Copyright 2024 © All rights Reserved. Real Progressives
Powered by Modern Monetary Theory
Episode 67 – A Universal Basic Income vs A Job Guarantee with Claire Connelly
Show Notes
Transcript
Extras
Download
This week we’re bringing back a conversation Steve had with journalist and researcher Claire Connelly in 2017, which explores all the best arguments in the job guarantee vs universal basic income debate.
Claire says that the American nostalgia for a more prosperous era supports the case for government involvement in employment even beyond the New Deal. The fact that the US had almost full employment during WW2 is largely responsible for much of the prosperity in the postwar era. Even today, it could be said that the military is the closest we have to an employer of last resort.
Conservatives object to government involvement in the economy – but Claire points out all the ways in which the government subsidizes large corporations and enriches the lives of those at the top. Since the government creates the currency, a job guarantee wouldn’t require a tax increase that would decrease anyone’s stash of money.
We’ve given the government permission to abdicate its responsibility for employment and both sides of the political aisle are comfortable with the idea. That being the case, Claire asks why not dissolve government entirely and elect the CEO of Goldman Sachs?
The implications are directly responsible for the situation in the Eurozone. The EU, IMF, and World Bank have more power than the national governments themselves. Most of those countries have not benefited from the arrangement. Even the Greek bailout did more for the German banks more than the people of Greece.
One of our objections to a UBI is the fact that it doesn’t set a price anchor or a wage floor. It simply serves to funnel more money to these same corporations and rentiers. Claire talks about the rentier economy being one of the largest detriments to economic growth. The level of personal debt in the developed nations implies that income derived from a UBI will simply go to the rentiers – in the form of mortgages, rents, payment of credit card or other debts – doing little to improve the lives of the citizens and possibly making it worse by effecting a rise in prices.
Elsewhere in this episode, Steve and Claire discuss a range of topics from Georgian land value taxes to autism, all within the context of the jobs and income. Anyone who gets involved in arguments about the UBI and FJG will want to listen.
Macro N Cheese – Episode 67
A Universal Basic Income vs A Job Guarantee with Claire Connelly
Claire Connelly [intro/music] (00:03):
To me simply throwing money at something is a lazy alternative to actually fixing the root causes of structural unemployment. This is direct contradiction in this idea of make America great again, because it’s nostalgic for a time where a job guarantee existed, but it’s claiming that it wants to use neoliberal policies to extend the direct opposition to the very results that that program created.
Geoff Ginter [intro/music] (01:25):
Now let’s see if we can avoid the apocalypse altogether. Here’s another episode of Macro N Cheese with your host, Steve Grumbine.
Announcer Andy Kennedy (01:34):
Hello, this is Andy Kennedy, the producer of Macro N Cheese. Due to illness in the Grumbine family unrelated to COVID-19, Steve hasn’t been able to record a new interview for this week. Instead, we are releasing an interview from July, 2017. His guest was Claire Connelly, who’s an Australian journalist and researcher, and has some good insights into the UBI versus job guarantee debate. So as Steve would say, without further ado, please enjoy a Universal Basic Income Versus A Job Guarantee with Claire Connolly.
Steve Grumbine (02:15):
Okay. So one of the things that was very exciting to me when we first started talking was you wrote this really incredible piece that a UBI was not the answer, that a job was what we needed. A federal job guarantee was what we needed. And it was a really, really phenomenal piece. And now we’re going to talk a little bit tonight about a potential way of looking at basic income that maybe others haven’t considered before. So I’m going to let you talk about that.
Claire Connelly (02:45):
Okay. So for those who have not been initiated, a UBI is a universal basic income. And it’s designed to act either as a partial or whole substitute for social spending. People who consider themselves to be particularly left of center, I guess see it as a means to supplement or completely replace employment. But I think a lot of people that sit towards the left of the divide, feel as though employment is a concept that is to be left in the past.
And as technology and outsourcing devalues labor and replaces it altogether, some people on the left have the idea that maybe employment is an antiquated issue. Some people on the right believe that a universal basic income is an excellent replacement for social spending, because it actually means that there’s less money being spent on social services.
And that aligns ideologically and with the idea that the less money they can throw at a problem, the better because, generally, some conservatives at least tend to believe that it is not the government’s place to address employment as a whole, or even the social issues that stem from unemployment. Those of us who sit perhaps more to the center that is neither left nor right believe that a universal basic income might be one part of a range of solutions that can address issues that stem from unemployment and underemployment.
But I would like to personally emphasize that I do not think that it is a replacement either for social spending or for employment. We all know that unemployment is a rising problem. Underemployment is an even bigger problem. We’re seeing right now a lot of people having to take on a number of part-time jobs just to put bread on the table and a universal basic income would mean that people, regardless of your political persuasion, your age, your skill level, your capability, your employment status, or your health status, if everyone gets a certain amount of money each month from the government, that can certainly ease some of the stresses that we all have to face either with paying rent or mortgages, food, school fees, taxes, all of this stuff that we as adults have to deal with.
But I would be loathed to see the universal basic income replace employment, because I do not believe that employment is a thing of the past. I think that employment has a number of virtues, not just the ability to support oneself. It is a way that people earn meaning for their lives. It’s where we meet our friends. It’s where a lot of us meet our partners. It’s where we get our sense of self-worth. And so the idea to me that we can simply leave employment behind is something that used to work, but no longer does.
Because it’s just actually not worth the time-cost ratio, I think tends to have the potential, to be a utopian idea. The role of a government is to plan an economy based on the needs of those people that elect it. Corporations do not vote. Businesses do not vote. Only individuals can vote. And so the idea that a government has abdicated its responsibility for employment is a very popular idea in neoliberal thought. So, to me, simply throwing money at something is a lazy alternative to actually fixing the root causes of structural unemployment.
And I think this is potentially where universal basic income can come in, but why, if we’re going to spend that money anyway, why not spend it in a way that is structured, that guarantees affirmative employment for the greatest number of people with the least amount of energy. That means that most people can support themselves and put food on the table and pay their own taxes. Employment is a concept that is agreeable to all people of almost all political persuasions, because it meets everybody’s needs.
You know, for those who are opposed to simply throwing money at issues, employment is the answer to that particular issue. And for those of us on the left who believe that the government needs to take a more affirmative role in ensuring that most people that they represent have jobs can pay taxes and pay for their own stuff that also suits their political ideology as well. So having a structural form of a universal basic income to me brings it far closer to what looks like a job guarantee program, where the public sector becomes the employer of last resort, is a far greater alternative than simply throwing money at a problem. Does that make sense?
Grumbine (07:46):
Absolutely. So one of the things that I think is very important in what you said was that we’ve talked at length here about the balance of basic income versus job guarantee. But in the United States, we have something for example, called social security and Bernie Sanders ran on the idea of expanding social security. The opportunity exists to provide social security to those who don’t want a job or who are unable to have a job, et cetera.
But I think one of the most exciting things about those who advocate for a job guarantee is the concept of federally funding it through the sovereign while administering it locally to address the very real needs of local communities. And what is really special to me about that for many people, they don’t realize that this is a tremendous intersectional moment where communities that are different than say rural America or urban America or whatever, they can design these jobs to meet their local needs.
And we talked at length about what is falling apart in America, for example, and I know this is a global problem, so I don’t want it to be too American centric. But when you look, the last 40 years, America has let itself fall to pieces. We haven’t invested in anything. Our bridges are crumbling and falling apart. Our schools are still with that old like led tiles, I mean, like fallout shelter 1940’s kind of schools. And if we spent the money to upkeep this, the jobs we’d have so much work out there for blue collar people in particular, this idea of a basic income would go right out the window.
The problem is, is that we’ve created this need by starving America, by starving all the countries around the world with this neoliberal push. So I think sometimes we forget, and this is what you said that hit home so much. We’ve ignored the structural problems. And we go for the lazy man’s way out by trying to push this basic income idea and just throw money at the problem.
The reality is it’s not the money we need so much as we need housing. We need clothing. We need food. We need healthcare. We need these things. And those things without an anchor to the price, there’s no guarantee they throw enough money at you to be able to make that basic income worthwhile.
Connelly (10:13):
Yeah, I think one of the biggest contradictions of the current political age is the tagline “Make America Great Again,” because it refers to a nostalgia for a period in the past of implied prosperity, right? We all go, well, you know, we want to go back to the 1950s and sixties or seventies, even, you know, when things seem to be easier, when things were less complicated, stuff was more affordable, there were more jobs, et cetera, et cetera.
The irony of that phrase is that it’s nostalgic for a period in time that was the direct beneficiary of a job guarantee program. The only reason that America and Australia and the UK, and pretty much the entire developed world, at least probably to the detriment of developing nations, the prosperity that we experienced is a direct result of the New Deal, which was a program implemented by Roosevelt to pull America out of the great depression.
And the prosperity that America and the world experienced is a direct result of this job guarantee program because they needed to rebuild after the war. And so the government stepped in to say, we will be the employer of last resort. Every man and woman is entitled to work. It is a fundamental, basic human right. And even the prosperity that we were experiencing in the late eighties, early nineties is a direct result of that program.
So there’s this direct contradiction in this idea of Make America Great Again, because it’s nostalgic for a time where a job guarantee existed, but it’s claiming that it wants to use neoliberal policies, which stands in direct opposition to the very results that that program created. So I think we need to understand where that prosperity came from. It came from the government stepping in to actually ensure that every man and woman had the ability to earn a living and earn a wage that supported the cost of living. So the government right now, both American and the UK and Australia and Canada, for example, really need to spend more time meditating on that contradiction.
You cannot solve an issue of Make America Great Again with neoliberal politics. And let’s not forget Roosevelt was subject to a potential fascist coup for trying to implement the New Deal. Both the Democrats and the Republicans tried to literally overthrow him with the funding of some of the greatest financial institutions in the world because they believed that that program was a threat to the aristocracy. Winston Churchill in the UK was similarly subject to a coup attempt that was staged and almost implemented by financial aristocrats.
So, you know, let’s take a step back and understand that every single piece of progress that has been achieved economically and financially over the last 50 years, as a result of outliers like Roosevelt, who was prepared to defy his own party for the betterment of the people he was elected to represent. Roosevelt, back in the age of the New Deal, was the equivalent of what Sanders and Jeremy Corbyn are today. And I think we forget that because history has been kinder to Roosevelt, then, you know, more modern history has been to either these two candidates and maybe that’s because maybe what we’re to close to it.
I don’t know. You know, only time will be able to tell. But I think it’s really important that we remember history accurately because how are we meant to learn from those lessons If we’re buying into the mythologies that have been created around them, which encouraged people to ignore the actual foundations of what was on the table at the time?
Grumbine (14:09):
We’ve been trying our best to build this economy back up. When in reality, during World War II, we had a tremendous, I mean, the economy was through the roof. The factories were at full tilt. Women were working, men were working, kids were working. We had to sell war bonds to slow the economy down. It was just incredible. Here we are now.
We’re, once again, using the military industrial complex as the employer of last resort as our engine, our economic engine to drive the economy, whether it was Vietnam, whether it has been Iraq, whether it was the cold war, we’ve always used these things to do this. When we have a social agenda that we could easily implement, that everyone would benefit from. If we just re-envisioned what the public purpose was instead of being focused purely on the military, focusing on our families and our children and our planet. It just seems like a no brainer to me.
Connelly (15:10):
Time when the public sector is badly in need of fresh ideas and fresh blood flowing through its vein. It seems as though every second day, we’re hearing stories about public sector stuff-ups, particularly, you know, in IT. If you’re down in Australia, you know, there isn’t a day that goes by where we don’t hear stories about some kind of IT problem that was basically the result of warring departments with antiquated ideas about how technology works. But to your point, America already has a job guarantee program and that is through the military.
And from my understanding, you don’t necessarily need to be serving in order to be a part of that program. There are plenty of other jobs that you can do within the military that doesn’t require you to visit the Middle East or serve on the front line. And there are a whole bunch of services, Docs for example, the department of child services is one of the most underfunded areas of the public sector that exists in modern history.
And that case is so in Australia, in the UK, in the US. You continually hear stories of these kids who are falling through the gaps, because nobody is bothered to come by and actually do the check on the family. And the result is more often than not more domestic abuse than should really exist, particularly for families who are receiving checks from the government in order to take in and care for children. But a lot of these systems are still paper systems. They’re not even digitized.
So regardless of being able to have enough people to go and actually visit these people’s homes and ensure that these children are being raised safely, that they’re going to school every day, that there’s enough food on the table, that their literacy and numeracy is up to scratch, just the digital systems that could provide those checks. There aren’t enough resources there either. So there are a whole bunch of areas within the public sector that are massively underfunded, that a job guarantee program could address.
And to that point, the universal basic income is inadequate in that, it doesn’t at the moment, it doesn’t exist very much at the moment outside of some small pocket programs, Denmark, I think, and in some other areas of Europe. But outside of that, the ideology of a universal basic income doesn’t really account for longevity of skills. We’re living to a hundred, maybe more now. And a lot of people aren’t going to be able to afford to retire at 65, 70, you know, even outside of the fact that the retirement age keep getting increased year on year, because it turns out the government realizes that can’t afford to pay it out when it actually is expected.
If we’re living longer, we need to have skills that last us two, three lifetimes compared to the kinds of programs that existed post-war when we were still dying between the ages of 65 and 85. To make it to 95, even 30 years ago was an anomaly. And today it’s common. So we need the kinds of jobs programs that ensure those that we have transferable skills so that we can support ourselves. If you believe that it is not the government’s job to fund the social safety net or to structure a program, to take care of those kinds of things, then you need to ensure that the people you represent have the skills that allows you to avoid continuing to focus on those kinds of things.
You can’t say, well, you don’t have the skills and you don’t the job, and we don’t want to spend the money, so please go and be homeless because, in reality, that just means there’s more money that the government has to spend dealing with the social problems that result from unemployment. Even if you were a staunch neoliberal, there is political and financial incentive for government to ensure that people have skills that allows them to earn their own money.
It shouldn’t be a matter of whether this is left or right. This is just basic economic pragmatism. So if you don’t want to spend on the social safety net, at least to the extent that is currently being spent, which in my opinion is not nearly enough, but let’s look at it from another point of view. If you believe that the social safety net is overfunded and is not the role of the government to take care of, then you need to create a solution to that.
And the solution to that is employment. And if the private sector isn’t going to create that employment, then the public sector does need to step in. And if the private sector has a problem with that, their remedy to that is to employ people. It’s pretty simple when you actually think about the nuts and bolts of it.
Grumbine (19:57):
So I want to say something here real quick, Claire. One of the biggest things that drives my ship every day is that my son is on the spectrum. He has autism and the funding that it would take to have the kind of therapy day in and day out that he would actually need to fulfill his grand ability, the ultimate possibilities of his life. We get two hours a week of therapy. And if you’ve ever been with a child that has spectrum issues, you understand everything from textures, with eating and speaking and all the other sensory issues that go with that require an incredible amount of help.
We don’t fund schools that actually are capable of dealing with autism, which is all too regular now. We don’t fund things like that. And the amount of care jobs that would come from that is unbelievable. But the reason why I bring this up is this, when you understand state theory of money, and you understand that the money comes from the state, that the alternative is bank debt or IOUs from the bank, denominating the government unit account, the trade off there is ridiculous.
Why in the world would you put the onus on the people to, somehow or another, bear the weight of the economy when the reality is the money comes freely from the government? It doesn’t make any sense to me. And that to me is where the real stumbling block is. Cause many of the people that feel we’re spending too much money on these services believe that because they believe it’s their hard earned tax dollar that’s going to it. And they look at their paychecks and they see a bunch of money missing.
And then they look over at these services and they say, we’ve got to cut these services. They’re lazy. They’re no good. They’re ne’er do goods. And I think that that right there, before you even worry about what you’re spending on, if you eradicate that myth right there, and just start talking about what is the public purpose, I think it changes, an it’s no longer a partisan issue, now just the human issue.
Connelly (21:57):
It’s interesting that you say that because actually, you know, we’ve talked about the job guarantee program through the US military, but America and Australia, and the UK has another job guarantee program in the form of private subsidies. It is correct to say that many in the middle class are paying too many taxes. But part of the reason that they’re paying too many taxes is that the 1% and the 0.1 of the 1% aren’t paying any taxes at all whatsoever.
And so the middle class, the upper middle class, the middle class, the lower middle class, and the working class are paying a greater proportion of their taxes to make up for that fact. But there’s a contradiction here because in the financial sector and particularly in the technology sector, we celebrate spectrum issue. You know, we look at people like Steve Jobs and Bill Gates and go, you know, they were brilliant people that were on the spectrum that created these amazing things. But the only thing that allowed them to be successful for one, coming from families that allow them to have a safety net in case things fail.
And two, was the safety net created by the government for the corporations that these people work for. It’s kind of ironic that the governments like to say things like corporate tax cuts create jobs when a lot of these tax cuts are going to corporations that don’t pay tax at all in the first place. So how are you meant to create jobs with a tax cut but the tax that you’re not paying? It doesn’t make any sense. And another job guarantee program exists in the form of CEO bonuses.
I’m sure you’re probably aware Steven, that the bailout for the banks that were issued under Obama went to profit margins and they went to CEO bonuses. They didn’t help people keep their houses. They didn’t help people deal with the mounting debt that they had to pay. It went to boost the incomes of already wealthy people. So the idea that a job guarantee is a radical idea is a bit of a misnomer because it already exists. It just exists for people that don’t need it.
So now why not take just a modicum of the same amount of money that you’re already giving to the corporate sector in the form of subsidies and tax cuts and well, you know, direct payments and use that to ensure that the rest of us can afford to buy the things that these corporations are creating. You’re not going to give them a job, but at least give them more income to be able to spend on this stuff that we need.
Intermission (24:38):
You are listening to Macro N Cheese, a podcast, brought to you by Real Progressives, a nonprofit organization dedicated to teaching the masses about MMT or modern monetary theory. Please help our efforts and become a monthly donor at PayPal or Patreon, like and follow our pages on Facebook and YouTube and follow us on Periscope, Twitter, and Instagram.
Grumbine (25:26):
It’s interesting that you say that because part of me thinks that the object of these sorts of spending ideas, going back to Milton Friedman, many of the center right, and far right libertarians and others that buy into the whole quantity theory of money and really want to enhance capitalism, cut all regulations and just let it go unfettered. Those folks look at a negative income tax, going back to Friedman’s early days and say, hey, here’s a great way to give a basic income cause they believe, number one, let’s get rid of all safety nets.
Let’s give them some money. Let’s just throw some money at them and then let them figure out what to do with it cause they’re bright and we’ll just enhance capitalism that way. So when I look at people that are championing this UBI, when I talked to them and I explained to them that there is no price anchor to the needs of the people, there’s nothing that is guaranteed. I compare it to a school voucher. In the United States, many people would like to give vouchers out so people can pick what school they want to go to.
But when you think about that, if everybody gets this $5,000 voucher then what you’ve done is you’ve created status quo again, because now what’s going to happen is the wealthy will self-select to another wealthy school where they can be amongst people that they feel comfortable being around. And then the poor will be left with the poor people once again. And nothing has changed except the wealthy pay less for the school than they did before.
And so, to me, it seems like this is more of the same thing where we’re not really giving them anything because there’s no inflation constraint there. There’s nothing there to stop the price from going up. But within the job guarantee, by structuring things around labor and providing the benefits to go with a federal job, for example, in the United States, if you get the job guarantee, you get the federal job benefits. All of a sudden now you’ve created a new wage floor.
Now you’ve gotten rid of a minimum wage. You’ve created a whole new situation where in order to hire people out of the job guarantee, they’ve got to meet or beat something. Basic income, that could actually subsidize crap wages. It doesn’t actually do for us what we’d like it to do. And these people are religiously addicted to UBI and they don’t think it through and it drives me crazy. And then they get mad at me for, for laying it out there to them. But the reality is is that it’s not a good solution on its own.
Connelly (28:05):
Basic income has the potential to be a good solution. I don’t want to throw stones at people who are trying to fix the problem. Their intent is good. I think the danger here as with almost all issues is that people think of one issue in a vacuum and they assume that everyone agrees with all of the implications that come along with that. Even if they’re not explicitly talking about what those implications are.
People on the right like to think that everyone believes that a universal basic income is good because it means that less money gets to be paid into social welfare. People on the left believe that the universal income is good because it means that we no longer have to worry about employment as the main form of income. Both of those ideas are deeply flawed and deeply incorrect and come with a bunch of implications that aren’t really being talked about.
The danger with the universal basic income is that they can go — here’s your $1,500 a month, but by the way, you now have to use that money to pay for your Medicare, for your healthcare, for your education, for all of the things that were currently being subsidized under social security. If that disappears the universal basic income exists, but it’s being paid back into the system that’s creating the problems in the first place.
You need a system that has affordable healthcare, competitive education that is incredibly affordable for the people and incredibly expensive for government, you need to be able to measure the health of the economy on consumer confidence instead of the fluctuations of the market, and these are all things that exist outside of whether we have a universal, basic income or not. But I think people need to understand that a UBI has the potential to destroy the safety net and defeat the purpose that a universal basic income exists to address in the first place.
And if people are spending the money being given to them by the government back on rent, mortgages, debt, what is the point? The money is still going to enhance the income of people who don’t even need it in the first place. So whether we have a job guarantee program or whether it exists in the form of a universal basic income, it needs to be structured in a way that keeps money flowing in and out of the economy that empowers people to be able to afford the very basic necessities, a roof over their head, food on the table and the kind of education that makes them employable in the long term.
Outside of that, it would be very nice for people to be able to save for a rainy day because we all have emergencies where our car breaks down, or God forbid, we get sick. You know, people need to have some money put aside to deal with that, particularly in America because your healthcare costs are exponentially more expensive than anywhere else in the world. And universal basic income isn’t going to address that one way or the other.
But if you were going to have one, you need to ensure that all of these other things are protected. Otherwise you’ve basically got the system that we have now, except that you’re being given a pittance by the government that’s going to fund the thing that’s already being funded through social security, except now we’re paying it directly instead of the government structuring a program to ensure all of these things are affordable.
Grumbine (31:13):
That’s absolutely spot on Claire. I want to ask you real quickly. So obviously there are a million ways to skin a cat. One of the things that jumped out at me, though, was when me and you were talking prior to going live, you had talked about the combination of a land value tax, which is a Georgist perspective. And using that as a means of offsetting a UBI. And even though I’m not for a UBI on its own, there’s some merit in what you were saying there. And I’d like to give you an opportunity to talk about that.
Connelly (31:51):
Also, we know that the rentier economy is one of the biggest detriments to economic growth right now, because almost everything is being commodified. And debts generally go to some form of rentier. Whether that’s a bank loan, whether that’s the rent on your house, the tax on your land, the mortgages that you’re paying. Most of the money that is being paid right now goes to pay off some kind of debt.
And the danger with the universal basic income is that that money is just going to flow straight back into the hands of property owners and land owners and any form of rentier economy that currently exists right now. And, you know, that’s what basic income does not need to be funded through tax. I, to say that right off the top, as a caveat.
That being said, it would be complementary to the goals that a universal basic income is designed to address, to fund it through a land value tax to ensure that money is not flowing directly into the coffers of property owners, of debtors, of financial institutions because there’s a risk that if you had an unstructured universal basic income, the kind that is being suggested by many who sit to the right of the political spectrum, that’s just the way of ensuring that more money flows to the people who are currently collecting rent off the rest of us right now.
And I think you’ll agree with me, Steven, that that would just create more problems than it actually addresses. So there is a suggestion that you could fund a universal basic income of land value tax rather than property tax, because the value of the house and the value of the land are two very different things. It might be a way to ensure that you can control the value of property to ensure that we don’t have a continuity of the property crisis and housing crisis that exists right now.
It creates a new threshold for the value of both rent and the cost of a property. And it ensures that money is flowing in and out of the economy in a way that supports the greatest ability to support oneself for the greatest amount of people with the least amount of effort. That is unlikely to happen because the current economy supports the rentiers of the world and not the rentee or the debtee.
But these are things that we need to think about when we’re talking about a universal, basic income, because it has the potential to be a wolf in sheep’s clothing. Because it sounds great on paper if you don’t look at the implications of what lies underneath, what fits in the small print. This could just be a very clever way of paying more rents to people than is currently being paid right now. So funding it off a land value tax ensures that that doesn’t happen. In a nutshell,
Grumbine (34:50):
I’m going to take a moment. I’m going to read a clip from a great article called Universal Basic Income is a Neoliberal Plot to Make You Poor. And it’s (eBook) New Thinking for the British Economy, open democracy (website). And I found it interesting. I’m going to read this to you to fuel a little bit more of our discussion and see what your take on this is. If you listen to way I said, I’m just read it out loud here.
It says: “The reason many people on the left are excited about proposals such as a universal basic income is that they acknowledge economic inequality and its social consequences. However, a closer look at how UBI is expected to work reveals that it is intended to provide political cover for the elimination of social programs and the privatization of social services. The Liberal Party’s resolution is no exception. Calling for savings in health, justice, education, and social welfare, as well as the building of self-reliant taxpaying citizens clearly means social cuts and privatization.”
Connelly (36:05):
It just seems like a really impractical idea. Like if we’re going to throw money at a problem, why not do it in a way that is structured and actually solves a bunch of problems? It seems as though the universal basic income appeals to people who don’t like to think of the idea that the government is responsible for employment. They are uncomfortable with the idea that the government needs to step in to solve financial and economic issues.
My personal view is, if that’s the case, why don’t we just abolish governments altogether and start to elect the CEOs of Goldman and Sachs? I mean, it’s the government’s job isn’t to take care of employment and what does it exist to do except to fund subsidies and ensure that they float to the corporate sector? Which, again, if that’s the case, then corporations should be the ones that are voting, not people. But government, by definition, was by the people, for the people.
Why are we wasting all of this money on huge, expensive election campaigns if the end result is not to benefit the people who elect government? So that’s a problem in and of itself. And we have given the government permission to abdicate its responsibility for employment. This is a relatively new phenomenon. And it’s one that I’m deeply surprised by its popularity, because it seems as though people on both sides of the political aisle are very comfortable with this idea now.
And then that in itself has all sorts of implications because then really this is why organizations like the EU and the IMF and the World Bank and the millions and billions of dollars of consultants that are employed by these organizations have more power than the governments themselves, which is why you’re finding itself in such a huge conundrum. It’s why the Catalans were not allowed to secede from Spain because, if that happens, what’s the stop Greece from pulling out of the EU? What’s to stop Lithuania?
You know, there are a whole bunch of countries that would probably like to have their central banks back and have control over their own currencies again because, unless you’re France or Germany, the EU is not necessarily been that beneficial to these smaller member nations. And you know, it’s why we’ve seen these huge Greek bailouts, which, on the surface, look as though it’s a bailout for the Greek economy, when really it’s the bailout French and German banks in disguise because they can’t call it what it is without fear of losing power and losing at the next election.
So again, I think America, in particular, and America’s conservatives are very good at giving very, very effective and appealing sounding names to things, like death tax, for example. But it doesn’t, by definition, describe what it is because if it described what it is, I think people would have a lot more questions about how it actually operates. So we need to be careful with the label that we give things, and we need to ensure that we give all of these issues the time and attention that it needs.
And we need to ensure that it reaches the right people so that more of us are actually engaged and involved in the process and understand the implications of all of these big decisions that are being made on our behalf, a lot of the time without our permission. And I’ve said this before in a number of the things that I’ve written, but it is our threshold to this kind of BS that is keeping this system of afloat.
The only reason that a wage is created at all, let alone a minimum wage was to prevent the overthrow of government. Once people realize that, I think they’ll realize they have a lot more power to influence political change and economic and financial change then they’re giving themselves credit for. I think we just need to continue to very carefully and meticulously examine these ideas without throwing stones at the people that are suggesting these ideas like the universal basic income, because it’s designed to be deceptive.
And while a lot of us are discussing it as though it’s well intentioned and it has the potential to be, let’s not throw out the baby with the bath water, and let’s not alienate people who would like to be a part of the solution.
Grumbine (40:32):
So I want to bring up something here. It was a beautiful statement you made. It was talking about the corporations and how Germany, et cetera have been bolstered. Their banks have been lifted up really is what we’re talking about with Greece, et cetera. And this plays into the Marxist side, the left wing side of assessing the relationship between quote ,unquote, “labor and capital.” And you start looking, you realize that part of their distrust of government isn’t just because Marx said it 350,000 years ago before Methuselah, it’s because it’s happening right here in front of us, that governments are not protecting the people.
Governments are protecting corporations and they’re protecting these large wealth owners as opposed to the people. So it really is a hidden serfdom. I mean, you’ve really created a slavery that has been very, very hidden, very stealth mode. And it’s quite obvious. And part of it is just like anybody on a plantation, if they’re kept ignorant and they’re kept unaware of their power and they’re kept completely out of the loop as to what is going on, they will go along to get along because that’s the only reality they know.
But when you expose them, and this is what we’re trying to do repeatedly is expose people to these economic truths, these economic lenses, these perspectives, so that people own their power instead of waiting for some politician to decide it’s okay. That’s my biggest fault with the Sanders folks, even my friends in the Sanders movement. If Bernie didn’t say it, it ain’t so. So they’re willing to live in this paradigm that’s waiting for him to give them the okay.
And that right there is unsustainable because the things that we need to do require us to be bigger and badder than any politician and any political structure. We need to be united to be able to push these and no longer accept it. That was the key that you said, we accept this stuff. If we stopped accepting it, they would literally have a choice of having to either serve the people or deal with tremendous unrest. What are your thoughts on that?
Connelly (42:42):
I always say if the people that showed up to the Women’s March showed up to vote, we wouldn’t be in this mess in the first place. And it wouldn’t necessarily be Hillary that would have won in the end. You know, voting is the greatest form of protest in the world. And right now it’s still effective. It has the potential not to be. The power of the vote, there have been significant attempts to degrade the power of our vote over time.
And I think that belief is what is discouraging people from showing up on election day. But if we’re going to show up to these Women’s Marches, and if we’re going to Occupy Wall Street and we’re going to have all of these counter-establishment kind of movements, you know what’s more effective than all of those things? Showing up to vote. Doing a voter drive. And to the people who are sort of, you know, economic skeptics or, you know, you sit on the right of the political divide, I want to say to those people, you don’t really have to sacrifice anything.
We could continue with the same subsidies for the corporate sector that exists right now. None of that has to stop because the government creates the money. All we’re asking is for the same kind of subsidies that flow to the corporate sector, to flow to the people who vote, and who pay taxes, and who work jobs. And without those jobs, these goods and services wouldn’t exist. You don’t have to pay more tax even. You could give everyone in the country a massive tax cut, including the 1% and the economy would improve.
The only thing that we’re asking for is equality of subsidy really is what this is about. The only issue that the private sector and economic conservatives would have with either a job guarantee or universal basic income, is that the floor for a minimum wage would increase. And that is the sticking point. That is the point where they go, well, that’s going to cost us more even if we’re going to get millions of dollars in subsidies towards the end of the year.
I mean, right now the government is paying corporations to create jobs. You know, a lot of these jobs are already government subsidized. It’s not being paid for out of the coffers of these corporations. And if you’re a bank your losses aren’t being paid for by your coffers either. They’re being paid for by the government. I mean, that’s a really dangerous situation to be in. There’s no incentive to not commit white collar crime because they know it’s not going to be investigated.
And even if it is investigated, it’s not going to be prosecuted. And even if it is prosecuted, it’s going to be the fine that’s the equivalent of a dollar. And it still even gets to that point in the first place. So we’ve literally got a system that encourages widespread financial malfeasance, with subsidies and tax cuts and direct payments on top of that. That’s a very dangerous system because you’re literally saying you have permission to commit fraud without consequences. So that needs to be dealt with in and of itself.
But on top of that, even if you don’t want to deal with those issues, fine but let’s just have equality of spending for public and private, for individuals and corporations. You know, if you’re going to give Microsoft or Apple a massive multimillion dollar subsidy, why is that okay because it’s a company and why is it not okay because it’s an individual? Because individuals are the people that create businesses and create companies. They start with one person or maybe two people.
You don’t have a company without people. Not yet, anyway. We’re not at the point where a robot can go, I have a really great idea and I could do it all myself and I don’t need to employ anyone. I don’t need to ask any questions. You know, I can just generate it myself because I’m a great piece of AI. And even when we talk about these kinds of conversations about technology replacing workers, people tend to ignore computers still need upkeep. You still need somebody to write the program that power the artificial intelligence in the first place.
You need patches to be able to ensure that these systems are secure over time. You need people to fix the machines. That all requires employment. We are not yet at a point where a computer program can write itself into existence and fix all of the problems along the way not to mention these robots have to get to people’s businesses and homes. That requires transport. That also requires warehouses for them to be stored in before they are transported.
You need people to drive these trucks. And even if you don’t and you have driverless trucks, those trucks need to be designed and built an upkept as well. So there are all these forms of human skill that go into creating the technology that supposedly replacing us in the first place. And it’s a total misnomer. At no point can technology truly replace human ability, because guess what? Humans create technology. So if this is the case, then we need a system that is equitable so that all of us can afford to continue to have the skills to contribute to the economy.
Grumbine (47:49):
I couldn’t agree with you more. I’m hoping that we’ll have you back on again soon, because one of the things that is really, really nice with what we’re trying to do, at least I think it’s nice. It makes me feel good anyway. Is we’re trying to demonstrate that the issues that we see in the United States are the issues that are happening around the world. And that so much of the problems that are in the UK right now, and quite frankly, even in Australia are in large result, USA is a net importer but we’re a net exporter of American exceptionalism.
And one of the things we seem to like to export is this neoliberal urge to privatize. And so, you know, having people like yourself on that can help us see that international view so we don’t stay tunnel vision USA, USA, USA. It’s a really, really important thing. We’re one global community. We may have different currencies, but we have a similar need and we have similar rules and expectations that we can have. And it’s good to know that the United States doesn’t have it right. It’s good to know that the suffering we have is optional and we can look across the pond or down under and see you guys doing it better than us, quite frankly. So I want to thank you for joining us and I’ll give you the last word.
Connelly (49:12):
Look. I think it’s easy to think as though the grass is greener. I mean, I think it’s fair to say Australia has a much better health system than America does because it’s subsidized and the ability to go to the doctor and not paying anything is a really big part of Australian identity. It was actually the liberal government during the last election, proposed a $20 copay for people who wanted to go to a GP and the labor government successfully ran what it called a Mediscare Campaign, because it was seen as the first step towards privatization.
And the only refuge that the Liberal Party had was to say, well, we’re not really privatizing Medicare. We’re just privatizing the administration of Medicare, which is like, really like that leg that you’re going to go out on? But it’s really important to understand that Australia is very, very close to trying to implement the same kinds of health and education systems that exist in the US; and America is being seen as an imprint to be replicated in Australia, but particularly for those who sit to the right of the center.
So I think we need to be careful when you say you guys down under doing it so much better. We were, but that system is being chipped away at day by day by day. And if I can end on this thought, I’m sure a lot of people now know that privatization generally means there’ll be less services and you’ll pay more for them because really privatization is going to create profits at the margins. That’s what privatization exists for.
But if we’re going to think of things like public transport and health and education as basic human rights, then we need to run it as a public system. And if the government cannot run out of money, then we do not need to worry about a budget that is going to go bankrupt. Because these are ideas that are created by ideology that have no foundation in reality because if people understood how government spending works, they realize that there really is no such thing as a budget in the first place.
So let’s just ensure that we look objectively at all systems in all countries, because I think it’s really easy to go Well, Canada does it better or Australia does it better when we’re picking and stealing from a lot of different countries and not always to the interests of the people that are going to be utilizing these systems in the first place, We have the same problem that America does. Your congressmen have government funded healthcare. They will never have to use the public system.
Australian politicians have lifetime pensions. They will never have to know what it’s like to figure out whether or not they can afford to pay school fees or give their kids the health care that they need. People are making a lot of sacrifices and it doesn’t have to be that way. So if that’s what I can leave you with, I hope that people will get a lot out of this conversation.
Grumbine (52:05):
Thank you. I appreciate it immensely. With that, I’m going to say thank you so much for joining us, Claire, and thank you all, everyone for joining us as well. And, hopefully, we will have you back on soon.
Connelly (52:18):
Always great to be on. Thank you for having me back on the show. I’m around any time. Call me.
Grumbine (52:24):
Fantastic. Alright, bye bye, everybody. Thank you so much, Claire. We’re out of here.
Ending Credits (52:36):
Macro N Cheese is produced by Andy Kennedy, descriptive writing by Virginia Cotts and promotional artwork by Mindy Donham. Macro N Cheese is publicly funded by our Real Progressives Patreon account. If you would like to donate Macro N Cheese, please visit patreon.com/realprogressives.
Coming Soon
Share on facebook
Share on twitter
Share on linkedin
Share on reddit
Share on email
Share this Episode
Follow the show and subscribe on your favorite player.
Show Notes
Transcript
Extras
Download
This week we’re bringing back a conversation Steve had with journalist and researcher Claire Connelly in 2017, which explores all the best arguments in the job guarantee vs universal basic income debate.
Claire says that the American nostalgia for a more prosperous era supports the case for government involvement in employment even beyond the New Deal. The fact that the US had almost full employment during WW2 is largely responsible for much of the prosperity in the postwar era. Even today, it could be said that the military is the closest we have to an employer of last resort.
Conservatives object to government involvement in the economy – but Claire points out all the ways in which the government subsidizes large corporations and enriches the lives of those at the top. Since the government creates the currency, a job guarantee wouldn’t require a tax increase that would decrease anyone’s stash of money.
We’ve given the government permission to abdicate its responsibility for employment and both sides of the political aisle are comfortable with the idea. That being the case, Claire asks why not dissolve government entirely and elect the CEO of Goldman Sachs?
The implications are directly responsible for the situation in the Eurozone. The EU, IMF, and World Bank have more power than the national governments themselves. Most of those countries have not benefited from the arrangement. Even the Greek bailout did more for the German banks more than the people of Greece.
One of our objections to a UBI is the fact that it doesn’t set a price anchor or a wage floor. It simply serves to funnel more money to these same corporations and rentiers. Claire talks about the rentier economy being one of the largest detriments to economic growth. The level of personal debt in the developed nations implies that income derived from a UBI will simply go to the rentiers – in the form of mortgages, rents, payment of credit card or other debts – doing little to improve the lives of the citizens and possibly making it worse by effecting a rise in prices.
Elsewhere in this episode, Steve and Claire discuss a range of topics from Georgian land value taxes to autism, all within the context of the jobs and income. Anyone who gets involved in arguments about the UBI and FJG will want to listen.
Macro N Cheese – Episode 67
A Universal Basic Income vs A Job Guarantee with Claire Connelly
Claire Connelly [intro/music] (00:03):
To me simply throwing money at something is a lazy alternative to actually fixing the root causes of structural unemployment. This is direct contradiction in this idea of make America great again, because it’s nostalgic for a time where a job guarantee existed, but it’s claiming that it wants to use neoliberal policies to extend the direct opposition to the very results that that program created.
Geoff Ginter [intro/music] (01:25):
Now let’s see if we can avoid the apocalypse altogether. Here’s another episode of Macro N Cheese with your host, Steve Grumbine.
Announcer Andy Kennedy (01:34):
Hello, this is Andy Kennedy, the producer of Macro N Cheese. Due to illness in the Grumbine family unrelated to COVID-19, Steve hasn’t been able to record a new interview for this week. Instead, we are releasing an interview from July, 2017. His guest was Claire Connelly, who’s an Australian journalist and researcher, and has some good insights into the UBI versus job guarantee debate. So as Steve would say, without further ado, please enjoy a Universal Basic Income Versus A Job Guarantee with Claire Connolly.
Steve Grumbine (02:15):
Okay. So one of the things that was very exciting to me when we first started talking was you wrote this really incredible piece that a UBI was not the answer, that a job was what we needed. A federal job guarantee was what we needed. And it was a really, really phenomenal piece. And now we’re going to talk a little bit tonight about a potential way of looking at basic income that maybe others haven’t considered before. So I’m going to let you talk about that.
Claire Connelly (02:45):
Okay. So for those who have not been initiated, a UBI is a universal basic income. And it’s designed to act either as a partial or whole substitute for social spending. People who consider themselves to be particularly left of center, I guess see it as a means to supplement or completely replace employment. But I think a lot of people that sit towards the left of the divide, feel as though employment is a concept that is to be left in the past.
And as technology and outsourcing devalues labor and replaces it altogether, some people on the left have the idea that maybe employment is an antiquated issue. Some people on the right believe that a universal basic income is an excellent replacement for social spending, because it actually means that there’s less money being spent on social services.
And that aligns ideologically and with the idea that the less money they can throw at a problem, the better because, generally, some conservatives at least tend to believe that it is not the government’s place to address employment as a whole, or even the social issues that stem from unemployment. Those of us who sit perhaps more to the center that is neither left nor right believe that a universal basic income might be one part of a range of solutions that can address issues that stem from unemployment and underemployment.
But I would like to personally emphasize that I do not think that it is a replacement either for social spending or for employment. We all know that unemployment is a rising problem. Underemployment is an even bigger problem. We’re seeing right now a lot of people having to take on a number of part-time jobs just to put bread on the table and a universal basic income would mean that people, regardless of your political persuasion, your age, your skill level, your capability, your employment status, or your health status, if everyone gets a certain amount of money each month from the government, that can certainly ease some of the stresses that we all have to face either with paying rent or mortgages, food, school fees, taxes, all of this stuff that we as adults have to deal with.
But I would be loathed to see the universal basic income replace employment, because I do not believe that employment is a thing of the past. I think that employment has a number of virtues, not just the ability to support oneself. It is a way that people earn meaning for their lives. It’s where we meet our friends. It’s where a lot of us meet our partners. It’s where we get our sense of self-worth. And so the idea to me that we can simply leave employment behind is something that used to work, but no longer does.
Because it’s just actually not worth the time-cost ratio, I think tends to have the potential, to be a utopian idea. The role of a government is to plan an economy based on the needs of those people that elect it. Corporations do not vote. Businesses do not vote. Only individuals can vote. And so the idea that a government has abdicated its responsibility for employment is a very popular idea in neoliberal thought. So, to me, simply throwing money at something is a lazy alternative to actually fixing the root causes of structural unemployment.
And I think this is potentially where universal basic income can come in, but why, if we’re going to spend that money anyway, why not spend it in a way that is structured, that guarantees affirmative employment for the greatest number of people with the least amount of energy. That means that most people can support themselves and put food on the table and pay their own taxes. Employment is a concept that is agreeable to all people of almost all political persuasions, because it meets everybody’s needs.
You know, for those who are opposed to simply throwing money at issues, employment is the answer to that particular issue. And for those of us on the left who believe that the government needs to take a more affirmative role in ensuring that most people that they represent have jobs can pay taxes and pay for their own stuff that also suits their political ideology as well. So having a structural form of a universal basic income to me brings it far closer to what looks like a job guarantee program, where the public sector becomes the employer of last resort, is a far greater alternative than simply throwing money at a problem. Does that make sense?
Grumbine (07:46):
Absolutely. So one of the things that I think is very important in what you said was that we’ve talked at length here about the balance of basic income versus job guarantee. But in the United States, we have something for example, called social security and Bernie Sanders ran on the idea of expanding social security. The opportunity exists to provide social security to those who don’t want a job or who are unable to have a job, et cetera.
But I think one of the most exciting things about those who advocate for a job guarantee is the concept of federally funding it through the sovereign while administering it locally to address the very real needs of local communities. And what is really special to me about that for many people, they don’t realize that this is a tremendous intersectional moment where communities that are different than say rural America or urban America or whatever, they can design these jobs to meet their local needs.
And we talked at length about what is falling apart in America, for example, and I know this is a global problem, so I don’t want it to be too American centric. But when you look, the last 40 years, America has let itself fall to pieces. We haven’t invested in anything. Our bridges are crumbling and falling apart. Our schools are still with that old like led tiles, I mean, like fallout shelter 1940’s kind of schools. And if we spent the money to upkeep this, the jobs we’d have so much work out there for blue collar people in particular, this idea of a basic income would go right out the window.
The problem is, is that we’ve created this need by starving America, by starving all the countries around the world with this neoliberal push. So I think sometimes we forget, and this is what you said that hit home so much. We’ve ignored the structural problems. And we go for the lazy man’s way out by trying to push this basic income idea and just throw money at the problem.
The reality is it’s not the money we need so much as we need housing. We need clothing. We need food. We need healthcare. We need these things. And those things without an anchor to the price, there’s no guarantee they throw enough money at you to be able to make that basic income worthwhile.
Connelly (10:13):
Yeah, I think one of the biggest contradictions of the current political age is the tagline “Make America Great Again,” because it refers to a nostalgia for a period in the past of implied prosperity, right? We all go, well, you know, we want to go back to the 1950s and sixties or seventies, even, you know, when things seem to be easier, when things were less complicated, stuff was more affordable, there were more jobs, et cetera, et cetera.
The irony of that phrase is that it’s nostalgic for a period in time that was the direct beneficiary of a job guarantee program. The only reason that America and Australia and the UK, and pretty much the entire developed world, at least probably to the detriment of developing nations, the prosperity that we experienced is a direct result of the New Deal, which was a program implemented by Roosevelt to pull America out of the great depression.
And the prosperity that America and the world experienced is a direct result of this job guarantee program because they needed to rebuild after the war. And so the government stepped in to say, we will be the employer of last resort. Every man and woman is entitled to work. It is a fundamental, basic human right. And even the prosperity that we were experiencing in the late eighties, early nineties is a direct result of that program.
So there’s this direct contradiction in this idea of Make America Great Again, because it’s nostalgic for a time where a job guarantee existed, but it’s claiming that it wants to use neoliberal policies, which stands in direct opposition to the very results that that program created. So I think we need to understand where that prosperity came from. It came from the government stepping in to actually ensure that every man and woman had the ability to earn a living and earn a wage that supported the cost of living. So the government right now, both American and the UK and Australia and Canada, for example, really need to spend more time meditating on that contradiction.
You cannot solve an issue of Make America Great Again with neoliberal politics. And let’s not forget Roosevelt was subject to a potential fascist coup for trying to implement the New Deal. Both the Democrats and the Republicans tried to literally overthrow him with the funding of some of the greatest financial institutions in the world because they believed that that program was a threat to the aristocracy. Winston Churchill in the UK was similarly subject to a coup attempt that was staged and almost implemented by financial aristocrats.
So, you know, let’s take a step back and understand that every single piece of progress that has been achieved economically and financially over the last 50 years, as a result of outliers like Roosevelt, who was prepared to defy his own party for the betterment of the people he was elected to represent. Roosevelt, back in the age of the New Deal, was the equivalent of what Sanders and Jeremy Corbyn are today. And I think we forget that because history has been kinder to Roosevelt, then, you know, more modern history has been to either these two candidates and maybe that’s because maybe what we’re to close to it.
I don’t know. You know, only time will be able to tell. But I think it’s really important that we remember history accurately because how are we meant to learn from those lessons If we’re buying into the mythologies that have been created around them, which encouraged people to ignore the actual foundations of what was on the table at the time?
Grumbine (14:09):
We’ve been trying our best to build this economy back up. When in reality, during World War II, we had a tremendous, I mean, the economy was through the roof. The factories were at full tilt. Women were working, men were working, kids were working. We had to sell war bonds to slow the economy down. It was just incredible. Here we are now.
We’re, once again, using the military industrial complex as the employer of last resort as our engine, our economic engine to drive the economy, whether it was Vietnam, whether it has been Iraq, whether it was the cold war, we’ve always used these things to do this. When we have a social agenda that we could easily implement, that everyone would benefit from. If we just re-envisioned what the public purpose was instead of being focused purely on the military, focusing on our families and our children and our planet. It just seems like a no brainer to me.
Connelly (15:10):
Time when the public sector is badly in need of fresh ideas and fresh blood flowing through its vein. It seems as though every second day, we’re hearing stories about public sector stuff-ups, particularly, you know, in IT. If you’re down in Australia, you know, there isn’t a day that goes by where we don’t hear stories about some kind of IT problem that was basically the result of warring departments with antiquated ideas about how technology works. But to your point, America already has a job guarantee program and that is through the military.
And from my understanding, you don’t necessarily need to be serving in order to be a part of that program. There are plenty of other jobs that you can do within the military that doesn’t require you to visit the Middle East or serve on the front line. And there are a whole bunch of services, Docs for example, the department of child services is one of the most underfunded areas of the public sector that exists in modern history.
And that case is so in Australia, in the UK, in the US. You continually hear stories of these kids who are falling through the gaps, because nobody is bothered to come by and actually do the check on the family. And the result is more often than not more domestic abuse than should really exist, particularly for families who are receiving checks from the government in order to take in and care for children. But a lot of these systems are still paper systems. They’re not even digitized.
So regardless of being able to have enough people to go and actually visit these people’s homes and ensure that these children are being raised safely, that they’re going to school every day, that there’s enough food on the table, that their literacy and numeracy is up to scratch, just the digital systems that could provide those checks. There aren’t enough resources there either. So there are a whole bunch of areas within the public sector that are massively underfunded, that a job guarantee program could address.
And to that point, the universal basic income is inadequate in that, it doesn’t at the moment, it doesn’t exist very much at the moment outside of some small pocket programs, Denmark, I think, and in some other areas of Europe. But outside of that, the ideology of a universal basic income doesn’t really account for longevity of skills. We’re living to a hundred, maybe more now. And a lot of people aren’t going to be able to afford to retire at 65, 70, you know, even outside of the fact that the retirement age keep getting increased year on year, because it turns out the government realizes that can’t afford to pay it out when it actually is expected.
If we’re living longer, we need to have skills that last us two, three lifetimes compared to the kinds of programs that existed post-war when we were still dying between the ages of 65 and 85. To make it to 95, even 30 years ago was an anomaly. And today it’s common. So we need the kinds of jobs programs that ensure those that we have transferable skills so that we can support ourselves. If you believe that it is not the government’s job to fund the social safety net or to structure a program, to take care of those kinds of things, then you need to ensure that the people you represent have the skills that allows you to avoid continuing to focus on those kinds of things.
You can’t say, well, you don’t have the skills and you don’t the job, and we don’t want to spend the money, so please go and be homeless because, in reality, that just means there’s more money that the government has to spend dealing with the social problems that result from unemployment. Even if you were a staunch neoliberal, there is political and financial incentive for government to ensure that people have skills that allows them to earn their own money.
It shouldn’t be a matter of whether this is left or right. This is just basic economic pragmatism. So if you don’t want to spend on the social safety net, at least to the extent that is currently being spent, which in my opinion is not nearly enough, but let’s look at it from another point of view. If you believe that the social safety net is overfunded and is not the role of the government to take care of, then you need to create a solution to that.
And the solution to that is employment. And if the private sector isn’t going to create that employment, then the public sector does need to step in. And if the private sector has a problem with that, their remedy to that is to employ people. It’s pretty simple when you actually think about the nuts and bolts of it.
Grumbine (19:57):
So I want to say something here real quick, Claire. One of the biggest things that drives my ship every day is that my son is on the spectrum. He has autism and the funding that it would take to have the kind of therapy day in and day out that he would actually need to fulfill his grand ability, the ultimate possibilities of his life. We get two hours a week of therapy. And if you’ve ever been with a child that has spectrum issues, you understand everything from textures, with eating and speaking and all the other sensory issues that go with that require an incredible amount of help.
We don’t fund schools that actually are capable of dealing with autism, which is all too regular now. We don’t fund things like that. And the amount of care jobs that would come from that is unbelievable. But the reason why I bring this up is this, when you understand state theory of money, and you understand that the money comes from the state, that the alternative is bank debt or IOUs from the bank, denominating the government unit account, the trade off there is ridiculous.
Why in the world would you put the onus on the people to, somehow or another, bear the weight of the economy when the reality is the money comes freely from the government? It doesn’t make any sense to me. And that to me is where the real stumbling block is. Cause many of the people that feel we’re spending too much money on these services believe that because they believe it’s their hard earned tax dollar that’s going to it. And they look at their paychecks and they see a bunch of money missing.
And then they look over at these services and they say, we’ve got to cut these services. They’re lazy. They’re no good. They’re ne’er do goods. And I think that that right there, before you even worry about what you’re spending on, if you eradicate that myth right there, and just start talking about what is the public purpose, I think it changes, an it’s no longer a partisan issue, now just the human issue.
Connelly (21:57):
It’s interesting that you say that because actually, you know, we’ve talked about the job guarantee program through the US military, but America and Australia, and the UK has another job guarantee program in the form of private subsidies. It is correct to say that many in the middle class are paying too many taxes. But part of the reason that they’re paying too many taxes is that the 1% and the 0.1 of the 1% aren’t paying any taxes at all whatsoever.
And so the middle class, the upper middle class, the middle class, the lower middle class, and the working class are paying a greater proportion of their taxes to make up for that fact. But there’s a contradiction here because in the financial sector and particularly in the technology sector, we celebrate spectrum issue. You know, we look at people like Steve Jobs and Bill Gates and go, you know, they were brilliant people that were on the spectrum that created these amazing things. But the only thing that allowed them to be successful for one, coming from families that allow them to have a safety net in case things fail.
And two, was the safety net created by the government for the corporations that these people work for. It’s kind of ironic that the governments like to say things like corporate tax cuts create jobs when a lot of these tax cuts are going to corporations that don’t pay tax at all in the first place. So how are you meant to create jobs with a tax cut but the tax that you’re not paying? It doesn’t make any sense. And another job guarantee program exists in the form of CEO bonuses.
I’m sure you’re probably aware Steven, that the bailout for the banks that were issued under Obama went to profit margins and they went to CEO bonuses. They didn’t help people keep their houses. They didn’t help people deal with the mounting debt that they had to pay. It went to boost the incomes of already wealthy people. So the idea that a job guarantee is a radical idea is a bit of a misnomer because it already exists. It just exists for people that don’t need it.
So now why not take just a modicum of the same amount of money that you’re already giving to the corporate sector in the form of subsidies and tax cuts and well, you know, direct payments and use that to ensure that the rest of us can afford to buy the things that these corporations are creating. You’re not going to give them a job, but at least give them more income to be able to spend on this stuff that we need.
Intermission (24:38):
You are listening to Macro N Cheese, a podcast, brought to you by Real Progressives, a nonprofit organization dedicated to teaching the masses about MMT or modern monetary theory. Please help our efforts and become a monthly donor at PayPal or Patreon, like and follow our pages on Facebook and YouTube and follow us on Periscope, Twitter, and Instagram.
Grumbine (25:26):
It’s interesting that you say that because part of me thinks that the object of these sorts of spending ideas, going back to Milton Friedman, many of the center right, and far right libertarians and others that buy into the whole quantity theory of money and really want to enhance capitalism, cut all regulations and just let it go unfettered. Those folks look at a negative income tax, going back to Friedman’s early days and say, hey, here’s a great way to give a basic income cause they believe, number one, let’s get rid of all safety nets.
Let’s give them some money. Let’s just throw some money at them and then let them figure out what to do with it cause they’re bright and we’ll just enhance capitalism that way. So when I look at people that are championing this UBI, when I talked to them and I explained to them that there is no price anchor to the needs of the people, there’s nothing that is guaranteed. I compare it to a school voucher. In the United States, many people would like to give vouchers out so people can pick what school they want to go to.
But when you think about that, if everybody gets this $5,000 voucher then what you’ve done is you’ve created status quo again, because now what’s going to happen is the wealthy will self-select to another wealthy school where they can be amongst people that they feel comfortable being around. And then the poor will be left with the poor people once again. And nothing has changed except the wealthy pay less for the school than they did before.
And so, to me, it seems like this is more of the same thing where we’re not really giving them anything because there’s no inflation constraint there. There’s nothing there to stop the price from going up. But within the job guarantee, by structuring things around labor and providing the benefits to go with a federal job, for example, in the United States, if you get the job guarantee, you get the federal job benefits. All of a sudden now you’ve created a new wage floor.
Now you’ve gotten rid of a minimum wage. You’ve created a whole new situation where in order to hire people out of the job guarantee, they’ve got to meet or beat something. Basic income, that could actually subsidize crap wages. It doesn’t actually do for us what we’d like it to do. And these people are religiously addicted to UBI and they don’t think it through and it drives me crazy. And then they get mad at me for, for laying it out there to them. But the reality is is that it’s not a good solution on its own.
Connelly (28:05):
Basic income has the potential to be a good solution. I don’t want to throw stones at people who are trying to fix the problem. Their intent is good. I think the danger here as with almost all issues is that people think of one issue in a vacuum and they assume that everyone agrees with all of the implications that come along with that. Even if they’re not explicitly talking about what those implications are.
People on the right like to think that everyone believes that a universal basic income is good because it means that less money gets to be paid into social welfare. People on the left believe that the universal income is good because it means that we no longer have to worry about employment as the main form of income. Both of those ideas are deeply flawed and deeply incorrect and come with a bunch of implications that aren’t really being talked about.
The danger with the universal basic income is that they can go — here’s your $1,500 a month, but by the way, you now have to use that money to pay for your Medicare, for your healthcare, for your education, for all of the things that were currently being subsidized under social security. If that disappears the universal basic income exists, but it’s being paid back into the system that’s creating the problems in the first place.
You need a system that has affordable healthcare, competitive education that is incredibly affordable for the people and incredibly expensive for government, you need to be able to measure the health of the economy on consumer confidence instead of the fluctuations of the market, and these are all things that exist outside of whether we have a universal, basic income or not. But I think people need to understand that a UBI has the potential to destroy the safety net and defeat the purpose that a universal basic income exists to address in the first place.
And if people are spending the money being given to them by the government back on rent, mortgages, debt, what is the point? The money is still going to enhance the income of people who don’t even need it in the first place. So whether we have a job guarantee program or whether it exists in the form of a universal basic income, it needs to be structured in a way that keeps money flowing in and out of the economy that empowers people to be able to afford the very basic necessities, a roof over their head, food on the table and the kind of education that makes them employable in the long term.
Outside of that, it would be very nice for people to be able to save for a rainy day because we all have emergencies where our car breaks down, or God forbid, we get sick. You know, people need to have some money put aside to deal with that, particularly in America because your healthcare costs are exponentially more expensive than anywhere else in the world. And universal basic income isn’t going to address that one way or the other.
But if you were going to have one, you need to ensure that all of these other things are protected. Otherwise you’ve basically got the system that we have now, except that you’re being given a pittance by the government that’s going to fund the thing that’s already being funded through social security, except now we’re paying it directly instead of the government structuring a program to ensure all of these things are affordable.
Grumbine (31:13):
That’s absolutely spot on Claire. I want to ask you real quickly. So obviously there are a million ways to skin a cat. One of the things that jumped out at me, though, was when me and you were talking prior to going live, you had talked about the combination of a land value tax, which is a Georgist perspective. And using that as a means of offsetting a UBI. And even though I’m not for a UBI on its own, there’s some merit in what you were saying there. And I’d like to give you an opportunity to talk about that.
Connelly (31:51):
Also, we know that the rentier economy is one of the biggest detriments to economic growth right now, because almost everything is being commodified. And debts generally go to some form of rentier. Whether that’s a bank loan, whether that’s the rent on your house, the tax on your land, the mortgages that you’re paying. Most of the money that is being paid right now goes to pay off some kind of debt.
And the danger with the universal basic income is that that money is just going to flow straight back into the hands of property owners and land owners and any form of rentier economy that currently exists right now. And, you know, that’s what basic income does not need to be funded through tax. I, to say that right off the top, as a caveat.
That being said, it would be complementary to the goals that a universal basic income is designed to address, to fund it through a land value tax to ensure that money is not flowing directly into the coffers of property owners, of debtors, of financial institutions because there’s a risk that if you had an unstructured universal basic income, the kind that is being suggested by many who sit to the right of the political spectrum, that’s just the way of ensuring that more money flows to the people who are currently collecting rent off the rest of us right now.
And I think you’ll agree with me, Steven, that that would just create more problems than it actually addresses. So there is a suggestion that you could fund a universal basic income of land value tax rather than property tax, because the value of the house and the value of the land are two very different things. It might be a way to ensure that you can control the value of property to ensure that we don’t have a continuity of the property crisis and housing crisis that exists right now.
It creates a new threshold for the value of both rent and the cost of a property. And it ensures that money is flowing in and out of the economy in a way that supports the greatest ability to support oneself for the greatest amount of people with the least amount of effort. That is unlikely to happen because the current economy supports the rentiers of the world and not the rentee or the debtee.
But these are things that we need to think about when we’re talking about a universal, basic income, because it has the potential to be a wolf in sheep’s clothing. Because it sounds great on paper if you don’t look at the implications of what lies underneath, what fits in the small print. This could just be a very clever way of paying more rents to people than is currently being paid right now. So funding it off a land value tax ensures that that doesn’t happen. In a nutshell,
Grumbine (34:50):
I’m going to take a moment. I’m going to read a clip from a great article called Universal Basic Income is a Neoliberal Plot to Make You Poor. And it’s (eBook) New Thinking for the British Economy, open democracy (website). And I found it interesting. I’m going to read this to you to fuel a little bit more of our discussion and see what your take on this is. If you listen to way I said, I’m just read it out loud here.
It says: “The reason many people on the left are excited about proposals such as a universal basic income is that they acknowledge economic inequality and its social consequences. However, a closer look at how UBI is expected to work reveals that it is intended to provide political cover for the elimination of social programs and the privatization of social services. The Liberal Party’s resolution is no exception. Calling for savings in health, justice, education, and social welfare, as well as the building of self-reliant taxpaying citizens clearly means social cuts and privatization.”
Connelly (36:05):
It just seems like a really impractical idea. Like if we’re going to throw money at a problem, why not do it in a way that is structured and actually solves a bunch of problems? It seems as though the universal basic income appeals to people who don’t like to think of the idea that the government is responsible for employment. They are uncomfortable with the idea that the government needs to step in to solve financial and economic issues.
My personal view is, if that’s the case, why don’t we just abolish governments altogether and start to elect the CEOs of Goldman and Sachs? I mean, it’s the government’s job isn’t to take care of employment and what does it exist to do except to fund subsidies and ensure that they float to the corporate sector? Which, again, if that’s the case, then corporations should be the ones that are voting, not people. But government, by definition, was by the people, for the people.
Why are we wasting all of this money on huge, expensive election campaigns if the end result is not to benefit the people who elect government? So that’s a problem in and of itself. And we have given the government permission to abdicate its responsibility for employment. This is a relatively new phenomenon. And it’s one that I’m deeply surprised by its popularity, because it seems as though people on both sides of the political aisle are very comfortable with this idea now.
And then that in itself has all sorts of implications because then really this is why organizations like the EU and the IMF and the World Bank and the millions and billions of dollars of consultants that are employed by these organizations have more power than the governments themselves, which is why you’re finding itself in such a huge conundrum. It’s why the Catalans were not allowed to secede from Spain because, if that happens, what’s the stop Greece from pulling out of the EU? What’s to stop Lithuania?
You know, there are a whole bunch of countries that would probably like to have their central banks back and have control over their own currencies again because, unless you’re France or Germany, the EU is not necessarily been that beneficial to these smaller member nations. And you know, it’s why we’ve seen these huge Greek bailouts, which, on the surface, look as though it’s a bailout for the Greek economy, when really it’s the bailout French and German banks in disguise because they can’t call it what it is without fear of losing power and losing at the next election.
So again, I think America, in particular, and America’s conservatives are very good at giving very, very effective and appealing sounding names to things, like death tax, for example. But it doesn’t, by definition, describe what it is because if it described what it is, I think people would have a lot more questions about how it actually operates. So we need to be careful with the label that we give things, and we need to ensure that we give all of these issues the time and attention that it needs.
And we need to ensure that it reaches the right people so that more of us are actually engaged and involved in the process and understand the implications of all of these big decisions that are being made on our behalf, a lot of the time without our permission. And I’ve said this before in a number of the things that I’ve written, but it is our threshold to this kind of BS that is keeping this system of afloat.
The only reason that a wage is created at all, let alone a minimum wage was to prevent the overthrow of government. Once people realize that, I think they’ll realize they have a lot more power to influence political change and economic and financial change then they’re giving themselves credit for. I think we just need to continue to very carefully and meticulously examine these ideas without throwing stones at the people that are suggesting these ideas like the universal basic income, because it’s designed to be deceptive.
And while a lot of us are discussing it as though it’s well intentioned and it has the potential to be, let’s not throw out the baby with the bath water, and let’s not alienate people who would like to be a part of the solution.
Grumbine (40:32):
So I want to bring up something here. It was a beautiful statement you made. It was talking about the corporations and how Germany, et cetera have been bolstered. Their banks have been lifted up really is what we’re talking about with Greece, et cetera. And this plays into the Marxist side, the left wing side of assessing the relationship between quote ,unquote, “labor and capital.” And you start looking, you realize that part of their distrust of government isn’t just because Marx said it 350,000 years ago before Methuselah, it’s because it’s happening right here in front of us, that governments are not protecting the people.
Governments are protecting corporations and they’re protecting these large wealth owners as opposed to the people. So it really is a hidden serfdom. I mean, you’ve really created a slavery that has been very, very hidden, very stealth mode. And it’s quite obvious. And part of it is just like anybody on a plantation, if they’re kept ignorant and they’re kept unaware of their power and they’re kept completely out of the loop as to what is going on, they will go along to get along because that’s the only reality they know.
But when you expose them, and this is what we’re trying to do repeatedly is expose people to these economic truths, these economic lenses, these perspectives, so that people own their power instead of waiting for some politician to decide it’s okay. That’s my biggest fault with the Sanders folks, even my friends in the Sanders movement. If Bernie didn’t say it, it ain’t so. So they’re willing to live in this paradigm that’s waiting for him to give them the okay.
And that right there is unsustainable because the things that we need to do require us to be bigger and badder than any politician and any political structure. We need to be united to be able to push these and no longer accept it. That was the key that you said, we accept this stuff. If we stopped accepting it, they would literally have a choice of having to either serve the people or deal with tremendous unrest. What are your thoughts on that?
Connelly (42:42):
I always say if the people that showed up to the Women’s March showed up to vote, we wouldn’t be in this mess in the first place. And it wouldn’t necessarily be Hillary that would have won in the end. You know, voting is the greatest form of protest in the world. And right now it’s still effective. It has the potential not to be. The power of the vote, there have been significant attempts to degrade the power of our vote over time.
And I think that belief is what is discouraging people from showing up on election day. But if we’re going to show up to these Women’s Marches, and if we’re going to Occupy Wall Street and we’re going to have all of these counter-establishment kind of movements, you know what’s more effective than all of those things? Showing up to vote. Doing a voter drive. And to the people who are sort of, you know, economic skeptics or, you know, you sit on the right of the political divide, I want to say to those people, you don’t really have to sacrifice anything.
We could continue with the same subsidies for the corporate sector that exists right now. None of that has to stop because the government creates the money. All we’re asking is for the same kind of subsidies that flow to the corporate sector, to flow to the people who vote, and who pay taxes, and who work jobs. And without those jobs, these goods and services wouldn’t exist. You don’t have to pay more tax even. You could give everyone in the country a massive tax cut, including the 1% and the economy would improve.
The only thing that we’re asking for is equality of subsidy really is what this is about. The only issue that the private sector and economic conservatives would have with either a job guarantee or universal basic income, is that the floor for a minimum wage would increase. And that is the sticking point. That is the point where they go, well, that’s going to cost us more even if we’re going to get millions of dollars in subsidies towards the end of the year.
I mean, right now the government is paying corporations to create jobs. You know, a lot of these jobs are already government subsidized. It’s not being paid for out of the coffers of these corporations. And if you’re a bank your losses aren’t being paid for by your coffers either. They’re being paid for by the government. I mean, that’s a really dangerous situation to be in. There’s no incentive to not commit white collar crime because they know it’s not going to be investigated.
And even if it is investigated, it’s not going to be prosecuted. And even if it is prosecuted, it’s going to be the fine that’s the equivalent of a dollar. And it still even gets to that point in the first place. So we’ve literally got a system that encourages widespread financial malfeasance, with subsidies and tax cuts and direct payments on top of that. That’s a very dangerous system because you’re literally saying you have permission to commit fraud without consequences. So that needs to be dealt with in and of itself.
But on top of that, even if you don’t want to deal with those issues, fine but let’s just have equality of spending for public and private, for individuals and corporations. You know, if you’re going to give Microsoft or Apple a massive multimillion dollar subsidy, why is that okay because it’s a company and why is it not okay because it’s an individual? Because individuals are the people that create businesses and create companies. They start with one person or maybe two people.
You don’t have a company without people. Not yet, anyway. We’re not at the point where a robot can go, I have a really great idea and I could do it all myself and I don’t need to employ anyone. I don’t need to ask any questions. You know, I can just generate it myself because I’m a great piece of AI. And even when we talk about these kinds of conversations about technology replacing workers, people tend to ignore computers still need upkeep. You still need somebody to write the program that power the artificial intelligence in the first place.
You need patches to be able to ensure that these systems are secure over time. You need people to fix the machines. That all requires employment. We are not yet at a point where a computer program can write itself into existence and fix all of the problems along the way not to mention these robots have to get to people’s businesses and homes. That requires transport. That also requires warehouses for them to be stored in before they are transported.
You need people to drive these trucks. And even if you don’t and you have driverless trucks, those trucks need to be designed and built an upkept as well. So there are all these forms of human skill that go into creating the technology that supposedly replacing us in the first place. And it’s a total misnomer. At no point can technology truly replace human ability, because guess what? Humans create technology. So if this is the case, then we need a system that is equitable so that all of us can afford to continue to have the skills to contribute to the economy.
Grumbine (47:49):
I couldn’t agree with you more. I’m hoping that we’ll have you back on again soon, because one of the things that is really, really nice with what we’re trying to do, at least I think it’s nice. It makes me feel good anyway. Is we’re trying to demonstrate that the issues that we see in the United States are the issues that are happening around the world. And that so much of the problems that are in the UK right now, and quite frankly, even in Australia are in large result, USA is a net importer but we’re a net exporter of American exceptionalism.
And one of the things we seem to like to export is this neoliberal urge to privatize. And so, you know, having people like yourself on that can help us see that international view so we don’t stay tunnel vision USA, USA, USA. It’s a really, really important thing. We’re one global community. We may have different currencies, but we have a similar need and we have similar rules and expectations that we can have. And it’s good to know that the United States doesn’t have it right. It’s good to know that the suffering we have is optional and we can look across the pond or down under and see you guys doing it better than us, quite frankly. So I want to thank you for joining us and I’ll give you the last word.
Connelly (49:12):
Look. I think it’s easy to think as though the grass is greener. I mean, I think it’s fair to say Australia has a much better health system than America does because it’s subsidized and the ability to go to the doctor and not paying anything is a really big part of Australian identity. It was actually the liberal government during the last election, proposed a $20 copay for people who wanted to go to a GP and the labor government successfully ran what it called a Mediscare Campaign, because it was seen as the first step towards privatization.
And the only refuge that the Liberal Party had was to say, well, we’re not really privatizing Medicare. We’re just privatizing the administration of Medicare, which is like, really like that leg that you’re going to go out on? But it’s really important to understand that Australia is very, very close to trying to implement the same kinds of health and education systems that exist in the US; and America is being seen as an imprint to be replicated in Australia, but particularly for those who sit to the right of the center.
So I think we need to be careful when you say you guys down under doing it so much better. We were, but that system is being chipped away at day by day by day. And if I can end on this thought, I’m sure a lot of people now know that privatization generally means there’ll be less services and you’ll pay more for them because really privatization is going to create profits at the margins. That’s what privatization exists for.
But if we’re going to think of things like public transport and health and education as basic human rights, then we need to run it as a public system. And if the government cannot run out of money, then we do not need to worry about a budget that is going to go bankrupt. Because these are ideas that are created by ideology that have no foundation in reality because if people understood how government spending works, they realize that there really is no such thing as a budget in the first place.
So let’s just ensure that we look objectively at all systems in all countries, because I think it’s really easy to go Well, Canada does it better or Australia does it better when we’re picking and stealing from a lot of different countries and not always to the interests of the people that are going to be utilizing these systems in the first place, We have the same problem that America does. Your congressmen have government funded healthcare. They will never have to use the public system.
Australian politicians have lifetime pensions. They will never have to know what it’s like to figure out whether or not they can afford to pay school fees or give their kids the health care that they need. People are making a lot of sacrifices and it doesn’t have to be that way. So if that’s what I can leave you with, I hope that people will get a lot out of this conversation.
Grumbine (52:05):
Thank you. I appreciate it immensely. With that, I’m going to say thank you so much for joining us, Claire, and thank you all, everyone for joining us as well. And, hopefully, we will have you back on soon.
Connelly (52:18):
Always great to be on. Thank you for having me back on the show. I’m around any time. Call me.
Grumbine (52:24):
Fantastic. Alright, bye bye, everybody. Thank you so much, Claire. We’re out of here.
Ending Credits (52:36):
Macro N Cheese is produced by Andy Kennedy, descriptive writing by Virginia Cotts and promotional artwork by Mindy Donham. Macro N Cheese is publicly funded by our Real Progressives Patreon account. If you would like to donate Macro N Cheese, please visit patreon.com/realprogressives.
Coming Soon