Matthew Yglesias has proposed a Guaranteed Basic Income as an alternative to the minimum wage. Apart from its economic effects, the GBI would also shift the balance of power between employers and employees. (More)

Valuing Work, Part II: Employment, Power, and the Guaranteed Basic Income

This week Morning Feature considers how we value each others’ contributions to society. Yesterday we began by unpacking work versus employment, that is: work a boss or customer pays for. Today we consider Matthew Yglesias’ proposal for a Guaranteed Basic Income. Saturday we’ll conclude with Ross Douthat’s claim that a post-employment society, while fiscally sustainable, may trap those without jobs in mere survival with no opportunity to grow and thrive.

Sleeping in a hammock?

The photo accompanying Matthew Yglesias’ Slate article proposing a Guaranteed Basic Income seems to me unfortunate. It shows several people in a park, with the focus on a man in the foreground asleep in a hammock. The caption reads “When I’m dictator, people will get paid to do this.”

That would be true in a limited sense. The Guaranteed Basic Income that Yglesias proposes would provide everyone, regardless of what they do, a monthly allotment sufficient to afford basic human needs. Yglesias didn’t invent the idea. Thomas Paine proposed something similar in his tract Agrarian Justice in 1795. Dr. Martin Luther King, Jr. proposed it in his last book, Where Do We Go From Here: Chaos or Community?, published in 1967. The following year, James Tobin, Paul Samuelson, John Kenneth Galbraith and 1,200 other economists echoed the idea in a letter to Congress. Nobel laureate economists including Herbert A. Simon, Friedrich Hayek, James Meade, Robert Solow, and Milton Friedman also supported the idea of a Guaranteed Basic Income.

“The work ethic ceases to be viable”

French economist André Gorz offered a compelling argument for it in his 1986 book Critique of Economic Reason:

The connection between more and better has been broken; our needs for many products and services are already more than adequately met, and many of our as-yet-unsatisfied needs will be met not by producing more, but by producing differently, producing other things, or even producing less. This is especially true as regards our needs for air, water, space, silence, beauty, time and human contact.
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Neither is it true any longer that the more each individual works, the better off everyone will be. The present crisis has stimulated technological change of an unprecedented scale and speed: ‘the micro-chip revolution’. The object and indeed the effect of this revolution has been to make rapidly increasing savings in labour, in the industrial, administrative and service sectors. Increasing production is secured in these sectors by decreasing amounts of labour. As a result, the social process of production no longer needs everyone to work in it on a full-time basis. The work ethic ceases to be viable in such a situation and work-based society is thrown into crisis.

A comparative handful of people with machines can now seed, tend, and harvest more food than thousands of farm workers produced a century ago. We no longer pay people to fill our gas tanks or connect our telephone calls. Many professionals now type and format their own documents. Many stores now offer self-checkout. These are only a few examples of a general trend: industrialization and then computerization have made many jobs obsolete. Simply, a modern economy can produce an equal or greater amount of goods and services with fewer workers.

“No one is destitute but everyone has the positive incentive to work”

That is the objective of the U.S. Basic Income Guarantee Network, an informal group of economists and academics who meet yearly to discuss research and propose ideas. Their About page states:

The Basic Income Guarantee (BIG) is a government ensured guarantee that no one’s income will fall below the level necessary to meet their most basic needs for any reason. As Bertrand Russell put it in 1918, “A certain small income, sufficient for necessities, should be secured for all, whether they work or not, and that a larger income should be given to those who are willing to engage in some work which the community recognizes as useful. On this basis we may build further.” Thus, with BIG no one is destitute but everyone has the positive incentive to work. BIG is an efficient, effective, and equitable solution to poverty that promotes individual freedom and leaves the beneficial aspects of a market economy in place.

Several prominent libertarians even support the Guaranteed Basic Income, on the theory that it would be more efficient and less economically disruptive than the maze of government programs it could replace, including the minimum wage, the Earned Income Tax Credit, the Child Tax Credit, Temporary Assistance for Needy Families, Supplemental Nutrition Assistance Program, Free/Reduced-Price School Lunch Program, and Section 8 Housing Assistance. It could even replace Social Security, as payments would also go to disabled persons and retirees.

Why work?

Proposals for a Guaranteed Basic Income inevitably meet objections about lazy freeloaders, lying around like the man in the hammock in Slate‘s photo. If every adult citizen is guaranteed a sufficient income to meet basic needs, why work?

As we saw yesterday, most people say they would work even if they didn’t need the income, and many people work without receiving an income. We are, in Jonathan Haidt’s phrase, “an ultrasocial species.” Most of us like being part of a community and a society, and like to feel we contribute to our community and society. Even with a Guaranteed Basic Income, the vast majority of us would still work at something.

So the question of “Why work?” is really “Why have a job?” and here there are two answers. First, most of us would want more than a basic subsistence income, and a job would provide that. Proposals differ, but for purposes of example let’s say the Guaranteed Basic Income was equal to a living minimum wage. Those who worked would receive income above that. For example, an entry level wage might be only $2 per hour, but for a full-time worker that would be $80 per week above basic living expenses. Indeed this would allow U.S. businesses to better compete with foreign labor markets, as U.S. employers would be supplementing their employees’ Guaranteed Basic Incomes.

The second reason is more subtle. With less wage competition, and because potential employees’ basic needs would be met by the Guaranteed Basic Income, employers would need to provide other incentives. As Yglesias writes:

In a GBI world, an employer has to make work somehow appealing enough to get employees even though everyone’s guaranteed a basic minimum whether they work or not. But that “appealing” factor could be high wages, could be valuable skills and training, could just be a pleasant work atmosphere, or could be some combination of the three.

“A pleasant work atmosphere”

I dare say “a pleasant work atmosphere” – including a clean and safe workplace, respect for employees, flexible scheduling, and other such benefits – would be the most compelling incentive for most workers. As we saw yesterday, most people take pride in their work, and dealing with bosses was the most common complaint about their work. Simply, to attract employees you would need to offer a workplace that your employees enjoyed …

… and that would dramatically shift the balance of power between employers and employees. Merely owning a business or having been promoted to management would no longer be license to mistreat employees. Wealth privilege would not evaporate, but arrogant displays of privilege in the workplace would carry severe consequences. More of your employees would quit, and few people would be desperate enough to work for you no matter how badly you treat them.

That balance of power, I suggest, is why the Guaranteed Basic Income meets such resistance. Tomorrow we’ll see that the resistance is easing, with even conservative New York Times columnist Ross Douthat agreeing that we could afford to provide a Guaranteed Basic Income. We’ll also discuss his primary objection: whether this policy would lock too many people into subsistence, with no opportunity to build social capital and thrive.

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Happy Friday!