John McDonnell, the Shadow Chancellor, has apparently decided that the next Labour manifesto should include a commitment to Universal Basic Income (UBI) even though, as yet, no figures are available to support the proposal in the UK, and no data from previous trials has proven whether the system will work, or not.
I find the announcement a challenge. I have in my time argued for UBI. If I was now given a choice between Labour adopting modern monetary theory, with a job guarantee attached, or a universal basic income I believe that modern monetary theory with a job guarantee would be more important, more realistic, more likely to deliver, and more acceptable to voters.
I can see value in a UBI. I do not dismiss the idea. But I think the public are a long way from accepting it as yet, whereas a job guarantee makes a lot of sense to many people, especially given Labour's priorities, and the current state of the economy.
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Yes.
MMT-based Green Economy initiatives alongside a Job guarantee should IMO be the firm basis for any left-leaning manifesto across Europe. The fact that it isn’t answers the question of why the Left isn’t making more political gains against failing right wing governments.
A paradigm shift of this magnitude is what the electorates have plainly been demanding with no reply so far. Add a wealth tax, tax transparency, county-by-country reporting, local government funding initiatives through local bonds and regional investment banks as part of the devolved movement and the ensuing electoral landslide would give the brave politico a mandate for 5 years of change.
If ‘we’ can see this why can’t ‘they’?
Give it time
Spot on.
Ironically the revolution isn’t happening in Europe, but ironically (or maybe not ironically ) in the US – as George Monbiot describes in The Guardian: “America’s new revolutionaries show how the left can win”…
https://www.theguardian.com/commentisfree/2018/jul/11/america-left-alexandria-ocasio-cortez-new-york-primary
PS Alexandria Ocasio-Cortez knows all about MMT
PS You are right re AOC and MMT
Excuse my ignorance but where would all the jobs come from in an ever increasingly automated world, or am I missing something fundamental here?
Just think about what you would wish to be done that isn’t.
Those are the things that will happen as a result of automation. That always been what happens.
The end of the typing pool did not decimate employment. We just created different and new jobs.
I am not as worried about automation as many are, except for young men without many skills.
Young men without skills is a very critical element in our current society. I think it is an explosive issue for the future if nothing is done about it.
@ Rob
Once you remove the “must make a profit filter” there are a great many caregiving jobs that aren’t adequately funded. Mental health is a huge field that isn’t and so is taking care of the elderly. Talk to psychologists and psychotherapists and many are saying the whole basis of many developed societies is badly skewed whereby babies and young children are not receiving sufficiently adequate caregiving because the primary caregiver, usually the mother but not necessarily so, has to work to make ends meet. Lack of adequate caregiving whilst young results in adults who struggle to cope with life and some create serious problems for their societies.
I have to say that I agree with you.
Was it Denmark who tried it recently? I’d love to see a review report.
I sent John the Fadhel Kaboub video via his secretary with a recommendation to pay particular attention to the Job Guarantee. Could I have been successful at last? But John’s continuing attraction to UBI is disappointing – I asked him personally to read my Morning Star article. Perhaps he has picked up on MMT, despite his economic advisers appearing to be particularly poor.
I have been elected (unopposed) to the National Policy Forum where I had hoped to be able to bend John’s ear a little more. Unfortunately it is most probably going to abolished but there is hope that we may become part of an NEC committee on policymaking.
Good luck!
Yes Carol – sincere best wishes!
Congratulations, Carol. Or do I mean commiserations 🙂
Give it wellie !
I agree – up to a point, but I think we should avoid the best becoming the enemy of the good. There are many good reasons to implement some form of UBI, particularly as a means to reform the UKs creaking and dysfunctional welfare system. None of which preclude the radical importance of MMT and the usefulness of the JG. So there doesn’t have to a choice between the two – they don’t exclude each other, either theoretically or practically: UBI vs JG is a false dichotomy. It’s important that Labour (amongst others) attempt to open up as wide a ‘policy space’ as possible, in discussing and proposing as many progressive ideas as possible. So any such attempts to throw open that Overton Window should be applauded. I look forward to John McDonnell et al talking about the JG in due course.
I’m never going to pretend to know anything about economics but giving people money for nothing can’t be a good idea.
Yes people will be able to afford the basics, but how long will that last? With increased affordability I presume that inflation would follow and affordability would drop back to a natural balance.
As will all UK government ideas, there will be loopholes and they will be abused.
The money should be used to create economic benefit/output….there are plenty of jobs that councils need done but can’t afford…(I’m aware that increasing affordability will increase Tax receipts etc)…Things like grafitti cleaning, repairing roads, ground clearing…general maintenance etc..
Hitlers high employment of ’30s Germany and the New deal in the US in the 30’s aren’t ideal models but we can make use of our human resources to make a better country.
I know I’m going to get accused of wanting to bring back workhouses etc but this is not what I am saying…Fair pay for a fair days work funded by central government is what I would like to see.
Quite right, fuzzy – your economic intuition and logic & knowledge is perfectly sound. A real UBI simply cannot work. Never has, never will. It is very inflationary and the inflation whittles the UBI to a pittance, or if it is indexed, it causes hyperinflation. So often, basic income supporters change their proposals to something NOT universal. This makes it hard to argue with them, as they are a target moving at blinding speed. In that case, at best, all they end up with is “welfare” – something that every human society ever has had – and all they have done is come up with a new name, and a generally inferior way of delivering it. Big deal.
The New Deal, the Beveridge report, the postwar Labour government etc – the ideas of that era are at such a higher plane of intelligence that it is embarrassing to read the extremely thoughtful and thought-provoking forgotten old stuff (I spend hours on it every day) and then return to the “modern” imbecilities like the UBI. It’s like reading the works of great thinkers and then being with them after they suffer strokes or Alzheimer’s, trying to get them to remember how to feed themselves.
Of course it need not be inflationary
Tax can solve that
But I am not sure it’s the best direction for tax
Might I add I do not like your style: think harder please
Calgacus
Your reference to Alzheimers is really incredibly inappropriate. In fact is rather ugly – yes – that’s the word. Ugly .
Do you now anyone with a form dementia I wonder?
As for your antipathy toward UBI – it is less contentious but I am sure that any inflationary influences can be contained by proper policy elsewhere – more appropriate regulation of markets for example might be the answer and if finance were made to be more long-term in the seeking of their returns (say a 5 year lock in period as proposed by Steve Keen) the temptation to gouge out profits for short term gain might be stopped. This is just one thing that could be done but there are others. It just needs sound planning.
Without UBI or a JG, what are we going to tell people? Don’t have kids because there are no jobs and no income for them? Or have only one child please? I think that we seriously need to grasp this issue.
The economy needs cash to work and without paid work or supplementary income where will the hard cash come from in an increasingly workless world? Debt? Well we know about that one don’t we?
Mel – I see employers actually over-training their workforces for what are increasingly menial jobs that means people are actually over-qualified for what they are doing. It’s bizarre.
Terry – Welfare guru Prof Paul Spicker says much the same in that means testing is expensive and diverts budgets into benefit admin and away from delivering relief. Mind you, G4S and Serco love this don’t they (or they did).
Calgacus will not post comments of that sort again
Fuzzy – OK, but would you go into a widgets factory and say “I don’t know anything about widgets, but this is what you ought to do”?
Or stand at the shoulder of a brain surgeon carrying out neurosurgery …
You get the idea?
I don’t want to be horrible, but think about what you are saying here.
I beg to differ. We give people many things that have value for free – education, healthcare, access rights to national and urban parks and footpaths. We have one part of the UK giving out free sanitary products. The only thing that makes money difference is its fungibility – in other words it’s useful in an amazing way. Crank up the electric presses and give it out.
Ah , but there’s a problem with that. The more you print the less valuable it becomes. The tax system offers the option of taking it from other people and then giving it out without the money losing value and without the people doing the taking being taken to court. That makes tax unique.
Sounds like you are describing a JG, which by the way acts as an inflationary anchor.
Indeed the reason why MMT focuses on it is not just as a ‘job scheme’ (although thats very important), but as an automatic means of ‘balancing the economy’ between real resources being used too much (evidenced by inflation) and real resources being used too little (evidenced by unemployment).
Once achieved, we can say good bye forever to the macroeconomically stupid current model of ‘balancing the budget’.
Fuzzy? And all that work done in the household economy and neighbourhoods?
Yep – all un-valued or undervalued.
Even the State’s contribution is negligible according to orthodox economic thought (according to Mazzucato).
I have see many use this argument against UBI, and the argument seems to be that if we as a society make sure that everyone can afford the basics then those basics will then be under pressure to become unaffordable again. This to me is a damning indictment of our society if the only way it can function is if a section of it cannot be allowed to have even the basics.
The way I see a UBI is that it should provide a solid floor for people to build on, unlike the current social security net that has so many holes in it that many fall through. A job guarantee can then be built on top but the jobs offered must offer a decent salary and the jobs should have meaning, not just jobs for the sake of jobs. One of the plus sides of a UBI is that it gives the person room to say no, some people are not suitable for some jobs ( care sector ) but are forced to take them or be sanctioned and then we wonder why some carers are not living up to their job titles.
Maybe if this was put in place job centres could become a place where people want to go to find help, guidance and useful work rather than a place of punishment for minor infractions.
Fuzzy
Giving people money who do not have work or cannot work may be a good idea because the money is used to spend in the economy because it is essentially other peoples’ wages/income. It keeps those in work in jobs. Think about it.
With more companies exporting jobs abroad and increased automation on the horizon we are going to have to grasp this fact one day. Would you rather these people be issued with debt rather than real/base money?
There are other drivers’ of inflation other than wages – debt for example and the inefficient workings of those in the markets. Are house prices reasonable? Commodity prices? What about companies that go around buying oil supplies and then store it, creating a shortage so that the oil price goes up and then they capitalise?
I do agree however that when you look around our country, the infrastructure and general maintenance of it has tanked since 2010 and austerity. Everything I see screams ‘Here’s a job for someone’.
And speaking of jobs, all Government has to do is to employ enough people to patrol the loopholes you say they create because that is what I have seen them not doing – whether it is under staffing at HMRC or our police force.
And as a final point think about a country where there is no money spend. Where would investment come from in the private sector? Government could not do it all but a Jobs Guarantee or UBI (or a combination) funded by them would help to promote the real mix of both public and private that a healthy economy needs.
I’m not a big fan of a job guarantee. I’m a much bigger fan of an education and training guarantee designed to ensure that everyone is able to get a job befitting their talents and inclinations.
The UK has a huge productivity problem and this is always put down to under-investment. I think we need to be more accurate and pin it on under-investment in our workforce.
The private sector won’t do it. They just whinge and turn every debate on immigration into a demand to be allowed to import skills from elsewhere as it’s cheaper. The state needs to do it.
But we need a plan that actually works. It’s not enough that a training program be designed to enable everyone to get a job, it has to actually cause everyone to get a job. That would remain the choice of the free market, and the free market has produced what we have now, and stopped there. Fifty years ago unexperienced people like me could get hired and trained in advanced technical jobs. Much less now. Training employers not to whinge and whine might do it.
Indeed, no matter how much people are trained, coached etc. if there’s not sufficient spending in the economy to employ everyone the result is unemployment.
Bill Mitchell’s parable of 95 buried bones and 100 dogs springs to mind…
http://bilbo.economicoutlook.net/blog/?p=1868
Simple version here…
https://alittleecon.wordpress.com/2013/06/19/the-parable-of-100-dogs-and-92-bones-why-the-work-programme-cant-work/
All credit to you for having the integrity to keep an open mind Richard and moreover for being big enough to change it.
The JG idea is gaining ground fast in the ‘Bernie Sanders’ wing of the US Democratic party (not least because the concept of a JG has deep historical resonance there i.e. FDR’s New Deal / Martin Luther King’s call for Jobs For All).
I’ve always leaned towards basic income, but it seems to me that some sort of basic income is necessary to make sure job guarantee is not workfare. They could set the ball rolling by getting rid of means testing and setting child benefit and the state pension at sufficient levels and abolishing all sanctions on unemployment benefit and disability benefit. A guaranteed job offer based on a persons natural aptitude’s could combined with a basic income is the best way forward.
@Terry
“some sort of basic income is necessary to make sure job guarantee is not workfare.”
Quite, but this seems now to be admitted by JG advocates. It makes it in reality a guaranteed job OFFER. More info here:
http://www.progressivepulse.org/economics/are-these-the-advantages-of-the-job-guarantee
The JG is not Workfare. From MMT expert Pavlina Tcherneva…
The program is based on the principle of “fair work” not “workfare.” It does not require people to work for their benefits. It is instead an alternative to existing workfare programs.
The JG is “fair work” in the sense that it provides a fair opportunity to any person to secure decent, well-paid employment. It not only provides the needed employment safety net, but also changes the very macroeconomic conditions that people face as they search for a better life.
A JG meets the call of the United Nation’s Universal Declaration of Human Rights and FDR’s Economic Bill of Rights by recognizing that the access to decent work is a basic human right and a precondition to social and economic justice.
Terry, this is exactly my view too. We could make so many such steps in the right direction without even calling it ‘UBI’. A new Labour government could implement reforms such as these and be halfway there without scaring the horses. A gradualist but very definite approach to transformation. I was rather surprised by Richard’s suggestion that a big bang approach might be being considered.
We don’t know what is being considered
I made no suggestion on that
What’s wrong with a Job Guarantee and generous backup unemployment benefits? This is virtually what we had before Thatcher.
Agreed
My thoughts – for what they’re worth:
Any country that claims to be civilised should be providing some sort of ‘income guarantee’ to ensure that all its citizens – even if they have no employment or other income – have enough to survive on. In the UK this role is performed – I would say not very well – by Universal Credit/other welfare benefits, as a top up safety net.
The big concern I have over Job Guarantee/Employer of Last Resort/Job Offer Guarantee is that – although I understand the advantage of such a scheme, and how it can be financed – I haven’t seen anything (so far!) explaining how, in a practical sense, it might work – especially if it is expected to fill the ‘income guarantee’ role, or function alongside what might be described as ‘semi-employment’ (zero hours, questionable self employment, part time work, etc.).
So I am generally in favour of a UBI scheme – to be what Universal Credit perhaps should be, and which I find conceptually simple – providing a ‘guaranteed income’ as a launch pad (rather than top up), set at essentially unemployment benefit level, and also replacing income tax personal allowance (with then a flat x% tax/NI rate for ‘ordinary’ tax payers).
And then alongside and supplementing it, a JG/ELR/JOG scheme to provide fulfill the ’employment buffer stock’ role, but without having to provide the ‘income guarantee’.
Bit naive perhaps on my part, but if you are the job giver of last resort how would you sack anyone? And what incentive is there for those with a JG to do best effort. Please note before flaming me that I’m very much in favour of UBI, but I’m struggling with compulsion and other issues attached with the job element.
There is no compulsion on a JG
I agree about no compulsion. So the hard part I guessing is putting a price on leisure if you don’t have any compulsion? Otherwise I’d be minded to RnR
From Pavlina Tcherneva’s JG FAQ…