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Economy

Nov 29, 2016

What do the IPA, Yanis Varoufakis and Katniss Everdeen have in common?

They'd all much prefer to live in a world with a Universal Basic Income safety net.

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You can’t go home again, particularly if your first address was Canberra. I was raised in this social democracy toy-town where sweet subsidies flowed from the federal hive until 1989. Since then, self-government has busied itself playing catch-up with an administrative West that worships the wisdom of business, and considers the future of the people a bit of a bother. This week, it seems the secular prayers of the private sector were answered when local government announced a partnership with Uber. Uber is the future, don’t you know?

Without an unflinching look at the way in which we organise our social and economic systems, Uber will be our future. Sure, it currently provides riders with a low-cost service and drivers with a wage. But this “hack” is already revealing its flaws. The US company, currently valued at US$65 billion, pays about the same tax in Australia as an individual heart surgeon. Its capacity to monitor both riders and drivers might even trouble Edward Snowden. It is bound to vanquish an unresponsive taxi industry and raise its prices after battle. As for all those contractors? Well, when most of the potentially deadly bugs are driven from its driverless cars, these impediments to profit will be forgotten in public conversation until such time as we remember that they vote. They’ll elect a hateful nationalist who was the only person to successfully lie about bringing jobs that no longer exist back, and we’ll call them stupid racists. Even the brown ones.

This is the possible dreadful future for the West. Another one looks nicer. The utopian imagination sees a world of driverless cars, automated farms and robot factories as providing peace and leisure — apolitical futurists like Ray Kurzweil have long predicted a time where we’d all just refine our yoga moves and produce sculptures on our 3D printers. But a society in which we are liberated from work by the technological gains of the capitalist era needs more than a few glossy ACT local government private sector partnerships to set it somewhere north of survival.

“The future currently looks like the Hunger Games,” said Professor Steve Keen, the Australian economist best known for predicting the global financial crisis (and for hiking up Mount Kosciuszko after famously losing a bet that Australian house prices would fall by 40%) and whom I have Skyped for his opinion on the thing most commonly known as Universal Basic Income (UBI), widely discussed by policy wonks of all flavours as the solution to a post-Uber world.

Yanis Varoufakis, the former Greek finance minister and a friend of Keen’s, also invokes the Hunger Games in his public discussion of the DiEM25 project. We can live like Katniss in a time of poverty and tribalism, or we can all board the Starship Enterprise and flourish in our rainbow outfits. Varoufakis, who, like Keen, has maintained a long and ardent interest in the future of labour, is fond of mentioning Star Trek, a future that can only be made possible, he says, with recourse to UBI.

[Fantasy budget 2015: abolish Centrelink and just give people money]

Varoufakis has taken the decision to be very upbeat in his public presentations, but Keen is a more restrained advocate for UBI — an idea he expresses as Basic Income Guarantee (BIG), that Milton Friedman described as Negative Income Tax and that the Australian Greens pop into their downplayed economic policy pages as Guaranteed Adequate Income. And, if you think that’s an odd collection of people to be advocating for a single idea, you’d be right. UBI, essentially an unconditional sum of money given to all citizens, has many champions.

“It’s not a panacea,” said Keen. But it is an idea whose time, it is largely agreed, has come. Even the thickest and most conservative economic thinkers concede that Fordism — Henry Ford famously paid his workers enough to ensure they could purchase the products they made — is as likely to return as the Model T. Uberism requires amendments if any of us are going to buy anything in a near future of high unemployment. As Keen said, “if you don’t distribute the income, the profitability itself gets challenged”.

Many Silicon Valley business leaders know this, and Elon Musk is among those advocating for UBI. Government tends not to listen to post-Keynesians like Varoufakis or Keen. Or Bernie Sanders, who, prior to his campaign commitment to bring jobs back to the rust belt (they’re not coming back) has considered UBI. But if the Tesla guy, the IPA and moderate economics writers in the Sydney Morning Herald are fighting for it on moral grounds — Peter Martin argues that it will keep people from doing “illegal jobs such as prostitution”, which is now known as sex work and is not illegal in NSW — it is quite likely to become policy.

So, it’s time for those of us with an interest in the future to ask questions about the shape of UBI, which ranges, in the IPA case, from the Friedman free-market model which sees all social services cut to pay for it to more Nordic dreams, such as those of Dr Louise Haagh, which presume no interruption to services, even an expansion of services, and that the rich, who will also receive the UBI, will be taxed to pay for it.

As Keen notes, UBI, which he prefers to know as BIG, left and right can agree on the idea, because they’re talking about very different things. The IPA believes that charitable organisations have always provided social services more efficiently, whereas the material left knows that to be horse shit. The right believes in low taxes and that companies like Uber should be rewarded for their ingenuity, whereas more centrist thinkers, like Canada’s Trudeau government which has approved pilot UBI experiments, still hold out some hope that the rich will agree to pay for a scheme, from which they’ll be beneficiaries.

If they think about it, the rich might. They’ll receive the UBI — we can’t possibly agree to give welfare only to the needy — on which they’ll accrue interest and they’ll still be able to sell to those existing on UBI alone.

I ask Keen if UBI will have an effect, if not on inflation — despite the best efforts of Western governments, desired inflation is currently impossible to achieve –then on cost of living for the people who most need UBI. “It may change price dynamics in some regions,” he said. And you can imagine this might be the case in rust-belt towns whose surviving supermarkets raise their prices.

There are problems with UBI. It may deepen the divide between classes of rent-seekers and renters. It may cause price hikes. It may tempt those companies who still employ people in the future to lower wages. It could worsen the corporate feudalism we see emerging in business models like Uber.

Keen, whose pessimism makes me trust him, reminds us that “capitalism is cyclical”. UBI/BIG is something he sees as a remedy to this stage of history. You have a massive overhang of debt and insecure employment, you must correct it. And, if you’ve given up on fantasies of revolution, you must keep correcting it.

Or you can just order an Uber and ask it to drive you to your childhood in Canberra. One where a patchwork of private and public sector solutions was not applied.

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26 comments

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26 thoughts on “What do the IPA, Yanis Varoufakis and Katniss Everdeen have in common?

  1. form1planet

    Thanks Helen! Perhaps not such a deeply shit idea after all? Or maybe still deeply shit, but somewhat less so than all the other remotely feasible options?

    1. Helen Razer

      I must concede, it is only mildly shit!
      (Good memory, by the way.)

    2. Dog's Breakfast

      Well done form1. I noted HR’s comment in an earlier essay and asked for further discussion from her.

      Thanks Helen. I just think it’s an exciting idea. God knows, we were supposed to be the leisure generation, but like what Peter Costello did nationally, so many of us did individually, and for that very reason you and so many others can’t buy a home. The choice between leisure and apparent, but not real, relative wealth, was made, and as a society and a people, we made the poor choice.

      Mind you, we were strongly prodded that way.

      I see this as one possible way of breaking the cycle that leads to bloody revolution. Equally, the jobs for all of Bill Mitchell ain’t too bad either. Personally, I would have both, a Basic income guarantee and a jobs guarantee.

      God knows, we could work as much as we wanted, or as little, possibly. A boy can dream.

  2. Nicholas

    This article explains in detail why a Job Guarantee is vastly superior to a Basic Income Guarantee. The author is Bill Mitchell, a Professor of Economics at the University of Newcastle.
    http://bilbo.economicoutlook.net/blog/?p=34479

    1. Helen Razer

      I know Bill’s blog. I personally think an abolition of private property guarantee is the way. A girl can dream.

  3. Phillip Roslan

    I am confused by Helen’s statement that “Even the thickest and most conservative economic thinkers concede that Fordism — Henry Ford famously paid his workers enough to ensure they could purchase the products they made — is as likely to return as the Model T.”
    What Henry paid his workers had nought to do with Fordism. Fordism has to do with Taylorism and assembly line production where the worker is deskilled and performs repetitive, low skilled, tasks and therefore paid as little as possible. The link to Marx’s ‘alienation’ is well known. Some industries have apparently entered a post-Fordist stage where workers are ‘organised according to the principles of flexible specialisation’. Tell that to the assembly line workers in developing countries who are still subjected to mind-numbing Fordist principles.

    1. Helen Razer

      “Fordist capitalism” or “Fordism” is used by many writers to describe the whole she-bang. I am not saying it was wonderful, by any means. But it was designed to make its labourers customers, and it functioned like that for a while. Using it in this way does not minimise the alienation of labour. Which, as you know, afflicts all social relations of all people in the Marxist view, which is also my view.
      But. Really. The amount he paid his workers really was a part of the model. It kept them in servitude. Not at all saying that is good.

  4. Kenneth Piaggio

    Thank you Helen for this article.
    I have concerns about basic income guarantee since it does not solve the problem of ‘meaning’ while it helps solve the problem of ‘poverty’.
    I have been quite attracted to the idea of a ‘job guarantee’ (which is not the same as ‘work for the dole’) because gives both.
    It will be much better for me to link you to the site that best articulates the Job versus income guarantee.
    The second link compares the two guarantees (written in 2011).

    Bill Mitchell’s Job Guarantee entries (last updated November 2016):
    http://bilbo.economicoutlook.net/blog/?p=32498

    Bill’s post that ‘Employment guarantees are better than income guarantees’ (2011):
    http://bilbo.economicoutlook.net/blog/?p=13025

    I have been very disappointed with Yanis Varoufakis.
    He seems to stop short of actually doing or saying anything worthwhile.
    Thanks again for bringing up this important topic for discussion.

    1. Woopwoop

      I agree about “meaning”. People without jobs are often rather morose. Maybe people who work are too busy to ruminate on the meaninglessness of life, and are thus happier.

      1. Helen Razer

        The Marxist view is that persons are naturally productive. Being a very lazy person, I was never convinced by this. But, still, the old fella was correct about a lot of stuff, so I am going to give him the benefit of the doubt. And you, too, with the claim that people are unhappy when they have no labour.
        But, labour as we know it is a constructed thing, right? I have experienced unhappiness after getting the sack, but this was less to do with the fact that I didn’t have to tool around on the company CMS basically doing nothing but the fact that I was dreadfully embarrassed to be “unemployed”.
        There is plenty of useful labour that robs people of happiness. Parenting, for example. Not the loving your kids bit, but the doing of all the things it takes to keep them from death bit. Domestic work makes loads of people unhappy, but I kind of enjoy it, despite my minimal skill. It may make more people happy if it was considered a job. And, actually, since it has been transformed into some totem of personal growth or whatever for high income earners, a lot of people seem to enjoy it more. Well, if all the cupcakes on Instagram are any guide.
        My point being. I agree humans, like beagles, are generally more content when they have a task. But it doesn’t have to be “productive”.

  5. Nicholas

    We can broaden our concept of what a paid job can be so that people can do things that are meaningful and interesting to them, and useful to society in a broad sense of societal wellbeing, not a narrow sense of commercial profitability. A Job Guarantee can be designed to make paid work more fulfilling than it currently is for many people. It also responds directly to the expressed needs of the two million Australians who want to do more paid work, not less. A Basic Income Guarantee reduces people to consumption entities and denies people the experience of contribution and belonging that they seek.

    1. Helen Razer

      But, whether they are production entities or consumption entities in the current understanding of these terms makes little difference. I think this moral urging to perform labour can end up being just as deleterious as the other.
      As above, I am prepared to agree (kind of) that humans are naturally productive. But, where some people find that productivity in shopping. They really do. Look at the way in which many women, in particular, consume. It’s basically labour. Every bit as alienating.
      This is not to say that I think humans “naturally” shop. Any more than I think they “naturally” sit down in factories and assemble one bit of a product. My point is, I think going back as far as possible to first principles is important with this debate. I will go back to Marx and agree that we “naturally” want to do stuff. That’s about it.

      1. Helen Razer

        Oh. And that we are “naturally” social.

  6. Draco Houston

    The fatal flaw of UBI is revealed by supporters of it, this isn’t really about fixing the problem of the death of Jobs, it is about letting capitalism lurch along a little longer.

    It tries to head off the reform of wage labour that we have known has been coming for a triple digit number of years. Instead of lowering work hours it proposes to just make it possible for consumption to happen despite poverty. It’s ok if more and more people become unnecessary, they can just be attached right onto a public teat in the service of capital. Never mind how the people that are still working at that point feel, as they are the ones paying the taxes, not the filthy rich and transnational capital.

    This is why the idea got shot down in Switzerland, ain’t no one wanna pay for artists to buy VR headsets or whatever rosy picture the left advocates of this like to paint. We’ll get the right wing version of it, a universally basic as hell income that replaces the dole and subsidizes the wages of workers, suppressing wage increases.

    It gets us no closer to ‘from each according to their ability, to each according to their needs’, but that is why it is an idea whose time has come. It will show up just in time to keep capitalism from falling over and yielding to something that makes sense, like that nice Mr Keynes did in the Great Depression.

  7. Dog's Breakfast

    Well Helen, I always thought I was lazy too, but in retrospect realise not, and not at all, I actually like doing meaningful work, and tend to dislike doing meaningless work, but boy, the meaningless shit pays a lot more.

    With a guaranteed wage, people could think more of a job they want to do rather than just get on the next paying gig. Producing something tends to be more meaningful, but everyone has their own yearnings and there are enough of us around.

    Meaning, and activity, and social beings. Sounds like a path to a better existence.

  8. Nicholas

    Most people experience a major part of their belonging, contribution, and fulfilment through doing paid work for a major part of their lives. Fiscal policy that ensures that a large number of people will be unemployed, under-employed (in a time sense and/or a skills sense), or precariously employed is by far the most obscene form of waste that we create. The question isn’t whether it is better to be a production entity or a consumption entity; it’s how to give everyone genuine and appealing options about how to experience contribution, belonging, and meaning. A BIG would do little to help people to enact their vision of a good life ; a JG would do quite a lot.

  9. Woopwoop

    Hunter-gatherer societies, we are told, spent a small part of the day actually hunting and gathering, and the rest of their time in deeply satisfying and meaningful cultural and religious practices.
    The trouble is, you have to believe in it.

  10. old greybearded one

    Interesting thoughts Helen. I remember when CEOs paid far less in average salary multiples boasted about how many people they put on rather than sacked. Ford certainly had a point though. No money no sales and Henry was no leftie. I personally consider Uber to be a collection of scum trying to avoid tax, workers comp and scrutiny. I wonder what happens when you hire your car, have an accident and the insurance company says sorry your policy does not cover letting out for hire? Normally that is forbidden without a higher premium.
    I am a teacher, I love my job, just not the crap and ignorant blathering from experts who have no clue what is happening in the real world. Have a good week eh?

    1. Helen Razer

      Golden era of functioning Western capitalism is gone, OGO. But, yes. Let’s both have a good week in the ruins! May you encounter no experts or MBAs.

  11. davoid

    UBI is a poor solution. Modern Monetary Theory (MMT) coupled with Job Guarantee is a good solution. This is supported by Bernie Sanders. A (relatively) easy to follow proponent is Stephanie Kelton. Also Australian Bill Mitchell from Newcastle. it’s worth looking at the talks on Youtube. This Conversation article isn’t written as clearly as it might be, but not too bad. https://theconversation.com/forget-surpluses-a-governments-true-task-is-to-keep-us-employed-1624

    This is by a long shot the soundest set of solutions to our problems that I’ve come across. Unfortunately it is somewhat complicated, so not very easy to get across, particularly to a polity which is currently happy to view a nation’s economy like a household one.

  12. Graham R

    Uber is a Trojan Horse, ushered in through the gates by a combination of globalist, Right Wing Laberal Australian Governments and a cheapskate population willing to ride with a service they know in their hearts cannot be supplied at the price they are paying (and is willing to drop a point off the Uber driver’s rating should the driver dare mention that unfortunate fact).

    And how did Uber arrive? By bashing the door down in every State jurisdiction whilst regulators shrieked and threw up their hands, declaring they had no idea how to deal with this interloper. Applying the Rule of Law never occurred to them, and neither did sanctioning the company itself in any way.

    But who cares? Cheap rides, hey, at below cost?
    Gosh, the ingenuity.

    And gosh, the marketing genius: in a diabetes-ridden populace Uber dispenses sugar bombs, plus – wait for it – 350 mls of the most common substance on the planet, served in a dolphin-killing plastic bottle. The public, in their perspicacity, squealed with delight.

    Helen, Uber drivers do not earn a “wage.” They earn SFA (excuse the economics jargon). What they do is use their vehicles as an ATM, withdrawing the monetary value stored within them.

    Uber replaces an industry (actually there never was a taxi industry, just a serfdom model with a bunch of overlords – taxi owners, radio companies, taxi pool companies, Govt bureaucracies/plate-sellers) that offered the lowest rates of pay in Australia, and literally zero conditions, with an industry that offers even lower rates of pay – same conditions).
    Uber vs taxis is just one of the first cases of the Uberisation of all remaining jobs in Australia. I hope everyone enjoys the process.

    Helen, you mention the “bugs” to be sorted from driverless cars. The only bugs in driverless cars are the human beings in the cars around them. In order for driverless cars to work human beings are going to have to be defined as automatically in the wrong when confronting them. Just as speed cameras and re-light cameras’ accuracy are incontestable, so will the accuracy of driverless cars be. Human beings will be defined as inferior drivers to automated cars and will likely be unable to contest a driverless car’s decision. In so doing, driverless cars will remove another whole suite of rapidly diminishing human rights.

    But that’s OK: in the future nobody will have enough money to buy and drive their own car because they will be unemployed. Last time I looked, something like 35% of Americans were employed in the transport sector. Mmmm, that a lot of unemployed people, innit? Some kind of UBI is going to be essential to stave off revolution.

    1. Graham R

      Red light, dammit, red light.

  13. Jussarian

    I see UBI as one of two comparatively practical reforms to lessen the leverage employers have over employees and potential employees and all their dependants, due to the built-in inefficiencies of the labour market. The other is some form of workplace democracy, but that has its own specific challenges too. Employees could use UBI to make their employment suit them better, individually and as a class. The problem with this vision of it is rousing sufficient employees to use UBI in this way to affect the whole labour market and economy.

  14. Phillip Lloyd

    Does it help in any way to point out that because Uber is spelt without an umlaut, it should be pronounced “Ubber” as in “rubber.” Karl Marx probably would’ve chuckled in his beard at this clumsy appropriation of his language.
    As a single parent of two young kids, a guaranteed income would make my life a lot easier. Maybe it’s something that needs to be considered for certain people: single parents, carers, etc.
    When, a few years back, Germany went through a review of its social security payments, the German constitutional court overturned the first amendments because the proposed changes didn’t take into account the principle of human respect and dignity. One of the changes as a result were measures designed to make sure that children of social security recipients were not excluded from things such as sport and holiday programmes. The argument being that these kids need to be able to participate fully in society otherwise the cycle of dependence would just continue.

    1. Helen Razer

      I am certainly going to now pronounce it per your advice!

  15. Phillip Roslan

    Further to the Fordism discussion. You wrote ‘ “Fordist capitalism” or “Fordism” is used by many writers to describe the whole she-bang. I am not saying it was wonderful, by any means. But it was designed to make its labourers customers, and it functioned like that for a while…’.
    I was not aware that the term was used in that way but it is still wrong and a myth possibly started by an article in a newspaper that happened to be sponsored by Ford. Ford was suffering crippling staff turnover because of lousy pay and conditions; some reports are of well over 300% turnover. It was costing the company a fortune in training and worker replacement. When a worker walked away from the original style of automotive assembly line everything stopped. Henry was an anti-semite who increased wages so that he could keep workers but only if they agreed to conduct their lives in the way he dictated and according to his moral beliefs.

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