How BIG is BIG Enough: Would the Basic Income Guarantee Satisfy the Unemployed?

L. Randall Wray | July 10, 2013

(This is a prequel, Part 1 on BIG; I already did Part 2. Sorry it is longish, but not technical.)

Last week I criticized an article by Allan Sheahan who argued that “Jobs Are Not the Answer” to America’s unemployment problem. The thesis was based on two propositions. First, labor productivity has grown so we’d never be able to find sufficient work for all. Second, we don’t need jobs anyway because:

“Job creation is a completely wrong approach because the world doesn’t need everyone to have a job in order to produce what is needed for us to live a decent, comfortable life. We need to re-think the whole concept of having a job. When we say we need more jobs, what we really mean is we need is more money to live on. One answer is to establish a basic income guarantee (BIG), enough at least to get by on — just above the poverty level — for everyone. Each of us could then try to find work to earn more.”

I devoted most of the space in my response to the first point. Labor productivity has been rising since caveman first grabbed a club. Productivity’s importance as a cause of unemployment is at best of second order importance and certainly not new. The real cause is money. To be more specific, it is because we choose to organize a huge part of our social provisioning process through the monetary system, with much of our production controlled by capitalists. It is a monetary production economy—capitalists will not employ labor if they do not believe it will be profitable. (Note that is a statement of fact, not a criticism.)

The problem is not that we cannot find useful things for people to do. Any one of the readers of this blog could come up with a list of hundreds of useful things to do that are not being done because no one can think of a way to make profits at them. So we can use the JG/ELR to put people to work doing useful things without worrying about profiting off their labor.

And if all else fails, we can share the work that we can imagine by cutting the work day and the work week, and providing vacations to Americans. Why not the 30 day type of vacation that other rich nations provide? Four day work weeks? A legal right to six months paid paternal and maternal care? Paid sabbaticals for all, one year off out of every seven? (Why should tenured faculty have all the fun?)

Ok, ‘nuff said on that one. I think many readers agree with me. All we need is the Job Guarantee/Employer of Last Resort and we will get everyone employed. And we can simultaneously work toward more paid time off—if the JG/ELR program offers it, private employers will, too.

So what we need to do is to look at the second argument in more detail. Many readers apparently do not know what a BIG is. And just how BIG a BIG is supposed to be. In other words, what it is supposed to accomplish.

BIG is not meant to be a little hand-out. That is why I criticize BIG-gers for the bait and switch of pointing to Alaska as evidence that “BIG works.” Alaska gives a tiny little hand-out. Not even enough to support a panhandler living out of a shopping cart. $878 is not BIG enough. It is a nice Christmas gift from Alaska Claus.

Nor is BIG meant to be welfare, or a negative income tax. BIG is universal—everyone gets it. That eliminates any stigma because everyone gets it. It will enjoy universal support—who would be against a Big BIG check from Uncle Sam? Giving a middle income household a Big BIG check, and then taxing it all back would not generate universal support. It would stigmatize the program immediately. Everyone must benefit from the program to garner the support. Otherwise it is just another type of bait and switch: promise everyone a Big BIG check but then impose a Big BIG tax to take it away. No. Everyone gets to keep the check.

Note that JG/ELR supporters agree with the argument that programs that target only the poor stigmatize them. That is why the JG is universal. There is no means testing. All can work in the program. Bill Gates can send his kids to the JG if they want to do something useful with their lives. And we won’t tax Bill Gates to “pay for” the wages his kids get in the program. Heck, if Bill gets tired of running Microsoft and wants to take a couple of years off, doing some Meals on Wheels in the JG, he could take a real job, too, actually helping people rather than trying to monopolize the software universe.

And the JG undertakes projects that have widely shared benefits—essential to build wide support for the program, so that even those who never work in a JG job still see benefits.

While BIG is universal, it does not necessarily benefit society. I can take my BIG check and blow it all on booze, burgers, coke, and guns. So to garner universal (or nearly so) support, everyone must get a BIG check and it cannot be taxed away. Otherwise it is bait and switch. If you get your Big BIG check taxed away, and watch me lounging about guzzling booze and shooting the local wildlife, whilst supported by my Big BIG check and paying no taxes, you are not going to be a happy camper.

BIG proponents insist that one must be able to live a dignified life on BIG alone. Not a life of dumpster diving and sleeping under cardboard. Not the kind of life that 878 bucks a year provides in Alaska. Note, JG/ELR supporters agree on that too. The JG/ELR wage must be high enough to provide a decent living standard. Exactly how high? We should aim for the “living wage.” We might need to start lower, and gradually work up to that.

Alaska’s $878 is a BIG bait and switch. Add some zeros if you are serious about dignity. Yes, we can start smaller than—say–$8780—but eventually we’ve got to put up or shut up about dignity. $8780 is not dignified, let alone $878.

Before I get all the comments, let me show that this is precisely what the BIG-gers propose. Start with something lower and then gradually raise the pay. But their goal is to disconnect income from work, to “free” people from the need to work. They see JG supporters as holding on to a “work fetish.” The BIG program is universal and seeks to provide a decent living standard—just like the JG/ELR—but without any work. So the difference is that BIG checks go out to everyone. And no one needs to work to get them. And everyone gets a dignified, American, living standard no matter whether they want to work or not. That is BIG.

I’d roughly put an “American” living standard somewhere around $35,000 per year per person. (Note: in 2012, US per capita income was $43K; in Alaska it was $47k, or about 54 times greater than the BIG Permanent Fund payment that the BIG-gers get all breathless about. In other words, if the Permanent fund paid out $878 PER WEEK instead of per year, I’d go starry-eyed, too. If you live in D.C per capita income is $75K—over double my $35k guestimate. Go figure. I guess it helps to have lobbyists greasing the wheels of commerce.)

We could quibble a bit about the $35K. If you watch TV, you do not see lifestyles that could be supported on much less than that, at least since the days when Sanford&Son dominated the airwaves (indeed, the contrast between their lifestyle and the American lifestyle was the gag). I don’t see how one could make the argument that one really is “free to choose” not to work if the BIG payment is less than that. How could one live the life of “dignity” BIG proponents talk about on less?

Yes, you can survive on less, but most people would feel the economic pressure to search for jobs.

BIG proponents seek to guarantee a BIG sufficient to gain access to no less than “full membership and participation in social life to all members of society.” That has got to be more than food, clothing, and shelter. It almost sounds like membership in golf and yacht clubs to me. (Full quote and citation below.) The BIG should thus be sufficient for “all play, no work,” full membership in society, and active participation in all aspects of social life without any compulsion to work.

Remember, Sheahan’s argument is that we do not need any more jobs—the unemployed will get BIG, but no more jobs. So if BIG pays anything less than an American living standard, then BIG is a Big bait and switch—the unemployed would rather have a job than the life of leisure BIG proponents offer up instead of work. I do realize that some advocates have admitted that it will be necessary to start somewhat smaller, then scale up the BIG payments. That is fine—the JG/ELR proponents suggest the same thing with regard to the program wage. Maybe start at the minimum wage then scale it up to a living wage. But no one should get all hot and bothered about $878 a year. BIG has got to start at $15k, or so, and work toward $35k in order to deliver on promises.

So, we’ve got several potential bait and switch problems with BIG:

1. BIG is a Universal program, which guarantees universal support, but if you work for a living we’re going to tax away your BIG. To avoid a bait and switch, everyone needs to get a Big BIG. And they get to keep it. Otherwise we’ve just got welfare.

2. BIG payments allow individuals the freedom to choose to live a life of dignity—whether they work or not. But if the BIG payment is too low, then if you choose not to work, you will need to dumpster dive. That isn’t dignified. To avoid a bait and switch, BIG needs to be Big.

3. BIG proponents argue we don’t need JG/ELR because BIG payments allow all to choose not to work. If the BIG payments are too low then most will choose to work anyway—in jobs that do not exist. BIG must be Big to replace the JG/ELR so that the unemployed are happy not to work. Otherwise, it is a bait and switch.

4. BIG is said to provide an alternative to the “work fetish,” allowing all to explore their full potential, living a life of freedom (….on $878 a year? Freedom to do exactly what?) so people can abandon the work ethic in favor of something more elevating. If this isn’t just bait and switch, BIG must be Big. And since working is oh-so-20th century, we need for lots of people to choose not to work (since BIG is replacing work, not encouraging more of it). If after implementation of BIG, most continue to work (as some BIG proponents have predicted), then BIG was a Big bait and switch after all. We could have just raised wages and didn’t need the BIG at all since it turns out that work is not a “fetish” but rather something people actually want to do. That would mean, of course that Sheahan is wrong: we do need more jobs, not a BIG.

Last week some questioned my interpretation of what BIG wants. I’ve been involved with BIG for a very long time. One of its main proponents worked with me at the Levy Institute in the 1990s; I’ve been invited to present on BIG panels; and I’ve published comparisons of BIG and ELR, including one for the BIG website. Go here for a list of BIG publications, including articles by me and Pavlina Tcherneva as well as Phillip Harvey (all ELR supporters): http://www.usbig.net/papers.php.  So in the rest of this piece, I’ll show that I have not misrepresented what BIG advocates.

Finally, before delving into the details let me stress the position that the JG/ELR supporters hold: BIG is compatible with the JG/ELR. We can have both. What we object to is the BIG claim that “we don’t need no stinking jobs” or that BIG makes work somehow obsolete. Our position is this: once the JG/ELR program is in place, we can add a form of BIG.

However, as I said last week, I do not support sending a BIG check to everyone. It is a devaluation of the currency, as prices rise so that the BIG payment essentially becomes the entry price to the marketplace. So we will need to target the BIG to those who do not (or cannot) work. Yes there’s some stigma. But, first we implement ELR so that anyone who is ready and willing to work has a job in the JG/ELR. Then we provide BIG (or whatever you want to call it) to those who cannot, should not, or will not work. Even Americans do not mind so much that old people and kids mostly don’t work. Most Americans with disabilities want to work but cannot find jobs. The JG/ELR option eliminates that problem. Yes we will still have some who are stigmatized by accepting a BIG over taking a job. But at least all who want to work can get a job. The number on BIG will be very much smaller once we’ve got the JG/ELR option available.

Sorry, folks, but we need an anchor to the currency. It is only worth what you need to do to obtain it. As your wise mom told you long ago. If money grew on trees, it would be worthless. A BIG payment to everyone is essentially the same thing as letting people rake a pile of leaves off the lawn to go buy Beemers. Will the price of a BMW rise? You betcha.

Let me turn to my paper with Pavlina, Common Goals—Different Solutions: Can Basic Income and Job Guarantees Deliver Their Own Promises, which analyzes BIG and contrasts it with ELR. I will only draw on selections from our argument. You can read our paper (#112) as well as many others at the BIG net: http://www.usbig.net/papers.php. Note that following the recommendation of Bill Black, we provide quotes and citations for our explication of the BIG position. We rely on BIG’s founders and most active and respected leaders. All of the quotes come from academic literature (references provided below), not from comments on blogs.

1. What is the shared goal of BIG and ELR? Proponents of income and job guarantee schemes agree on two things. The first is that both the market economy and the modern welfare state have failed many members of society by increasing the precariousness of the labor market, reducing safety nets, and leaving many without the basic resources for a decent living.  Poverty, income inequality and unemployment are pervasive features of capitalism and modern welfare often takes the form of punitive measures aiming to discipline the “undeserving” poor or the unemployed.  The second is that to begin addressing these problems, public policy needs to provide some form of universal guarantees to all citizens. It is the nature of these guarantees that represents the sharp division in policy recommendations.

Income guarantee supporters champion the provision of an adequate standard of living by affording sufficient resources to all member of society. They argue that this objective can be achieved by guaranteeing a minimum income to all (a basic income guarantee, or BIG hereafter). Job creation proponents want to guarantee access to a job that could provide a decent income to the economically active population (and their dependents). They believe that adequate resources can be provided by guaranteeing a job to all, usually through programs as the Employer of Last Resort (ELR). The key distinction between the two is that basic income advocates want to decouple the income-work relationship observed in modern economies on the basis that economic justice and freedom require that resources are provided to individuals without the compulsion to work. Job guarantee supporters, on the other hand, want to directly address the unemployment problem, arguing that there are many people who want to work but cannot find employment. Once that problem is resolved, then we provide income support to those who cannot or do not want to work.

2. Rights to Income and Work

a. The Right to Income

In the modern literature, among the most ardent supporters of the BIG idea is Philippe Van Parijs, who champions a profound reform in policy based on the ethical imperative of securing freedom, equality, and justice for all.   The basic idea rests on Van Parijs’s concept of real freedom, which ensures full membership and participation in social life to all members of society (1995).  The libertarian concept of real freedom rests on two pillars.  The first is that individuals are formally free within a well-enforced structure of property rights and personal liberties. The second is the concern with the worth of that individual liberty.  This second pillar is in fact the crux of the pro-basic income argument.  According to Van Parijs “the worth or real value of a person’s liberty depends on the resources the person has at her command to make use of her liberty” (Van Parijs, 2001, 14).  Thus our object of concern, Van Parijs continues, must be: “the distribution of opportunity—understood as access to the means that people need for doing what they might want to do—[which is] designed to offer the greatest possible real opportunity to those with fewest opportunities, subject to everyone else’s formal freedom.” (ibid)

Real freedom then is not only a matter of rights but also of means (Van Parijs, 1995, 30). Thus the provision of a basic income to all which offers equal access to resources and opportunity is seen as an unalienable human right.

b. The Right to a Job

Job guarantee supporters see employment not only as an economic condition but also as an inalienable right. Wray and Forstater (2004) provide a concise statement of the justifications for the right to work as a fundamental prerequisite for social justice.  They first trace the philosophical origins of the argument to John Dewey, who maintained that: “The first great demand of a better social order…is the guarantee of the right, to every individual who is capable of it, to work—not the mere legal right, but a right which is enforceable so that the individual will always have the opportunity to engage in some form of useful activity and if the ordinary economic machinery breaks down through a crisis of some sort, then it is the duty of the state to come to the rescue and see that individuals have something to do that is worthwhile—not breaking stone in a stoneyard, or something else to get a soup ticket with, but some kind of productive work which a self-respecting person may engage in with interest and with more than mere pecuniary profit.” (Dewey 1939, 420-21, quoted in Wray and Forstater 2004)

Some job guarantee supporters such as Harvey (1989) and Burgess and Mitchell (1998) argue for the right to work on the basis that it is a fundamental human (or natural) right.  Such treatments find supports in modern legal proclamations such as the United Nations Universal Declaration of Human Rights or the Employment Act of 1946 and the Full Employment Act of 1978. As these authors recognize, social justice arguments rest on more than the official recognition of the right to work as a fundamental human right. Amartya Sen, for example, supports the right to work on the basis that the economic and social costs of unemployment are staggering with far-reaching consequences beyond the single dimension of a loss of income (Sen 1999, p. 94). Another Nobel Prize Winner William S. Vickrey (2004) identified unemployment with “cruel vandalism” and spent the latter years of his life outlining the social and economic inequities of unemployment and devising strategies for its solution.

In sum we believe that the justifications for the right to income and the right to work on the grounds that they are inalienable human rights, consistent with the goals of social justice and freedom, are not incompatible.

3. The Basic Income Guarantee and Its Objectives

There are multiple variants of the guaranteed income idea—it generally goes under the names of “territorial dividend,” “state bonus,” “demogrant,” “citizen’s wage,” “universal benefit” and “basic income” (Van Parijs, 2004, 7). Generally these refer to a universal payment to each citizen, irrespective of gender, marital or employment status. There is another type of basic income called the negative income tax (NIT), which guarantees a basic income to those who cannot earn adequate or any private sector income. In other words, those individuals whose income falls below a certain tax threshold, receive a negative tax to bring them up to the minimum that is promised. Most modern income guarantee advocates support a basic income scheme that is not conditional on labor market participation the way the negative income tax is, and therefore, NIT will not be the object of our attention here.

Van Parijs offers perhaps the broadest and most widely accepted definition of basic income: “By universal income I mean an income paid by a government, at a uniform level at regular intervals, to each adult member of society. The grant is paid, and its level is fixed, irrespective of whether the person is rich or poor, lives alone or with others, is willing to work or not.” (Van Parijs, 2001, 5)

The essential feature of BIG for our purposes is that basic income is not conditional on labor market participation nor on income level—everyone gets it.

4. BIG and Justice

Basic income proposals are motivated by a plurality of goals.  Justice is a core justification, but basic income is considered just also because it liberates individuals from submitting to demeaning wage-labor employment and allows them to pursue the “realization of one’s conception of the good life” (Van Parijs 2004, 18).  In essence, BIG offers the freedom to say “no” to undignified forms of employment and to choose the form of activity an individual wishes to pursue (Widerquist, 2004). The underlying assumption is that the labor market can no longer ensure adequate wages for all to cover their basic needs. Global transformation, high inflation, and protracted periods of unemployment have marginalized those individuals whom the market mechanism has found to be redundant (Standing 1992, Offe 1992).

As conventional policies are considered to be lacking, BIG meets the dual challenge of poverty and unemployment without the general welfare traps of forced inactivity or low-paid inactivity (Parijs 1995, Clark 2002).  Thus basic income provides a social safety net, which arguably eliminates the poverty and unemployment traps, while at the same time enhances individual’s autonomy and worker’s bargaining power.

Another major goal of BIG is the advancement of socially inclusive society and the improvement of the socio-economic situation (Clark 2002, Fitzpatrick, 2003).  In addition BIG increases efficiency. Clark (2002) argues that solely monetary measures of efficiency are inadequate and proposes the following definition: “Efficiency is concerned with the improvement of the socio-economic situation of the whole country, with an emphasis on maximizing social participation in all its forms.” (Clark, 2002, 17)

By enhancing social inclusion and civic attachment, then income guarantees also enhance efficiency.

5. How big should BIG be?

According to Van Parijs maximization of individual life-chances and opportunities and, therefore, real freedom, requires that a basic income be set at the highest sustainable level (Van Parijs 1992, 1995, 2004). However, the basic income proposals vary in size. Among the relatively modest proposals is Atkinson’s revenue neutral participation income for the UK for 1992, which ranges from £17.75 to £39/per week (or approximately £925 to £2034 annually) (Atkinson, 1996, 69-70).   Among the boldest schemes is Schutz’s $30,000 per year (Schutz, 1996, 14-15). Generally, however, proposals hover around the official poverty line (see Herbert Simon’s pitch for $8,000 (2001) and Clark’s proposed $9,359 minimum (2004)). Brian Barry defends a subsistence level basic income (Van Parijs, 2001, 64), while Ronald Dore (ibid, 80) and Van Parijs see subsistence-level incomes as the first step toward the highest sustainable income guarantee.

The size of the basic income is crucial for its ability to accomplish its goals. It seems to us that even the relatively generous $10,000 a year advocated by many (1999 dollars) would not be consistent with the lofty goals of “maximizing” life’s chances and opportunities. Alaska’s $1000 a year is laughably small. It seems to us that Schutz’s $30,000 is closer to the high mark set by Van Parijs.

A decent BIG is going to be expensive because everyone gets the BIG check. For that reason, it is very much bigger than the JG. Perhaps a big JG would on average employ 5% or 8% of the working age population; the BIG pays 100% of the working age population as well as the retired population (and maybe it pays children, too). It will cost at least ten times more—and maybe much more—to give the same living standard to the lowest income levels (ie: to those most likely to be in the JG). The JG is in a sense targeted—to those who take a JG job. It puts wage income directly into the hands of those who did not find higher-paying jobs outside the program (or, at least, who did not want those higher paying jobs if they did find them). Estimates of total spending on a JG program run between 1% and 3% of GDP. The main reason that total spending is low is because it is a relatively small program.

Note from Philip Harvey’s paper (#57 on the BIG site): “Thus, paying for Professor Clark’s hypothetical BIG program would have approximately doubled actual federal expenditures in 1999 from $1.7 trillion to $3.4 trillion.  To support this increase in spending, he proposes that the current federal income tax be replaced with a flat tax on all income, without any deductions except for the BIG payments themselves.  He estimates that a flat rate of 35.8% would have been sufficient to produce the required revenue in 1999.”

You read that right. $1.7 trillion cost of a BIG for the USA in 1999—doubling Federal spending. Keep that in mind. Clearly we are not talking about Alaska’s Permanent Fund, $878 each. Clark’s program is relatively frugal. At Schutz’s $30k, a BIG would pay out $6.9 trillion to today’s 230 million adults. That’s a Big BIG.

6. BIG’s Achilles’ Heel: BIG can be highly inflationary

The value of the dollar is determined on the margin by what must be done to obtain it.   If money “grew on trees”, its value would be determined by the amount of labor required to harvest money from trees. In an ELR program, the value of the dollar is determined on the margin by the number of minutes required to earn a dollar working in the ELR job. Assuming that BIG provides a payment of $20,000 per year to all citizens (equivalent to a JG job paying $10 per hour for a maximum 2000 hour working year), the value of the dollar on the margin would be the amount of labor involved in retrieving and opening the envelope containing the annual check from the treasury, divided by 20,000. For a couple of minutes of labor effort, you get $20,000. Obviously, the purchasing power of the dollar in terms of labor units required on the margin would be infinitesimally small. Remember that everyone gets this check. It might not happen overnight, but this would be your mom’s equivalent to money growing on trees, and would raise the price of labor (or devalue the currency—depending on how you want to look at it).

As BIG sets off inflation, it erodes the purchasing power of the BIG check. In order to maintain its policy goals (i.e. pull people out of poverty or maintaining a decent standard of living), the basic income payment must necessarily increase to compensate for the inflationary pressures. If the payment is not increased, we will have a “one-off” inflation when the recipients receive their check; but this check will not be able to buy the (now) more expensive goods necessary to maintain the desirable standard of living. If policy keeps the basic income at the original level, the benefit will be deficient—so it would have to grow over time.

Since the objective is that people are in fact capable of buying the minimum desirable basket of goods and services, the basic income payment must be redefined upward. This, however, further increases prices and erodes the BIG purchasing power. We are caught in a vicious cycle, which creates (what we can term here) “an inflationary trap”. As the value of the currency deteriorates, the purchasing power drops, necessitating an increase in the benefit. As the level of the minimum guaranteed income is redefined upward to compensate for the drop in purchasing power, the value of the currency drops further, commanding another increase in BIG payment. What must be recognized here is that in a modern monetary economy, unconditional provision of monetary income does not offer the means to a good standard of living, rather it erodes these means; i.e., it redefines that standard of living (or the poverty line, if that is the desired benchmark) in monetary terms.

Note that if people do what BIG supposes they should do—choose not to work so that they might enjoy a life full of adventure, self-actualization, contemplation, and freedom—then the supply of output goes down. That means your BIG check will be competing with everyone else’s BIG checks for a declining amount of things to buy. Inflationary pressures are made worse—unless the BIG presumptions are wrong and everyone actually prefers work over paid leisure. Also note that the BIG is not countercyclical—as the ELR is. You get the $6.9 Trillion in Big BIG checks in recession and even in run-away economic booms.

7. How ELR addresses some of BIG’s goals without introducing its disadvantages.

While the primary objective of an ELR is somewhat narrower than that of BIG—it only aims to eliminate unemployment while maintaining stable prices—it accomplishes a number of goals that are important to BIG advocates as well.

Most importantly, ELR does not introduce inflationary pressures. The ELR wage unit maintains a relatively constant purchasing power of the dollar—the dollar will be worth the amount of labor it can hire out of the ELR labor pool. This is a major advantage over basic income. ELR does not introduce inflationary pressures for several reasons. The most important one is that it fixes the value of the currency to the labor bufferstock wage.

ELR does not suffer from the inflation trap characteristic to BIG and if the wage is set at the living wage level (something which most job guarantee supporters favor), neither does it have the unemployment or poverty trap that BIG proponents fear. Note that ELR is strongly countercyclical, rising when the private sector downsizes. BIG does not—everyone gets her check no matter what is happening to the economy. ELR helps to stabilize the economy; BIG does not.

Like BIG, ELR is universal and purely voluntary. We strongly object to punitive conditionality criteria or demeaning means-tests—as do BIG proponents.  Furthermore ELR jobs provide not only an income but also socially valuable goods and services.

Among BIG advocates Van Parijs, for example recognizes that even a colossal BIG program may not resolve issues such as inadequate housing, education, healthcare—all key components of a decent standard of living. Parijs acknowledges that a BIG must be part of a more comprehensive social policy that includes other programs, but very little discussion is devoted to how we can ensure these other necessities are provided.

What ELR offers is a vehicle for achieving many of the goals that society democratically determines are worth pursuing. If the goal is the adequate provision of care for the young, sick, and elderly, then ELR can explicitly incorporate these services in its institutional structure.  If it is deemed that communities require environmental cleanup, then ELR jobs can be targeted specifically to solving these problems. In other words ELR can be designed as an open and flexible program that can serve many societal needs. ELR can also broaden the meaning of work by recognizing certain activities as socially useful and by compensating for them. By extension then, through the many forms of community involvement which are now recognized as legitimate ELR jobs, we foster advanced citizenship, reciprocity and social cohesion.

Finally ELR increases efficiency.   By training and educating workers and maintaining them as gainfully employed, ELR also enhances human capital, thus the detrimental effects of idleness and unemployment are avoided.  ELR also increases efficiency because it increases production, maintains human capital and protects the environment.

In conclusion, BIG and ELR share many of the same goals and objectives. BIG proponents oppose ELR because they believe it promotes the fetish of work. ELR proponents advocate providing jobs to those who want to work. In their view, ELR is compatible with BIG, and so they do not oppose it. ELR proponents would prefer NOT to send a Big BIG payment to all as this would devalue the currency. However, if we are going to have a BIG for all, it is still necessary to offer ELR so that those who want to work have the opportunity to get a job.

ELR supporters do agree that we need decent incomes for all. Most people can achieve decent income through work so long as their wage is high enough. Others will need income not related to work—some form of BIG. Hence, ELR supporters are not opposed on principle to BIG. They just want to get the horse (jobs) before the cart (decent incomes for all).

 

References

Atkinson, A. B. 1996. “The Case for Participation Income” The Political Quarterly.  Vol. 67. No. 3. 67-70.

Barry, B. 1996. “Survey Article: Real Freedom and Basic Income”, The Journal of Political Philosophy, vol. 4, no. 3, pp. 242-276.

Burgess, John and William F. Mitchell. 1998. “Unemployment Human Rights and Full Employment Policy in Australia.” In Globalization, Human Rights and Civil Society, eds. Melinda Jones and Peter Kriesler. Sydney, Australia: Prospect Press.

Clark, Charles M.A. 2004. “Ending Poverty in America: The First Step (draft)”. USBIG Discussion Paper No. 80.

Clark, Charles M.A. 2003. “Promoting Economic Equity: The Basic Income Approach”. In Institutional Analysis and Economic Policy. Mark R Tool and Paul Dale Bush. (Eds.). Boston, MA: Kluwer Academic Publishers.

Clark, Charles M.A. 2002. The Basic Income Guarantee: ensuring progress and prosperity in the 21st century.Dublin:Ireland: The Liffey Press.

Dewey, John. 1939. Intelligence in the Modern World, ed. Joseph Ratner. New York: Modern Library.

Friedman, Milton. 1962. Capitalism and Freedom. Chicago, IL: University of Chicago Press.

Forstater, Mathew. 1999. “Public Employment and Economic Flexibility.” Public Policy Brief No. 50. Jerome Levy Economics Institute.)

Harvey, Philip. 2003. “The Right to Work and Basic Income Guarantees: A Comparative Assessment” USBIG Discussion Paper No. 57.

Harvey, Philip. 1989. Securing the Right to Employment: Social Welfare Policy and the Unemployed in the United States. Princeton, NJ: Princeton University Press.

Fitzpatrick, Tony. 2003. After the New Social Democracy. Manchester, UK: Manchester University Press.

Keynes, J. M. 1936. The General Theory.

Minsky, Hyman. 1986. Stabilizing and Unstable Economy.

Mitchell, W. and Wray, L.R. 2005. “In Defense of Employer of Last Resort: a response to Malcolm Sawyer.” Journal of Economic Issues. forthcoming.

Offe, Claus. 1992. “A Non-Productivist Design for Social Policies.” Arguing for Basic Income. Ed. Van Parijs, Philippe. New York, NY: Verso.

Paine, Thomas. 1796 Agrarian Justice.

Pigeon, Marc-André and L. Randall Wray. December 2000. “Can a Rising Tide Raise All Boats? Evidence from the Clinton-era expansion.” Journal of Economic Issues, 34.

Rawls, John. 1971. Theory of Justice. Harvard University Press.

Sawyer, M. December 2003. “Employer of last resort: could it deliver full employment and price stability?” Journal of Economic Issues. 881-908.

Schutz, Robert R. 1996. The $30,000 Solution. Santa Barbara, CA: Fithian Press.

Standing, Guy. 1992. “The Need for a New Social Consensus.” Arguing for Basic Income. Ed. Van Parijs, Philippe. New York, NY: Verso.

Tcherneva, Pavlina R. 2003 “Job or Income Guarantee?” C-FEPS Working paper 29.

Van Parijs, Philippe (ed.). 1992. Arguing for Basic Income. New York, NY: Verso.

Van Parijs, Philippe. 1995. Real Freedom for All. Oxford, UK: Oxford University Press.

Van Parijs, Philippe. 2001. What’s wrong with a free lunch. Boston: Beacon Press.

Van Parijs, Philippe. March 2004. “Basic Income: A Simple and Powerful Idea for the Twenty-first Century”. Politics and Society. Vol. 32. No. 1. 7-39.

Vickrey, William S. 2004. Full Employment and Price Stability. Eds. Mathew Forstater and Pavlina Tcherneva. Cheltenham, UK: Edward Elgar

White, Stuart. 2003. The Civic Minimum. Oxford, UK: Oxford University Press.

Widerquist, Karl. 2004. “Freedom as the Power to Say No”.  USBIG Discussion Paper No. 88.

Widerquist and Lewis. Levy paper #212

Wray, L Randall and Mathew Forstater. 2004. “Full Employment and Economic Justice” in The Institutionalist Tradition in labor Economics. eds. Champlin, Dell and  Janet Knoedler. Armonk: NY: M.E.Sharpe.

Wray, L. Randall. 1998. Understanding Modern Money.

(Cross-posted from EconoMonitor)

Comments


Leave a Reply

You can use these XHTML tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>