Prosperity

The Basic Income and Job Guarantee are Complementary, not Opposing Policies

Let’s see what happens when everyone has some cash on hand

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By Brad Voracek

It’s disappointing to see debates between proponents of the Basic Income Guarantee (BIG) and the Job Guarantee (JG). These discussions detract from the fact that both of these ideal policies are distant from the policies we currently have in place. Supporters of either of these policies should be working together to get either one implemented, and we can debate adding the other later. Today, we need to move beyond our current disjointed welfare system to one that will help Americans, and either policy (or both!) seems like a step in the right direction.

If we look at the current system, the three largest welfare programs we have are Medicaid, the Earned Income Tax Credit (EITC), and the Supplemental Nutrition Assistance Program (SNAP). Before the Affordable Care Act (ACA), Medicaid was limited to certain low-income individuals, but the ACA expanded this program so that all adults with incomes below 138% of the federal poverty line are eligible. For FY 2015 Medicaid cost $532 billion to cover 73 million individuals. EITC provides additional income to low wage workers, and in 2014 paid out $67 billion to 27.5 million tax filers. Finally, SNAP guarantees an income to buy certain necessary items, and paid out $69 billion to 22 million households in 2015.

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Then beyond those three largest programs, we have a smattering of additional programs that help the poor in this country. There’s a housing assistance program, Supplemental Security Income (SSI) for the elderly, Pell Grants for college tuition, the Temporary Assistance for Needy Families(TANF) program, the Child Nutrition Program, the Head Start preschool program, various Job Training programs (like AmeriCorps and Job Corps) under the Workforce Investment Act, Unemployment Insurance, the Child Tax Credit, Supplemental Nutrition for Women, Infants, and Children(WIC), and then theres others I’m sure I missed (oh yeah, the Obama phone!) along with various state and local programs. The amount of overlap, overhead, and bureaucracy involved with running all of these programs surely diminishes their effectiveness.

All of these programs provide support by doling out income or necessities, with or without a requirement that the recipient be working. BIG and JG would both be ways to consolidate all of these programs, and then the debate becomes how much does someone have to work in order to receive assistance. A lot of people who advocate for BIG think that our current system has a lot of pointless jobs, and BIG would be away to allow those people to pursue something more creative. Considering that most entrepreneurs have one thing in common — access to capital — that may not be too far off. Then there are JG proponents who probably agree with that point, but think we can use the policy to help organize jobs that need to be done (liking cleaning up our environment, or building our infrastructure). Most people who support BIG worry that a JG would create “make-work”, quoting Keynes famous “bury bank notes and dig them back up” line. To them, just giving people the bank notes makes more sense. On the other hand, JG proponents worry about losing the social utility of work. People want to contribute to society, and they see work that needs to be done. Both policies seem hard to pass in today’s political climate.

I think proponents of both the BIG and JG are disappointed with a U6 unemployment rate of 9.5%, current companies lack of interest in maintaining our environment, and over 45 million Americans living in poverty. Call it whatever you want, let’s guarantee every American access to the necessities: healthy food, shelter, and healthcare. Clearly this is going to require some people to do some work, so let’s make sure that work gets done with our social structure as well. Calling it a BIG or a Basic Necessities Guarantee (BNG) or a JG doesn’t matter so much to me.

In fact, I’d probably start with calling it the EITC. Get rid of the minimum income phase in, and we instantly have a “BIG”, with all the infrastructure already in place. It would only go to unemployed or low income citizens, since the EITC phases out, which helps it be a progressive policy. So that it can cover the housing benefits and others, we could expand the credit a bit too. How do we pay for this? It’s simple. Scrap the other welfare programs (keep Medicaid, that one’s complicated). The overhead of having all of these programs is gross. How feasible is this plan? Honestly, no clue. I’ve never made a policy. I’ve barely met anyone who even makes policy. It seems like the closest option there is, however. I can see the complaints already though. These ungrateful welfare abusers will buy alcohol and drugs with their new found income! Somehow it’s not OK to drink and do drugs if you’re poor, but if you’re rich, go for it, right? If you get rid of SNAP, people won’t buy food for themselves! Well surprise, there’s already a way to trade SNAP benefits for cash — it’s called craigslist.

Then there’s the other major complaint this would cause — now there is no incentive to work. We have to keep abject poverty as a social option so that people keep working at McDonalds making the McObese, and keep stocking the Wal-Mart shelves so that Wal-Mart can pay starvation wages which allow people to be eligible for the EITC in the first place. I’m not really sure those are the jobs that need to be done. If our low wage workers were working on local farms producing fruits and vegetables, I’d probably agree… someone has to do those things (or make robots to do them!). Yet I haven’t seen any proof an income stops people from working. It’s all speculation. I bet people still do things. Here I am, incomeless, and I’m doing something. I’m writing. I’m volunteering. I’m applying to jobs that I want to do and think will have a positive benefit. Getting rejected, but still, I’m trying.

Let’s see what happens when everyone has some cash on hand. If we start starving and need the government to force us to produce food, we’ll do it then. Yet from the friends I’ve talked to, boredom is a very potent driver of change. I know my fellow millennials and I have dreams of growing our own food in our parents backyards, or the empty lot across the street, or the empty K-Mart, or the empty mall. If only they’d let us. If only we had a little income, a little land, and some water to give it a try. If only the police weren’t killing and hurting us. If only Nestle wasn’t pumping out water from government land for free and forcing us to spend money on it. A lot of us worked our asses off at school, and what did we get? The choice between huge corporations who we see as destroying the environment, or low incomes working retail living with our family and friends. Meh. My friends and I want something different. I choose believing there’s something better than choosing between two evils.

Remember when the public hated huge corporations for destroying small business, not each others’ identities? Do we remember The High Cost of Low Price? BIG and JG proponents, let’s not quibble. We’re on the same side. There’s work to be done. Get organized. Make it happen.

Originally published at The Minskys.

2016 December 25


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  • Duncan Cairncross

    Yet I haven’t seen any proof an income stops people from working.
    There have been studies – they all found that people DID NOT stop working

    It’s all speculation.- no its NOT – there have been studies about this – and they all found that people kept working

    • Brad Voracek

      Please share the papers, I’ll update!

  • OllieJones

    Interesting.

    To be most useful, basic income guarantee money needs to be paid as if it were wages: weekly or at least twice per month. Why? The people who really need it live hand to mouth. They often don’t have real access to banking. They often get stuck at the end of the month when cash paid monthly runs out. If they have cash on hand they perceive as “big” then they’re vulnerable.

    SNAP (f/k/a food stamps) did a good job of dealing with this cash-flow issue by adopting a debit card. But SNAP is a medieval game of political football played by rich legislators kicking around the empty stomachs of poor people to score points.

    The Earned Income Tax Credit has a giant problem in this respect; in practical terms it’s not an income, it’s a once-a year bonus. It gets treated that way by a lot of people who need it as an income. They pledge it before it arrives.

    I volunteer in a drop-in center for kiddos in a public housing project. This request is routine from parents: “can I borrow $x? I’ll pay you when my tax refund comes.”

    The trouble is, their tax refunds are routinely overcommitted. So that puts people in the humiliating position of asking for a “loan” knowing full well it can’t be repaid. We’ve dealt with that by asking donors for an emergency cash gift fund. We just give people the money. But that’s also a tough deal: we have to keep the existence of the fund secret, otherwise it would run out immediately.

    Being poor is hard, hard, Kafkaesque, work. USA cultural norms justify the bureaucratic labor we impose on poor people with vague moral attitudes. Those attitudes would vanish like dew in the sun if people in power had to do that kind of work before they could feed their families.

    • Brad Voracek

      Fantastic point that I did not consider when making that proposal. EITC might be able to get enough income to families, but it doesn’t get them incomes distributed through time as they would need it to be. This would require some additional infrastructure, making it not as simple as I thought. Perhaps some sort of public banking scheme would be better.

      What I was hoping to achieve, but really didn’t articulate well enough, was moving people from debating these ideas abstractly to actually talking policy details for how the infrastructure for either a BIG or JG would be setup. Work for another piece, I suppose.

      An interesting side effect I also thought of if EITC’s phase in were to disappear – the definition of earned changes. You earn income simply by existing. That gives me a nice warm feeling inside.

  • Steve

    Good attempt at integrating the BIG and JG perspectives. Personally I’m not that concerned about any “problems” associated with a universal dividend. 90% of us find purpose even under the present austerity and I suspect that even more would find the same under the relative prosperity available with it. Even so I think the best way to prepare us for a post scarcity economy would be to re-define the concept of full time work into 20 hr/wk of employment 20 hr/wk of volunteerism and/or self determined positive, constructive purpose plus a $1500/mo. dividend to everyone 18 and older. This would keep the labor market robust even with the virtual certainty that innovation and AI will destroy employment at a rate 20-30 times the rate it ever has before, allays any authoritarian fears that “everyone will become lazy” and also costlessly injects needed demand directly into the hands of individuals so that the economy will flow freely….like general equilibrium theorists dream it does. Of course if one wanted to work 40 or 60 hrs/wk and their employer wanted to retain them that would be fine and they wouldn’t have to do any volunteering while still receiving their dividend, and of course someone who just wanted to take care of their family would also still receive their dividend. Purpose trumps employment

    Actually we’ll want to implement another macro-economic policy strategically placed at retail sale where merchants would give say a 40% discount to consumers and then all of the merchants’ discount would be rebated back to them by a monetary authority mandated to specifically do that. This would not only prevent and price inflation, but would actually integrate price deflation harmlessly and profitably into profit making systems.

    Of course the present monetary and financial authorities would resist this, but if we are smart we’d start a grass roots to communicate how the above two policies are in the interests of the small to medium sized business owner as it would insure a steady stream of additional demand for their products/services and enable them to sell them at 40% less than their best competitive price….while getting that full price. It’s what I call the new Steve/Powell Memo. As David Graeber has shown us finance has been the problematic business model for at least the last 5000 years. I’m not interested in destroying finance, only de-throning and de-toothing it so it can take its correct and smaller place along side every other business model. In order to de-hypnotize themselves and the general populace from the dominating monetary paradigms of debt and loan ONLY economists need to integrate monetary gifting into the debt based system.

    wisdomicsblog.com

  • Frank Kamanga

    We are Global Unification Universal Basic Income Movement. Our mission is to create a world of universal prosperity and innovation, by ensuring basic economic security. No one should be held back from their aspirations, passions, and dreams.
    We believe that advocating for, and experimenting with Basic Income is the best way to practically tackle the problem of economic insecurity. In order to explore Basic Income we will use dialogue and the science of human motivation to inspire people to dream of economic freedom for themselves, and then to motivate them to take action to create that world, all the while measuring and testing our impact to best understand the root differences between economic freedom and economic insecurity.
    To build a movement of direct action through this project in support of Basic Income until it is brought into force through legislation regardless of party affiliation.
    We are running a Campaign for this project on facebook. As a condition to access the funds the online facebook group of universal basic income must have 500,000 members from across the globe. Therefore Global Unification Universal Basic Income movement is requesting all its supporters and fans to visit this page and join the group. https://www.facebook.com/groups/Global.Unification.International/

  • Lev Shakhmundes

    Brad,
    Here is my first question for you. How would any job guarantee policy fit into a capitalist economic system? A formulation of a plausible job guarantee policy, however tentative, could clarify.
    Best regards,
    Lev

  • This article contained so much that I disagree with that I had to provide a point by point rebuttal inside a Google Document, which I’ve shared so that anyone with the link can reply to my comments if they wish:

    https://docs.google.com/document/d/1IjP1XhAIaVWkocMaA0MKT7H8EUkHoHVj057NJ-wykS4/edit?usp=sharing

    • Brad Voracek

      I appreciate your comments, and responded with my thoughts in your google doc.

      • Thanks I have replied where appropriate.

        Sorry I got mad.

  • Ishi Crew

    i know alot of people on food stamps, etc. they sell em for drugs, cigarettes, sex, and alc. i used to get em too and do same thing–except i sold em to pay cover charges at music clubs.

    karl widerquist https://usbig.net/bigblog/author/karl is a big proponent of big, and works in qatar (a slave state—-he gets paid teaching about BIG, the slaves dont get paid, and he doesnt have to do any work or analyses–totallly shallow Phd type) and he also has a job with georgetown u (catholic, racist, homophobic -lite, classist–heavy, all heavy on the side of hypocrites ) .

    not too different from UC berkeley. except that is a publicly funded place. GJ and BIG are not too different. rather than EITC i prefer ‘negative income tax’ and say parecon (patrticipatory economics.). https://thenextsystem.org (i know alot of these people, and i think they steal my ideas)

  • Our show this morning was about Basic Income Guarantee If feels great to envision a world where all needs are meet. http://www.am950radio.com/shows/food-freedom

  • mohinderkumar

    Pilot studies in India, Africa, Canada, Britain, etc. and BIEN’s on-line literature clearly show that with BI people didn’t stop working and those who were unemployed they got some cash to set up petty enterprise. In Asia, it had social positives as well.

    My concern is different. Why “job” discourse should hijack your basic premise of BI? Primordial hunters and gatherers facing uncertainty of kill and modernity facing uncertainty of job are no different anyway.

    BIG and/or JG stand for freedom. Let people earn this guarantee as freedom first, rather than earn wages or earn jobs. In Ladakh (India), even mobile nomads of hundreds of years’ age culture have become wage wanderers under the impact of modernity! What an irony! What is this capitalist culture?

    You’ve written a brilliant piece. It’s an intellectual “start up”. I exist, so I’ve the right to all entitlements which keep me alive without “employment”. Work is NOT = Employment. Work is to play with Nature and its objects. They ARE my objects, my extension. Capitalism/finance capital or any MoP howsoever smart in technology is far < < < < Universe.

    Brad, stick to your basic premise, basic principle of your essay. Never compromise on "sources", "feasibility", "benefits", "funding", Let people organize themselves, and go for demand for re-distribution of resources.