I figure this has already been reacted to quite often, but as I want to focus on this style of posts for the meat and potatoes of this blog, it’s a good place to start.
Some economists have proposed running a job guarantee through the non-profit sector, which would make it even easier to suit the job to the worker. Imagine a world where people could contribute the skills that inspire them – teaching, tutoring, urban farming, cleaning up the environment, painting murals – rather than telemarketing or whatever other stupid tasks bosses need done to supplement their millions. Sounds nice, doesn’t it?
1.a. You want a better paying job? Improve your human capital. Learn the skills employers are looking for. Want a job in the first place? Find someone who is hiring and convince them you are the best person for the job. That you are the person who will give them the best input of time and labor for their output of resources.
No one owes you a job. Business owners don’t run a business so they can hire people. They start them up to earn money. And as such, they choose to hire the people who have the skills they need.
And hiring people to produce art for the sake of employing them makes as much sense as hiring people to dig ditches for the sake of digging ditches. As Milton Friedman remarked to the Chinese when he watched them force their people to dig a multi-hundred mile canal with shovels – if you want a jobs program take away their shovels and give them spoons.
A job guarantee that paid a living wage would anchor prices, drive up conditions for workers at megacorporations like Wal-Mart and McDonald’s, and target employment for the poor and long-term unemployed – people to whom conventional stimulus money rarely trickles all the way down. The program would automatically expand during private-sector downturns and contract during private-sector upswings, balancing out the business cycle and sending people from job to job, rather than job to unemployment, when times got tough.
1.b. Let’s get something straightened out first. Only 4.8% of those on an hourly wage and 2.7% of all employees in the United States are on the minimum wage. ~75% of those currently on minimum wage will receive a raise or a promotion – often both at the same time – within six months. ~90% will receive a raise or a promotion within twelve months. On top of that, 62% of those on minimum wage are students in High School and College working entry-level jobs in the secondary and tertiary (Retail and Service) sectors of the economy, where they are building their human capital and making their time more valuable to potential employers. Only 18% of those on the minimum wage earn 1/2 or more of the household income, and this includes students living on their own and still receiving money from their parents in spite of no longer being a member of that household.
As to the poverty line, only 22% of those on the minimum wage are below it, with 68% earning 150% or more the poverty line. And again, both stats include students receiving financial support from their family as they finish their education, establish their own homes, and increase their human capital for later.
As to where they live, 42.9% live in suburban areas, and 29.9% live in rural areas. Statistically, the average person on minimum wage is a middle class suburban kid still in school and working to improve his or her human capital so they can sell their time to the highest bidder.
Because that is what working is, selling your time for money to be used to purchase what you want later. Its how we got currency in the first place, it’s a better system than the barter economy which so many seek to re-establish either deliberately or as a side-effect of consistently failed collectivist economic policies.
But let’s think even bigger. Because as much as unemployment blows, so do jobs. What if people didn’t have to work to survive? Enter the jaw-droppingly simple idea of a universal basic income, in which the government would just add a sum sufficient for subsistence to everyone’s bank account every month. A proposal along these lines has been gaining traction in Switzerland, and it’s starting to get a lot of attention here, too.
2.a. Lets look at the cost first. How do you plan to fund such a ridiculous idea? Who are you going to tax to support it? If we were to pay everyone in the United States roughly $1000 a month, it would cost ~$3 Trillion. That’s trillion, with a T. The federal government only took in $2.8 Trillion. Are you really willing to cut EVERYTHING in order to support people who are not giving anything back to the economy?
Because that’s the thing. If I have a guaranteed income, I have no incentive to work. To quote the Video!Hayek from EconStories’ “Fight of the Century: Keynes vs Hayek Round Two”, “Jobs are a means, not the end of themselves. People work to live better, to put food on the shelves.”
Without that need to go out and earn an income, people stop working. Ever watch an episode of Dirty Jobs? How many of those people doing the literal dirty work necessary to keep our civilization functioning would show up to work if they didn’t have to do so in order to feed and shelter their families?
And once you start, the demand for more NEVER stops. You think the howling over the decrease in the rate of growth the GOP suggests for the budget every year are bad now? Wait until the ENTIRE budget is consumed by paying people to live without contributing to society in any way. The only way we will be able to continue paying for this will be pump ever larger quantities of dollars into the market and inflation will skyrocket. Which will drive ever more people out of the economy and onto the dole. And that path leads to societal collapse and violent anarchy.
We live in the age of 3D printers and self-replicating robots. Actual human workers are increasingly surplus to requirement – that’s one major reason why we have such a big unemployment problem. A universal basic income would address this epidemic at the root and provide everyone, in the words of Duke professor Kathi Weeks, “time to cultivate new needs for pleasures, activities, senses, passions, affects, and socialities that exceed the options of working and saving, producing and accumulating.”
2.b. 3D Printers and Self-Replicating robots are not the cause of increasing unemployment. While these things change the nature of the economy, they do not create systemic unemployment. Through a process known as “Creative Destruction” old jobs which are no longer needed are eliminated and new ones are created. No one knows what these jobs will look like, but they will occur.
The reason we have such high unemployment is due not to a glut of labor – the pre-Great Recession employment number prove that – what we have is a lack of consumer confidence. The increases in GDP are largely driven not by C (Consumption) but rather by G (Government Spending) and I (Investment). With the government pumping funds into the financial sector via Quantitative Easing, it is the G which is driving the increases in I, hiding the lack of growth in C, and pushing up Y to the point of apparent economic growth. But, without an increase in C, there cannot be an increase in employment.
You want to fix the unemployment problem? Look for ways to boost consumer confidence and the amount of liquid assets consumers have to spend on consumption, look for ways to get the government out-of-the-way of the small businesses which employ 50% of the employees in this country, and then stay out of their way.
You want a strong economy? Create a stable framework of laws and only change them when needed. The more you change the laws, the less long-term planning businesses are going to be able to conduct and the more likely they will be to choose options which reduce their liabilities over increasing productivity. When you have forced a business owner into the position where the rational thing is to sit back and wait, you have effectively destroyed his ability to expand and hire new people.
The most mainstream way of flipping the script is a simple land-value tax. By targeting wealthy real estate owners and their free rides, we can fight inequality and poverty directly, make disastrous asset price bubbles impossible and curb Wall Street’s hideous bloat. There are cooler ideas out there, too: Municipalities themselves can be big-time landowners, and groups can even create large-scale community land trusts so that the land is held in common. In any case, we have to stop letting rich people pretend they privately own what nature provided everyone.
3.a. Comparing nations with no concept of private property to those with private property is rather striking. If no one owns the land, you get the tragedy of the commons. If the “people” – which inevitably means the State acting on their behalf – owns the property, they will build to an absolute minimum and then do nothing. Check out Cabrini Green or almost any Section 8 Housing in the country if you want to know what I mean here. Government owned low-income housing whether in Russia, the United States, the UK, China, or South America inevitably turns to shit around the residents and becomes uninhabitable.
However, if those landlords you seem to hate so much are managing it, the property is taken care of. Unlike the government, those private owners have an incentive to maintain the property. Unlike the government, their income requires people to want to live there. Bad landlords see less people willing to live there until the landlord has to either demolish the building or start maintaining it the way he should be. If your landlord isn’t doing his job, then go and re-read your contract and hold him to it. Make him do his job. It’s your responsibility, not the government’s.
Ever noticed how much landlords blow? They don’t really do anything to earn their money. They just claim ownership of buildings and charge people who actually work for a living the majority of our incomes for the privilege of staying in boxes that these owners often didn’t build and rarely if ever improve. In a few years, my landlord will probably sell my building to another landlord and make off with the appreciated value of the land s/he also claims to own – which won’t even get taxed, as long as s/he ploughs it right back into more real estate.
Think about how stupid that is. The value of the land has nothing to do with my idle, remote landlord; it reflects the nearby parks and subways and shops, which I have access to thanks to the community and the public. So why don’t the community and the public derive the value and put it toward uses that benefit everyone? Because capitalism, is why.
3.b. As to your comments on development, who do you think supplied the capital to pay for that development? Construction is expensive, apartment towers even more so. If there is no profit motive, there is no incentive to provide quality, multi-family housing. it wouldn’t be practical to do so. The money wouldn’t be there. Those landlords you hate so much PAID to have that building constructed in the first place. The rent you are paying is your thanks to them for doing so.
Hoarders blow. Take, for instance, the infamous one percent, whose ownership of the capital stock of this country leads to such horrific inequality. “Capital stock” refers to two things here: the buildings and equipment that workers use to produce goods and services, and the stocks and bonds that represent ownership over the former. The top 10 percent’s ownership of the means of production is represented by the fact that they control 80 percent of all financial assets.
This detachment means that there’s a way easier way to collectivize wealth ownership than having to stage uprisings that seize the actual airplanes and warehouses and whatnot: Just buy up their stocks and bonds. When the government does that, it’s called a sovereign wealth fund. Think of it like a big investment fund that buys up assets from the private sector and pays dividends to all permanent U.S. residents in the form of a universal basic income. Alaska actually already has a fund like this in place. If it’s good enough for Levi Johnston, it’s good enough for you.
4. You clearly have never taken an Economics class. And not just for your comments here in this idea. Those “hoarders” you are decrying for their control of capital are the ones who are providing the necessary resources to start up new businesses. The rich don’t pour gold into a giant silo so they can go swimming in it, they put that money into businesses which promise a good return on their money. Very few of the 1% you rag on here have significant liquid assets, their assets are bound up in business stocks and ownership shares.
THIS is where the jobs you want so much come from. Ordinary people from every economic level placing their money in startups and established businesses and getting a share of those profits back. That money which is put in is used to expand the firm’s means of production, hiring more people to run that machinery, and the money filters out into the rest of the economy.
Its how the economy works. And the healthier the economy is, the higher the velocity of the money. The higher the velocity, the better off everyone is as the money passes from hand to hand faster.
The Bank of North Dakota doesn’t make seedy, destined-to-default loans, slice them up inscrutably and sell them on a secondary market. It doesn’t play around with incomprehensible derivatives and allow its executives to extract billions of dollars. It just makes loans and works with debtors to pay them off.
5.a. Those loans you are decrying were mandated by the government. 90% of all sub-prime loans were made in the quarter before a Community Reinvestment Act audit. After the CRA first started to demand banks make sub-prime loans for the right to expand, banks just sat on their existing branches. Then the government guaranteed those loans and moral hazard was proved to be a natural aspect of human nature once again. It was then they started up the derivatives market. The market didn’t really begin to expand, however, until Fannie Mae – protected by nepotism in the Senate – began buying up the risk on those subprime loans for the purposes of 1. getting the potentially toxic assets off the books and 2. flushing more capital into the system to make even more of those bad loans. Every step of the way, the government acted as a pusher or an enabler, getting otherwise rational banks hooked on toxic lending practices in the name of “fairness” and in direct violation of natural laws. Had the US run those banks instead, it would have been us on the line for them.
There is only one state that currently has a public option for banking: North Dakota. When North Dakotans pay state taxes, the money gets deposited in the state’s bank, which in turn offers cheap loans to farmers, students and businesses.
5.c. North Dakota’s bank is solvent because North Dakota is going through an oil boom. Without that surge in revenue, the bank would have folded and the people would have been on the hook. State owned banks are not guaranteed by external forces, they are guaranteed by the State itself. And if the state goes bankrupt, so to does the bank. The sheer moral hazard involved is massive.
If you really want an idea of what it would be like to live under the system you are suggesting, just listen to the music of Dmitri Shostakovich, a man who knows what it is like first-hand and managed to translate it into song.