Basic Income and a Job Offer rather than a Guarantee

Felix Fitzroy and Jim Jin, both of the University of St Andrews have recently written a paper ‘Basic Income and a Public Job Offer: Complementary Policies to Reduce Poverty and Unemployment.’

I see the title is a little unambitious – I would have thought a basic income could not only reduce poverty but also change society. Still we have to start somewhere and the report is intriguingly unusual in proposing what most would refer to as a universal basic income (UBI) as well as a Job Guarantee although they go on to explain why they prefer the less prescriptive term Job Offer.

They start with an outline of both the problems of austerity and the problems in the Labour market. These are likely to be familiar to most Progressive Pulse readers: underemployment if not unemployment, insecure jobs often contracted on a zero hours basis and self employment which is at pay rates that are below the minimum wage. It transpires that even in Europe’s economic engine house, Germany, labour (if we take that to mean the bottom 40% of earners) has experienced no real growth in wages since 1991. So the problem is actually widespread.

It is at this stage that I see why the report’s ambition is rather lacking – they are still in the tax and spend scenario so are at pains to cost their recommendations all of which of course need to be ‘affordable’. They manage to demonstrate that their ‘modest’ Basic Income measures of £4000 per head per annum could be funded simply by abolishing the personal allowance without other tax increases –  though at this low level the simplicity of the system would be augmented by other benefits for housing and disability in particular. They also admit that the current £15 billion of unclaimed benefits would be more likely to be taken up in a more open system.

The report says that Universal Basic Income as unearned income, fails to provide the much cited ‘dignity of work’. They, in turn, fail to acknowledge that this dignity might be of rather less importance when everyone has unearned income – indeed an income which is both unearned and received as of right.

The authors suggest that, with the rise of “non-standard employment”, the appeal of the Job Guarantee has tended to be less attractive than the Universal Basic Income, which they prefer to call the Basic Income (BI). They refer to (the economist and MMT exponent), Tcherneva’s review of the Argentinean Plan Jefes, which during the economic crisis was a form of Job Guarantee, and which is seen as strikingly successful.

The report remains convinced that “BI without the conditionality and limited duration of most current benefits would doubtless improve welfare but is unlikely to remove the stigma of unemployment.” They mention that studies have shown that very few lottery winners give up work altogether (which I’m bearing in mind next time I buy a ticket). This may be the case but this smacks of a pervasive Conservative mantra. Before the Thatcherite idea that the poor were feckless, we never bothered that the Beatles probably composed some of their songs when unemployed. (Allegedly rock and roll as rhyming slang for the dole was a consequence.) JK Rowling definitely did some of her writing whilst unemployed. Stigma is really not necessary – simply an optional extra.

When the report continues that “most proponents of either BI or JG when they treat their preferred policy choice as exclusive, neglect problems with sole reliance on this option and ignore the potential gains from complementary [choices]” they are on firmer ground.

If I’ve understood correctly the idea for the Basic Income and a Job Offer seems to have been inspired by the book ‘Basic Income: A Radical Proposal for a Free Society and a Sane Economy’ by the Belgian academics, Philippe van Parijs and Yannick Vanderborght.

This inspiration makes for real substance. It is important that the Job Guarantee becomes the Job Offer. The Job Guarantee implies some coercion – “The Job Guarantee (JG) implies the right to be employed and paid [without] reciprocal obligation on employees to perform tasks to any required standard. So only a qualified JG or Job Offer for those who are able and willing to work, would be feasible.”

Training, apprenticeships and career progression would be inherent to the JO. That is something we don’t hear of in the JG and that really helps to justify the JO – it’s an offer in the marketplace and has to be sold – it is not compulsory but the choice of the prospective employee – so these additions to a basic JG provide encouragement for acceptance and are likely to improve the perception of any JO.

The report identifies home caring and public works as the two main areas for JO since they provide a set of tasks that are in pervasive need into today’s society and encompass areas where most people have something to offer, as well as a basic ability which is capable of upskill.

Indeed our old friend the ‘Green New Deal’ gets a mention which the report thinks the Job Offer programme could probably help to provide at a lower cost. And of course by helping to create a significant public sector which provides reasonable wages and good conditions – and, even flexible work times – it would put pressure on the private sector to compete. This should be good for working conditions.

They conclude by indicating that “modest levels of both BI and JO could bring almost everyone into employment and above the poverty level with only moderate tax rises” and go on to give examples (whist confirming eligibilty restrictions would be required especially if the UK remains in the EU) – with costings.

Because UBI would transform the concept of worth – both personal and financial, membership of society, and eventually even where money comes from, so fundamentally, I think the writers are decidedly timid in deciding they cannot propose a fully fledged UBI. But as politics has to be the art of the possible a Job Offer together with a Basic Income is a half way house and would make an ideal transitional measure that could be used as a method of acclimatising the political outlook to embrace a full UBI.

Perhaps I’m being too harsh – perhaps Basic Income and a Job Offer is radical enough for one paper without upsetting the received wisdom on where our money comes from as well. And perhaps, in the current environment meeker proposals are more likely to be generally acceptable.

The authors rightly propose that trials should be undertaken, though giving out money should not be that difficult (unless you are trying to cut down on previous amounts on offer – as for the misleadingly named ‘Universal Credit’) and so it seems clear that most of the trialling will be required for the Job Offer (whose ultimate real purpose is surely gently to imbue acceptance of the principle of a Basic Income).

So the report is a worthwhile step in the discussion on how, as jobs become more and more insecure as well as scarce, we are all going to acquire the resources to live. But the report falls down on where money comes from, and on the idea of ‘avoiding subsidising idleness’ which is the nineteenth century Protestant work ethic writ large. Yet it certainly outlines what would be a worthy and workable scheme as it stands – but also and all the better, an expedient method of transition towards UBI, which I see as nothing less than inevitable in the long run. There is nothing to lose by letting the Job Offer trials begin immediately….

It is unfortunate that the report so often suggests that money for nothing has a moral hazard attached and it is particularly bizarre when every single recipient – that is every citizen – would have it. And when in any case the rich have, for a very long time, been earning money ‘in their sleep’ (as John Stuart Mill put it) and we don’t round them up to put them in workhouses.

Unless of course that is the Prime Minister’s next big idea.

Comments

  1. Charles Adams -

    I do not agree that UBI is either inevitable or a even a good idea. I am with Bill Mitchell on this:

    “A basic income guarantee is a neo-liberal strategy for serfdom without the work”

    http://bilbo.economicoutlook.net/blog/?p=35705

    The fundamental problem with UBI is that it accepts the premise that money is the thing whereas in fact it is what we do that matters. After 40 years of neoliberalism and the financialisation of everything we need to wake up and realise that money is simply an accounting tool that helps us to organise what really matters and what really matters is having a good life.

    All UBI will achieve is make people into conduits for trickle up economics. Better to give people the foundations for a good life, education, skills, health, somewhere to live and the freedom to organise the rest themselves. Universal basic services rather than income.

  2. Peter May -

    Entirely agree that what really matters is having a good life. But whereas UBI would be tweaking capitalism, UBS would be overthrowing it and I think in that context UBI could be a step on the journey towards UBS.
    But I cannot imagine UBS is likely to appear anywhere anytime soon. After all, even the most basic universal service of all, the NHS, is still 70 years later, unique in the world.
    I’m not sure serfdom exists without the work – but as Bill Mitchell believes in the Job Guarantee serfdom without the work is one up from that!

      1. Peter May -

        Thanks, I’ll take a look at the report. I certainly agree with Jonathan Portes comment “The role of the state is to ensure an equitable distribution of not just money, but opportunity to participate and contribute to society. For that to be meaningful, there are likely to be certain services everyone should be able to access.”

  3. Ivan Horrocks -

    An interesting review and summary, Peter. Thanks. When reading about policy ideas such as the job offer I’m reminded of a scheme for the unemployed that I and many other unemployed people benefitted from in the late 1970s early 1980s: the Community Enterprise Programme (CEP). It provided me with an opportunity to move from what was classed as unskilled manual work into community work, and then eventually on to becoming a mature student and thus to the job I have now. Of course, once the Tories got their hands on it the CEP became the Community Programme (CP) which for many was a form of cheap labour. Mind you, still a lot better than the zero-hours exploitation we see nowadays.

  4. Marco Fante -

    A lot of this explores the social and political side of it which is, of course important.

    The basic Keynesian macro is must also be considered. In a scenario where AI and robotics wipe-out a large proportion of existing jobs.UBI is all well and good as a backstop. In terms of aggregate demand, however, it is no substitute for a fully paid fully employed workforce. Job Guarantee improves on UBI but still doesn’t quite meet this requirement.

    Ultimately, the real conversation starts with a reduction of the working week and ends with the death of capitalism as we know it. A market system cannot allocate work evenly in a world of massive, permanent excess capacity. Aggregate demand could (would, will?) collapse in that in that situation and leave us with a paradox where technological advances create mass poverty and actually reduce GDP.

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