Wednesday, 24 July 2013

Basic Income or Job Guarantee?

(3/3) So if both the BI and the JG have many overlapping advantages (assisting the worst-off, ensuring there is demand in the economy), how are we to choose between the BI and JG? For one thing it will be necessary to emphasise their differences. The way to judge these differences, however, is from the perspective of distributive justice. The fairer approach is the one we should prefer.

I indicated some of the differences between BI and JG in my first post on this topic. The BI is provided to everyone without any conditions, while the JG is only provided to those who perform what is required of them by the programme. BI will be cheaper to administer, but the JG will not pay out to those unwilling to work. It is difficult to say in the abstract which one will be cheaper, but there is an important difference. The JG will make people more likely to seek work in the market, particularly if it is combined (as I argue it should be) with a generous earning subsidy for those on a low hourly wage. This will push more people into work, whereas the BI will push more people into a life of leisure.

The greater amount of work performed in a JG society should broadly reduce prices (as more will be produced), and also ensure that socially useful activities are performed by those who would otherwise be unemployed. These are benefits of the scheme not accounted for in the cost to government. Advocates of the BI may claim that the BI will produce these positive outcomes anyway – if people get money for nothing they will spontaneously do something useful with their time. I’m sure many would, but I’m equally sure many wouldn’t. Indeed, a very small minority might cause more trouble if they have more leisure than they would if they were working.

Coppolla makes a very perceptive point regarding the differences between proponents of the JG and those of the BI. One difference might be that JG supporters are “managerialist” and want to make sure people are doing something useful. BI supporters love freedom, on the other hand (like Van Parijs), and are happy to leave it up to people to decide for themselves what they wish to do with their time. As a liberal myself, my sympathies here are on the side of freedom. However, the likely extra costs to society of this freedom are what tip me towards the JG approach. Furthermore, there is something democratic in asking people to do what their community has decided (perhaps via public suggestions which are voted upon) to be useful work projects.

My primary reason for preferring the JG relates to the economic advantages it offers to low-paid workers. Giving more resources to leisure-lovers will mean less resources available to support low-earners who are keen to work (whether because they want to consume more, save more, gift more, or just have a strong work-ethic). Better to channel resources to the low-paid rather than to leisure-lovers.

In the post-scarcity economy, of course, it might not be necessary to impose the work requirement. If there really was nothing that people had to do to make their society a better one in which to live then there is no point in forcing people to work. However, I imagine that it will always be possible to improve things, and it would be fair to apportion the corresponding work (and any ensuing pay) as fairly as possible.

The argument for the JG with earning-subsidy approach arises where there is tax revenue scarcity, particularly if there are useful things that people could do if they were appropriately directed. In this case the JG approach is superior unless we assume that a particular notion of freedom is of primary importance (as it seems to me Van Parijs does).

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