A Universal Job Guarantee Proposal: Critics

What do the critics say?

Having examined what a Job Guarantee is, and what the benefits are – let’s move on to examine the criticisms offered of the program. Some of the criticisms below are valid, some are premised on a different understanding of the future, while some are simply based on a misunderstanding or misrepresentation of what a Job Guarantee is.

“Automation and technological progress mean there won’t be any work to do.”

Many people support policies like a Universal Basic Income on the basis that the world we are moving towards is one in which many jobs simply won’t exist, in which case we should transfer wealth from the owners of the robots to the people who have been replaced by them. Without a crystal ball it’s impossible to know for certain, and if automation is as pervasive as some predict, there’s a very strong case for that kind of policy program. In the meantime, there’s good evidence to suggest that we’re a long way off a world without work. Countless studies demonstrate that rather than automation decreasing the number of available jobs, it simply changes the composition of the work required within particular jobs [1]. Given that context, it’s important that we have a policy framework that gives people a right to access to the pool of available work rather than have that access determined by the whims of the market. Even if we were to give people enough of an income to survive without work, the more radical position is ensuring that everyone has access to the means of production.

Even if we were to give people enough of an income to survive without work, the more radical position is ensuring that everyone has access to the means of production.

“A Job Guarantee is coercive, paternalistic or workfare by another name.”

Definitionally, a Job Guarantee is voluntary and non-punitive. People are welcome to take existing unemployment benefits as an alternative. People are given the full wage-benefit complement society has determined as the minimum award. A Job Guarantee does, however, not allow people to absent themselves from community altogether. It requires people to bring their skills and experience to the table for the benefit of people beyond themselves, and offers them decent pay and conditions to do so. But it also creates an obligation on the state to show up for people, rather than casting them out on their own. A guaranteed income doesn’t give someone the ability to move towards being a carpenter, a teacher, or till the fields owned by mega farms. A guaranteed job requires the government to provide people with access to the necessary training, development, support and property to make good on that guarantee and make sure community needs are being met. Apprenticeships and on-the-job training is a crucial aspect of the Job Guarantee design, meeting people where they are, and helping them develop skills that may allow them to transition to the private sector should they wish to. It allows communities, and democratically elected local councils to have direct control over what is considered work – placing power in the hands of people rather than corporations. But importantly, a Job Guarantee is not paternalistic in that it takes someone who wants a job, and gives them one. It offers people the thing they were seeking directly, rather than ineffective job incentives or a cheque with no guarantee of work attached to it.

“People won’t have the skills to perform the work needed by communities.”

There is a logistical challenge in ensuring, on the one hand, people have access to work that meets them where they are in terms of ability, experience and interest, while on the other hand trying to ensure that community needs are addressed. A Job Guarantee program can largely address this through providing on the job training, apprenticeships or even formal higher education as a work option for the unemployed. By placing the obligation on the government to find people work, we create a framework by which the government participates in managing economic transitions directly. This is not dissimilar to the way the Commonwealth Employment Scheme operated – surplus public sector hiring and on the job training would often be funded in industries in which future private sector demand was expected, ensuring people could up-skill, or re-skill as they made their way through their career.

“A Job Guarantee is administratively impossible.”

Of course there are significant challenges in making any large social program work well. Think of the amount of effort necessary to ensure a functional education system: curriculum design, physical infrastructure, sufficient teaching staff, effective assessment and grading, catering for different abilities and diverse classrooms. We don’t always get it right, but we’ve been on a century-long journey of improvement and progress because we agree with the aim. A Job Guarantee offers an expanded vision for the role of community and the state in people’s lives, rather than a system of individualised payments that enable participation in the private market. To support a Job Guarantee is to support the notion that everyone who wants a job should be entitled to one – the logistical details are a separate, and worthwhile,  debate that won’t be anywhere near concluded at the point of implementation.

But some of the logistical challenges are overstated. Most state governments are the largest single employers within their state economies. We have a model for government employment and administration of people that works. Most local councils, and registered charities already have a clear sense of additional work that could be done if they had the funding and the people to do it. At its simplest, you could imagine every Centrelink office in the country turning from an unemployment centre into an employment centre, matching people with work from job banks that are populated by local councils and community organisations.

“Full employment is inflationary.”

Recent analysis suggests that prices won’t increase significantly even at very low levels of unemployment [2]. But a Job Guarantee also mitigates inflation partly by operating countercyclically, and by anchoring government cash injections to a concrete unit of a person’s time. But significantly, a Job Guarantee also creates a buffer stock of employed people that operates in a very similar way to the buffer stock of unemployed people. The private sector can always hire out of the Job Guarantee pool of workers, just as they could out of the unemployed pool of workers – there’s a one time price effect of shifting the minimum wage-benefit package to low income private sector workers upwards [3].

“People will take advantage of the scheme to do bullshit jobs or no work at all.”

This point of view starts from a fundamentally suspicious and cynical view of human nature. By and large, unemployed people want to work. Their job status isn’t the result of a lack of character or effort, it’s the result of there not being enough jobs. People who are given the right level of ownership, training and support, and a clear sense of connection with the purpose and importance of their work – generally want to perform well. The flexibility and breadth of work under a Job Guarantee program means that many of the things people leave the private sector to concentrate on – childcare, volunteer work, care for the elderly, further education and re-training – are able to be remunerated under a Job Guarantee system. Some people may genuinely wish to absent themselves from the workforce altogether. Those people should be ensured a dignified quality of life, regardless of their engagement with the Job Guarantee program, but also be offered a level of support in case there is an underlying reason for wanting to opt out that can be resolved.

“We can’t afford it.”

In the current economy, a Job Guarantee in Australia would have a net cost of about $25 billion per year. There are numerous answers as to how governments will pay for that cost.The first and best answer is provided by an emergent stream of macroeconomic thinking sometimes referred to as Modern Monetary Theory: that sovereign, currency issuing governments can afford anything that is for sale in the currency they issue [4]. The real constraints on modern government spending isn’t whether the money exists, or the size of a specific deficit, or the public debt at a moment in time – it’s the availability of real resources in the economy. As a set of observations about the way the modern payment system works, Modern Monetary Theory is both accurate and a useful framework through which to think about progressive policy initiatives as it shifts the conversation to “is this spending worth it,” rather than the more misleading “can we afford it.”

The second answer, which is perhaps easier in the current political environment, is that the government has just passed income tax cuts worth $140 billion over the next decade. And until recently, the government was proposing corporate tax cuts worth $80 billion over the next decade. There are many arguments available to progressives in arguing against $220 billion in tax cuts over the next ten years, but my preferred answer is: we’ve got a better idea for how to spend that money. And conservatives have given up the right to tell us it’s an unaffordable amount.

The real constraints on modern government spending isn’t whether the money exists, or the size of a specific deficit, or the public debt at a moment in time – it’s the availability of real resources in the economy.

How does a Job Guarantee compare with a Universal Basic Income?

This article has not to this point, drawn a comparison with a Universal Basic Income. In part, this is because these policies are too often presented as in conflict or competition with each other, when really they are separate policy proposals with separate aims. Debates about policies and priorities are undoubtedly important and unavoidable within the left. But the level of energy and animosity that is often targeted at other left proposals is, I think, often destructive rather than constructive. Advocates for a Job Guarantee are not the enemy or roadblock to a UBI, or vice versa. The entrenched power of capital and the established political class are usually the common enemy of both.

Wherever possible, progressives should be looking for ways to express their views, while building the biggest, most inclusive tent possible and being generous to one another’s ideas. In that spirit, below are some observations that may help explain why many advocates have chosen to dedicate their time and energy to a Job Guarantee first.

Affordable UBIs are inadequate, and adequate UBIs are unaffordable [5].

The UK think tank Compass analysed a modest proposal for a UBI that would sit on top of existing welfare distributions. That analysis concluded that such a UBI would cost 6.5% of the UK’s GDP, but would only reduce poverty amongst working age people from 13.9 to 12% [6]. Proposals for a full-blown, living wage UBI like the one proposed by the Australian Greens would cost significantly more – in Australia, it is likely to be an annual cost of $254 billion, increasing government spending by 55% [7]. While the government can always afford such payments, for the reasons detailed above, the economy probably cannot. To prevent such a large injection from causing price increases that would negate the benefit of the policy, significant tax reform will be needed. Setting aside the political obstacles to achieving tax reform of the scope and scale required, the issue is then that the UBI is no longer universal. High, and even moderate income earners will be paying significantly higher tax such that they are no longer net-beneficiaries of the UBI payment. The key feature of a UBI as opposed to a Guaranteed Basic Income is that the universality of payment removes the stigma associated with receiving it. But it’s not hard to imagine a political future under a generous UBI where the class divide is exacerbated by the taxation rates necessary to prevent inflation, and in which net-UBI-recipients are seen as dependent on the net-tax-contributors very similarly to today.

By contrast, in most developed economies it’s estimated that the cost of entirely eradicating poverty through targeted payments that place people above the poverty line is 1% of GDP [8]. A Job Guarantee would address poverty, help redefine work and challenge neoliberal narratives of entitlement with a smaller, more immediately available step outside the political imagination and at 10% of the cost.

A standalone UBI doesn’t challenge capitalism, it enables participation in it.

Proponents of a UBI often argue that it recognises and compensates people for their humanity rather than their work. It’s a powerful idea, and an even more powerful message. The reality is, however, that unconditional payments enable people to become consumers without challenging the domain of the market over production. It entrenches an aristocracy of producers who serve a democracy of consumers. A Job Guarantee by contrast expands the pool of services, products, places, and experiences that are provided by communities rather than companies. It challenges the state to give people access to the socially owned means of production, or abridge private ownership of capital as necessary to secure access to work for all.

Moreover, a guaranteed income takes a great many people who want a job but can’t find one, and simply gives them a cheque. It does nothing to provide people who are discriminated against, or marginalised from the labor market due to their location, disability, or educational background with access to the means of production. People unable to find paid work under the status quo will be unable to find paid work under a UBI. It creates no structure or framework to give people a path to forms of social inclusion that financial independence alone doesn’t offer. The best a UBI does for these groups is give them a near-poverty wage, and leave them dependent entirely upon the private or charitable sector to produce the goods and services they need.

Conclusion

The last two years in global politics have been a source of both angst and inspiration for progressives. As reactionary, racist, and regressive political movements and leaders have won key victories, the left has been forced to confront the notion that the boundaries of what’s politically possible are far wider than we imagined. But within that opening, old ideas have found new purchase and debates have reignited as we search for policies that are scaled up the challenges of the world in which we live. A Job Guarantee is but one proposal but it has transformative potential, and mainstream appeal [9].

This post by Ed Miller first appeared in 2018 in Green Agenda

References:

  1. AlphaBeta, “The Automation Advantage,” Insights, August 2017
  2. Steven Hail, Economics for Sustainable Prosperity, Binzagr Institute for Sustainable Prosperity, 2018, p234.
  3. William Mitchell, “The Buffer-Stock Employment Model and the NAIRU: The Path to Full Employment” Journal of Economic Issues 32, no 2: 547–555.
  4. For an introduction to Modern Monetary Theory, see: Steven Hail, “Explainer: what is modern monetary theory?” The Conversation, January 2017. For an academic introduction, see: Stephanie Bell, “Can Taxes and Bonds Finance Government Spending?” Levy Economics Institute, Working Paper No. 244, July 1998.
  5. Luke Martinelli, “Assessing the case for a Basic Income in the UK”, University of Bath, IPR Policy Brief, September 2017
  6. Daniel Zamora, “The Case Against a Basic Income”, Jacobin, December 2017
  7. Howard Reed and Stewart Lansley, “Universal Basic Income: An idea whose time has come?” Compass Report, May 2016 at p17.
  8. Matt Bruenig, “How much money would it take to eliminate poverty in America?” The American Prospect, September 2013.
  9. Essential Research, Weekly Omnibus survey of 1027 Respondents, 10th to 13th of 2018

 

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