The indignity of no work

http://www.economist.com/blogs/freeexchange/2014/02/social-norms

by benfreu • 12 years ago

133 263 12 years ago

mattdw4• 12 years ago

A world in which a healthy adult has the reasonable expectation of earning a decent living while working full-time at a market wage is absolutely a world in which the dignity of work is a useful social value to cultivate. In a world in which that is not a reasonable expectation, the dignity of work can be a harmful concept.

Interesting times ahead. It's going to be painful getting there, if we get there at all, but the idea of a Universal Basic Income seems to be getting more popular. (It wasn't so long ago it was pretty much pure sci-fi.) Particularly I guess as it begins to look like modern capitalism may not actually be good at providing jobs for everyone who needs one.

Potentially UBIs could be very good for the world, freeing people to work on things they personally desire and value, and in some ways redistributing the 'means of production' back to the little guy.

dantheman6• 12 years ago

The idea of a basic income is still sci-fi. There just isn't that much money.

Freeing people to work on things they desire will mean no one will ever wash dishes at a restaurant, no one will pick up trash, no one will spend time wiring your house for internet, or fix your computer, or do a large swath of jobs. The argument that with UBI people will still do that only for more money is crazy, since the taxes would have to be so high to support UBI that the costs would dwarf what people could afford.

As these services collapse so to will higher paying ones; lets see a doctor get up early to wash the floors of her practice since she can't afford to hire a cleaning staff and still charge patients a reasonable rate.

argonaut3• 12 years ago

No. It does not mean no one will ever work as a dishwasher/etc. It just means that the market rate for dishwashers/etc. will be higher. This would be due to the supply curve for labor shifting.

Certainly, some businesses will not be able to hire as many (or any) dishwashers/etc, but those that they do hire will have to be paid more. But that is a natural extension of decreasing the supply of labor.

The higher price that businesses will pay for labor will also push them to invest in capital (automation).

EliRivers2• 12 years ago

"Freeing people to work on things they desire will mean no one will ever..."

Unless they want more money, of course. Hands up everyone who might want more money than the minimum needed to survive.

scotty795• 12 years ago

Washing dishes is so incredibly dumb. What should have been done long ago is standardising plates, cups and cutlery and creating integrated dish cabinet/washer that can wash those standardised items and store them.

The fact that in 2014 we still rely on manual work to wash the dishes is a disgrace perpetrated by oversupply of cheap human work.

hayksaakian• 12 years ago

The idea is that technology makes doing anything undesirable totally optional.

We made horses obsolete for transport, and now nobody HAS TO ride a horse (99%). You can do it for fun.

I would argue that today, most people who ride horses enjoy doing so, where the same could not be said for times before modern transportation.

mattdw4• 12 years ago

The idea of a basic income is still sci-fi.

That's untrue. Switzerland is having a national referendum on whether to offer one, and stipends from oil or casino money, while not enough to live on at this point, already exist in a few places. You may be correct that there's not enough money to give everyone enough to live on, but it's far from sci-fi.

(There is plenty of money in the world, it's just tied up in things like insane finance industry salaries, or $500k/yr/person for imprisonment, etc.)

And historically? People looked after their own menial tasks, where they were small enough, and where the tasks were too big for individuals (like roads, or building a town hall) the community got together and did it.

kevingadd2• 12 years ago

I don't understand how 'there just isn't that much money' is a meaningful statement in a world where governments can issue more currency. How much money do you propose we need to offer a basic income system?

dualogy3• 12 years ago

Last I heard, instead of paying taxes, Brunei citizens all get an annual $30k outright. Isn't that real-world, non-sci-fi Basic Income?

ansimionescu3• 12 years ago

The idea of a basic income is still sci-fi. There just isn't that much money.

Sorry, but that last part is utterly dumb. There is enough of everything for everyone, money is just one of the abstractions we built for convenience's sake. Most of these abstractions for power have gone out of hand, but I assure you that there exists a theoretical parallel universe where basic income is implemented at a global scale.

alexeisadeski35• 12 years ago

There just isn't that much money.

A $10k/yr income for every American would cost $3T.

Current US gov't spending is over $6.4T.

coldtea6• 12 years ago

The argument that with UBI people will still do that only for more money is crazy, since the taxes would have to be so high to support UBI that the costs would dwarf what people could afford.

Actually you could support UBI by just taxing 1-2 people in the whole US.

ronaldx5• 12 years ago

Freeing people to work on things they desire will mean no one will ever wash dishes at a restaurant, no one will pick up trash, no one will spend time wiring your house for internet, or fix your computer, or do a large swath of jobs.

Absolutely disagree.

Freeing people to work on things they desire will mean that undesirable jobs (such as the ones you describe) will have to increase pay and conditions to correctly reflect the job's undesirability. To me, that's an awesome result!

In the specific case of being a doctor: it's possible (but unlikely) that desirable jobs such as doctors may have to take a relative paycut to cover other expenses.

I don't see that as the worst thing. Doctors deserve to be paid according to their skill, yes, but at the moment have entrance requirements which are disproportionate to the job at hand. This effectively limits a desirable career to the already-privileged and means the system is not necessarily accurate at identifying the most skilled candidates. If poor, skilled people are more securely able to fund themselves through medical school, that would also be great!

AngrySkillzz• 12 years ago

The U.S. currently spends about 2.3 trillion dollars on social welfare every year. That's around $9,500 per adult per year, a pretty good starting point (and cheaper to administer since you aren't means testing and can collapse all of those other programs into one).

Combined with small tax increases or a cut in some of the U.S.'s other massive expenditure programs (i.e. the military), we can pretty easily afford to pay every adult U.S. citizen above the poverty level to do nothing.

lotsofmangos• 12 years ago

The idea of a basic income is still sci-fi. There just isn't that much money.

I don't think you understand how money works. If there are available resources then there can be available money.

dredmorbius5• 12 years ago

There just isn't that much money.

There's as much money as the regulator of the currency cares to create. Money is fungible.

Money isn't real wealth, and you cannot create more resources than you have simply by creating new wealth tokens. However, if what's ailing you is that the exchange tokens aren't equitably distributed, that does turn out to be a problem that can be addressed, directly, by creating and distributing more money.

The incentive effects are an interesting case to contemplate, but the more I think about it, the more that chasing revenue-generating opportunities of themselves seems to be more a part of the problem than of the solution.

marcosdumay3• 12 years ago

There just isn't that much money.

Sorry, but the idea scales from almost zero spending into infinity. You can not claim that there isn't enough money.

Our future looks very interesting because our machines promise to make goods very, very cheap. But they also promise to put almost everybody out of work. Left to a market, most of the population will starve, and very few become very rich. But almost any level of basic income will solve this, even if today it's too little.

mistercow• 12 years ago

There just isn't that much money.

How much money? Basic income doesn't imply a specific amount.

Freeing people to work on things they desire will mean no one will ever wash dishes at a restaurant...

This is probably false. Even if the basic income is enough to live off of, people will still want more money for luxuries. But instead of having to work 50 hours a week to scrape by, they'll be able to work 20 hours a week and live comfortably, even at low wages.

And if you get to the point that you actually have more jobs than people to work them? You either lower the basic income, or you let inflation do it for you.

Better yet, automation ceases to be a bogeyman for unskilled workers. If jobs get automated away, we can increase the basic income to compensate. On the flip side, we can actually incentivize automation by increasing the basic income, leading to a future where we stop making humans do dumb jobs just so they can be employed.

_delirium4• 12 years ago

A reasonable number of social-democratic countries have basically an overly bureaucratic, somewhat perversely-incentivized version of a basic income already, and it works ok. For example, the last-line social welfare system in Denmark, which you qualify for if you have no assets and don't qualify for a "better" system (like jobseeking assistance), known as kontanthjælp ("cash assistance"), is about $24k/yr. If you're a citizen there is basically no way you can be disqualified for this system, so it functions as an income floor.

This isn't properly a basic income, because you don't get it if you work, and in addition you need to exhaust all your assets first. This provides some perverse incentives, along with some bureaucracy to keep it all organized. But when it comes down to it, once you exhaust your savings and unemployment benefits, there's an income floor of $24k/yr, which is like a basic income except you lose it if you save money or find a job... which if anything worsens the disincentive problem. I'm not sure just extending it to a proper basic income would be worse for finances, and suspect it could be better.

Jach2• 12 years ago

Here's a simple if perhaps naive question. Suppose UBI is $x/yr. What's going to stop every apartment complex owner and every rental landlord from raising the cost of living on that property by $x/yr/tenant? Will the government start fixing prices? (I imagine that slightly more realistically all owners of physical resources, not just land owners, would raise prices as much as they can while still maintaining roughly the same profit percentage in order to compete with other owners to capture the new income, and so no single group of actors is likely to capture it all with one type of product.)

scotty795• 12 years ago

That's the only thing I can see that can go wrong with basic income. I'd counter that with progressive property tax. So that if you own 5 accomodations, of which each can house a family, you might be better off with selling the sixth one than holding it, paying exorbitant tax and risking it might stay empty for too long. I would pump money earned from this tax back into basic income.

Such tax might be beneficial even now in some places. In Japan and Italy so many properties were bought out by people intending to profit from the rent that price of accomodation rose to the point that most young people can't afford to live alone and stay with parents instead.

mattdw4• 12 years ago

An alternative to fixing prices would be just to compete. The government could start building its own housing, recouping the costs straight back from UBI rents, and simultaneously holding privately-owned market prices to a more reasonable level.

alexeisadeski35• 12 years ago

The same thing that keeps them from raising prices today:

Competition.

vl2• 12 years ago

In short - market. One landlord raises too much, tenants smash some buses and move to another apartment complex. Yes, there will be some inflation in rent market and other consumer goods, but unlikely so drastic.

UBI funds have to come from somewhere. Depending on the source of the money, UBI will either create low inflation or large inflation.

As a matter of fact, I suspect that recent min wage increase by feds is an attempt to induce inflation. All this money are going to be spent - basically creating larger money supply in consumer sector, and, maybe finally inducing some inflation feds are trying to start since 2008. Look at priced tags of recent tech acquisitions - some sectors of economy already value money much less than consumer sector.

VLM3• 12 years ago

Nobody here mentioned competition across sectors and price compression?

Competition across sectors example is land lord can ask for a 10% increase, but the renter is totally free to say forget it and downsize to a rental at the original rental rate, while buying a xbox or whatever with the new income. Or paying off that .edu loan. Or paying for healthcare. Or whatever. Mandatory expenses like healthcare, tuition, iDevices, they're free to go up as high as they want and probably will. Most things are not mandatory.

Price compression is the $10M skyscraper penthouse isn't going to change because its a rounding error, but this could have a huge effect in a slumlord area. Where I live is in between, I already make about 3x median household income so going to 3.5 or so isn't going to change much.

djrobstep• 12 years ago

Here is an interesting basic income calculator:

http://mattbruenig.com/basicincomecalculator/

Happily, it suggests lots of proverty reduction is achievable with a very manageable percentage of GDP.

lazyjones2• 12 years ago

That's far too simplistic and cannot be taken seriously.

One of the first serious issues you'd have to consider is migration from other countries to your model country with basic income. There's billions of people out there who'd happily live on basic income in some first world country and I'd absolutely encourage them to do so, given what the first world's riches are built on (but I digress...).

yourapostasy• 12 years ago

We do not yet have the technological foundation to feasibly implement a Banks'ian Culture-type "hard" UBI, and we barely have the beginning glimmers for even "soft" UBI like what many are discussing today. We lack energy production and management, AI, and nanotech for even rudimentary hard UBI, and even soft UBI is infeasible due to knock-on effects whose management is poorly-understood. Example: we already have a diabetes epidemic with low socioeconomic groups, and the obesogenic environment is not well studied enough to know if giving those groups more access to free time will improve outcomes. Will those groups on average use a soft UBI to improve their overall health, or will they choose poorly and the benefits of UBI blowback into exploding healthcare costs? No one really knows yet. I would like to believe that soft UBI would lead to better health outcomes, but that might simply be my own socioeconomic background speaking.

The few soft UBI trials commonly found in citations were too short-lived to tell whether we were simply observing a Hawthorne Effect at work or if the outcomes were sustainable.

loup-vaillant5• 12 years ago

France's welfare system is already close to ABI. You have to fight bureaucracy, you're not eligible unless you have no revenue, and it's barely enough to survive, you're supposed to be actively looking for work, but it's there.

We could start by simplifying the system, and replace that welfare system by an equivalent ABI (the salaries of currently working people will probably need some adjustments). It would be insufficient of course, but that would be a start.

slurry• 12 years ago

(It wasn't so long ago it was pretty much pure sci-fi.)

On the other hand full employment through monetary policy is pretty much science fact. Yet neither the United States nor the EU even pretend to pursue it. (China pretty much does, however. It works pretty well for them.)

It's not like providing a decent living for near everyone is this unsolved problem which, if could only we find the correct technocratic solution, we could just roll up our sleeves and implement.

The problem is that a lot of people are against doing it. At all.

smackay2• 12 years ago

This is slightly off topic. Work is rather a vague term. If you break it down into it's components: effort, compensation, social-benefit, etc. then you can start to assign relative merit to different kinds of work. For example financiers which might be categorised as: high compensation, low to moderate effort and low social benefit and janitors: low compensation, moderate effort, low compensation. Now you can start to make value judgements about how different types of work are rated or (should be) valued by the general public or society as a whole. You can also factor out the ideological or moral components attributed to work by various political factions and start to answer interesting questions such how much should teachers be paid and what jobs which are low compensation, low social benefit should we be automating as fast as possible.

dantheman6• 12 years ago

If you allow competition the market will do this. Compensation also takes into account the joy the job provides, some jobs are relatively pleasant and thus pay less than some that are much worse.

As for automation, I completely disagree - we automate where we can get the biggest gain on output. So if something costs a lot or has high social benefit we should automate it as much as possible so that it can provide more benefits to more people.

smackay2• 12 years ago

There are many types of job where market forces cannot solve the problem. (Within the context of the Universal Basic Income) there may entire categories of types of job that could be created to solve social (in the most general sense) or civic problems. For example charitable or education related activities are low to no profit - or at least it is not easy to measure their benefit directly or immediately, but high social value in the sense that they mitigate future problem that result in increase expenditures or taxes and so have long term value. Since the market uses money and direct profit as a means to measure everything it simply cannot deal with this.

mattdw4• 12 years ago

Compensation also takes into account the joy the job provides, some jobs are relatively pleasant and thus pay less than some that are much worse.

That's not generally my observation of the world. No-skill-required jobs pay less, skill-required jobs pay more. There's a slight bonus for dangerous jobs, but not a heap, relatively speaking. Pleasure derived or not only appears to have an effect on income levels outside of traditional employment and into freelancing territory, for example with starving artists and writers.

cwaniak2• 12 years ago

There are these interesting developments that I noticed and I'm interested to see how many others noticed that: (1) Polarization of left vs right views among people in both US and EU (2) Sudden drastic turn to the right in many places in the EU while at the same time turn to the left in the US.

It seems to me that since 1945 the US has been mostly right wing and is turning left radically, while the opposite is true in the EU.

tjaerv• 12 years ago

False dichotomy. There is more than one dimension. For starters, see the Nolan chart:

http://en.wikipedia.org/wiki/Nolan_Chart

TeMPOraL• 12 years ago

There's something to it. It's anecdotal, but looking at the trends in political discussions in Poland among my generation (folks in their 20s), it seems to me that they want changes in the very direction of what people in US have and complain about...

IvyMike• 12 years ago

I'm a cynical ass, but whenever I hear the phrase "the dignity of work" I can't help but sarcastically mentally add "yeah, work will set you free".

cwaniak2• 12 years ago

Everybody in the USSR had job. But these jobs didn't produce any (usually) value to the society. Who wants to have a job like this? You want to do something valuable so you know that what you produce people are willing to pay for (vs. being forced to pay for it). It just seems much more healthy too.

Broken_Hippo3• 12 years ago

I disagree. I don't think everyone wants or needs a valuable job, and to most people, this is an unobtainable dream. The truth is that most people I've met doing menial jobs are happy doing them IF they have enough money to cover necessities and do something enjoyable outside of work and their employer treats them fairly. This means that in the balance, their life is meaningful, even if their employment isn't.

I also believe job satisfaction is completely independent of a job's contribution or value to society. Cleaning toilets has a definite societal benefit, but it is still menial work that requires little actual skill and is a job most people look for ways out of.

conanbatt• 12 years ago

That people are willing to pay for something does not indicate value. The same old story of price vs value. The last finantial crisis is a great example of being able to sell something without(or lesser) value. Value is a great market, but it is not directly proportional to value.

Another example, is that if you are sick and about to die, the value of the cure for you is infinite, so you would pay everything you have an everything you will ever have if you had to. Value != Price.

coldtea6• 12 years ago

Everybody in the USSR had job. But these jobs didn't produce any (usually) value to the society.

Well, they got a huge backwater, mostly agricultural country, into one of the big powers of the industrial era. And got to feed some hundends of million of people, have space exploration, very good physics and math, music and arts, and a lot more besides.

So, it's a myth that these jobs didn't produce any value to the society. They just weren't as competitive as the west, but then again, they started from far worse and backwards conditions, in an a land which is cold and unhabitable as hell in large regions. And they had political BS to deal with too.

Not every similar scheme will result in the same results. Stalinist politics and such is not a necessary byproduct of everybody having a guaranteed job.

qwerta• 12 years ago

It was criminal offense not to have a job. Regime just used it as a stick on homeless and people outside system. Some actually payd their employer for providing a fake job; for example self-employed plumbers in gray economy.

robotresearcher• 12 years ago

Russia was a leading world power long before the creation of the USSR. Your "backwater" was:

"One of the largest empires in world history, stretching over three continents, the Russian Empire was surpassed in landmass only by the British and Mongol empires."

(Wikpedia - http://en.wikipedia.org/wiki/Russian_Empire)

kfk2• 12 years ago

So we are saying that most of the people out there are of no use to the economy and thus, most probably, to society. Well, welcome to fascism 2.0, this vision is elitist, it creates a huge power lobby (the entity paying up the basic incomes...), and it sees people as sheep with no brains.

Broken_Hippo3• 12 years ago

How exactly do you come up with that? I understand the concept, agree with it to a point (it is rather exaggerated) and I am no facist and do not have enough power, percieved or monetary, to be able to be an effective elitist. I'm anti-huge power lobby, unless you can find one that does much more good than harm. People are under pressure to be sheep already if you work one of these 'jobs'. I take the notion and look at how doing fixes could make society freer and better.

My curiosity is how exactly you came to the conclusion of this being a facist and elitist idea?

kfk2• 12 years ago

I'm anti-huge power lobby, unless you can find one that does much more good than harm

This is the core of the thinking behind a dictatorship

People are under pressure to be sheep already if you work one of these 'jobs'

What pressure? People are asked to work in exchange of money. Which means this system, however imperfect, still sees people as useful and productive and, thus, still gives them a chance

And it's elitist because you are creating a clear division between those that are productive and those that bring no value and that actually are a negative investment (because they do "fake" jobs). You really think you can put a mentality like that in place without creating elitism and potentially an even more uneven society than today?

pyoung• 12 years ago

...no use to the economy and thus, most probably, to society.

I think you made too big of a jump there. We are already being confronted with a situation where vast quantities of people are no use to the modern economy. The fact is technology is going to replace a lot of what we traditionally considered work. This does not mean that these people are worthless, they still hold social and cultural value to society (well, most people, there will always be people who are a drain on society, but we have that now and I don't think that will ever change).

... it creates a huge power lobby...

We already have that. And to make matters worse, the current process of distributing welfare is highly political and manipulated by special interests. With a BI, the power stays in place, but at least the bureaucracy and special interests are removed from the process.

dllthomas18• 12 years ago

We are saying that at some point, your time is more use to you than to us. That's hugely different than "your time is useless".

jlangenauer• 12 years ago

Whenever I hear the phrase "the dignity of work", I'm reminded of Jeffrey Bernard's quote:

"As if there was something romantic and glamorous about hard work ... if there was something romantic about it, the Duke of Westminster would be digging his own fucking garden, wouldn't he?"

http://www.rense.com/general56/thevirtueofidleness.htm

alexeisadeski35• 12 years ago

Isn't gardening a popular hobby amongst the rich?

theaeolist• 12 years ago

Clipping, not digging.

bluedino• 12 years ago

'Gardening' is quit a bit different than breaking your back to pick 200 bushels of oranges for 14 hours in 90 degree heat.

lazyjones2• 12 years ago

Prince Charles showing off his worn-out gardening coat: http://www.dailymail.co.uk/news/article-2291333/Countryfile-...

(he also wrote a couple of books about organic gardening)

atmosx4• 12 years ago

Quoting Aristotle:

All paid jobs absorb and degrade the mind.

Anything more than 3 hours of work per day, equates slavery.

I don't think the above quotes are absolute, but are hard to argue against. However, I wouldn't expect any other approach from The Economist which content's quality has been growing logarithmically lately.

unicornporn• 12 years ago

Since 1930 productivity in my home country Sweden has increased fivefold, mainly due to technical achievements. Does that mean that we work 20% of the time we did then? No it does not. Wealth has increased of course since the 1930s, and perhaps we want a higher material standard.

But also consider than since the 1970s productivity in Sweden has doubled. Does that mean we work 4 hour days instead of 8 hour days now? No, of course not. Instead, since the 1970s we work 100 hours more each year.

As a society i feel that we should be using the technical achievements to give us more time for the things and the people that we love. Is that too much to ask for?

thelogos3• 12 years ago

Europeans are already working a lot less hours than american. It's ridiculous that many Americans can't even get 2 weeks of vacation. Things are even more brutal in developed Asian countries, and that's why their suicide rate is so high.

DanBC• 12 years ago

Here's the first ten countries in the list of countries by suicide.

Greenland

Lithuania

South Korea

Guyana

Kazakhstan

China

Belarus

Slovenia

Hungary

Japan

Obvious caveats about national suicide stats apply.

atmosx4• 12 years ago

Following a political conversation about 2 years ago, a very insightful left-wing commenter pointed out this:

"One of the biggest failures of Europe's socialism was the lack of any requirement to half the weekly working hours in 70s and 80s."

I wish this idea was more widely discussed, but still the mainstream idea is that more working, produce more value as if 'free time' does not hold any value.

It some scenarios is ridiculous. In Greece for example, the government trying to boost spending, opted for a law that allows commercial stores to open on Sunday. Before that it was illegal, you had to have a special permission to do that.

Of course, the problem is NOT the working hours. The problem is that people don't have money. Apparently the government thins that Greeks are waiting for Sunday to go buy sugar, milk and cigarettes. Says a lot about the level of contact that our (Greek here) politicians have with reality.

fit2rule• 12 years ago

There is a lot of joy to be had in doing something for someone, that they want done so much that they are willing to pay you for the work. After I've slogged 80 hours in a week on something, getting a huge fat check from my customer is a great joy, indeed.

Its not work that matters - its the formal exchange of value that occurs when someone pays you for something you've done for them, because they want to pay you that amount and are happy to do so.

The value of work is in the exchange - not the doing, not the acting, not the 'being a worker' mentality - but in actually receiving a great reward which prolongs ones own life and increased ability to survive in the world.

Fat checks are great! Work hard for them: even greater!

strlen3• 12 years ago

I think there's several separate issues: Krugman correctly points out that work disincentives are different from job destruction. However there are different kind of work disincentives: it is certainly hard to view people working _just_ for healthcare (as opposed to switching jobs, retiring early, or starting their own business) as something positive. By all means, disentangling healthcare from employment is at least a worthy goal -- there are many artificial reasons which currently make non-employer health insurance (and non-insurance health care) far more expensive than would otherwise be.

On the other hand, the individual mandate and increased price of even the most basic catastrophic coverage does seem to cut into disposable income, which (in a sense) has the equivalent effect of huge marginal tax hike: essentially as the salary increases, essential benefits decrease (no eligibility for food stamps, subsidizing housing, or subsidized healthcare), while taxes increase. Incentive to do anything other than get by decreases, strong incentives are created to cut out other "unavoidable" payments such as by moving to places with less expensive housing costs, even if at the cost of less employment opportunities. Replacing the system that offers increasingly little to honest working poor(1), but imposes regressive mandates to fund what are essentially transfers from working classes to middle-class senior citizens (e.g., medicare and social secure) with a a universal basic income (funded through income tax or perhaps a Georgist "rent tax") would help, but making it a political reality may be tricky but feasible ( see here for an interesting analysis from a "left-libertarian"/classic liberal perspective: http://bleedingheartlibertarians.com/2014/01/the-positive-po... )

This does not automatically imply that various "mandates" of are always bad policy, the job of policy advocates should not be to hand-wave issues, but to present them in a way such that the public could make an informed choice. There are many times where Krugman does an excellent job of this (indeed, I'd imagine he rightly sees this as the very point of his NYT column); yet, it's odd that while Tyler Cowen (another trained economist) discusses this topic in a great deal in Great Stagnation and Average is Over, Krugman does not mention this and talks about what is really a related, but separate (even if important) matter of income inequality. Honestly, I don't see how income inequality (which is a serious danger for many reasons -- I don't mean to handwave it) has a role in this: if we raised the salary of teachers in Bay Area to that of software engineers, these salaries will still remain minuscule compared to that of top CEOs, but does anyone doubt that this would greatly increase teachers' job satisfaction? The problem with low pay isn't that someone is paid higher, the problem is that low (or no) pay makes life extremely stressful as basic needs and rudimentary wants are harder to fill: never mind being able to send kids to college, it's more about being able to afford a place where kids have a room to themselves while still having room to grade class papers after work -- one can't afford this on a teacher's salary in most parts of Bay Area.

(1) This is what irks me a lot about the debate on this topic. It's one thing to argue that welfare programs are wrong because taxation is wrong (then your job is to prove that taxation is wrong), but if taxation is wrong why not first cut programs that impose a greater tax burden? Military and medicare spending each cost more than food stamps and don't seem especially under-funded, yet it's the food-stamps program that got cut.

smsm4215• 12 years ago

Why it is hard to view working "just for healthcare" as positive? Is it hard to view working "just for money" as positive? I.e. suppose that one works only because one needs money and otherwise he would spend his time playing Tetris, walking on the beach and reading medieval poetry. Why is it negative that he still works and not lives off other's money and other's work, involuntary taken?

If this is not negative, then how is it different for healthcare? It's the same money, only spent in a different way, mostly because american tax code is weird and the government tried to mess with pay arrangements repeatedly which gave birth to various fringe benefits including employer-sponsored healthcare. But at the end of it, it's the same money, isn't it?

>> one can't afford this on a teacher's salary in most parts of Bay Area.

If you raise salaries for a wide class of employees - what do you think will happen to the housing prices? Also, where would the money come from? California has about 300K teachers. Each 10K of salary increase would cost 3 billion dollars (not counting pension costs, employer's part in taxes, etc. so actually more). Where those additional billions would come from?

But teacher's salary in Bay Are is not so far from software engineer's: http://rossieronline.usc.edu/teaching-salary-california/

The second and third highest paying districts are both located in Santa Clara County, which is also home to Silicon Valley. The average salary in the Mountain View-Los Altos Union district is $100,530, while Los Gatos-Saratoga Joint Union has an average salary of $92,636.

Considering other benefits like pensions, I'd say not so far from that of many software engineers.

Edmond3• 12 years ago

I think the difference is that prior to the ACA, you didn't have much of a marketplace for the self insured, so you were artificially tied to your employer for the group insurance coverage.

The ACA is apparently not perfect (I, like most people haven't read the law:) ) but I think anything that keeps people from becoming serfs is a good thing.

Your argument about healthcare being money in a different form is flawed. You could make a similar argument for when people used to live in employer provided housing because owning their own homes was impossible for most people. I am sure not too many people would want to go back to serfdom because after all a roof over your head is another form of being paid.

lmm• 12 years ago

Why it is hard to view working "just for healthcare" as positive? Is it hard to view working "just for money" as positive?

Working for the sake of something you want is a positive. Working just to avoid dying isn't.

suppose that one works only because one needs money and otherwise he would spend his time playing Tetris, walking on the beach and reading medieval poetry. Why is it negative that he still works and not lives off other's money and other's work, involuntary taken?

Because he's less happy, fulfilled and so on than he could otherwise be. If the amount he suffers by working is more than the cost of the taxation that would support him, then yes that's absolutely a negative.

strlen3• 12 years ago

Why it is hard to view working "just for healthcare" as positive? Is it hard to view working "just for money" as positive? I.e. suppose that one works only because one needs money and otherwise he would spend his time playing Tetris, walking on the beach and reading medieval poetry. Why is it negative that he still works and not lives off other's money and other's work, involuntary taken?

That doesn't sound quite correct. Working just for the money is a neutral, the _negative_ here is involuntary taxation. I agree that it's in a negative (and have pointed out later in my comment a particularly bad form of it), but some kind of taxation is unavoidable (anarcho-capitalism is a fascinating theory, but none of its variants strike me as realistic).

Further, I'm not advocating a system that covers every single type of heath benefits for free. I'm simply talking about insurance against catastrophes and in some cases arguing against government interference -- e.g., the kind that essentially made healthcare go through employers and insurance agencies, as opposed to Milton Friedman's idea of MSAs (a stronger form of HSAs/high-deductible insurance -- something that ACA has actually made more expensive).

Essentially it's about marginal utility: having no healthcare available is much worse than not having certainly elective healthcare but having other healthcare. Likewise earning $0 vs. earning $15k a year (not enough to live on in Silicon Valley, but ok for getting by elsewhere in the country) is much bigger difference than the difference between earning $15k and $30k, which is a much bigger difference than going betwen earning $30k and $45k. No one should be entitled to a comfortable life, but I don't think a system where individuals who are not employable (whether involuntarily or voluntarily) are left to rely on charity alone is one that will ever be created (irrespective of whether or not it could be theoretically justified). I'm an advocate of scraping the current welfare state and replacing it with a simple basic income payment (if that's not politically feasible, I'm fine with Friedman's idea of a negative income tax). This will actually lead to less government interference: less welfare programs, possibly lower (or at least no higher) taxes, and so forth. Here's an argument for this from a well known socialist organization Cato Institute (backed by such left-wing pinko commies as the Koch Brothers): http://www.libertarianism.org/columns/libertarian-case-basic...

Furthermore, in terms of reducing tax rates, I strongly favour slashing military and police spending (no SWAT teams for tiny suburbs), ending the drug war, and cutting middle class entitlement programs (or at least privatizing them or making them voluntary).

If you raise salaries for a wide class of employees - what do you think will happen to the housing prices? Also, where would the money come from? California has about 300K teachers. Each 10K of salary increase would cost 3 billion dollars (not counting pension costs, employer's part in taxes, etc. so actually more). Where those additional billions would come from?

Raising the salary is not the only way to do so: increasing the supply of housing. I live in Saratoga and lived in Mountain View: the avg price of a resident (averaged between condos, townhomes, and single family homes) is well north of $1mm in those areas. In Mountain View this can attributed to location (and Sunnyvale which is directly adjacent is cheaper, especially the north parts of Sunnyvale closer to Mountain View), but in Los/Gatos-Saratoga this is entirely due to minimum lot sizes (my place is currently worth significantly below that -- but due to being in a small area that was annexed to Saratoga and which retained much smaller lot sizes).

My point also wasn't about the need of higher pay, it was about job satisfaction having more to do with being over certain thresholds as opposed to the bizarre idea that it had something to do with how much I am making in relation to some CEO.

Re: salary itself. This also does not include the pay that is docked to go to unions (union membership is mandatory for teachers in California -- I am all in favour of removing that requirement for unions of government employees). These are closer to starting salaries of SWEs not average salaries of all engineers (my first job out of college was $85k in 2006 at Yahoo -- not exactly a company known for highest wages). Finally RSUs are a huge part of engineer's salaries: $100k in RSUs vested over four years (with refreshers) is common for even new college grads. I am not advocating raising everyone's salary of course. I am in favour of treating teachers more as software engineers: merit pay increases, performance reviews, and no traps like tenure -- much as with software engineers, it should be easy for teachers to switch schools or move to a different area if their pay is not satisfactory (and as with software engineers, it might mean some would leave the profession if they are doing it just for the money and money doesn't suffice, this again is a positive).

I think you mistook me as someone advocating greater taxation -- done in the same manner as today -- I am not; I actually believe we far less meddling in our lives, certain kinds of taxes could be lower (but perhaps other kinds -- e.g., tax on rent per Henry George), and so forth. However, I find that arguing about immediately abolishing all taxation (logical outcome of what you're advocating) are going to work -- I much prefer to acknowledge that the problems much of the left perceives are real, but offer solutions that are less coercive than status quo or other alternatives.

yoha• 12 years ago

I am not an unconditional advocate for Basic Income but I think that the idea is intriguing and could potentially be very efficient. I am not going to argue about what BI could or could not do but I would really like to see more experiments with it to have some tangible information. I would rather see that it fails than hope that it would work. Of course, I'll be delighted to see it work.

[1] https://en.wikipedia.org/wiki/Basic_Income

yummyfajitas3• 12 years ago

We had a couple of experiments. This article asserts all sorts of vague positive effects - the concrete effects are a 9-13% drop in working hours and an 8.5% decrease in hospital visits. Unfortunately, as usual with articles on this topic, primary sources are not cited.

https://decorrespondent.nl/541/why-we-should-give-free-money...

Back of the envelope calculations are also useful. I did one a while back, you can steal the source code and build your own to at least determine affordability. The basic gist is that an inefficient targeted program is vastly cheaper than an efficient untargeted one.

http://www.chrisstucchio.com/blog/2013/basic_income_vs_basic...

prestadige• 12 years ago

There are at least two major indignities connected to a conventional life and career. The first is that mainstream education is about winning prizes rather than learning what is interesting to you, for its own sake. The second is that most people don't particularly enjoy their jobs, they're only working for money.

Although there's still a taboo around not working, it can't last. The future, as Arthur C. Clarke said, is not full employment, but full-time playing. (Some of that playing will resemble what we now call 'research'.)

Meanwhile, there is work for anyone who has minimal food, shelter and web access. There are many unsolved problems out there and not just in open source software. With dignity galore, because they're important.

stefan_kendall• 12 years ago

"Maybe the jobs are gone forever" - Good analysis, economist. This article is full of bullshit 'maybes' and aggressive 'income inequality' overtones.

I don't know how this garbage gets onto HN.

forgottenpass• 12 years ago

I don't know how this garbage gets onto HN.

The only unique aspect of this piece is it strikes a nerve with you. I know how it gets here, because HN is jam packed with "analysis" that doesn't make any stronger of a case for itself. Vague wishy-washy "Maybe the jobs are gone forever" level points are taken at face value when the rhetoric is headed to more agreeable conclusions.

rwmj• 12 years ago

A similar idea: When good ideas (like the Protestant Work Ethic) turn bad:

http://stumblingandmumbling.typepad.com/stumbling_and_mumbli...

squozzer• 12 years ago

What dignifies people is autonomy. Someone intelligent enough to write for The Economist should be able to figure that out. That they couldn't (or chose not to) makes the article little more than propaganda.

hifier4• 12 years ago

I'm confused by the idea that technology will somehow eventually render most of the population jobless. Why should this cause a breakdown of the capitalist system? These discussions seem to take this for granted without explaining why this is true.

It looks like technology will continue to allow more and more people to pursue business ventures that are less and less related to filling basic needs. We will still consume, we will still find ways to trade that are mutually beneficial. We will simply have a better standard of living. It seems the logical conclusion is that there will be more opportunity for everyone, not less.

Different jobs and different opportunity is not the same as no jobs and no opportunity.

marcosdumay3• 12 years ago

What those people will do that we can not create machines that do it cheaper, faster and better?

hifier4• 12 years ago

So these machines will spontaneously appear?

VLM3• 12 years ago

You may find a study of history to be interesting. What you describe sounds like the European post-western-roman empire dark ages not utopia.

How do you intend to consume if none of the consumers have money anymore? How do you intend to trade if the market is polluted by expensive middlemen and centralized .gov pre-selecting the winners and losers? If the standard of living were better in a non-monetary economy in theory, how come it never works that way in practice? Opportunities require money and power to take advantage of them, without either they will not be lost.

Why wasn't the (first) Great Depression a paradise on earth? No one had jobs or money. New high technology all over the place. So why exactly would the second Great Depression be any better than the first, if its of basically the same form? Even worse, recall the interesting economic hack used to "fix" the first one? All you need is a world war, and for the survivors, its gets better.

hifier4• 12 years ago

I've either terribly represented my thought, or you have grossly misunderstood my statement.

I am arguing FOR a capitalist system. I'm saying I don't understand why the article authors will assume it is going to break down because of technological advances. It has not thus far.

Edit: I see that my second statement in my first reply is poorly written. I meant "this" to refer to technological advancement, not to joblessness.

everyone• 12 years ago

I would argue that many modern 1st world jobs are a form of pointless busy work. I am also concerned by the waste of resources and damage to the environment many of these jobs entail. Most of the truly important work (like food production) is achieved overseas or by a very small percentage of the population. The victorian "work ethic" way of thinking needs to be re-examined and possibly discarded as I do not think it is useful anymore, in fact I think nowadays it is detrimental. A more exigent social philosophy for this age would be more focused on trying to achieve a more sustainable society.

yetanotherphd5• 12 years ago

I don't get the philosophy behind the "dignity of work". People primarily work in order to get paid, money they then spend on themselves or their families. Work is no more altruistic than going to clubs and having casual sex.

Society functions not because people feel compelled to work out of principal, but because if no one worked, the price of labor would go up until people were enticed to do it.

And it's also very strange that eroding the labor supply is painted as a "loss of jobs", when lowering the labor supply means more and better jobs for those who do want them.

Finally, the idea that making poor people better off is bad because they might work less, is ridiculous. What is society striving for in the first place, if not the benefit of its members? Sure, the disincentive to work creates real deadweight economic loss. But this loss has to be weighed against the gain to the people receiving the handouts. It seems pretty clear that the wrong balance between work incentive and reducing inequality was struck in the US, and Obamacare is helping to fix this.

Tycho• 12 years ago

What does dignity have to do with altruism?

allochthon2• 12 years ago

We might talk instead about the dignity of endeavour for its own sake, or the dignity of contribution to society. Such phrases may seem to have the makings of a social infrastructure for socialism. Indeed they do, for a world in which machines can do much of the work will need to become more socialistic if it is not to become intolerably unequal.

You know we're in new territory when the Economist puts forward something like this without pulling it apart in the next paragraph and explaining why a free market solution is preferable.

erichocean6• 12 years ago

Eliminating taxation and implementing a basic income payed for by new money created out of thin air, pegged to the GDP for the year, is how the world will deal with machines creating more wealth than we know what to do with, without people.

It's a direct form of wealth transfer that requires zero force, no "putting people in cages because they can't/don't pay" nonsense.

For social spending, you do the same: print new money that's a percentage of GDP, and let citizens allocate their share to various social causes (police, fire, education, natural disaster relief, etc.).

As a concrete example, if the USA produces 15 trillion in GDP for the year, you could print 3.75 trillion for basic income, and 3.75 trillion for social income. The 3.75 trillion for basic income would be split evenly among the 330 million people, amounting to $11,364 annually per person. Each person would also have $11,364 to allocate ("appropriate") for various social causes.

Taxation is eliminated. Everyone is fed and sheltered. Growth in wealth is shared equally. Anarchists still get to keep all of the money they earn (remember: no taxation). IRS is gone. All of the tax-funded welfare programs are gone, but we've got plenty of money annually to dedicate to social welfare programs. People don't have to give money to the police if they care more about education. There's no need for a minimum wage, or tracking people's incomes. There's no downside (in terms of extra taxation and lost benefits) to working more. And on and on.

This is entirely doable today, at a purely technical/administrative level. Once robots are doing the work of the labor class, and 40% of the country literally has no jobs, and won't, ever—then it'll become a social necessity.

That's why the problems in this article don't keep me up at night: not only is the solution easy, it's far preferable and way more democratic and fair than what we have today.

For extra humanity, create a global currency, peg new money creation to the world's annual GDP, and do a basic and social income for everyone in the world equally, full stop.

aianus• 12 years ago

In this scenario, the government would need to use physical force to ensure transactions are conducted through the inflating currency rather than barter or gold or bitcoin or foreign currency, etc.

erichocean6• 12 years ago

That's possible, sure, but I think it's very unlikely for purely structural reasons (the best kind IMO).

Because everyone will have this currency by default, natural market forces will causes businesses to want to sell things in that currency (people have it, and want to spend it).

The currency itself is stable (tied to GPD growth, not politician's whims).

Once some businesses decide to take it (and they will, see above), then those businesses getting that income will also spend it at other businesses who accept that income, making those businesses even more successful, causing other business to also accept the currency, and so on.

And remember: everyone has some of this currency. Who is going to have it, and not spend it? I'd venture to say the percent of people flushing their basic income down the toilet is in the low single digits at best.

It's a virtuous cycle, and no force should be needed to keep it going. Think about it: who in their right mind would move to another currency that wiped out their entire existing and future wealth? As another commenter pointed out, $11K a year is like having $500K in wealth paying out an annuity. Who would voluntarily give that up for some alternate currency that makes them poor?

Even today, look at how hard it is to modify a social welfare scheme. It's not because the government has guns and the desire to use them, it's because people really, really rely on social stability.

But yes, you're right of course: like all fiat money schemes, it only works because people want it to work. IMO people will want this to work, and furthermore: it's in each individual person's self-interest that it works.

adrianbye• 12 years ago

err.. your left wing viewpoints are showing..

have a look at what happens to indigenous groups that are given handouts.. massive alcoholism.. obesity.. huge problems.

people will have to work and improve themselves. the struggle in life is important along with risk taking.

but, the dynamics of pay may change to compensate for the amount of leverage we can get today in society

erichocean6• 12 years ago

people will have to work and improve themselves. the struggle in life is important along with risk taking.

Completely agree. I think the dynamics of getting a basic income when everyone gets the basic income are different than when a subset of people are living off of the work of another subset of people, who don't benefit (in fact, are penalized).

In the scheme I proposed, no one is penalized for success, and no one is penalized for not wanting to participate in capitalism. Society is not penalized because capitalists are out there making additional wealth for themselves.

I really do think the non-initiation of force, the lack of penalties, and the universal equality changes the dynamics of social welfare programs for the better. It's very much like The Incredibles: when everyone is special, no one is.

I firmly believe that a universal basic income won't reduce the struggle in life, it just shifts it from the bottom of Maslow's chart up a level or two or three. I think we can all agree that's a good thing, no matter your political persuasion.

toomuchtodo4• 12 years ago

Canadians seemed to handle it just fine.

http://en.wikipedia.org/wiki/Mincome

Mincome was an experimental Canadian basic income project that was held in Dauphin, Manitoba during the 1970s. The project, funded jointly by the Manitoba provincial government and the Canadian federal government, began with a news release on February 22, 1974, and was closed down in 1979.

The purpose of this experiment was to determine whether a guaranteed, unconditional annual income caused disincentive to work for the recipients, and how great such a disincentive would be.

It allowed every family unit to receive a minimum cash benefit. The results showed a modest impact on labor markets, with working hours dropping one percent for men, three percent for wives, and five percent for unmarried women.[1] However, some have argued these drops may be artificially low because participants knew the guaranteed income was temporary.[2] These decreases in hours worked may be seen as offset by the opportunity cost of more time for family and education. Mothers spent more time rearing newborns, and the educational impacts are regarded as a success. Students in these families showed higher test scores and lower dropout rates. There was also an increase in adults continuing education.[3][4] A final report was never issued, but Dr. Evelyn Forget (/fɔrˈʒeɪ/) conducted an analysis of the program in 2009 which was published in 2011.[4][5] She found that only new mothers and teenagers worked substantially less. Mothers with newborns stopped working because they wanted to stay at home longer with their babies, and teenagers worked less because they weren't under as much pressure to support their families, which resulted in more teenagers graduating. In addition, those who continued to work were given more opportunities to choose what type of work they did. Forget found that in the period that Mincome was administered, hospital visits dropped 8.5 percent, with fewer incidences of work-related injuries, and fewer emergency room visits from car accidents and domestic abuse.[6] Additionally, the period saw a reduction in rates of psychiatric hospitalization, and in the number of mental illness-related consultations with health professionals.[7][8]

chongli2• 12 years ago

have a look at what happens to indigenous groups that are given handouts.. massive alcoholism.. obesity.. huge problems.

Those problems are far more complex than you're making them out to be. Besides that, your claim of handouts is simply false. The social assistance given to Status Indians comes with a great deal of stipulations, some of which are extremely harsh such as restrictions on who you can marry. Further complicating the issue are the problems of reservation living conditions, cultural alienation and simple boredom.

Universal Basic Income sidesteps these issues because it doesn't come with any crippling lifestyle restrictions. It's simply a form of income security that benefits all people by raising them out of poverty and reducing the fear and hopelessness associated with unemployment.

allochthon2• 12 years ago

Your idea is an interesting one. It's a radical change, and I don't have a clear sense of the unintended consequences.

This is entirely doable today, at a purely technical/administrative level.

Perhaps. But from a political standpoint, it's utopian and most unlikely in the near term.

toomuchtodo4• 12 years ago

Perhaps. But from a political standpoint, it's utopian and most unlikely in the near term.

What's stopping us?

yetanotherphd5• 12 years ago

Since M0 is about 3.7 trillion, printing 7.5 trillion in cash would cause inflation of about 200% per year.

This would have obviously bad effects, causing people to great lengths to avoid holding cash. I think income or sales tax is the only way to distribute large amounts of money from the rich to the poor.

lilsunnybee2• 12 years ago

It could still work possibly if there was a cap on basic food costs, rent controls in place. Also stockpiling or speculation on basic necessities might need to be very restricted. A lot more regulations would need to be in place alongside the basic income to keep the economy sane i imagine.

erichocean6• 12 years ago

Not all inflationary pressure is equal (i.e. it's not true that printing X dollars leads to Y% inflation—the kind of dollars X represents matters a great deal). In part, my scheme wouldn't cause hyperinflation for much the same reasons that fractional-reserve lending doesn't cause hyperinflation, even though it also increases the money supply (drastically, too).

It matters a great deal how the money is put to use, and why, and what limits are set on the increase in the money supply. For example, it's obvious that fractional-reserve lending would not work if the fraction was 0/100 (i.e. no reserve). Similarly, large-scale money printing doesn't work when it's arbitrary and up to political whim.

Also, a nitpick: M2, not M0, is traditionally what is used to forecast inflation.

Houshalter• 12 years ago

There is no such thing as a free lunch. The taxes just become hidden in inflation instead of visible income taxes, and it becomes impossible to adjust taxes to different levels on different individuals (all dollars pay the same tax in lost value regardless who holds them or how much income they made that year.)

sbmassey• 12 years ago

It's all fun and games with the citizens basic income until the government hits hard times and has to think about what to cut. Having the vast majority dependent on income from a single, fallible organization is a recipe for disaster.

The indignity of no work

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