social decay will continue until the elites are stopped. Which of course after watching John Boehner kiss Nancy Pelosi yesterday, two who represent all that is wrong, I don’t see any of them being stopped.

    1. Jim Haygood

      ‘… telling them to their faces … why they had become the degraded rabble that they were, and the true cause of their degradation could not be more aptly described than by their existing in a “cultural vacuum.” ‘ — Polanyi

      Harsh verdict on 21st century America! We’re not going to hear it from political candidates, though, cuz the prevailing wisdom is that the most optimistic candidate wins.

  5. Carolinian

    Interesting post. With regard to

    And we can already see signs of deep dislocation in the widespread use of prescription medication, both anti-depressants, as well as performance-enhancing drugs like Adderall.

    the Newshour had a discussion about the proliferation of prescription pain killers and said that the United States, with 5 percent of the world population, consumes 80 percent of the opioids. Perhaps Huxley had it right. Sez America: “Just give me my soma.”

    At any rate it is clearly true that the dismal “science” has replaced religion as the organizing ideology of our societies–the main similarity being that both appear to be faith based beliefs. The French kings had chapels built into their palaces where they could give thanks for their “divine right.” In America we have think tanks.

    1. financial matters

      Various Indigenous populations have had high levels of substance abuse after being dislocated from their lands and livelihoods. They seem to be getting back self-respect in fighting the fossil fuel companies and protecting this land and especially water with is both overused and contaminated with extreme extraction. And these groups are finding allies in ranchers and farmers and more of the general population. Tar sand workers describe their work as if they are in prison and 98% say they would retire anyplace but the places they are decimating. (This Changes Everything)

      We definitely need better connections with creative ideas and the people who profit from these ideas. (The Entrepreneurial State)

      I think a BIG has some advantages along the lines of Polanyi in having a system of social justice but think it should be incorporated with a Job Guarantee. And also incorporated with single payer health care and free K-16 education. This is all possible but takes a re-orientation of the political process. (http://neweconomicperspectives.org/2014/12/economic-agenda-america-commentary.html)

      “We know that we are trapped within an economic system that has it backwards; it behaves as if there is no end to what is actually finite (clean water, fossil fuels, and the atmospheric space to absorb their emissions) while insisting that there are strict and immovable limits to what is actually quite flexible: the financial resources that human institutions manufacture, and that, if imagined differently, could build the kind of caring society we need.” Naomi Klein

        1. Ulysses

          I admire both FDR, who was president when Polyanyi published The Great Transformation, and Polyanyi himself. Yet I would never suggest that we shouldn’t have dismantled Jim Crow just because FDR wasn’t keen on losing the white southern racists for the “big tent” Democratic Party. Times change, and arguments from old authority are inherently weak.

          Aristotle was a pretty smart guy, too, but I would hate to think that someone could successfully win an argument, defending slavery, merely by pointing out that Aristotle thought it was all hunky-dory.

          That being said, I also would favor JG over BIG schemes here in the United States– simply because I think it would find much easier cultural acceptance and political support. That is, if our national politics ever return to reflecting the real interests of real people– instead of merely being sick, twisted and surreal spectacles lavishly funded by big money interests.

          1. Calgacus

            Ulysses: FDR wasn’t keen on losing the white southern racists for the “big tent” Democratic Party. Actually, he was. After FDR defeated Willkie, he met with him with a proposal to reorganize the parties, joining the liberal Dems with the liberal Repubs, getting rid of the white southern racists. Willkie was somewhat suspicious of the plan. Both died before anything could come of it. Without that segment, what FDR thought would not have mattered so much, as he wouldn’t have been president. Notwithstanding what Aristotle said, he did free his slaves in his will.

            The basic reason to favor a JG over a BIG (what is often called a UBI here) is that the JG is possible, and a UBI BIG is not. It is an insult to one’s intelligence. A non-universal BIG is just welfare – we have it already, and it hasn’t done much.

              1. Calgacus

                BIG is a pipe-dream and always was. It is something that has never worked in practice because it obviously doesn’t work in theory. It’ a stoner idea – hey lets have a lottery that everyone wins.

                The JG on the other hand is the best tested idea of all time. The whole world ran full employment more-or-less societies in the postwar Keynesian era and saw the best economic performance of all time. All human enterprises with the sole exception of national monetary economies are run along the logic of the JG. But people need to see how something works in theory, not just in practice. That’s what MMT does.

        2. financial matters

          It seems that Polanyi wanted goods distributed in a more non-market manner that would better define our social connectedness. He had an aversion to poverty and how market economies can require imposition by violence.

          It doesn’t seem like adding a subsistence safety net would necessarily be inflationary but might be more equalizing such as repealing the FICA tax.

          I think Joe Firestone brings up some useful points at the above link. He also includes a link to some objections.

          “”One notable absence from Senator Sanders’s economic agenda is the idea of a Basic Income Guarantee (BIG), a new entitlement for all Americans. A BIG set at something like $8.00 per hour cost-adjusted across regions would be very useful for people who don’t want to work at pursuits defined as socially valuable by others, and would also be very helpful for people who cannot work at all for various reasons. We, as a society can support it. It would help the economy and provide a measure of economic justice. It would also support innovation, a bit of space for people who want to employ most of their time on innovation and artistic pursuits even at the cost of having a subsistence income. All that said, there are many objections to a BIG, http://pavlina-tcherneva.net/TchernevaBIGvsJG.pdf, which may outweigh these advantages.

          Also, it would not cut into the labor force provided there was sufficient difference between the BIG subsistence rate and the living wage rate provided by the Job Guarantee. What I’ve specified above is a difference of 50% in JG vs. BIG compensation. If that’s not enough of a gap to provide an economic incentive to work, then the BIG rate could be lowered accordingly. So, I think Bernie ought to include a BIG in his economic agenda, along with his other measures, since it too would strengthen the safety net and moderate inequality.””

          1. Joe Firestone (LetsGetitDone)

            Thanks for summarizing my position. If forced to choose between the two, I’d take the JG at a living wage with good fringes and cost of living adjustments across the country. The BIG would be nice to further extend personal freedom, But the JG implements one of FDR’s Economic Bill of Rights and also is a price anchor as many MMT economists have argued.

  6. MartyH

    Interesting that the Commentariat is all over this one and nobody commented over on the Parramore interview.

    Yves:

    As Lambert points out, a basic income guarantee simply subsidizes consumption. It does not allow for democratic influence over the labor market.

    Democratic influence over the labor market is the scourge that Capitalism was invented to eradicate. The Labor Movement had the temerity to challenge that program and has been “Right To Work”ed out of any useful leverage. The Petit Tyrant Capitalist wants 3-D printed (homogeneous, compliant, deferential), interchangeable, and inexpensive pawns to operate the clockwork of the enterprise. That way they don’t have to share their profits with other than the courtiers.

    @Carolinian got to this first:

    At any rate it is clearly true that the dismal “science” has replaced religion as the organizing ideology of our societies–the main similarity being that both appear to be faith based beliefs.

    I note that our new and improved Congress has made “cooking the books” the score-keeping technology of government “success.” Not sure which “book” of their New New Testament that was cribbed from.

    1. Jef

      As even E Warren documented earnings are only part of the equation. It is all of the parasitical ad-ons to the cost of living that is the bigger burden.

      So insuring that people have more money either through wage increase or guaranteed income does nothing more than continue/increase the parasite paradigm.

      The only problem is if we rid ourselves of the parasite economy we would have massive unemployment and across the board wealth loss. Damned if ya do….

    2. diptherio

      As someone mentioned above, it may be the case that the best way to go would be to incorporate the BIG w/ a JG and participation in the latter to be a requirement for the former for working age people. As part of the JG program, you could do worker co-op trainings and provide start-up funding for people who want to start a cooperative business.

      Of course, that is the antithesis of the present system of doing things…so we might have to wait till after the revolution…

    3. flora

      I agree.
      A couple of points.

      Capitalism has no problem with slavery. Capitalism did not end slavery in the US. The democratic process finally ended slavery – the peculiar institution.
      see:
      https://chronicle.com/article/SlaveryCapitalism/150787/
      Many of the Silicon Valley libertarians/futurists openly say that freedom and democracy are incompatible.
      Example : “I no longer believe that freedom and democracy are compatible.” – Peter Thiel, 2009 *

      If Silicon Valley’s elite are proposing basic income so people can come up with the ‘next big thing’, it is for Silicon Valley’s benefit, not yours. Already these elites are colluding to suppress wages in their own companies and importing cheaper foreign workers. How cheaper still if someone else would pay young people to tinker and develop ideas the big companies could swoop in and take or buy for peanuts. See Microsoft’s history of software “appropriation”.

      *Harper’s Magazine, January 2015. “Power and Paranoid in Silicon Valley – Come With Us if You Want to Live”, by Sam Frank.

      1. flora

        And from the same Harper’s article (online, pay wall, http://harpers.org/archive/2015/01/come-with-us-if-you-want-to-live/ )

        ” Thiel and Vassar and Yudkowsky, for all their far-out rhetoric, take it on faith that corporate capitalism, unchecked for just a little longer, will bring about this era of widespread abundance. Progress, Thiel thinks, is threatened mostly by the political power of what he calls the “unthinking demos.” ”

        Shorter: if we’ll give up democracy and let the corporations run everything all will be well. TPP ?

  7. mk

    Nothing changes until people become difficult to govern. Nothing changes until people put their phones and tvs down, hit the streets and shut down the economy. Nothing changes until we organize ourselves, like a school of fish swimming together, able to change direction together on a moment’s notice….

    1. MikeNY

      Nothing changes until people become difficult to govern. This is, sadly, too often true.

      I confess I haven’t decided between the BIG and the JG — that is, if I must decide between them.
      I have decided that justice requires i) a living wage paid to each worker, ii) that we tax the rich.

    2. Ulysses

      X1000!!

      There is no more powerful force on our side than solidarity. Never cross a picket line, never (as Sam Adams reminds us upthread) use a self-checkout, never look the other way when a brother or sister is being harmed. “An injury to one is an injury to all!”

      We have been losing badly in the class war the kleptocrats have waged against us. I’m convinced this is mostly because too many of us were too heavily propagandized, narcotized, etc. to see what was happening. Now people are starting to wake up, and the kleptocrats will no longer have such an easy time of it!

  8. sd

    Instead of a guarantee, why not directly fund public works instead? Actual work leads to developed skills which leads to more work, etc. As far as a salary guarantee, it just seems like a way for wealthy companies to get away with paying their employees minimum wage and calling it generous.

    1. James Levy

      I am theoretically sympatico with your proposal, but practically speaking so many entrenched interests have veto power over how things are done that it likely wouldn’t work. If you read Mike Davis on how they screwed up the subway in LA, or James Howard Kunstler on how community pressure warped the Atlanta transit system, or how the “bullet train” in California now goes from nowhere special to nowhere special (with no coherent linkages) because local interests put the kibosh on any rational lines and the only places that get the train are places too weak and divided to prevent it going through, I have lost faith that any such monies would be reasonably spent.

    2. Banger

      Public works determined by what demographic and for what purpose? Build roads to benefit the energy and transportation corporations–to help Wallyworld get its products tom it’s stores faster? That does nothing to help us in the long term no more that a certain pipeline.

  9. JohnB

    Isn’t the basic problem behind this, not the actual BIG program itself, but the way that government funds itself: Using taxes/debt, in a way that is susceptible to ‘deficit scaremongering’?

    If you tried to fund a Job Guarantee using the same taxes/debt method, would it not be open to the same types of abuse? (you could use it to get rid of unemployment benefits, and even disability benefits – by creating work programs for the disabled, like already exist – and then use deficit scaremongering to hold wages back forever, while inflation marches forward, slowly eroding workers adjusted income)

    So, isn’t the solution here, to just change how government funds itself, away from taxes/debt, and towards money-creation/inflation-management (ala MMT)?
    That would get rid of the deficit scaremongering arguments that could turn BIG (and JG) into a weapon, and would allow the BIG problem to work beneficially, wouldn’t it? (if not, why would a JG not equally be affected?)

    1. Ben Johannson

      The problem with BIGotry is luring people out of the workforce whilst subsidizing increased consumption, aka more environmentally deleterious and more profits for industrialists. The Jobs Guarantee increases output with jobs and services aimed toward community well-being and environmental protection, and by setting a living wage floor forces employers to improve pay, benefits and working conditions or lose their workers to the JG. Profit share of national income will fall, wage share will rise, workers gain all the bargaining power they need to discipline managers and we can finally begin the process of changing how Americans think about work.

      A Jobs Guarantee generates social outcomes superior to BIGotry in every category.

  10. Chris O'Rourke

    I think the point being missed here is that due to technology and outsourcing there simply aren’t enough jobs for everyone, and everyone can’t and shouldn’t feel compelled to be an entrepreneur. So much has been lost in society because our identities have become defined by our relative participation in economic productivity that is defined by growth. We cannot go on this way.

    A basic income coupled with universal health care would actually release business from having to worry about providing a minimum or living wage and benefits, requiring them only to create a work environment that would entice people to want to work there. Then, people would work for additional income for perks in their lives based more on their authentic interests and this would also benefit employers. The monetary velocity would be tremendous and consistent, and if structured properly would easily pay for itself. The boom and bust syndrome would be mitigated.

    Best of all, there would be more people free to be active citizens and improve their communities living lives that are not defined by our economic system. Schooling could be more localized, and communities could focus more on sharing skills toward relocalization, energy descent, and other important preparations for an inevitable post-carbon future. There is a huge ‘labor surplus’ that can be returned to the benefit of communities and people. It is time for the economy to start working for us, instead of the other way around. There is plenty of information out there how basic income can work and make our society a much better place in which to live.

    1. Yves Smith Post author

      “There aren’t enough jobs” because corporations are choosing to underinvest and are engaged in rampant short-termism. You can see this in the record level of profits to GDP. Numerous papers have shown how companies seek return targets that are higher than what would be best for them in terms of profit maximization. But bad incentives lead them to fixate on short term share prices.

      I need to write up the precedent, but the history shows that income guarantees of this scale were disastrous for the class receiving them.

      1. Will37

        Yves Smith,

        Thank you for writing this incisive article. It was a real pleasure to read. Although I am sympathetic to the idea of UBI I found this critique extremely effective. I did have a question regarding your statement regarding UBI: “It does not allow for democratic influence over the labor market.”

        I was dissuaded from viewing workplace-democracy by criticisms leveled by Herbert Gintis that, in my mind, raises serious doubts about the viability and desirability of workplace democracy. A brief summary of his criticisms (with some of the relevant literature cited):

        “Burczak’s treatment is highly sophisticated, but I am afraid I am not persuaded. The absolutely central and bottom-line problem is that an economy consisting of worker-owned and democratically controlled firms would impose a significant static efficiency loss on the economy and would severely retard scientific and entrepreneurial innovate. I say this with pain and regret, because I and my colleagues work for almost ten year to devise a workable market socialism, but my final conclusion (I’ll let the others speak for themselves) is that our models are more applicable to promoting self-employment of poor farmers in developing countries (see Pranab Bardhan, Samuel Bowles and Herbert Gintis, “Wealth Inequality, Credit Constraints, and Economic Performance”, in Anthony Atkinson and Francois Bourguignon (Eds.) Handbook of Income Distribution (Dortrecht: North-Holland, 2000):541-603).

        The main problem facing democratic worker control of firms is that the workers must be residual claimants on the profits and losses incurred by the firm, or the workers will have no reason to adopt efficient technology and work practices. Lenders will not willingly lend to worker-controlled firms because they cannot maintain sufficient influence over the firm’s policies in this case (Herbert Gintis, “Financial Markets and the Political Structure of the Enterprise”, Journal of Economic Behavior and Organization 1 (1989):311-322). John Roemer and Pranab Bardhan (Pranab Bardhan and John Roemer, “Market Socialism: A Case for Rejuvenation”, Journal of Economic Perspectives 6,3 [Summer] (1992):101-116) worked out a sort-of “pari-mutual” betting plan that would direct public funds to the most promising firms, but it is implausible that such a plan, were it workable, would not succumb to political forces in a way to which private capital markets, based on the inviolability of private property, are virtually immune. Moreover, firms based completely on outside finance are extremely overleveraged and would inevitably collapse when even small threats to their viability arose.

        The conclusion is that democratic firms must be almost wholly worker-owned, meaning that virtually all of the firm’s capital stock is owned by the workers. However, there are severe problems with worker ownership. Most important, the capital per worker in the average firm is greater than the total wealth of the average worker in that firm. If the worker were given a share in the firm outright, he would prefer to sell it to diversify his asset holdings. Indeed, all the workers would prefer to sell out to a capitalist enterprise so they would become less vulnerable to the vicissitudes of the market. Indeed, there are several cases in which land redistribution to the peasants failed because the peasants sold the land right back to their previous landlords! Of course, this could be prevented by law, but the economic inefficiency of having a workforce of highly exposed individuals would be extreme. Moreover, if the workers own the firm, they will not want to expand employment in the firm, because the new workers would get a share of the value of the firm. Of course, new workers could be forced to buy a share in the firm, but few would willingly do so. Finally, the idea of worker ownership might be feasible for some highly stable and technologically developed sectors, but a vibrant economy is based on entrepreneurial innovation, and this is incompatible with workplace democracy.”
        http://www.amazon.com/review/R353KJO6WNGME0

        My questions are (a) whether you have reviewed these arguments (or some other iteration of them) and (b) how they do or do not impact your desire for greater democratic influence over the labor market.

        Thank you

        Will

        1. Yves Smith Post author

          I appreciate your long and thoughtful comment, but you misconstrued what I said. I said democratic influence over labor markets, not over firms directly.

          Separately, I don’t know the basis of Gintis’ research, but his conclusions don’t seem as well supported as he suggests. Giving peasants ownership in a society with no tradition of individual property rights is certain to lead to exploitation. Look at how the sudden imposition of a market economy on “free market” under Harvard’s guidance led to a plutocratic asset grab. A different version of the same syndrome was in Iraq, where we expected democracy to “naturally” take hold in a society with no democratic tradition.

          Mondragon is a hugely successful operation, and is very innovative, and that alone would seem to disprove Gittis. There are also quite a few worker-owned cooperatives that have done very well.

          1. Left in Wisconsin

            Gintis is a very smart guy but his thinking is always theoretical/mathmatical and if his equations don’t yield a satisfying answer, then you get claims like the above. But even looking at the brief except, you can see a variety of assumptions and non-assumptions that others would contest.

            That said, I do think efforts to promote widespread worker ownership in sectors that compete directly with large, profit-driven corporations are problematic. At the very least, you would need an alternative banking sector to finance the co-ops. Conventional banks hate hate hate lending to worker-owned businesses.

        2. Calgacus

          Wrote a long comment and accidentally deleted it. But I agree with Yves; his critique is not very well supported. I’d say it evinces the touching, childlike credulity – stemming just a bit from Marx – of most modern Marxists in the adequacy and soundness of the mainstream /neoclassical universe/ concepts. His response to Mondragon is lame, and “the main problem” stated that baldly is dubious neoliberal dogma. A sane society with a JG, with no unemployment, can and should be considered “market socialism”. The whole country is the democratically-run worker’s cooperative – in which the capitalist corporations are embedded. And it has a record of even half-hearted attempts being clearly superior – substantially better on efficiency, equality, innovation, growth etc – practically any measure anybody including Gintis has ever used, except the currently dominant one of the vile maxim of the masters of mankind – “Everything for ourselves, nothing for other people”..

          Gintis’s unrealism is glaring later: “Market socialists like to compare workplaces to communities, asking why we should have democratic communities but not democratic workplaces. This is a good question, but the fact is that our democratic communities work because we have a traditional market economy to draw upon. Moreover, while it is clear that a liberal democratic national constitution is a must, it is not clear that there would be something completely unacceptable about having corporations run communities, as they now run some schools and prisons.”

          Ahistorical and illogical – clearly from neoclassical brain damage – “the fact is” is a common tell-tale tic. (Democratic) communities are not based on the market economy, which is not traditional. It is the other way around. A socialist to whom it is not clear that corporate run schools, prisons and communities inevitably are or become repulsive, criminal, tyrannical institutions should get out more. And maybe read some Hegel & know-nothing populist sloganeering.

      2. Kurt Sperry

        Anecdotal examples are probably not sufficient data to draw firm conclusions from, given the inherent complexities.

  11. Gil Gamseh

    That truly execrable people (Tech Titans, CATO) support a BIG does not mean it is ipso facto a bad idea. Naturally the Poobahs, hostage to Beckerian, neoliberal nonsense, have zero summed the proposition. “We will give you this, but take away that.” Well, no thanks. I’ll take BIG and social welfare programs.
    All of the essential needs (see the UN Universal Declaration of Human Rights) of a person should be provided by the wealthiest country in the history of the world. As the post-industrial economy is incapable of providing a decent standard of living for most of us, then the BIG must come to pass. That the Privileged will never stop trying to overturn or undermine BIG is not a reason to oppose it either. That argument would forestall any democratic measures.
    As for work (i.e. the forced labor of our capitalist system), let’s abolish it. http://deoxy.org/endwork.htm Ludic(rous) you say? Well, work is being abolished in any event. Let’s beat Capital to the punch for just once.

    1. jrs

      Yes who wouldn’t rather live in Bob Blacks “play ethic” culture, and I don’t believe everyone is naturally “unproductive” (or anti-social etc.) if left free from work compulsion anyway.

      But considering we nearly had a 30 hour week in the 1930s (nearly 100 years ago), I don’t see why we can’t at least get part time work (with full time pay) if work there must be. Is there going to be any time to dance at the workaholics revolution?

    2. cripes

      I second points made by Gil Gamseh.
      Not convinced JG or BIG is bad by definition; implementation is all.
      Neither is liklihood of overlord sabotage sufficient reason to forego new social/economic structures; we would have abandoned child labor, eight hour day and minimum wages if our grandfathers thought like that.
      Manitoba had some very positive results of abandoned decade-long BIG experiment, surely it needs more study and experimentation to get it right.
      we do know this system does not provide enough jobs for able-bodied, let alone disabled. Yves can try harder to see beyond confines of late-capitalism income structures–which are collapsing–we all have to.

  12. camelotkidd

    How did capitalism get its start?
    That’s a question Michael Perelman attempts to answer in, “The Invention of Capitalism: Classical Political Economy and the Secret History of Primitive Accumulation.”
    Perelman shows how economic writers such as Adam Smith attempted to portray early capitalism as “a natural system of voluntary market relations, which are devoid of conflict, and benefitted all of mankind.”
    But what really happened was the violent seizure of other people’s means of production– primitive accumulation.
    Early capitalists needed desperate people willing to work as wage slaves in the horribly dangerous factories.
    But why should peasants leave the farm and their self-sufficient lifestyle and go to work for wages in a factory?
    As Perelman makes clear, the peasants did not go willingly. They were “forced into the factories with the active support of the same economists who were making theoretical claims for capitalism as a self-correcting mechanism that thrived without needing government intervention.”
    The peasants were forced off their land by the British government who attacked the economic independence of the rural peasantry through a series of Enclosure Acts.
    “Some enclosures had to be carried out by force and many sparked resistance from users of the common land, including the tearing down of fences used to enclose the land. As a historically significant process of land privatization, the Enclosure Acts are sometimes seen as one or both of building blocks of capitalism and theft by major landowners from the peasantry.”

    1. Jim

      Some issues to consider about your analysis of primitive accumulation.

      “But what really happened was the violent seizure of other people’s means of production–primitive accumulation.”

      Your statement on primitive accumulation seems to assume that the supposed birth of capitalism presupposes capitalism itself. In my opinion this type of attempt to explain the transition from the feudal to the capitalist mode of production using exclusively economic variables leads into a blind ally.

      Where the enclosures the point of departure of original accumulation? It should be noted that between the 15th and 16th centuries in the countries where the enclosures were most numerous the extent of fenced fields were estimate to amount to about three percent of all existing land. (See for support “The Agrarian History of Western Europe, A.D.500-1850.”

      It might be more insightful to look to non-economic variables to understand the origins of capitalism like the creation of cities as a political explanation (seen Italian city-states etc)or the creation of the idea of nationalism in England in the 16th century, as a possible cultural explanation.

  13. Dan Lynch

    “Mothball public housing, food assistance, Medicaid, and the rest, and replace them with a single check.” It would have to be a pretty big check to replace Medicaid. Most people have no idea how much health care can cost, especially if you are disabled or have other special needs.

    I take issue with Yves equating UBI and BIG. The Vice article talks about a UBI, not a BIG. The economics of a UBI are completely different from a means-tested BIG.

    “Without giving too much of the story away, its main results were to drive wages lower, since employers treated the income guarantee as a reason to pay workers less.”

    I agree that a UBI could have that effect, which is one of several reasons that I advocate a means-tested BIG, not a UBI. With means testing, employees would not qualify for a BIG. With means-testing, fewer people would qualify for food stamps, housing assistance, and so on.

    “As Lambert points out ….”

    It saddens me to observe the continued Lambertization of Naked Capitalism. If I cared what Lambert thought, I would visit Correntewire. I don’t.

    My personal proposal for a $250/week means-tested subsistance level BIG is intended simply to keep people from starving — for example, unemployed people who don’t qualify for unemployment insurance, or disabled people who don’t qualify for SSDI. It would not replace the rest of the safety net, though far fewer people would qualify for those programs if they were drawing the BIG. My BIG could coexist with a JG or other job programs — but if you had income from a JG, you would not qualify for the means-tested BIG. And the JG would pay more than the BIG, so you would have a financial incentive to choose work. It’s called a “JIG” — a job *OR* income guarantee.

    Is my means-tested BIG politically feasible at this time? No — and neither is the MMT living wage JG. NOTHING GOOD is politically feasible at this time. If you want good things to happen, first you have to change the political system, which will probably require a revolution.

    1. OIFVet

      And the JG would pay more than the BIG, so you would have a financial incentive to choose work. What’s this guarantee based on? Some sort of minimum wage? If so, is this minimum wage high enough to make it a living wage? In the end, isn’t that a BIG? I think that wittingly or not, you are proposing a combination of JG and BIG, which I personally like, but I think you need to clarify how a JG will provide a higher income than BIG.

    2. Amir S

      I also wanted to point out the clear difference between a Universal Basic Income and a Basic Income Guarantee!

      My understanding is that a Basic Income is paid to every citizen, with no means testing, whereas the Guarantee will only pay (or top up) those who are earning below the guaranteed amount. The incentives, optics and costs of these are very different.

      The BI has very low overheads because there’s no means testing, does not disincentivise work because each extra dollar earned is a dollar you keep, and recipients of BI are harder to negatively stereotype (c.f. “welfare queens”) because everyone is a BI recipient. Of course if the basic income is set anywhere near a subsistence level then it will be very expensive and if it’s much below that then people still need to work, leading to the observed reduced wages, but I’d like to know if the reduction in wages was more or less than the additional income before I decide whether that’s overall a bad outcome.

      Whereas the BI Guarantee (BIG) has all the admin overheads of other means tested programs, acts as a regressive tax if you find a job (i.e. you have to offset the wages from the job against the BIG income you’ll lose), and recipients and the program is much easier to demonise by the right they same way they’re baying to cut all other welfare …

      So I can’t agree with your preference for a BIG, nor your comments about Lambert, but defo agree that we need to be very clear not to conflate Universal Basic Income and Basic Income Guarantee.

    3. diptherio

      If you care what Yves thinks and Yves cares what Lambert thinks it would only make sense that you would also care what Lambert thinks…just sayin’

      1. Ulysses

        This seems a tad illogical. For example, I care very much about what you think on all sorts of issues based on your strong history of perceptive comments here at NC. If I then discover that you also care a lot about astrology, should I run out and consult an astrologer too? While I do personally feel that Lambert contributes real value to NC myself, I could understand others who greatly respect the independent work of Yves, but feel that she made a mistake in bringing him on board.

        1. Ben Johannson

          Actually I don’t understand why anyone other than perphaps an Old Order conservative would object to Lambert. Would you please explain that to me?

    4. Ben Johannson

      I agree that a UBI could have that effect, which is one of several reasons that I advocate a means-tested BIG, not a UBI. With means testing, employees would not qualify for a BIG. With means-testing, fewer people would qualify for food stamps, housing assistance, and so on.

      Then it gets labelled a handout for lazy poors and sits on the chopping block until our next Third Way Democrat passes welfare reform. BIGot-UBItuarists refuse to accept that culture matters and changing the way Americans think about work is a multi-generational process we haven’t even started yet.

  14. Denis Drew

    “When you hear Elizabeth Warren say how she is fighting for middle class families, some of her patter sounds anachronistic. That’s a sign that some of what she is trying to restore is irretrievably gone. For instance, she may succeed in stopping specific tricks and traps … ”

    THE BEGINNING OF THE WAY BACK — AS EASY AS BURNING SUGAR UNDER WATER? YOU JUST NEED A (constitutional) CATALYST!

    Unlike freedom of commercial speech (e.g., advertising soft drinks) which ranks significantly short in importance of political speech (e.g., Gettysburg Address), freedom of commercial association is so much an organic component of a free life (e.g., maxing out the market payout for our economic efforts), that it should rank just short of freedom of political association on economic grounds alone — but should be recognized as fully equal to political association (freedom of assembly) because labor unions are the only place where the great majority of Americans can assemble their political effectiveness (e.g., organized campaign financing and legislative lobbying).

    Recent Wisconsin Supreme Court: “… collective bargaining remains a creation of legislative grace and not constitutional obligation. The First Amendment cannot be used as a vehicle to expand the parameters of a benefit that it does not itself protect … ” [my emphasis]
    http://www.jsonline.com/news/statepolitics/supreme-court-to-rule-thursday-on-union-law-voter-id-b99321110z1-269292661.html

    Labor’s threshold question: could any government — local, state or federal — constitutionally bar all union organizing and collective bargaining. Seems constitutionally impossible in the face of the First Amendment — so, while laws may balance constitutional rights against other interests — at what point can collective bargaining of and by itself be said to switch its nature from being a fundamental constitutional right to being a “creation of legislative grace”. I don’t see how anybody can point to any such point.

    Establish collective bargaining as a fundamental right in federal court on the level with freedom of speech and we can change the culture of America overnight — even just by making unions as essential to genuine democracy a major national issue, win or lose on first try.

    Go labor! Morning in America.

    1. dutch

      Collective bargaining is a constitutional right in some jurisdictions. e.g. from Article 17 of the New York State constitution:

      “… Employees shall have a right to organize and to bargain collectively through representatives of their own choosing.”

        1. Left in Wisconsin

          This would seem to suggest that merely putting such language in a constitution doesn’t mean much.

          At some point, we will realize that the problem of US unions is more institutional than constitutional. Our labor law and institutions are based on an economic/industrial structure that no longer exists. As John R Commons pointed out a century ago, unions are hard to organize – they require that working people develop an understanding of how actual firms, industries, and markets operate and how organizing into unions might help them improve their situation – and in the rare periods when they do organize (almost always in large bursts and with the help of a left-friendly govt they have helped to elect), the firms immediately and continuously set to work on eviscerating them. But the reason people organize in the first place is because they see how a union could help. Today, trying to organize a union in most (productive) sectors of the economy is a suicide mission.

          Which gets to another problem: we have a labor law system premised on the notion that workers only needs unions if their employers are awful, that having a union is a sign of bad management. But what we need most are strong unions in the strongest sectors of the economy. And then we need mechanisms to to leverage worker power in these sectors to the rest of the working class who has less or no leverage.

          The fact that we still have lots of union members in this country is misleading, as they are disproportionately in the public sector, which plays by an entirely different logic. (I’m all for public sector unions; but it’s impossible to build worker class solidarity without strong private sector unions, particularly in export sectors of the economy.)

  15. Denis Drew

    FIRST MUSINGS OVER WHAT TO DO NEXT — WITH FIRST AMENDMENT PROTECTED COMMERCIAL ASSOCIATION:

    I just read in Which Side Are You On that the Warren Court killed the Norris-LaGuardia Act’s clear stated intent to ban federal injunctions against strikes (including wild-cats, sit-downs, even if there is a no-strike clause in the contract) …
    … which still left 48 states to do what they pleased. (Congress can set the jurisdiction of federal court.)

    Imagine (as John Lennon would say [now looking down?]) a federal court ruling (far West states likely) or better a US Supreme Court ruling finding collective bargaining to be a fundamental First Amendment right. All such rulings would probably fall.

    50 states have the right to regulate contracts. Federal law may dominate labor law under the present regime. Under protecting freedom of association states would seem to have a lot more leeway (maybe they could even do it now) to setup union recognition rules (I’m talking American style majority, exclusive representation unions; there is a move afoot to organize some minority unions too — universal practice in “right-to-work” Europe — even under today’s federal setup, but out of style for so, so long).

    Imagine (John Lennon) Washington State, Oregon, California and Nevada setting up centralized bargaining schemes (could work for retail workers, not for airlines probably).

    Point is, once you get ruling anywhere recognizing free association labor rights, the damn should burst everywhere. All the states that bar their employees from organizing would get hauled into many courts. Crackpot laws like Illinois’ just passed requirement that public school teachers must have 75% to strike (they did) should drop.

    All the Koch brothers can do cannot keep one lawyer from going to court and sending all these many dominoes cascading in an avalanche of labor organizing.

    1. Left in Wisconsin

      I’m missing something. Private sector union organizing is not illegal in this country (just very difficult and mostly pointless) and it is governed by federal law (states are pre-empted). What the Wisco court ruling did was affirm the right of states to make their own labor law regarding workers not covered by federal law (i.e. non-federal public sector workers). As the commenter above noted w regard to NYS, it isn’t obvious that having a constitutional right to organize is a game-changer, except for the public employees in those states.

      1. Denis Drew

        Left in Wisconsin,
        I will be emailing around my opinion that states can institute their own card check or even centralized bargaining legislation. If the latter is construed as conflicting with the supreme law of the land that could then be challenged in court under the First Amendment. Do you know any flat out, I have to be wrong objections to that?
        * * * * * * * * * *
        Below is the second half of my spam message as of now:

        What can we do with this latter day constitutional “revelation”?

        Judicially (negatively) we can go to court to attack the kind of law that waters down collective bargaining (among other crazy things: requires union re-certification every year) in Wisconsin. Illinois recently passed a law requiring the public school teachers union to have 75% vote in favor in order to strike (they did).

        I read “Union Bargaining a Dream For Many State Workers” — running off the long (and growing) list of states with short to no bargaining power for their employees. http://www.nbcnews.com/id/41810901/ns/business-us_business/t/union-bargaining-dream-many-state-workers/#.VKIEAP8FAE

        Legislatively (positively – without waiting for the courts) states should be able to institute local versions of card check and even (especially!) centralized bargaining. The latter would facilitate or mandate that employees doing similar work negotiate one common contract with multiple employers.

        I take centralized bargaining to be the gold standard of collective bargaining – the only end to race-to-the-bottom situation where for instance, Walmart ruins the labor contracts of supermarket workers; or where regional airline pilots are getting food stamps.

        State probably could have done both of these all alone without “thinking” of the First Amendment aspect – just using their ability to write business legislation. It seems to me analogous to supplementing an (imaginary) OSHA safety rule that hard hats must be worn on construction sites with a state rule that they wear face shields to on some occupations. Some state constitutions identify collective bargaining as a state constitutional right – New York is one example. Nothing federally pre-empted about that.

        Goodbye all anti-union (court and NLRB) rulings of the decades. Hello state (WA, OR, CA, NV?) collective bargaining laws that don’t conflict with (the supremacy of) Congressional legislation (card check, centralized bargaining?).

        All the Koch brothers’ horses and all the Koch brothers’ men cannot keep one lawyer from going to court – best prospects in our far Western courts, state and federal). Once the dominoes start falling in the far West it will start the whole country thinking.

  16. Ulysses

    Even long before capitalism the primary source of great wealth was always theft– war, slavery, genocide, the mechanisms varied but the violent have very often robbed the more peaceful (or less effectively violent).

    My whole former privileged life, as a pampered academic in North America, was only made possible because of horrific crimes committed by my Dutch and English ancestors in the 17th and 18th centuries. I cannot right those wrongs now, but at least I can attempt– in solidarity with millions of my brothers and sisters– to push back against the depredations of the kleptocrats in charge of our world today.

    We are legion, they are few. “El pueblo unido jamas sera vencido!!”

    1. MyLessThanPrimeBeef

      Perhaps our small band of ancestors did not know these concepts when they first moved out of Africa and ran into Neanderthals, but we know now that sharing and coexistence are possible.

      These ideals might just save us all, instead of just one group absorbing or wiping out another.

  17. alex morfesis

    a basic income is a trap… a basic opportunity is what had made and should continue to make america strong. not everyone should be an owner…the four hour week is really a four hundred hour week where a start up requires 20 different part time hats until it can get somewhere near critical mass. But in the rise and fall of enterprises, jobs come together and support industries find a calling. With all the “technology” we have put together in the last 20 years, we still have insane inefficiencies that can be made into enterprises. Craigslist may have “thought” it killed off the local newspaper, but it is useless for the most part today…no neighborhood or zip code headings and no break down into reasonable elements…yes it has searchable scenarios but unless you are looking for something that someone drilled into your meme, and you know how to filter around people who try to game the data-basing, its a waste…but even the reader in chicago, which was a truly efficient publication, has overpriced its online offerings for ads…opportunity lost…

    but the answers are available for those who do not fear work and potential failure…

    it is fairly easy to start a credit union…one can easily piggy back off an existing one for infrastructure until there are a few thousand parties who want to work together…a few hundred people is probably enough to get going…

    but no one takes the time to ask the simple questions…and as you point out, it then allows an opening for the feeding of this drab notion of being kept with a guaranteed income…

    it is how the junta in greece transitioned its control over the citizenry…I hope those of you out there don’t really think the junta just went away and is not and has not been lurking all these years…no one in the junta in greece was ever properly prosecuted and they are a large factor in the conversion of government assets in greece…the gladio clowns…bumped into one or two of them while living in athens…they are not too far from the surface…the golden yawn is in many ways tied to the old clowns and no one is willing to “out” them…ok…back to the point of this…in greece, there is this fall of the economy we have witnessed and a perfect example of how a guaranteed income can easily leave one vulnerable…for most greeks, until the phony derivatives collateral call that magically killed the papandreou govt, life was good and in one form or another, you had a basic guaranteed income….everyone had a door or window they could crawl through and get some money to live on…there are olive trees that have not been harvested by greeks in decades…have a son-in-law of someone I dated for a while in jersey…he was a kid from palestine…left with is uncle to work the harvest a few years on an island in greece…work greeks for the most part, refuse to do…he converts that into enough money to get to america and the family opens a small pizza shop in a not so great part of jersey…while working a second job he meets his wife to be, the daughter of the woman I dated for a while…he eventually gets his own tiny pizza shop on a side road in a lower middle class jersey town and advertises like crazy with local mailers and delivers…within a decade of having left the island harvest, he marries an italian girl, has a couple of children and builds a monster home on a hill 20 minutes from the GW bridge…yes he went bald from the stress…but are not most greeks losing sleep over “no opportunities”…greeks have been lulled to sleep and are a perfect example of what might happen to any society that thinks a “guaranteed income” is a solution…and for those Karl Philips Marxists out there (I prefer groucho), remember who actually funded mr lazy clowns of the world unite…did I mention philips electronics…I think i did…the truth shall get you fleas…

    1. cripes

      Yeah, yeah, you and Horatio Alger and George Bush.
      Build a mansion on a hill after a money-grubbing life.
      What part of no-jobs-for-everyone in high tech robot future do you not get?
      Jesus, your own mother is probably on some form of guaranteed income.
      This is main reason I have reservations about Yves take on this: she buys into full employment fantasy when we’re standing on precipice of no employment. Must find radical alternatives to capitalist paradigm.
      BTW, Greeks worked more average hours than any EU country.

  18. Banger

    Sorry Yves, I find your little essay incoherent—though it’s probably just me. Are you saying that because the tech types out west favor something we ought to reject it out of hand? Marshall Brain’s idea of guaranteed income is a recycled version of Buckminster Fuller’s idea that if you just give people a basic income most of them will “just go fishing” but one of those people will develop something remarkable that would sustain the rest of the population and then some. I think it would be more than one in a hundred I think the majority of people would do something remarkable and synergy would be the rule not the exception because I believe human beings, left to their own devices, generally want to have fun and construct things—some will want to “act-out” and eventually heal the multi-generational pain that is deep within not just the underclass but in many families.
    I think the idea is perfect for a number of reasons but what I don’t see from you which makes your essay incoherent is any hint of a viable alternative. Socialism and social democracy are unpopular—most people believe the government is a mess and can’t be trusted and many of us who post here understand that the current Washington Establishment is oriented ONLY to benefit the rich and powerful because, in my view, the left dropped out of struggling politically long ago for a variety of reason I won’t go into here but Washington REFLECTS the political culture and still has a limited ability to impose its will in a full-blown police state. The State uses propaganda and smoke and mirrors to deceive a public who, by all the evidence I have, wants to be deceived so it can feel free to escape into games, porn and all the variety of sub-human “entertainment” (enchantment) that pleases the lower-brain.
    Someone above said let’s do public works—fine but who determines what those works should be and what industries they help? I happen to be able to supply you with a list of likely industries to benefit. I see that as pretty useless and a band-aid at best that will not and cannot address the fundamental problem we face—who are we and what sort of society to we want to live in? We have the ability through technology to actually create any number of versions of a sustainable society but the powers that be whether on the left or right want things to remain within the current definition of “the economy” and lack the imagination and courage to look beyond the current set of arrangements.

    Besides, the reality is that today’s political economy is dominated various factions of the oligarchy that we all know—this mix is moderated by various public interest lobbies or various types that run the gamut of honest/dishonest but are mainly on the sidelines. If you look at the major sectors of power and analyze their goals and aspirations the Tech sector begins to look a little better—they don’t seek to hijack the government like the MIC and FIRE sectors and they are not tied into keeping things stuck in neutral so that nothing changes as most other sectors of the political economy seek. Most political force in Washington seeks to change as little as possible (the Democrats) and or move the country and the world into chaos so neo-feudalism can emerge (the Republicans). The utopian side of the tech industry at least has an interest in solving real problems for the benefit of most of us.

    Finally, starting a business is not hard particular with help online and through software particularly if we can eliminate many tax concerns and government regulations that are specifically aimed at making small-business hard which is always written by lobbyists for large corporations. Each of us can be an entrepreneur if our education trains us for that and are willing (even better) to be a part of co-ops and other communal associations. This doesn’t have to be a Randian nightmare but a road to socialism/communism via some libertarian principles.

    1. Yves Smith Post author

      You are absolutely crazy regarding starting a small business. Have you ever tried it?

      Oh, sure, anyone can START one. Making any money is another proposition entirely.

      Did you miss that 90% fail in the first 3 years? This is a long standing metric.

      And the reason most fail has nothing to do with “regulations”. That’s conservative propaganda. It’s that they couldn’t get enough customers.

      Going into business for yourself is a spectacularly bad idea that is romanticized in our culture.

      1. Banger

        Yes I’ve had a number of small businesses–one fairly successful and another not and my current one badly limping but still afloat. My point is that if we had a guaranteed income it wouldn’t be that big a deal to fail and the business atmosphere would not, in my view, be heavily weighted towards large corporations. Use your imagination and imagine that small businesses went up by a factor of ten you would see all kinds of services to aid you in setting something up and helping you market even non-profits. We could also orient the finance sector to tailor their services to small biz. I think it’s not quite helping your credibility by calling me crazy. Also, just because you label something and assign it to conservative hell doesn’t mean it lacks ALL validity.

        1. Kurt Sperry

          I think so too. Businesses that are begun using borrowed money or under-capitalized and expecting short term profits to live on kill most. That said if you can find a niche that doesn’t require much initial investment or overhead and are prepared to be poor for a time measured in years, small business is a viable option. There’s nothing like it if you can get the thing off the ground and flying. Businesses tend to be hierarchical to the point of outright autocracy, so if that is a problem for you there’s really no alternative to creating your own work situation. Most people don’t really seem to mind mindlessly following orders, and for them starting your own business probably doesn’t make much sense as the upsides for them will be outweighed by the downsides.

          I think a BIG if sufficient to scrape by on would unleash a lot of bootstrap entepeneurialism, as I think what prevents a lot of people from seriously considering becoming their own businesses is the fear of total failure with homelessness and food bank consequences.

          1. mikkel

            “I think a BIG if sufficient to scrape by on would unleash a lot of bootstrap entepeneurialism, as I think what prevents a lot of people from seriously considering becoming their own businesses is the fear of total failure with homelessness and food bank consequences.”

            I agree and would go one step further. There are many young people I know who want to do work that helps restore the environment and social justice through direct enterprise. They want to do things like permaculture gardens, rocket stoves, so on and so forth that have a proven theory but a huge need for tinkering on specifics. These things don’t require a lot of capital but do require a lot of time, and there will be no market until the patterns get perfected.

            A BIG would be amazing for helping this under employed generation find opportunity to create new business models for a post-growth, climate changing world. I’m trying my best to provide several people I know with such a situation (instead of socking it away for retirement) because I think it’s important that someone focus on it and they are the most enthusiastic.

            Also, while I’m sympathetic about Yves points of people starting their own business, the fact is that it is one of the best forms of education, both about the world and self. It doesn’t matter so much about whether things succeed or fail, but about the discovery of your strengths in the real world. Each person I’ve supported has explicitly said that it taught them invaluable lessons that they got neither through university or wage work. (I’m not crazy like Thiel by saying to skip college entirely, but entrepreneurship in your mid 20s is a good finishing school).

            Lastly, what I love about BIG is that it creates money directly in the hands of the populace. To me this is much more inherently democratic than having money created only through debt or government spending, which almost exclusively goes to the FIRE, ‘defense’ and extractive sectors first and foremost. The rest of us are then chasing after the crumbs of what those overlords feel like spending into the rest of the economy. A BIG — of a proper level — immediately changes the first order balance of consumption and could drastically change labor patterns away from environmentally damaging industries.

            1. mikkel

              Oh I should note I’m in NZ after moving away from the insanity of the US. I’d never start a business in the US with the health system and general social antipathy. When I talk about business experience it’s solely in an NZ context.

      2. Ulysses

        But going to work for Goldman Sachs is a super-duper swell idea?? Maybe it would be a good transformation of our national economy if more young people were encouraged to follow the example of Ben Franklin, and not Jamie Dimon. If far less people were destitute, thanks to any sort of scheme to slow the ongoing upward transfer of wealth into ever fewer hands, new entrepreneurs would have a lot more customers!

        If you want to guarantee that the kleptocrats gain even more power and wealth, don’t even think of starting your own business! Buy some credentials at a “prestige” law or biz school, make yourself attractive to the corrupt elites and laugh all the way to the bank as you deride those with more imagination. I’m actually very pleased that my own daughter has no interest in doing any of those things. She may well turn out, in financial terms, to be a “failure” as a musician. If she keeps her soul, however, she will have succeeded as a human being.

        1. Yves Smith Post author

          Go look at the bloody data. 90% failure rate. That means you burn your money, you burn that of your investors, and you get personally burned out and defeated.

          And contra Banger, this is seldom the result of being undercapitalized. It’s lack of viability from the get go, normally the founder not understanding how long it would take to get customers, or what his sales call to close ratio would be, some really basic belief about the venture being dead wrong and trying unsuccessfully to adapt around those problem(s).

          If the economics were viable, you’d be able to get the financing somehow, including from vendors who have a big incentive to have customers make it.

          1. vlade

            Indeed. I’d also argue that there’s the problem that the entry into most markets can be still fairly hard due to existing competition who often are willing to undercut and kill new entrants (especially these days) rather than lose (or even risk losing) market share.

            The ventures I saw suceed were mostly people who had customers to start with and their clients had an interest in the venture surviving.

  19. kevinearick

    Anode Phase Bucking

    Under empire equal outcomes, males and females can pretty much do the same things, creating a voltage common reference. In the real world, men cannot do what women do or vice versa. Depending upon power requirements, you want the sexes to buck 180X degrees out.

    Adding children / generations increases multiphase dimensionality, which the empire seeks to simulate with dc scale, which is a farce if you take the empire seriously, as anything other than an extension of gravity, which is a waste of timeenergy, creating event horizons, redundant resistors.

    The majority is always more than happy to print money in a positive feedback loop with natural resource exploitation, and hire revolving scapegoats, until it can’t, when it hunts you down, with best business practice proliferation, in public, private and non-profit corporatisms, the process of elimination. It only knows what you tell it.

    The only net difference among affirmative action brands is how efficiently they discharge natural resources to feed the bankers, the ultimate affirmative action babies, with interest on flipping real estate inflation. The problemsolution of these master-slave relationships is that they cannot produce productive children, which is why their schools get dumber every year, with proprietary vendors depending upon H1B1 at the top and the most desperate illegal aliens at the bottom, for compliance.

    That piece of paper is the entrance to a trap, for which there is no exit. You are the exit, or there is no exit. Somebody has to provide circulation back to the community for economic mobility to exist, and it’s not the bankers or their grant gravy train. Talk’s cheap. The secret to tunneling, climbing, is that not all current follows the path of least resistance.

    Funny, my wife is not afraid of vicious dogs, or getting wet in the rain. The planet knows you better than the empire does. You cannot beat natural selection, but go ahead and try.

    1. MyLessThanPrimeBeef

      Natural Selection vs, Unnatural Selection.

      Unnatural – a scientific project is almost always (especially one that is expensive) selected based on its usefulness to the rich and/or powerful.

      ‘I have an idea.’

      ‘Can it be used to monitor everyone?’

      ‘No.’

      ‘How about using it to destabilize uncooperative nations?’

      ‘No.’

      ‘Useful for making lots of fiat imperial money?’

      ‘No.’

      ‘Sorry, you have your chances. Next!’

      Thus, the idea gene pool is selected and selected, over and over again, to produce the fittest ideas.

  20. Elliot

    As an *actual entrepreneur (that is, supporting myself by manufacturing and selling products, with no venture capital nor Waltonesque family trust), it seems obvious that the simplest answer is as Yves says: raise the [frigging] minimum wage already!

    My customers would have more money to purchase my products, those who wanted jobs working for others could afford to live on them, entrepreneurs would be better off (and have time to devote to building business, not being in work-camp (has nobody noticed a jobs guarantee vs living wages is compulsory labor for the poorest of us?))……. and it would not require any re-tooling of laws, or administering of benefits, or hocus-pocus with eligibility or judging of worthiness. Just raise the minimum wage to a living wage.

    1. LifelongLIb

      I know several small business owners who are in fields that depend on disposable income (restaurants, home remodeling). I’ve tried pointing out the contradiction between paying employees as little as possible and then expecting the same people (in aggregate) to come through the door as customers with money to spend. But they don’t get it. They’re totally focused on how much the payroll is this week, not on whether they’ll have customers next month or next year. Go figure.

  21. nihil obstet

    The key to prosperity and better work is forcing higher wages? The advantage of the JG is democratic control over labor? Then why don’t we have them? We can get higher wages by legally raising the minimum wage. We can get a lot more democratic control first, by enforcing current labor organizing law and second, by requiring worker representatives on all corporate boards. I would be far more convinced that the JG would bring about these wonderful results rather than being a resurrection of the workhouse if we were able to improve the jobs that we now have. Or are we waiting for the Godot of the JG?

    We have a very successful program of income guarantee called Social Security. If we provide the income guarantee to everyone, a lot of people will spend their days watching trashy TV and shopping in big box stores, and that will pain our moralistic urge to improve everybody who isn’t like us. That’s called freedom. And it is messy because many, if not most, of us are status-conscious animals who seek to set up hierarchical sortings, and that leads to political battles of “Look how those people are destroying our society.” But we also get to define our humanity by desires and undertakings that are not only economic.

    Both the JG and a basic income will face difficulties of adoption and implementation, and will have drawbacks. Either would be better than what we have now. However, I see enormous problems with the kind of JG that its advocates describe and their criticisms of a basic income seem rather like projections.

    Actually, I rather like being referred to as a BIGot. Who do I hate? People who think their compatriots have only monetary value.

    1. jrs

      The job guarantee begins at times to sound as spurious as the communist promise of the “state withering away”, it just has to go through a period of totalitarianism first …. (but what if it never gets beyond that period and what about the meantime?). But if they considered that they might have been anarchists not communists.

      We will have democratic control over the job market we just have to get a job guarantee first. But maybe we’d should start out with democratic control first. Anyone who has had a low on the totem pole job should distrust whatever jobs their betters see fit to hand them, after all they already know what that is (in a way in which the “creative class” and so on never will). But it will be controlled by democracy, by the working class? It’s like to see that it will first.

      I think both being implemented in the current system as not particularly likely and both might be better than the status quo. It’s just if people are going to take to the streets, if we’re going to have a revolution (either violent or not), that revolution better be one worth the very risks it would involve. Aim high! Aim high they will crush you even if you aim low, so aim high. A world where everyone’s purpose in existence is still working for the machine is not that revolution. DEMAND bread AND roses, and time and energy to dance, every night after your short work or non-work day or in the workplaces you collectively own.

      1. Yves Smith Post author

        The history of positive outcomes of revolutions is poor, at least in the first generation or so. It was nearly 100 years after the French Revolution before a stable democracy was established in France.

        However, the threat of revolution to force change is an entirely different matter.

        1. J-Ho

          Yes, this. Nazi Germany, Stalinist Russia, or present day Syria/Iraq are the more likely outcomes of a revolution than a peaceful, stable and self-perpetuating Paris Commune or Anarchist Catalonia. Or the U.S. for that matter.

    2. Joe Firestone (LetsGetitDone)

      However, I see enormous problems with the kind of JG that its advocates describe and their criticisms of a basic income seem rather like projections.

      What problems do you see that Pavlina Tcherneva and Randy Wray haven’t already considered and accounted for? Yes, I’m asking you to read a little of what they say and then provide some reasons for the above statement.

      1. nihil obstet

        Oh, OK. I’m sure they’ve answered every question, and since those answers are clearly beyond any recap that could persuade anyone who isn’t already persuaded, I’ll put Tcherneva and Wray on my list of things to read because their advocates can’t understand their positions well enough to summarize them for discussing with interested people. I know I’m not tolerant enough of those who tell me that they have the solutions to all the problems if I’ll just play “I’ve Got a Secret” with them (or maybe “To Tell the Truth” would be the more relevant game show, for those of my generation). And I guess that’s why I’m a BIGot.

  22. Ulysses

    “Actually, I rather like being referred to as a BIGot. Who do I hate? People who think their compatriots have only monetary value.”

    :)

    Kudos on such a clever retort! Puerile name-calling is never helpful in establishing a serious debate on the merits. People tend to shut down the rational part of their brain, and leap over to the emotional side, when they are labeled as BIGots, or “crazy”, or whatever.

  23. just_kate

    This post makes me so darned depressed. It reminds me of the last obesity related post I read where my favorite blogger talked about the wisdom/benefits of getting off the sedentary track. My first job out of college was in Chicago and it was a great experience – all that walking, no car. All my various jobs from 15 yrs old on up prior to then had a fair amount of physical labor required. Then family obligations back on the west coast brought me to a series of jobs that were still pretty active followed by a succession of more sedentary work for my body but more stress and challenges for my brain. Sometimes I think my genes would have been better served had I gone into firefighting as a literal way of spending 60 hours a week working in various problem solving roles.

    My point being – as a basic income supporter – for me it has really become a fantasy to solve the problem that my brain today has more value to “the market” than my body ever will. But no matter how much time I can spend at the Y or even on regular weekend day hikes – I can feel it in my bones that I should not be spending 60 hours a week like this even though the people I am supporting financially depend in my being able to do so. Like I said – depressing.

  24. Left in Wisconsin

    I thought this was a great post with excellent comments. A few points not mentioned thus far, and one prediction:
    1. If we would take seriously the idea of redefining work, I think the JG makes more sense. There are only not enough jobs because we let private interests decide what constitutes work. For example, caring for family (children, elderly) is most definitely work, and we would have a much better society if we have more people doing it, and doing it better.
    2. But I do think the innovators are onto something. My state capital/university town is loaded with entrepeneurial types, the vast majority of whom can afford to do so because their spouse has a stable (now stable-ish) public sector or uni job with good benefits. A UBI with decent national health care would expand this opportunity to many others. And in theory you could tax progressively to fund it.

    Prediction: some kind of UBI/BIG combined with the elimination of most other means-tested govt benefits is coming. I say this simply because tech wants it and because the technology to personalize gov’t benefits can’t be that far away. The last thing TPTB, and the coming techPTB, want is a jobs guarantee.

  25. Richard Burr

    Hawkin’s says he was influenced by “Manna,” a novella set in the post work world where human work has been assumed by machines and machine intelligence. There are 2 living environments for humans. One is a bare bones environment for the masses who live out their natural lives in a robot-tended, closed community. The other is a luxury resort development in Australia that offers the option of uploading your mind to the cloud. I suspect Hawkin’s sees a guaranteed basic income as a transition stage to a Manna state.

  26. Calgacus

    @ nihil obstet et al: since those answers are clearly beyond any recap that could persuade anyone who isn’t already persuaded, Those answers – to why the JG rules & the JG-less BIG sucks are very simple:

    (0) First, MMTers don’t oppose (a realistic) BIG. But BIG advocates usually oppose a JG.

    (1)The Big BIG = the Universal BIG, often called a “UBI” on the web, but more usually called just “BIG” in formal literature in my experience. It is a universal (& therefore untaxed) payment to everyone, supposedly enough for a living. The BIG sucks because it is IMPOSSIBLE. It is spectacularly inflationary, probably the most inflationary policy ever seriously proposed. It can’t work. It is about as serious as – pretty much the same as – proposing that everyone win a lottery.

    (2)If the BIG is taxed, then it is means-tested. So it is a small BIG, a Negative Income Tax is one form. It is realistic, though it sucks compared to the JG. For what is so great about it? Basically we have it already: “small BIG” is just another name for “welfare”. These “tech titans” want to get rid of welfare-that- works: public housing, food stamps, Medicaid, Medicare etc. They want to replace it with something that doesn’t work nearly as well, that is more inflationary. Policies focused on “welfare” do not make economies thrive, don’t help the poor and the middle class in the long run. In the US, we’ve done it already – 60s style fine-tuning “Keynesianism” made the economy more vulnerable to the 70s inflation. And it didn’t do much about poverty.

    (2) There are two groups who understand the situation perfectly well: The poor and the rich. Poor people want jobs, a JG because they know it works. It changes the structure of the economy. Rich people, neoliberals, the ruling class capitalists, the tech titans hate a JG, a real right to a job – because they know it works, and would remove their power of economic sabotage and destruction that they so wantonly inflict on the poor ( and on the befuddled middles, at least to scare them).

    (3) But the middles – perhaps a majority or plurality of NCers – think they know better than the poor & the rich – and think the impossible universal BIG or the so-what?-small-BIG welfare scheme is “the solution” – to what? Not enough homeless people? The befuddled middles will soon join the poor if they support BIGism. Then they’ll know better; but it would be nice if before that, some middles could hire a poor/unemployed/homeless person to tutor them in basic economics – and learn from them.

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