Is there a case for a basic income guarantee – Part 1

This is Part 1 in my mini-series on my version of the debate between employment guarantees and income guarantees. An earlier post rightfully belongs in the series as Part 0 – Work is important for human well-being. This discussion will form part of the Part 3 of my next book (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. Wherever one turns these days, a so-called progressive pops up with a megaphone (conceptual) shouting that a basic income guarantee is the panacea for all manner of evil – starting back some years ago with unemployment and moving more recently, as that rationale was exposed, to the need to counter the expected ravages of the second machine age. 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. Further, the robot argument doesn’t cut it. Anyway, in Part 1 – Work is important for human well-being – I considered the need to broaden the definition of productive work. I also emphasised the importance of an on-going availability of work for human well-being. In Part 2, we sketch the arguments that have been advanced to justify the basic income proposal and find them inconsistent, illogical and deficient.

The Basic Income Guarantee (BIG) – uncertain motivation, error-prone macroeconomics

The Basic Income Guarantee (BIG) proposal has been advocated by a diversity of interests on the right and left of the political spectrum.

Tracing the origins of the BIG proposal reveals that the motivations of the proponents at different periods of history have varied from those who desire to cut government spending overall and push the responsibility of maintaining ‘welfare’ onto individuals, to those who were believed that unemployment was a violation of justice but was outside of the capacity of governments to solve it, to, more recently, those who invoke trepidation about the so-called second machine age and claim that robots are going to wipe out jobs on a massive scale (the ‘robot’ justification).

Voices from the left and the right weave various aspects of these motivations, often in overlapping ways, to justify their demands for a basic income to be paid by the state to all individuals (although even then, the unit that would receive the benefit is also a topic of disagreement).

British socialite and conservative activist, Juliet Rhys-Williams was a member of the Beveridge Committee, which sought to reform the system of income support in the early 1940s. Its final report – the Social Insurance and Allied Services (aka the Beveridge Report) provided the design that would become the post World War II Welfare State in Britain.

The idea advanced by the Committee was that a system of flat-rate social insurance contribution would underpin a flat-rate benefit scheme. Critics opposed to a large government arm claimed that these systems were complex, costly and promoted category bias (where a person would nurture characteristics that allowed them to ‘fit’ into one benefit category or another to ensure they gained the income support).

Rhys-Williams was a dissenting voice on the Beveridge Committee and opposed the proposed solution to income support. Instead, she put forward a negative income tax scheme, which would eliminate the Welfare State by providing a guaranteed minimum income with tax incentives to earn further income (Rhys-Williams, 1953).

[Reference: Rhys-Williams, J.E. (1953) Taxation and Incentive, New York, Oxford University Press.]

Her motivation was to reduce the size and footprint of government but at the same time providing a means for reducing poverty, a major concern of conservatives of her era, which has been lost in the neo-liberal era.

The same motivation underpinned Milton Friedman’s later proposal for a negative income tax, where an individual would receive a refund of any unused tax deductions/allowances up to some small maximum amount (the guaranteed income component) and then face a declining subsidy up to the threshold where they would pay full taxes on earned income (Friedman, 1962).

[Reference: Friedman, M. (1962) Capitalism and Freedom,Chicago, University of Chicago Press.]

Friedman’s deliberately considered the guaranteed component for a person who earned no income should be small because his motivation was for individuals to gain employment and if the subsidy component was too generous the incentives would work again his motivation.

Importantly, the negative income tax would replace the existing body of income support measures rather than be implemented as an additional layer of welfare.

His proposal was motivated by the notion that a free market, with only private welfare provision, would be superior and that government had a minimal role to play.

It was hardly the basis for a progressive vision of a society tightly linked by collective responsibilities and a view that systemic failure often impacted negatively and disproportionately on the more disadvantaged citizens.

The libertarian case was re-asserted by Charles Murray in his Wall Street Journal article (June 3, 2016) – A Guaranteed Income for Every American – which was a reprise of his 2006 idea (Murray, 2006).

[Reference: Murray, C. (2006) In Our Hands : A Plan To Replace The Welfare State, Washington, Aei Press.]

Murray works at the American Enterprise Institute, which was established in 1938 and is a leading voice of the neo-conservative movement in the US. It was established by New York business interests in 1938 as a vehicle to advance their interests and oppose the New Deal.

Its luminaries over the years have included Irving Kristol and Milton Friedman. The roots of Murray’s approach are consistent with that legacy.

The American Enterprise Institue were joined by a collection of strategic and highly influential right-wing think tanks set up by the capital in the 1970s (after the publication of the Powell Manifesto) to grab power back for corporate interests after the full employment era had forced a more equitable sharing of national income growth between labour and capital.

Murray is not an economist yet writes about economic policy.

Like Friedman, Murray sees the basic income guarantee as being desirable “only if it replaces all other transfer payments and the bureaucracies that oversee them”. It is a small government philosophy consistent with its ‘free market’ libertarian roots.

In 2016 prices, Murray proposes that:

… every American citizen age 21 and older would get a $13,000 annual grant deposited electronically into a bank account in monthly installments. Three thousand dollars must be used for health insurance … leaving every adult with $10,000 in disposable annual income for the rest of their lives.

Apart from the implicit public subsidy for the greedy and ineffective private US health insurance providers, the proposal provides a guaranteed income that would place an individual below the poverty line. The estimation threshold for a single adult according to the US Federal Poverty Guidelines was $US11,880.

Like any negative income tax proposal, the individual can then earn an additional $US20,000 without entering the positive tax segment. After that point, dollars are subtracted from the basic income as the individual earns more income in the labour market.

Murray also is motivated by his preference for a lower federal spending level, claiming that once the system adjusts (by 2020), the US government would be spending “nearly a trillion dollars” less.

The question that obviously arises is if these reductions in the government net injection into the economy are realised what non-government spending component will increase to fill the spending gap and maintain economic growth.

The reduced net public spending would come, in part, from reducing the non-labour costs involved in public administration, but would also come at the expense of reduced income support payments to individuals.

While Murray’s overwhelming motivation is to reduce the size of government and push the responsibility for maintaining living standards back onto individuals, he has also recently invoked the ‘robot’ justification.

He wrote that while many would “surely drop out of the labor force” if a basic income guarantee was introduced this supply shrinkage would pale into insignificance relative to the impacts of robots.

He wrote:

We are approaching a labor market in which entire trades and professions will be mere shadows of what they once were.

He also rejected the ‘luddite’ defence against the ‘robot’ fear because he claims “this time is different” where millions of jobs will be wiped out.

He claims that the provision of a basic income in these circumstances would revitalise “civic society” through the aegis of the mushrooming of “voluntary organizations” which would deal “with local problems”.

Government welfare agencies and “the entire bureaucratic apparatus of government social workers” would disappear but individuals would “pool their grants” to ensure nobody starved.

Murray’s proposal, like most of the basic income proposals, is disingenuous in the extreme. First, if one individual is below the poverty line under his scheme, pooling two below the poverty line incomes just means that two individuals remain below the poverty line unless there are systematic cost economies of scale that can be realised.

Often, when confronted with situations like this, individuals on deficient income support find savings by crowding into public housing. While they solve the homeless problem their amenity declines significantly. Hardly liberation.

But moreover, if robots are really going to wipe out all the jobs, they will begin to wipe out jobs that the likely recipients of the BIG would rely on.

So all the ‘incentive’ structures designed to encourage individuals to gain extra jobs if they want to make a decent living, which are used to justify the below-poverty guaranteed basic income, are just an elaborate lie to hide the fact that this scheme would create income poverty and abandon the responsibility of the currency-issuing government to provide jobs at a sufficient income to maintain reasonable material living standards.

That feature is common to most basic income schemes, although few proposals are as specific as Murray in specifying the exact basic income level that would be guaranteed. For example, the recently rejected Swiss proposal to provide a basic income which would allow a “a humane existence and participation in public life for the whole population”.

Similarly, the proposed Finnish basic income initiative has become so watered down that it would provide no relief from poverty for a currently unemployed worker.

It motivation has clearly been to cut government welfare outlays so the problem is that it is likely that unemployment would increase further and a vicious circle of poverty would ensue.

The ‘robot’ justification has also been used by the IMF recently to justify a basic income guarantee.

The earlier proposals from the likes of Belgian academic economist Philippe Van Parijs were motivated by a desire to solve an unemployment crisis that basic income proponents had transcended the capacity of governments to address (Van Parijs, 1995).

[Reference: Van Parijs, P. (1995) Real Freedom for All, What (if anything) can justify capitalism, Oxford, Clarendon Press.]

We turn to that argument first, which unlike the free market libertarian motivation, which is dominated by a desire to cut government spending overall and push more responsibility onto individuals, are supported by those on the left as well as some on the right.

Later in this chapter we will demonstrate that the ‘robot’ justification also falls short.

The ‘progressive’ case for income guarantees

Many progressive commentators advocate the introduction of a Basic Income Guarantee (BIG) as the primary policy weapon against poverty and consider employment guarantees to be coercive.

They highlight the fact that if there is a lack of employment alternatives available to citizens then the provision of an unconditional BIG, set at some ‘liveable’ level and payable to all citizens, is the most direct means of addressing income security.

Mitchell and Watts (2004) present a detailed critique of the basic income guarantees proposal and concluded that the BIG conception of income insecurity and unemployment is highly problematic.

[Reference: Mitchell, W.F. and Watts, M.J. (2004) ‘Comparison of the Macroeconomic Consequences of Basic Income and Job Guarantee Schemes’, Rutgers Journal of Law and Urban Policy, 2 1-24.]

Key BIG advocates (for example, Belgian Phillipe Van Parijs) typically claim that unemployment (a scarcity of jobs) is caused by some workers enjoying excessive wages relative to the free market outcome.

Trade unions and government minimum wage legislation are blamed for creating this scarcity of jobs. There is no recognition that mass unemployment is always the result of a deficiency of total spending in the economy.

That is, mass unemployment is a systemic rather than an individual failure.

Further, the BIG proponents adopt the neo-liberal assumption that governments are financially constrained and thus propose to fund the income guarantees in various ways.

Van Parihs, for example, proposes taxing those who enjoy employment because their excessive wages deny the unemploymed a chance to work.

The unemployed are thus considered to be ‘allowing’ those in employment to enjoy being employed and as a result should be rewarded for their sacrifice.

The implied concept of full employment is equally bizarre. The BIG advocates solve the problem of mass unemployment by engineering an artificial withdrawal of the available labour supply, so that some of the unemployed are reclassified as not in the labour force and in receipt of their basic income allotment.

Whether the BIG is to be modest or not, profound macroeconomic problems would still accompany its introduction.

The mainstream BIG literature advocates the introduction of a BIG within a ‘fiscally neutral’ environment. This is presumably to allay the criticism of the neo-liberals who eschew government deficits.

One of the sensitive issues for BIG proponents is thus its perceived ‘cost’.

Under budget neutrality, the maximum sustainable BIG would be modest. Aggregate demand and employment impacts would be small, and even with some redistribution of working hours; high levels of labour underutilisation are likely to persist.

Overall this strategy does not enhance the rights of the most disadvantaged, nor does it provide work for those who desire it.

It is obvious that persistent unemployment could easily be avoided by the introduction of the BIG if it was accompanied by a net government stimulus (deficit).

This recognises that at all times, given the spending and saving decisions of the non-government sector, the existing unemployment level is the choice of the currency-issuing government – in other words, mass unemployment means that the deficit is too small relative to non-government saving desires.

But without an appropriate fiscal stimulus, the basic income proposal would achieve full employment by persuading the unemployed to drop out of the labour force upon receipt of an income guarantee.

But the value of the currency would then fall given that nothing is provided in return for the government spending.

The resulting inflationary bias would invoke interest rate adjustments (given the current inflation-first approach adopted by central banks) that would constrain the economy from achieving sufficient growth to offer real employment options to all aspiring workers.

But then what would be the impact on labour supply?

If the level of BIG is increased, total labour supply is likely to decrease as both the unemployed and employed workers drop out of the labour force.

The economy would move towards full employment by stealth – pushing workers out of the labour force rather than providing work for them.

But then a further quandary emerges. The more generous BIG, would probably stimulate total spending such that there would be a shortage of labour at ‘full employment’, resulting from the artificial reduction of the full employment level of employment, which then compounds the inflationary pressure.

The alternative is that the excess demand for goods would be increasingly met via imports with consequential effects for the exchange rate and the domestic price level, which would accentuate the inflationary pressure.

Mitchell and Watts (2004) explored these and other destructive dynamics in detail. The conclusion is that the introduction of a BIG policy is likely to be highly problematic with respect its capacity to deliver both sustained full employment and price stability.

A sound policy also has to be viable if the extremes of that policy are encountered. It is obvious that the basic income proposal does not satisfy that requirement.

As more an more individuals opted for the basic income without work, output would drop dramatically and material prosperity would be violated. Leisure and consumption are closely related.

Further, given the logic employed by the basic income proponents that the government providing the basic income is financially constrained, the logic means that as increasing numbers of workers ‘liberated’ themselves by taking the basic income, the capacity of the government to sustain it would diminish.

In other words, on its own grounds, the basic income proposal is limited in scope.

MORE TO COME HERE.

Conclusion

In Part 2, we will analyse the ‘robot’ justification.

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:

1. Friday lay day – The Stability Pact didn’t mean much anyway, did it?

2. European Left face a Dystopia of their own making

3. The Eurozone Groupthink and Denial continues …

4. Mitterrand’s turn to austerity was an ideological choice not an inevitability

5. The origins of the ‘leftist’ failure to oppose austerity

6. The European Project is dead

7. The Italian left should hang their heads in shame

8. On the trail of inflation and the fears of the same ….

9. Globalisation and currency arrangements

10. The co-option of government by transnational organisations

11. The Modigliani controversy – the break with Keynesian thinking

12. The capacity of the state and the open economy – Part 1

13. Is exchange rate depreciation inflationary?

14. Balance of payments constraints

15. Ultimately, real resource availability constrains prosperity

16. The impossibility theorem that beguiles the Left.

17. The British Monetarist infestation.

18. The Monetarism Trap snares the second Wilson Labour Government.

19. The Heath government was not Monetarist – that was left to the Labour Party.

20. Britain and the 1970s oil shocks – the failure of Monetarism.

21. The right-wing counter attack – 1971.

22. British trade unions in the early 1970s.

23. Distributional conflict and inflation – Britain in the early 1970s.

24. Rising urban inequality and segregation and the role of the state.

25. The British Labour Party path to Monetarism.

26. Britain approaches the 1976 currency crisis.

27. The 1976 currency crisis.

28. The Left confuses globalisation with neo-liberalism and gets lost.

29. The metamorphosis of the IMF as a neo-liberal attack dog.

30. The Wall Street-US Treasury Complex.

31. The Bacon-Eltis intervention – Britain 1976.

32. British Left reject fiscal strategy – speculation mounts, March 1976.

33. The US government view of the 1976 sterling crisis.

34. Iceland proves the nation state is alive and well.

35. The British Cabinet divides over the IMF negotiations in 1976.

36. The conspiracy to bring British Labour to heel 1976.

37. The 1976 British austerity shift – a triumph of perception over reality.

38. The British Left is usurped and IMF austerity begins 1976.

39. Why capital controls should be part of a progressive policy.

40. Brexit signals that a new policy paradigm is required including re-nationalisation.

41. Towards a progressive concept of efficiency – Part 1.

42. Towards a progressive concept of efficiency – Part 2.

43. The case for re-nationalisation – Part 2.

44. Brainbelts – only a part of a progressive future.

45. Reforming the international institutional framework – Part 1.

46. Reforming the international institutional framework – Part 2.

47. Reducing income inequality.

48. The struggle to establish a coherent progressive position continues.

49. Work is important for human well-being.

50. Is there a case for a basic income guarantee – Part 1.

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.

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    48 Responses to Is there a case for a basic income guarantee – Part 1

    1. Neil Wilson says:

      If there is actually a shortage of jobs why not lower the state retirement age and pay the retirement pension earlier?

      If there is actually child poverty why not increase the rate of child benefit?

      If there is work being done that is unwaged, then why not debate whether it should be waged (why should two people look after each other’s children be classed as ‘childminders’ and paid, but if they look after their own children they are not).

      Beveridge in “Full Employment in a Free Society” (pp 17) states:

      “Maintenance of employment is wanted for its own sake and not simply to make a Plan for Social Security work more easily. This new report takes as its aim freedom from Idleness and sets out a policy for Full Employment to achieve that aim. Choice of the term Idleness has two implications. Idleness is a different word from unemployment; freedom from Idleness secured by full employment does not mean there must literally be no unemployment at all. Idleness is not the same was Want; it is a positive separate evil from which men do not escape by having an income. […] They must also have the chance of rendering useful service and feeling that they are doing so.”

      So not only are there better solutions available to the alleged ills, but BIG fails to acknowledge or even address Idleness. In fact it continues to embed and propagate Idleness – totally ignoring the impact it has on people’s lives.

      These days we would probably call it Social Exclusion.

    2. Andrew Anderson says:

      Idleness is not the same was Want; it is a positive separate evil from which men do not escape by having an income. […] They must also have the chance of rendering useful service and feeling that they are doing so.” Neil Wilson [bold added]

      It’s called self-employment or volunteering, Neil. You know, like the rich often do? Since they are free from wage slavery? A wage slavery you wish to perpetuate either by private or public means?

      Before your beloved banks stole the commons and very many family farms and businesses, self-employment was the norm, don’t you know? How about advocating a return to that then?

    3. Bob says:

      This is delusional stuff. In the UK there is little change of BIG or JG. Same anywhere with a right wing electorate. Conservatives already have “workfare” they are happy with and will probably not provide support for JG.

      As Neil’s recommendation on Medium “S Wilson” says:

      “The Conservatives went on to win a working majority in the UK Parliament election of 2015, even after Chancellor Osborne had introduced the controversial restrictions to Child Benefit in 2010 and 2013. The Labour manifesto heading into the 2015 election made no undertaking to re-establish a universal Child Benefit on the Barbara Castle model.

      If a political movement cannot win a working majority on the principle of a universal basic income for the most helpless in society, how can the proposal be won for those who are considered able to help themselves?”

      Let’s talk practical stuff first, like politics.

      In the past two dozen years both conservatives and new labour have provided a massively generous tax free far-from-basic income for landlords and homeowners cashed in via remortgages in Southern England only:

      http://www.bbc.co.uk/news/business-19288208
      «In 2001, the average price of a house was £121,769 and the average salary was £16,557, according to the National Housing Federation. A decade on, the typical price of a property is 94% higher at £236,518, while average wages are up 29% to £21,330»

      That is an average of North and South, so more than that, but screw it we will take it as it is.

      This means that in those 10 years landlords of average UK 2-up-2-down terraced houses (including a recession, and is more than that) have enjoyed a “basic income” of (usually) tax-free capital gains of around £12,000 per year (£200 per week), on top of £14,000 after-tax average earnings, all thanks to a bubble of unlimited credit arranged by various governments who have been very popular as 60-70% of voters are property speculators. To the point that the current one have decided that their main vote-buying strategy to support their core southern voters is to reward those core voters with another massive round of credit fueled property speculation in the South, and damn the losers in the North and the celtic fringe.

      This “basic income” of £12,000 a year has also been a purely regressive income redistribution from people from less property to people with more property.

      In other words, a form of “basic income” is reality that has been happening for decades, and the average UK voter is a property speculator who has been very satisfied with making a large additional “basic income” squeezed from people poorer than themselves, and wishes that those people poorer than themselves had lower wages and a higher unemployment rate so that landlords would find cheaper hired help.

      Thus it is not just striped suit wearing capitalists as in but also most UK voters who want to drive down their costs, as many of them are more invested in property than labour, especially of course if they are retired wannabe ladies of the manor, whose aim is to soak the poor and murder children for personal gain.

    4. Bob says:

      Andrew, you are delusional. In the UK there has been basic income for property speculators to cash in via remortgages backed by government sponsored private debt. Why would such voters support a BIG when they have one already?

    5. Bob says:

      BTW the situation is so extreme the Chief Economist of the Bank of England recommended that pensioners should sell their stock/bond based pensions and speculate in southern property:

      http://www.theguardian.com/money/2016/aug/28/property-is-better-bet-than-a-pension-says-bank-of-england-economist

      «Haldane believes that property is a better bet for retirement planning than a pension. “It ought to be pension but it’s almost certainly property,” he said. “As long as we continue not to build anything like as many houses in this country as we need to … we will see what we’ve had for the better part of a generation, which is house prices relentlessly heading north.”»

      Of course the stuff about building houses is BS, as it is gains in land value that matter.

      A good source showing how it is only happening in southern England. In all other regions house prices have been falling for ten years:

      http://www.lovemoney.com/news/53528/property-house-price-value-real-terms-2005-2015-uk-regions

    6. Bob says:

      The reason I am mentioning it is it is a massive issue and never really discussed by any economists.

      For example in the Brexit vote:

      * Low wages and high rents exist in several rich countries that are not part of the EU (e.g. Australia) and there are good wages and cheap rents in several rich EU countries (e.g. Sweden).

      * The expansion of the EU to low wage countries like Romania was demanded by the UK government that also encouraged low wage immigration to help bring down the wages in the NHS etc. and push up rents in the south-east and London, and yes in part this did help.

      * The Brexit leaders are those politicians who want lower wages and higher rent, have criticized the EU for bring too left-wing, and post-Brexit they would open immigration to people from really low wage countries, like Senegal or Burma, like Dubai does today, which is currently hard to do under EU rules. Those “guest workers” may not be able to vote.

      It is an illusion to think that low wages and high rents are the result mainly of EU membership rather than UK government policy, and that after Brexit the political class will suddenly adopt policies to support workers rather than just south-east property owners and pensioners.

    7. Jordan from Croatia says:

      The best reason for having BIG is that we already have it, especially Australia and Scandinavia.
      Every citizen allready have some income from thousands of programs to distribute it whether called annuity, pensions, dissabillity, unemployment benefit, housing programs……..

      Since we already have it why not institutionalize it under one name. What’s the difference?
      As you pointed out, dear Bill, there would be a large administration becoming unemployed and deficit would be reduced. That is why JG is needed to cover for all holes in BIG.
      And BIG is needed to cover holes in JG.

      My proposal is BIG and JG have to go toghether, relation between them to be defined not to ruin incentives for work but to ruin incentives for employers to abuse both.

    8. Andrew Anderson says:

      If a political movement cannot win a working majority on the principle of a universal basic income for the most helpless in society, how can the proposal be won for those who are considered able to help themselves?” Bob

      By threatening welfare for the rich? Such as government-provided deposit insurance, positive interest paying sovereign debt, the lender/asset buyer of last resort, etc. ?

      How can conservatives possibly defend those? They can’t. In my experience it’s so-called concerned Progressives like Neil who defend that welfare for the rich (Bill Mitchell is the honorable exception, at least wrt sovereign debt).

      Besides, just the proper abolition of government-provided deposit insurance should require $trillions in new fiat to be equally distributed to all, for example, US citizens to provide the new reserves needed for the transfer of at least some currently insured deposits to inherently risk-free accounts at the central bank. How’s that for a fat down-payment on a citizens’ dividend?

    9. Jordan from Croatia says:

      Andrew A
      What is wrong with deposit insurance?
      Surely nothing was wrong when it existed in postwar period during the highest prosperity achievement?
      So why is it such problem?
      Why arent you talking about the destruction of marginal tax rate that brought such prosperity by forcing owners to leave money in firms and invest it instead of pulling it out and buying stocks or public debt?

      Main reason that banks did what they did it was destruction of confiscatory marginal tax rate that prevented incentives for commission based exacutives to undertake unbearable risk. What would be the point of increasing bonuses to executives for risk taking if it was confiscated by tax? none.
      Deposit insurance did not incentivise risk taking, it was the possibility of huge bonuses.

    10. Andrew Anderson says:

      What is wrong with deposit insurance? Jordan from Croatia

      What is right about it? Accounts at the central bank are inherently risk-free. Then why can’t all citizens have accounts there? Especially the poor since currently the poor are forced to lend to banks (a deposit is legally a loan) to lower their borrowing costs and, by extension, the borrowing costs of the rich, the most so-called creditworthy. That or be limited to unsafe, inconvenient physical fiat.

      Moreover, why should banks receive their reserves by default when the monetary sovereign spends? Why shouldn’t they have to borrow them at honest interest rates from the military, Social Security recipients, Federal contractors, etc. who should be allowed accounts at the central bank too?

      Moreover, how can we have honest accounting when government privileges for banks such as deposit insurance and exclusive use of accounts at the central bank render their liabilities largely a sham wrt to the general population ?

      The question is indeed what is right about government provided deposit insurance, not what is wrong.

      As for taxes, why give the banks and the rich, the most so-called creditworthy, a license to steal in the first place?

    11. Andrew Anderson says:

      Deposit insurance did not incentivise risk taking, it was the possibility of huge bonuses. Jordan from Croatia

      How can largely sham liabilities wrt to the population not incentivise risk taking?

      But aside from that, government privileges for depository institutions mean they hold the economy hostage via the payment system – which currently must work through them or not at all. We should free the economy from being hostage to what is, in essence, a government privileged usury cartel.

    12. Matt B says:

      So what you’re really arguing for, Andrew, is a nationalised bank and for everyone to borrow at the central bank interest rate, regardless of risk?

    13. Andrew Anderson says:

      So what you’re really arguing for, Andrew, is a nationalised bank Matt B

      No. I’m arguing that all priviledges should be removed from depository institutions, not that government should take over lending since that would violate equal protection under the law.

      Banks could still create all the deposits/liabilities they dare but as 100% private businesses with 100% voluntary depositors.

    14. CharlesJ says:

      Andrew Anderson,
      “Banks could still create all the deposits/liabilities they dare but as 100% private businesses with 100% voluntary depositors.”

      If you are saying that all loans should be matched by deposits, that is mostly the case now. When a bank loans money it is created out of thin air and is deposited in accounts. At any given time about 3% exists as cash, but the rest already sits in bank accounts.

      Loans create deposits – that’s a fundamental principal.

      Kind Regards

    15. CharlesJ says:

      Andrew,
      “In my experience it’s so-called concerned Progressives like Neil who defend that welfare for the rich”

      Neil has never said that governments have to issue debt to match their deficit. You are just assuming that without listening to anything he says.

    16. Neil Wilson says:

      “You are just assuming that without listening to anything he says.”

      He’s not listening to anything anybody says. It’s another ‘true believer’ troll like good old Vincent the Gold Bug (for those who have been here long enough to remember that).

      There are no reasons. No debate. Just a belief and repeating the same line over and over. Always best to avoid feeding the troll.

    17. bill says:

      Dear Neil Wilson (at 2016/09/20 at 1:23 pm)

      Yes, I am approaching the point where I will delete any more ‘PM type – bank credit without prior reserves’ dialogue is offered. The point has been made. We know it. We have heard it many times. It is not particularly enlightened. And … doesn’t belong ad nauseum on my blog.

      best wishes
      bill

    18. Neil Wilson says:

      “What’s the difference?”

      There are those that believe the world owes them a living, and that they have a right to resources others have provided and created without any requirement to respond. I know quite a few people who run businesses in the parasite economy who work like that. They expect you to work ‘in partnership’ for nothing providing ever more resources for their ‘bids’ and ‘tenders’, yet never seem to get around to awarding actual paying contracts to anybody in return. It’s a scam that just ends up irritating people.

      As Tony Anderson put it recently: do you believe the surfers, individuals doing precisely what they want without regard for anybody else, should be paid? Either you believe they have the right to extract output from others without providing any useful output in return, or you believe they should produce useful output first and exchange it (via the medium of money) for output from others.

      Those are likely normative beliefs that will have to be settled at the polls. The idea that you can get something for nothing has always been defeated at the polls. The Swiss rejected it outright, and the total failure of any ‘trial’ income guarantee to stay in place at any level that is meaningful really ought to inform people about how acceptable the idea is. But it never seems to.

      I’ve tweeted up a piece on the history of the Family Allowance in the UK – which is no longer universal and has never been at anything more than 3% of median earnings. It is a pittance. If you can’t get a ‘basic income’ in place for children – who are prevented from working in most nations – then you have absolutely no chance with fit adults.

    19. Freddie says:

      Wouldn’t a BIG create divisions between those who live off the BIG and those who still work? The common argument I hear is that people will use the BIG to become musicians and artists or whatnot, but I think that is being idealistic. You will have some people (maybe the majority) using the BIG to just live and engage in entertainment. What happens when the first news articles come out about people using the BIG to sit around and play video games? People still in work will become resentful.

      This isn’t even getting into the problem of possible social isolation and mental and physical illness that may arise from people not participating in the work world, which is a major area for human socialization.

    20. Kevin Harding says:

      We’ll certainly much I can agree with.Most importantly that unemployment is the result
      of deficient aggregate spending it follows that BIG in a neutral fiscal straightjacket cannot
      address unemployment or much else.
      For those of us who support fiscal stimulus and a progressive tax and welfare system BIG
      is still desireable.Altough I prefer the notion of a citizens universal dividend a democratic
      contract not a living owed.

    21. Jordan from Croatia says:

      @Neil Wilson
      “Either you believe they have”
      “Believe” what believing has to do with what i say?

      Surfers already have income, it is only about changing the name and simplifying it. Why are you pretending that they do not have an income allready?

      Another thing is: how did surfers allready got undeserved income, which you claim is impossible at the present and give Swizzerland as an example. Abolishing slavery was also impossible, voting for women was also impossible, gay rights were also impossible and surfers getting social income was also impossible. So how did they get it in 60’s? Yes surfers also have an income. Please do not pretend that they do not.

      But so many times I have encountered your desire to punish. It is obvious that you are protecting your benefits. Well, you are destroying your own benefits by your own desire to punish “undeserving” others. Their spending is your income and vice verse. Please comprehend that.

      As i was saying, every Australian and scandinavian citizen allready has BIG, not at the time of voting rights but after worked somwhere for a year. After that they have a guaranteed income.
      Difference would be the time of entering BIG benefit: at voting age time instead of after working for one year as it is now.

    22. Neil Wilson says:

      “Surfers already have income”

      They don’t in the original example. The Surfers are those who don’t have a job and just want to surf. They want to be ‘free -man’. So they don’t have a living income, and they don’t want to do anything other than what they want.

      The original argument is that they should receive a living income, regardless of what they do. But that means somebody has to produce something real and give it to them for nothing real in return. Which simply isn’t fair.

      “Their spending is your income and vice verse”

      No it isn’t That’s a money illusion.

      Because they aren’t producing anything. So any income they give me is automatically devalued because there is nothing of value I can buy with it. So why would I want that? Ultimately in any exchange sequence the output reaches a peak. Under a Job Guarantee there is more output in the shared pool than there is under a system where people are paid for doing nothing. That’s why it stabilises the price system rather than blowing it out of the water.

      I, along with most of the population, don’t see why we should provide output to people who are giving us nothing real in return – particularly when they clearly could produce output for others if they were less selfish and more community focussed.

      We’ll do it for a short while out of charity, but certainly not for a lifetime.

      Which is why *all* basic income ‘trials’ end up as failures. It’s contrary to human nature.

      “After that they have a guaranteed income.’

      They don’t. They get a small amount of unemployment benefit that is time limited and insufficient to live on long term. Those systems are there to tide people over frictional unemployment. The whole argument about BIG is that it is *big* – i.e. enough to live on.

      Any less than that is just a stipend, and that then works like the tax credit systems that are in place – largely subsidies to corporations that pay poor wages.

      Quite a lot of the basic income proposals I’ve read recently are just tax credits that trigger taxation loss aversion in the entire population rather than just a small subset. All while crippling the spend side auto stabilisers.

      It’s an attempt at the foot in the door trick and it won’t get anywhere.

    23. Andrew Anderson says:

      Neil,

      We’ve debated before and you lost. You’ve said such ridiculous things as holding Central Bank notes (e.g. $20 bills) are the equivalent of having inherently risk-free accounts at the Central Bank.

    24. Andrew Anderson says:

      Yes, I am approaching the point where I will delete any more ‘PM type – bank credit without prior reserves’ dialogue is offered. Bill

      I am MOST DEFINITELY NOT a precious metals freak. Neil is attempting to smear me to imply otherwise.

      Nor do I oppose banks creating all the deposits/liabilities they dare, with reserves or not.

      Delete my comments if you will but read them first, please, is all I ask.

    25. Robert says:

      I, along with most of the population, don’t see why we should provide output to people who are giving us nothing real in return – particularly when they clearly could produce output for others if they were less selfish and more community focused.

      Why then, does the welfare state continue to persist?
      Perhaps welfare is the price of mass unemployment, regardless of what most of the population thinks.

      I don’t see why a BIG in the form of a citizens dividend is politically unacceptable. When every citizen is a shareholder, they become entitled to that dividend. It’s consistent with notions of property rights.

    26. Jason H says:

      Jordan, if we have a well targeted welfare system for the disabled etc who can’t work as we should then why do we need a basic income. Just pay a living wage to people to use their skills and use targeted welfare for those who need it.

      Basic income is a fantasy the left really doesn’t want to really and I mean seriously look at from economics and social psychology perspective. If I was given money for nothing and didn’t need to work I honestly would probably sit on a beach drinking beer somewhere. Definitely not a healthy thing. We all need a reason or purpose to live. That might be as an artist, musician or starting a business. A professional surfer if good enough will get sponsored. For everyone else it’s a hobby so by definition isn’t a job. We all pay for our hobbies from our wages earned through doing productive things for money.

      You remove the purpose from humans you trap them in the world of welfare trap and substance abuse etc. Trust me I’ve seen so many people trapped because the system now punishes them if they earn money. There’s a horrible flip side to money for nothing that the JG solves.

      I’m not sure why so many are arguing with Neil Wilson he’s a great MMT blogger and with each post I find his simplicity of explanation on medium is fantastic. Maybe you should argue on his blog instead as it doesn’t seem relevant to Bill’s blog post. There seems to be some background I’m not understanding reading your comments. Maybe we need Bill’s moderation as arguing without spelling out the information and leaving others guessing hasn’t helped me understand your point.

    27. larry says:

      Andrew, I am afraid that I don’t see what is so wrong with what Neil said. I wouldn’t have put it that way, but what you have with your $20 is an IOU, or legally binding promissory note, from the Central Bank. Of course, you can’t go to the bank and ask them to give you your $20, for they will say that you already have it. They expect you to save it for a future occasion or spend it.

      And this $20 is risk-free in a certain sense, unless of course it is stolen from you. There are certain risks attached to it, which are similar though not identical to those that would exist had you deposited it in a bank account. Unless, of course, there were no deposit insurance, which if I remember rightly is capped at $250k in the US and £75k in the UK. Deposit insurance was designed to protect the small to medium-sized savers from bank insolvencies, which used to be frequent, and still happen regularly with small banks.

      So, to get back to my initial point, I don’t see what is essentially wrong with what Neil said other than, possibly, the language he used to make his point.

    28. Jason H says:

      Andrew I thought PM meant “positive money”? I can’t speak for bill but it was how I read it. I still don’t understand what you’re arguing here. Care to enlighten me so I can at least understand your whole debate? As Larry said money is just a trusted IOU. Do you disagree with that? If so you must think in terms of precious metals or something. Again I need more information as it seems like you’re carrying on a debate from somewhere else with more information I’m not privy to.

    29. Jordan from Croatia says:

      ““Surfers already have income”

      They don’t in the original example.”

      What is the original example? system before the WWII? At the present those surfers receive income.
      I believe that you could not find 1000 people in australia that doesn’t receive some form of income or support, besides natives living far from urban areas.

      “Because they aren’t producing anything. So any income they give me is automatically devalued because there is nothing of value I can buy with it. ” WOOW just WOOW.
      Truth is that income is devalued only if there is a signifcant CHANGE in total spending by “undeserved”. I was thinking that all MMTers understood that change is what matters in economic effects, not a static flow. Change of the flow matter that affects economy and value of the money. Yes, there is some equilibrium tendency in medium terms, even tough equilibrium is a no-no word in MMT.

      Besides, i hope that everyone took that i wasn’t against JG and for BIG only. No, JG is the main force while BIG is only filling some gaps left by JG. BIG have huge holes in it which would be covered by JG.
      And JG have some minor holes that would be covered by BIG. For example, those moving between jobs volunterilly, somebody having to leave job in order to take care of more pressing matter like familly (new baby), long illness or long hospitalization due to traffic or any accident.

      Most of those problems are covered today by some provisions, but those are holes in JG, that BIG can cover more efficiently and automatically.

      “Because they aren’t producing anything. So any income they give me is automatically devalued because there is nothing of value I can buy with it. ”
      Now again, how can you say that when allready too much is produced to be used, and many would want to produce even more then it is done without care if this will go to some “deserving or undeserving surfer” just as long as they are paid by their employer. Does employer asks if his service or product goes to “deserving or undeserving”?

      Did you ever ask if a professional player of polo or english football that you have not ever watched devalued your income by having 6 figure income? To me it is the same whether in professional sport or sport that is not televised as surfing, i have no joy from it, yet some of them receive huge remunerations. Do they also devalue your income? Or some jurnalist that you never read, or tv anchor you never saw or heard. How their income devalue yours?

      I would argue that half of the jobs in the developed world (mostly in entertainment, military, sport, jurnalism, art…banking) contribute something (sometimes negative contribution) to a very limited number of people just as surfers do, yet they recieve income and some very exhorbitant incomes. Yet you find only “surfers” undeserving.

      I hope that all MMTers will grasp that economic principles are based solelly on money remunerative distribution, creation, flow, destruction without any influence of morality and utopistic asumptions. It is the system that is about money creation, flow and destruction that is MMT. Who does what for that money has very little significance. Everything else comes from historic normative influence on such system, and work for money as such.

    30. Jordan from Croatia says:

      @Jason H
      “We all pay for our hobbies from our wages earned through doing productive things for money. ”

      Who is we? Millitary that is destroying country after country in Middle East? Is that productive?
      Jurnalists that are consistently lieing? Entertainment like Big Brother? Sports like WWE or curling…..?
      Politicians that are preventing legislations to improve economoy and lives of people? They are productive?
      Hedge menagers that are bringing loses year after year?
      Bankers that work only for thier own bonuses by cheating investors?

      Those and many examples are examples you havent considered. I would argue that about half of all jobs in developed world are counterproductive yet many in those are receiving extraorbitant incomes. Why?
      Because service economy is replacing lost jobs due to productivity increase. It is been happening for long time now. Such is the nature of what kind of jobs replaced those that were in industry and agriculture. There is more to come since productivity needs only half of population to feed and care for all of population. Trend is increasing its velocity.

    31. Kevin Harding says:

      income = spending regardless of where the spending comes from.
      Inflation can be caused by spending in some markets where there is scarcity or
      poor competition regardless of where the spending comes from income or OMF
      surely all basic stuff but spending from welfare seems to have some magic inflationary
      or wasteful property.Ridiculous.
      Vast amount of paid labour provides little or no goods and services to anyone , let alone me
      personally indeed amongst the best paid work is buying and selling opaque fiscal
      products which serve no purpose at all.Much value is provided by the work of the past
      the infrastructure,knowledge and technology .Much value to us all is provided by computers and
      machines .
      Forget the straw men and the morality where is the reasoned argument?
      The interesting thing about a universal citizens wage is that it undermines the inevitable
      conflict between profits and wages and deals with the fact that wages are costs as well as income,
      IT promotes the work ethic if it is universal as you keep it when you get a job or set up your own
      job.

    32. mahaish says:

      “As Tony Anderson put it recently: do you believe the surfers, individuals doing precisely what they want without regard for anybody else, should be paid? Either you believe they have the right to extract output from others without providing any useful output in return, or you believe they should produce useful output first and exchange it (via the medium of money) for output from others”

      these are just issues for the current industrial age. the current paradigm defines valuable output in a very narrow way, and its driven by a notion that their is scarecity

      if surfers are honing their surfing skills, and doing what their hearts desire , its a hell of lot more of a valuable life , than turning up to work and not doing what your heart desires.

      I think Schumpeter is right , and we are all going to be socialist one day, because technological efficiency is going to drive down the cost of everything, and we will be left with knowone but ourselves to pre occupy us.

      we are probably going to get to some point in human history once we sort out all this chaos and achieve unimaginable productive efficiency, where we will get our free lunch within the next thousand years, especially once we bring in population control, which I think is inevitable, unless a few wars take care of that for us;).

      under this scenario, capitalism and the current paradigm of value for work or anything else is dead.

    33. Jake says:

      @jasonh

      what andrew anderson is referring too is that private banks are an oligopolistic cartel
      which recieve risk free income from interest on reserves at the central bank and have a captive funding base as the government guarantees deposit insurance for the general public’s deposits held at private banks.The general public don’t have anywhere else to put their deposits/ current accounts

      These banks are able to charge us for leveraging HPM and holding debt and carrying out maturity transformation bascily thanks to government provided privledges;deposit insurance and a risk free account at central.

      On top of that when asset prices collapse and financial assets are no longer shiftable and loose market value,Government will intervene to protect the market prices of these financial assets.Despite the banks playing a key role in private sector over-levarging and the consequential fall in private demand,the Government will intervene to protect these institutions.And as Bill has commented on not do enough to address the fall in aggregate demand.

      So the banks shareholders and staff are able to enjoy huge profits,salaries and mouth watering bonuses during the boom thanks to goverment provided intstitutional benefits (deposit insurance) and a captive funding base (deposits of the general public and holding deposits belonging to public recipients of government spending intiatives).And when the overleveraging creates an economic slump the solvency of these institutions is protected,and staff continue to enjoy extremely high salaries and bonuses.

      So it has occurred to andrew anderson that these priveldges which protect the private oligopolistic cartel should be extended to the general public to level the playing field.So he argues that everyone should have a access to a risk free current account at the central bank and also if any interest on reserve is to be paid,everyone would recieve it.Banks would not have the market dominance and obvious benefits of a captive deposit base as the general public could place their deposits at the Central Bank safe in the knowledge that they would be 100% secure.Banks would be unable to enjoy such high profits and bonuses and the ability to manipulate key markets too.Central bank account holders would also have access to interbank markets.

      Bill,himself supports reforms which address these points.With the full nationalisation of banks and socialisation of any bank profits.Any public bank would price risk and charge for maturity transformation of private debt on an uncollateralised basis and hold the loan on its balance sheet until its paid off.The deposits would still be isured but presumably bill wouldn’t support market manipulation and excessive salaries (for profits derived from institutional privledges).

      he also supports zero interest rate policies and zero issuance of public debt to private interest,(deficit spending would just show up on the other side the central Bank’s balance sheet according to accouting convention).These are the other priveledges that the rich benefit from which andrew anderson mentions.
      And bill supports changes to the tax incentives which encourage property speculation which is what Bob complained about.

      I have read Neil supporting a public option to banking which would presumably enjoy the same deposit insurance which provides captive funding .This would add more competition to the private banking cartel and impose more discipline on oligolipstic behaviour from banks.

      I would like Matt b who wrote “So what you’re really arguing for, Andrew, is a nationalised bank and for everyone to borrow at the central bank interest rate, regardless of risk?” to explain his objection to the proposals he just referred to in full.especially as the private setor has failed to price risk correctly periodically and it fails to see cyclical fluctuation in asset prices and the consequences of over leveraging in the economy.At the moment reserve bank account holder can borrow from the central bank at a high rate but with collateral at the discount window facility.So I suppose if the general public had access to this it wouldnt be problem,the CB would simply have to decide what is acceptable collateral.

      I for one think andrew anderson has a point ,private banks do get away with a lot and are able to enormously benefit from priveldges provided by the govt; namely the captive funding base provided by deposit insurance and implicit govt protectionism.

      Bill’s proposals essentially cover these concerns;through nationalisation.

      I can’t think of a reason why people shouldn’t in principle have access to bank accounts at the central bank.It does make sense to have local public lending banks to promote the capital development of the private sector and provide liquidity to small and medium sized firms using local government treasury deposits etc as a funding base.
      As for govt guaranteed deposit insurance for Private banks and Private financial instutitions,I would have to go through the pros and cons.Perphap Its an unhappy compromise between having a public support for a system which accrues benefits to a minority but is essential if we want/need a privatised financial sector.
      personally I am still developing my ideas around all this

    34. Matt B says:

      I don’t have any problems with a nationalised bank. I was only trying to get the debate to go from discussing a solution instead of the problems.

    35. Jake says:

      @jordan from croatia

      “Truth is that income is devalued only if there is a signifcant CHANGE in total spending by “undeserved”.”

      what does this even mean,purchasing power is about demand relative to supply of output.Neil point is about rationing out demand to people who contribute to supply of output

      I dont understand why football players earn milllions to buy over priced designer goods and some people beg in the streets.It would be intresting to see how much of employment actually contributes to much needed output that we need and contribute to keeping prices low by increasing supply.
      presumably things outside of health,education,scientific R&D,housing,food and energy production,provision of utilities,maintenance of infrastructure,basic goods like clothing and furniture,public sector services technology support serivces can be basicly be written off as redundant pointless work that wouldn’t really affect us if people stopped doing these non essential jobs.

      david greaber often writes that the corporate secter effetively have a jg providing work which isnt really needed but might be “nice to have” as neil describes,only for the private sector not for the public sector.

      I think that says more about who holds the purchasing power in our economy and who has access to casflows to fritter away on pointless things and even emplpying people to do pointless things.which i guess is partly what advocates of BIG try to address.

      yes you are right about productivity increases in manufacturing and agricultare leading to services jobs which to not do anything useful.Bruce greenwald talks about this a lot and he advocates a negative tax income for those who don’t get jobs as librarians and teachers,he is also very pro service sector though as well.

      @mahaish did schumpeter say that as well.anyway yes hopefully productivity will reach a point where output is basicly free thanks to technological advances.there will only be a very small amount of needed work roles.property rights and claims on production will have to be changed too at this point.

    36. Damien says:

      “Overall this strategy does not enhance the rights of the most disadvantaged, nor does it provide work for those who desire it.”

      I don’t see that you have at all provided a scaffold for this big statment. I agree there are various issues with various BIG/UBI proposals out there however an appropriately funded BIG with some deficit spending would be a huge improvement over the current “safety net”.
      I really appreciate most of your writing Bill but you seem to have an uncharacteristic dislike of the UBI the sits aloof from your other ideals. Is it possible your outrage is morale? Many of the boomers I speak with are disgusted by the idea of a person not working “its just lazy and selfish”.

      Perhaps your hung op on the social benefits of having a job. How do you square the evidence that jobs are good for social harmony and mental heath with the repeated surveys that show most people hate their jobs? The obvious answer is that social networks are good for mental health and human flourishing, not jobs.

      Personally I would like some sort of amalgamation between JG and UBI – I guess that would then look more like a JG however with not so much emphasis on work – more with social engagement.

    37. Andrew Anderson says:

      And this $20 is risk-free in a certain sense, unless of course it is stolen from you. larry

      A huge if. Also, I neglected to mention the huge convenience of accounts at the central bank over the inconvenience of dealing with physical fiat (e.g. counterfeit detection). Besides, what will Neil say if physical fiat is abolished? Where will his fig leaf be then when citizens may not use their own nation’s fiat AT ALL but instead must work through the usury cartel?

      So then, why can’t we all have accounts at the central bank? Is fiat for the use of all citizens or only for a government privileged usury cartel?

    38. Andrew Anderson says:

      @Jake,

      You largely get what I’ve been saying. Thanks for the positive feedback. Best wishes as you continue to think through the problem.

      This quibble though:

      and also if any interest on reserve is to be paid,everyone would recieve it. Jake

      Except that is welfare proportional to account balance, which should be avoided. Instead, let all fiat created for the private sector be equally distributed to all adult citizens. This new fiat would, of course, be in addition to normal deficit spending by the monetary sovereign.

    39. Andrew Anderson says:

      I thought PM meant “positive money”? Jason H

      Oh, my mistake but I am not a Positive Money fan either since:

      1) They would ban fractional reserve lending. This is probably unenforceable and is philosophically unsatisfactory too.
      2) Apparently support positive interest paying sovereign debt as a means to remove fiat from the economy. But this is welfare proportional to wealth, not need.

      As Larry said money is just a trusted IOU. Do you disagree with that?

      That is certainly true wrt fiat. However, private money could also be shares in equity (common stock).

      If so you must think in terms of precious metals or something.

      Not at all. Inexpensive fiat is the ONLY ethical money form for government use. As for private monies, if these are allowed, common stock is vastly superior to commodity monies, imo.

    40. Andrew Anderson says:

      I don’t have any problems with a nationalised bank. Matt B

      The monetary sovereign or its central bank should certainly provide inherently risk-free accounts for all citizens but as for lending I don’t see how loans to the private sector can avoid violating equal protection under the law, e.g. would the rich continue to be the most so-called credit worthy? This is not to say that the monetary sovereign should not issue grants for purposes that serve the general welfare such as full scholarships for worthy students, research, etc.

    41. Jake says:

      @ Andrew Anderson

      Yes right you are.well as Bill recommends best to have Zero interest on reserves .

      And simply let the deficit finance any extra new fiscal initiatives
      According to what ever your policy preference is.

    42. Andrew Anderson says:

      Bill recommends best to have Zero interest on reserves . Jake

      I’d say that the first $250,000 US or so should be negative interest free on individual adult citizen accounts at the central bank. All other private sector accounts should be charged negative interest from $0 to discourage money hoarding and to make 0% interest paying sovereign debt attractive by comparison.

    43. Neil Wilson says:

      “if surfers are honing their surfing skills, and doing what their hearts desire , its a hell of lot more of a valuable life , than turning up to work and not doing what your heart desires”

      Perhaps it is, but it doesn’t provide anything to anybody else does it. So you have an individual there who has received food and shelter created by somebody else, but failed to provide anything into the social pool in return. They have produced something and self-consumed – getting a double bite of the real output pie. And that simply isn’t fair to others.

      This is the key point. Whether you as an individual are doing enough to fulfil your obligation to the social pool is a matter *judged by others*. Those others who use up their time to produce your food and shelter.

      And that’s the bit that basic income supporters can’t stand. The idea that what they do is judged by a jury of their peers and the jury decides if it is sufficient to deserve food and shelter or not.

      Yet that is the very basis of civil society right from Anglo Saxon times. If you don’t conform then you become an ‘outlaw’ and end up having to fend for yourself.

    44. Andrew Anderson says:

      and to make 0% interest paying sovereign debt attractive by comparison. AA

      That is, 0% or less.

    45. Neil Wilson says:

      “How do you square the evidence that jobs are good for social harmony and mental heath with the repeated surveys that show most people hate their jobs?”

      Insufficient liquidity caused by a lack of jobs! Insufficient liquidity that allows the parasite economy to stay in business.

      Once you have a Job Guarantee, the matching process can work much more effectively and everybody can end up with the work they love. That has to be the key goal here.

      Ultimately you have to show your worth to others if you want them to do anything for you. That is work, and when you do it over time it is a job. And then you get paid for it. Very simple. Very straightforward. Very fair.

    46. Jason H says:

      Just catching up on comments.

      Firstly Jordan I didn’t say all work now is productive or for the common good. That’s what neo-liberalism does it’s very very hard to unorogram 30+ years of an endless media propaganda campaign. I’ve lived my whole life literally with the onslaught but once you clear your vision you’ll get what people.

      Damien, respectfully as bill and others say a BIG is a neo-liberal system that makes people think they aren’t worth anything. Welfare, cable tv, fast food no purpose leads us to mass suicide like the USA is experiencing so sadly amongst low educated white people. Greece under austerity has similar problems.

      A basic question I often think is why do humans need antidepressants? Why are we so medicated after millions of years of evolution? It’s not us it’s the society we have created and accept.

      Sorry I don’t have more time to elaborate but I hope I put a thought bubble out there. :-)

    47. mahaish says:

      “Perhaps it is, but it doesn’t provide anything to anybody else does it. So you have an individual there who has received food and shelter created by somebody else, but failed to provide anything into the social pool in return. They have produced something and self-consumed – getting a double bite of the real output pie. And that simply isn’t fair to others”

      indeed its unfair under the current paradigm of scarecity.

      but technological progress combined with population control is going to make this paradigm redundant. if we have a world in the future where our technological efficiency is such that we have overcome what are now considered potential resource contraints, due to unimaginable increases in productivity, costs are going to be being driven down towards zero, and so are profits and incomes.

      there just wont be the jobs in the sense we define them in this current age . and if the jobs aren’t there , the incomes not there, and neither are the profits. under this scenario the governments going to have to pay people to surf ;), or make a lot more things freely available.

      someone who lives to 100 + (assuming genetics is going to get us there) might only have to work 10 years of their life to fulfil societies productive needs.

      in the long run, capitalism is a dead duck, not only because of its inbuilt grievence mechanism, but our smarts are going to make it redundant.

      we are all going to be socialists in the end, lets just hope there is a bit more enlightenment to go with it this time round

      and im not a card carrying communist. I actually work for the evil empire of finance

    48. Mike Ellwood says:

      Although I believe strongly in the JG (and not really in BIG), I would add that perhaps even surfers don’t spend 100% of their time surfing, and at other times may be doing socially useful, albeit informal work e.g. taking care of / helping to bring up grandchildren (those would be “silver surfers” :-)), picking up litter, helping older and less able neighbours, organising community activities, being school governors, etc. As others have alluded, there are a whole range of voluntary, but still essential activities which are not easy to value in financial terms, and may not fit comfortably into the JG scenario. Perhaps there could be some level of slightly less formal JG, perhaps paid at a slightly lower rate, to allow for (and reward) this kind of activity.

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