I am now in Kansas City for the next several days, so blogs might come at odd times. I am getting close to finalising the manuscript for my next book (this one with co-author, Italian journalist Thomas Fazi) which traces the way the Left fell prey to what we call the globalisation myth and started to believe that the state had withered and was powerless in the face of the transnational movements of goods and services and capital flows. Accordingly, social democratic politicians frequently opine that national economic policy must be acceptable to the global financial markets and compromise the well-being of their citizens as a result. In Part 3 of the book, which we are now completing, we aim to present a ‘Progressive Manifesto’ to guide policy design and policy choices for progressive governments. We also hope that the ‘Manifesto’ will empower community groups by demonstrating that the TINA mantra, where these alleged goals of the amorphous global financial markets are prioritised over real goals like full employment, renewable energy and revitalised manufacturing sectors is bereft and a range of policy options, now taboo in this neo-liberal world, are available. One proposal that seems to have captivated so-called progressive political forces is that of the need for a basic income guarantee. As regular readers will know I am a leading advocate for employment guarantees. I consider basic income proposals to represent a surrender to the neo-liberal forces – an acceptance of the inevitability of mass unemployment. In that sense, the proponents have been beguiled by the notion that the state can do nothing about the unemployment. It is curious that they think the state is thus powerful enough to redistribute income. I also consider basic income proposals demonstrate a lack of imagination of what work could become and a very narrow conception of the role of work in human well-being. This blog will be the first in several (probably about four) where I sketch the arguments that will be developed (but more tightly edited) in the final manuscript.
Falling prey to the gainful worker construct
The labour force data statistics (employment, unemployment, participation rates) influence the political narrative on a regular (usually monthly basis). Each time a national statistical agency releases the latest survey estimates there are headlines in the media and all manner of claims by politicians to defend their policy positions (almost irrespective of the actual outcome).
The statistics are collected and disseminated on definitions specified in the ‘Labour Force Framework’, and represents international agreements between national statistical agencies. Activity is the basic concept – a person becomes active by working or seeking work and is inactive if they do neither of these things. There are complex rules to demarcate different status locations within the Framework (employed, unemployed, etc).
Prior to the formal introduction of the ‘Labour Force Framework’ as a result of the Great Depression, the major approach to collecting labour market data largely ignored unemployment.
For example, the so-called ‘gainful worker’ framework, which goes back to the early C19th, considered workers to be ‘gainfully employed’ if they were in a ‘gainful occupation’ (Hauser, 1949: 339):
A ‘gainful occupation’ in Census usage is an occupation by which the person who pursues it earns money, or money equivalent, or in which he assists in the production of marketable goods.
[Reference: Hauser, P.M. (1949) ‘The Labor Force and Gainful Workers-Concept, Measurement, and Comparability’, American Journal of Sociology, 54(4), 338-355 – JStor link.]
The Labour Force framework replaced the ‘gainful worker’ approach as a basis for collecting labour market statistics in the 1930s because unemployment became a major concern and there were no formal processes for measuring this problem.
Hauser (1949: 340) wrote:
In the glare of the public spotlight, it was clear that no one had the facts on the most important problem which was facing the nation at the time – mass unemployment. The focus of public attention on the unemployment problem and its political importance undoubtedly gave great impetus to the many experimental surveys conducted during the thirties, out of which a new concept and method of measuring the labor supply emerged.
However, while the ‘gainful worker’ concept was considered an inadequate basis for collecting and disseminating labour force statistics as a guide to policy, the bias it imparted on the way we think of productive employment persisted.
The gainful worker was effectively considered to be engaged in activities that advanced private profit rather than societal well-being. Other activities, particularly public sector employment held a lower ‘status’ and in many situations are not considered productive at all.
Similarly, the concept of productivity has been conceived as a private ‘market’ concept rather than being associated with outcomes that advance general well-being.
This bias was passed onto stigmatisation of public sector job creation programs where terminology such as boondoggling and leaf-raking! and ‘make work schemes’ entered the nomenclature to condition the public at large that nothing good comes from these types of programs.
Such is the public perception of public sector job creation which have been constructed by opponents as ‘make work’ schemes. How many times have you heard a conservative politician say that such ventures do not create ‘real’ jobs?
In 1958, the US experienced a sharp recession and with the unemployment rate in February 1958 and the debate sharpened on what should be done. The Time Magazine on Monday, February 24, 1958 reported that the Republican Vice President, Richard Nixon attacked Democrat proposals to introduce widespread job creation programs.
Nixon was quoted as saying:
The battle cry of the Administration’s opponents is obviously going to be ‘Depression is just around the corner.’ Some are urging us to go back to the multibillion-dollar leaf-raking boondoggling which failed so miserably in the 1930s … [if the Democrats are] … betting on depression … [the Republicans are] … betting on prosperity.
The key Democratic state Governors sent a “telegram” to President Eisenhower requesting that he introduce a “practical program to combat the growing national recession.”
The Democrat majority leader in the US Senate, Lyndon Baines Johnson said the Democrats were drafting a ten-point antirecession program, which would concentrate on widespread public works, and suggested a return to the Works Progress Administration (WPA) programs that were introduced under the New Deal during the Great Depression.
Just as now, the conservatives wanted tax cuts while the Democrats wanted direct job creation programs.
Nixon dismissed the plan, saying:
If the choice is between a boondoggling public program on a massive scale and a tax cut, I for one would be for a tax cut. It would give an immediate impetus to the economy.
Dismissing public sector jobs (especially those created as part of a fiscal stimulus) as ‘boondoggling and leaf-raking’ activities, at best, allows the conservatives to denigrate calls for the public sector to employ unemployed workers to work on community development projects at a minimum wage.
But at the same time, the same conservatives laud the virtues of the private sector as they create hundreds of thousands of low-skill, low-paid, precarious and mind-numbing jobs that leave such workers in ‘working poverty’.
This is also despite a long history where public sector job creation schemes have left massive positive legacies for those engaged in them and for future generations who benefit from the outputs generated.
For example, during the Great Depression, US President Roosevelt’s New Deal was introduced as the private sector was in full-scale retreat from job creation. The Public Works Administration (PWA), which was part of the New Deal, created hundreds of thousands of jobs and the work helped restore ageing public infrastructure (such as, roads, dams and bridges).
Many new buildings were constructed during this period (schools, recreational spaces, libraries, hospitals), which have delivered benefits to the generations that followed.
Harry Kelber (2008) wrote that the WPA meant that:
Thousands of unemployed writers, actors, musicians and painters were given an opportunity to earn a modest livelihood from their artistic talents … and to enrich the lives of countless culturally-deprived citizens. The productions of the WPA Theater Project, for example, entertained a phenomenal audience totaling 60 million people, a great many who had never before seen a play.
The Tennessee Valley Authority was a huge hydro-electricity project introduced during this period and brought electricity and prosperity to some of the poorest rural areas of the US.
At the time, Kelber (2008) notes that the private electricity providers stridently opposed the challenge to their monopoly control. The upshot was that the project forced them to reduce their power charges.
In general, the dynamism of the public sector at that time caused huge outcries from the capitalists who didn’t want challenges to their cosy profit making industries from public sector enterprise.
But societal well-being was unambigously advanced.
[Reference: Kelber, H. (2008) ‘How the New Deal Created Millions of Jobs To Lift the American People from Depression’, The Labor Educator, May 9, 2008. LINK.]
There are many other examples of public sector job creation outcomes that have left valuable legacies over the years across many countries.
The bias against public sector job creation programs is also in despite of evaluation evidence. Melvin M. Brodsky (2000: 31) conducted the outcomes of job creation programs that have been introduced in many OECD nations and concluded that:
Public-service employment programs … may be the only effective way to aid those among the long-term unemployed who are less skilled and less well educated.
[Reference: Brodsky, M.M. (2000) ‘Public-service employment programs in selected OECD countries’, Monthly Labor Review, October, 31-41. LINK]
Brodsky found that countries which assessed both the needs of the unemployment and the local labour market they were operating in before developing job designs were most successful. Further the successful programs were “more flexible, more targeted to local needs, and better linked to other labor market services” (Brodsky, 2000: 36).
Please read my blog – Boondoggling and leaf-raking … – for more discussion on this point.
For the purposes of this discussion, the problem we identify is that the progressive side of politics has also been seduced by the bias against public sector job creation.
By buying into neo-liberal narratives about the fiscal limits of the state and failing to understand the causes of mass unemployment are insufficient fiscal deficits, given the spending and saving choices of the non-government sector, progressive politicians have fallen into an acceptance of mass unemployment and to assuage their equity concerns they advocate income guarantee schemes over employment guarantee solutions.
This series of blogs will form the basis of the material on the topic of employment and income guarantees (including robots etc) in Part 3 of the book I am finalising at present, which I hope to have published by the end of 2016.
I will argue that basic income solutions, which were originally advocated by the likes of Milton Friedman, are an inferior approach to a progressive future when considered against the benefits of employment guarantees.
I will argue that basic income proposals:
1. Have acceded in a most compliant manner to the neo-liberal rationing of work through failed fiscal policies and articulate flawed macroeconomic propositions that are not significantly different to standard neo-liberal ideas about fiscal deficits etc. BIG proponents have thus surrendered the ground on full employment to the neo-liberal requirements that there is a continual buffer stock of unemployed to suppress wages growth and allow capital to access greater shares of real income.
2. See work in narrow terms – that is, as income earning activity and fail to embrace the reality that work is an integral aspect of our broad well-being. In this sense, the concept of work for basic income proponents is not that much different to mainstream neo-liberal economists who see work as a bad in competition for time with leisure which is a good.
3. See humans as ‘consumption’ units and the limits of government responsibility to provide some minimal level of consumption to each person. Broader responsibilities that are available to currency-issuing governments in terms of social development and social mobility are denied.
4. Accordingly, BIG advocates never propose a living income but rather some basic amount to allow a person to eke out some sort of existence without significant chances of achieving any upward mobility. So basic income proponents effectively solidify the existing wealth distribution.
5. Do not provide any inflation anchor. That is, basic income is not a macroeconomic stability framework. The inflation anchor remains fluctuations in unemployment, which is extremely costly to individuals and society.
6. Do not provide a dynamic whereby society can have a conversation about the definition of work such that the future challenges of robots and structural change can be addressed by broadening the meaning of productive activity. BIG proponents thus solidify the conventional division between work and non-work.
Work and well-being
Hiding behind all the sophistry embodied in mathematical dynamic stochastic general equilibrium (DSGE) economic models and their ilk, that are among the latest fads used by mainstream economists to create an almost impervious rhetoric as a means of appearing authoritative, are some pretty simple ideas.
In the area of work, mainstream neo-liberal economists present stylised textbook models where households are alleged to have a choice between income and leisure. To get income they have to give up leisure (classified as a good) to work (classified as a bad).
Work is thus a sacrifice the individual makes to get income (a good) and if the terms of sacrifice become too onerous they will increase their leisure (work less). Unemployment then is constructed as a voluntary decision to increase one’s non-work time (leisure) and to enjoy less income.
It is a mind-numbing articulation of the real world and in many ways becomes logically inconsistent and intractable, which is the topic of another conversation.
While mainstream economists love to remain in the security of their artificial world built on a deductive methodology that employs simplistic and flawed assumptions about human psychology and other a priori propositions about the world that can never hold in practice, other disciplines such as sociology and psychology, which are largely ignored by economists, have advanced knowledge in ways that help us understand the importance of work.
For example, there is an extensive research literature examining the role of work in advancing the well-being of individuals and their families (see the review contribution by Blustein, 2008 and additional references).
[Reference: Blustein, D.L. (2008) ‘The role of work in psychological health and well-being: A conceptual, historical, and public policy perspective’, American Psychologist, 63, 228-240.].
Blustein (2008: 230) concludes (see also Fassinger, 2008; Fouad and Bynner, 2008):
… that working is important, and indeed can be essential, for psychological health … Considerable research … has demonstrated that working can promote connection to the broader social and economic world, enhance well-being, and provide a means for individual satisfaction and accomplishment …
[References: Fassinger, R.E. (2008) ‘Workplace diversity and public policy: Challenges and opportunities for psychology’, American Psychologist, 63, 252–268.
Fouad, N.A., and Bynner, J. (2008) ‘Work transitions’, American Psychologist, 63, 241–251.]
The literature is replete with analysis where “individuals who lose their jobs often struggle with mental health problems (such as depression, substance abuse, and anxiety” (Blustein, 2008: 230).
Blustein (2008: 230) documents the findings of a plethora of research studies that have focused on the importance of work for psychological health.
1. “the loss of work has been consistently linked to problems with self- esteem, relational conflicts, substance abuse, alcoholism, and other more serious mental health concerns”.
2. “the loss of work has been associated with a notable decline in the quality of neighborhoods, a decline in the quality of family relationships, and an increase in crime as well as problems in other critical aspects of contemporary life”.
3. “the loss of employment opportunities … [leads] … to a marked disintegration in the quality of life, with corre- sponding elevations in drug abuse, criminal activity, violence, and apathy.”
From an anthropological perspective, Blustein noted (2008: 230) that:
In short, working is a central ingredient in the development and sustenance of psychological health. The nature of working is inextricably linked to our evolutionary past, as our survival was (and still is) dependent on our ability to locate food, find shelter, and develop a community for mutual support and nurturance …
Proponents of employment guarantees share the conclusion of Bluestein (2008: 232) and other researchers that “for many people”:
… working is the “playing field” of their lives, where their interactions with others and with existing social mores are most pronounced, with opportunities for satisfaction and even joy, as well as major challenges and, at times, considerable psychological and physical pain.
A progressive vision clearly cannot ignore the historical context in which a discussion of the benefits of work is being conducted.
Obviously, in a broad sense, the current mode of production, where workers are divorced from ownership of the means of production and have to subject themselves to the whims of capital in order to gain a living, is oppressive and coercive.
But, in identifying the importance of work for psychological well-being, we are not oblivious to this oppressive aspect. However, it is clear that people operate at multiple levels at the same time with some more prominent in their daily consciousness.
In this regard, Blustein (2008: 330) argues that:
… working is the social role in which people generally interact with the broader political, economic, and social contexts that frame their lives, working often becomes the nexus point for social oppression as well as a source of rewards, resilience, and relationships …
It is in that sense that we argue that work as an organised activity is an essential aspect of human well-being, notwithstanding socio-economic context that prevails.
Non-work in the current social context of work is detrimental to human well-being whether it manifest as unemployment or a disguised sort of unemployment made possible by the introduction of a basic income guarantee.
One of the strong empirical results that emerge from the Great Depression is that the job relief programs that the various governments implemented to try to attenuate the massive rise in unemployment were very beneficial. At that time, it was realised that having workers locked out of the production process because there were not enough private jobs being generated was not only irrational in terms of lost income but also caused society additional problems.
In summary, it is well documented that sustained unemployment imposes significant economic, personal and social costs that include:
- loss of current output;
- social exclusion and the loss of freedom;
- skill loss;
- psychological harm, including increased suicide rates;
- ill health and reduced life expectancy;
- loss of motivation;
- the undermining of human relations and family life;
- racial and gender inequality; and
- loss of social values and responsibility.
Many of these “costs” are difficult to quantify but clearly are substantial given qualitative evidence.
In Part 2 of this little mini-series I will develop an understanding of the basic income proposal and indicate its deficiencies as signalled below.
Then we will discuss employment guarantees, robots and the second machine age, and progressive transitions in work and income support. Several blogs to follow that is.
The series so far
This is a further part of a series I am writing as background to my next book on globalisation and the capacities of the nation-state. More instalments will come as the research process unfolds.
The series so far:
The blogs in these series should be considered working notes rather than self-contained topics. Ultimately, they will be edited into the final manuscript of my next book due later in 2016.
That is enough for today!
(c) Copyright 2016 William Mitchell. All Rights Reserved.