I disagree with your first comment about the $100 and the loaves, as I said, because you are overly simplifying. For example, even aside from the things I already mentioned, you also ignore the fact that the person needs to spend money or goods in order to produce the loaves.
That said, you might be able to refine that example or come up with another; I certainly do not think that markets infallibly have the result of rewarding value creation. I agree that free markets leads to that kind of inequality and that this is a not particularly great aspect of it. However, it is not reasonable to say “this is a horrible process” if you cannot propose a better alternative. And I am not even saying there is not a better alternative. I am just saying that no one has found one yet.
The fact that the Soviets used the St. Paul quote is revealing in regard to what usually happens if you attempt to replace free markets with something else. The problem e.g. with a guaranteed basic income is this: either people have to work, or they don’t. If they don’t have to work, then there is the implicit assumption that wealth does not depend on work, which in our world is false. So if enough people decide not to work, the system will necessarily collapse. This does not of course prove that a basic income is impossible, since you could simply keep reducing the amount of the income until enough people are working to keep it going. But it does show a serious issue. And on the other hand, if they do have to work, then they are slaves. And so the way the Soviets were using the slogan, they were making people slaves.
The only alternative (to the the impossible option of wealth not depending on work or to slavery) is to admit that if people choose to do so, they do not have to work, but they will suffer the consequences. Europe has a better unemployment system than the USA, for example, but even in Europe (at least in general and if I understand it correctly, and obviously the details differ in various places), there needs to be at least a bit of ambiguity about why you are unemployed. If you openly say, “I am perfectly competent and well qualified for many jobs, and I know from experience that I could get one next week if I wanted. In fact I just received an offer, which I rejected. I do not WANT to work, and I won’t,” even Europe will not continue offering you support.
The only alternative (to the the impossible option of wealth not depending on work or to slavery) is to admit that if people choose to do so, they do not have to work, but they will suffer the consequences.
Isn’t this exactly what basic income does? If you don’t work, you just get the basic income. If you work, you get the basic income plus some income from your work. (Yes there is a tax wedge so you’re not going to get your full market value, and this necessarily hurts overall output/economic growth—but precisely because people vary so much in how productive they are, it’s still a big win in utility terms compared to not having the BI. Not to mention that the actual real-world alternative isn’t really “no BI”, but redistributionist “welfare” as we know it.)
Even if you’re willing to work, some job offers are objectively pretty bad (let’s say it’s a five hour commute, the work is hazardous, and the salary isn’t enough for your food and medicine). Do you think people should die if they refuse such offers and better ones aren’t available? I’d prefer to legally define what constitutes a “reasonable” job for a given person, and allow anyone to walk into a government office and receive either a reasonable job offer or a welfare check. If the market is good at providing reasonable jobs, as some libertarians seem to think, then the policy is cheap because the government clerk can just call up Mr Market.
A refinement of your policy is to just deregulate the labor market so it can actually be good at providing “reasonable jobs”; then have the government office keep a regularly-updated survey of “reasonable job” wage rates, and if the wage rate is too low to be “reasonable”, give everyone who asks a check to make up the difference. If it turns out that there are no “reasonable jobs” at all then that wage rate is zero, so everyone who qualifies just gets the full welfare check. This system (a simple version of BI) avoids subsidizing these sorts of jobs, by just giving people that money instead.
I’d prefer to legally define what constitutes a “reasonable” job for a given person, and allow anyone to walk into a government office and receive either a reasonable job offer or a welfare check.
This proposal sounds to me like you are not aware of how our present system actually works.
The idea of a market economy isn’t that it’s the job of the government to hand out jobs. It’s not the role of the government to produce jobs. It’s rather employees who need labor to get things done, that they want to have done.
As a result, a person who seeks welfare is generally expected to apply to jobs a write job applications. Do you find the practice of telling a welfare recipient to write job applications to be wrong or do you just don’t know?
If the current system had no other benefits, except unemployment benefits which were available for a limited time and on condition of writing job applications, then yeah I’d consider it cruel and prefer mine. Mostly I was responding to entirelyuseless’s comment. They pointed out that UBI might hurt society by removing the incentive to work, so I tried to devise a similarly simple system that would support unemployed people without removing the incentive.
Yeah, I think it’s wrong that benefits run out after a certain time and you have to be writing job applications that whole time. I think “work or die” might be viewed as fair, because society needs work as entirelyuseless pointed out, but “find work or die” crosses the line into unfair.
Do you think people should die if they refuse such offers and better ones aren’t available?
No, but this is a strawman in any case. To a very good approximation, no one dies of hunger in the USA except some anorexics and victims of child abuse. That includes people who refuse such job offers; they do not die.
I would not necessarily be opposed to your proposal if it were fleshed out in a reasonable manner. I am not saying that we cannot do some specific things to make things better. That is different from attempting to replace the whole market system with a different system.
One thing you cannot do, however, is to make sure that only effort is rewarded and that luck is either evenly distributed or distributed only to poor people. Many people currently make efforts to put themselves in a position where they have a better chance of good luck, and if luck will not be rewarded, they will no longer make those efforts, so average utility will be lower.
I think a free market combined with benefits for poor people could go a long way in mitigating the “money-weighted utility” problem. It wouldn’t be neat, but we’re trying to optimize a complex thing. How much happiness should be given for free, and how much should be used as a carrot to make people create more happiness? That’s a question about human nature and there might not be any mathematically clean way to answer it.
Since we’ve had periods of almost full employment, it seems like almost everyone agrees to work if the job offers are good enough.
You are confused. Full employment is not defined as “everyone works”. Full employment is defined as “everyone who’s looking for work can find it”. People who are not looking for work are not counted as unemployed.
For example, at the moment the US unemployment rate is 4.7%. But the employment-population ratio is only a bit above 60%. So 40% of the US population between 15 and 64 does not work. But the unemployment rate is below 5%.
legally define what constitutes a “reasonable” job for a given person
That’s called “minimum wage”, isn’t it?
If the market is good at providing reasonable jobs
Nope.
The market is good at creating value and allocating resources in such a way as to maximize value produced. A job is a cost. You should prefer a lot of value and few jobs. That’s what high productivity of labour means.
Historically there were periods of almost full employment, so the inherently lazy people postulated by the first theory don’t seem to exist. So we’re left with the second theory. But then it’s immoral to require that people find work or starve. It would be more moral to pay them welfare when the government can’t find any reasonable job for them, for some reasonable legal definition of “reasonable”.
Europe has a better unemployment system than the USA, for example, but even in Europe (at least in general and if I understand it correctly, and obviously the details differ in various places), there needs to be at least a bit of ambiguity about why you are unemployed. If you openly say, “I am perfectly competent and well qualified for many jobs, and I know from experience that I could get one next week if I wanted. In fact I just received an offer, which I rejected. I do not WANT to work, and I won’t,” even Europe will not continue offering you support.
Counterexample: pensioners. (And yes, I can be quite sure that some of them are both able & qualified to work, because a non-negligible number of them do work.)
Pensioners have paid into the system, though. Yes, it’s a Ponzi scheme that no one sane would want to enter into in the first place, but they’re still entitled to get something out.
I agree with the normative statement that pensioners who pay in are “entitled to get something out”, but it’s a new claim. My comment, like the bit of entirelyuseless’s comment to which it responded, was about an empirical claim.
Pensioners have paid into the system, though.
The fact remains that there is a big group of people in Europe who can, in fact, claim government cash even if they declare that they have worked, and could work, but just don’t want to work. Insofar as entirelyuseless’s general point was that someone has to work to keep an economy going, that point is well taken, but the empirical claim about Europe is materially false.
(And, regarding the more general argument, if there were a basic income, the vast majority of people claiming it would likewise have paid into the system, through general taxation. So the fact of paying in doesn’t do a very good job of distinguishing a BI from a pension scheme.)
Yes, it’s a Ponzi scheme
How so? To my mind, a defining property of a Ponzi scheme is that it’s fraudulent, deceptive (or at least opaque) about where it finds the money that it disburses. But — in my European country, anyway — the government publishes annual accounts for its pension fund, which are, as far as I know, uncooked books. Check ’em out.
Most people are worried about cost of UBI. It seems like you’re more worried about reduced incentive to work. How about this system then. No UBI, but anyone can ask the government for a “reasonable job” (livable wage, not too far from home, compatible with health situation) and receive welfare until a “reasonable job” is offered to them. How to find the job, and whether it’s public or private, is up to the government. Any disputes like “I took the job and then quit because it wasn’t reasonable” get resolved in court.
I think not all cases of redistribution deserve to be called slavery. In particular basic income isn’t necessarily slavery because it can be financed by things like unimproved land rent, which should never have been private to begin with (see this picture). That ties in with the Soviet use of the slogan, which was partly aimed at royalty and landed nobility who only 50 years before could literally own people.
More generally wealth depends on work and luck which are usually hard to disentangle, but some examples of luck are very pure and it seems like a no-brainer to spread them around. Diminishing marginal utility of money shows that if a piece of luck falls from the sky, it’s better to share it with poor people than give it to one rich person. For example the government should auction off the right to search for oil and pump it, and use the proceeds for UBI, instead of giving dibs to the children of whoever owned the land before internal combustion was invented. That kind of approach can yield a surprisingly huge amount of money.
Going back to the original topic, I think a big part of the market’s recursive dynamics is also pretty much luck. My preferred solution is to carefully find ways to redistribute luck, while still rewarding effort. It’s not easy, but neither is being poor under the current system.
I disagree with your first comment about the $100 and the loaves, as I said, because you are overly simplifying. For example, even aside from the things I already mentioned, you also ignore the fact that the person needs to spend money or goods in order to produce the loaves.
That said, you might be able to refine that example or come up with another; I certainly do not think that markets infallibly have the result of rewarding value creation. I agree that free markets leads to that kind of inequality and that this is a not particularly great aspect of it. However, it is not reasonable to say “this is a horrible process” if you cannot propose a better alternative. And I am not even saying there is not a better alternative. I am just saying that no one has found one yet.
The fact that the Soviets used the St. Paul quote is revealing in regard to what usually happens if you attempt to replace free markets with something else. The problem e.g. with a guaranteed basic income is this: either people have to work, or they don’t. If they don’t have to work, then there is the implicit assumption that wealth does not depend on work, which in our world is false. So if enough people decide not to work, the system will necessarily collapse. This does not of course prove that a basic income is impossible, since you could simply keep reducing the amount of the income until enough people are working to keep it going. But it does show a serious issue. And on the other hand, if they do have to work, then they are slaves. And so the way the Soviets were using the slogan, they were making people slaves.
The only alternative (to the the impossible option of wealth not depending on work or to slavery) is to admit that if people choose to do so, they do not have to work, but they will suffer the consequences. Europe has a better unemployment system than the USA, for example, but even in Europe (at least in general and if I understand it correctly, and obviously the details differ in various places), there needs to be at least a bit of ambiguity about why you are unemployed. If you openly say, “I am perfectly competent and well qualified for many jobs, and I know from experience that I could get one next week if I wanted. In fact I just received an offer, which I rejected. I do not WANT to work, and I won’t,” even Europe will not continue offering you support.
Isn’t this exactly what basic income does? If you don’t work, you just get the basic income. If you work, you get the basic income plus some income from your work. (Yes there is a tax wedge so you’re not going to get your full market value, and this necessarily hurts overall output/economic growth—but precisely because people vary so much in how productive they are, it’s still a big win in utility terms compared to not having the BI. Not to mention that the actual real-world alternative isn’t really “no BI”, but redistributionist “welfare” as we know it.)
Even if you’re willing to work, some job offers are objectively pretty bad (let’s say it’s a five hour commute, the work is hazardous, and the salary isn’t enough for your food and medicine). Do you think people should die if they refuse such offers and better ones aren’t available? I’d prefer to legally define what constitutes a “reasonable” job for a given person, and allow anyone to walk into a government office and receive either a reasonable job offer or a welfare check. If the market is good at providing reasonable jobs, as some libertarians seem to think, then the policy is cheap because the government clerk can just call up Mr Market.
A refinement of your policy is to just deregulate the labor market so it can actually be good at providing “reasonable jobs”; then have the government office keep a regularly-updated survey of “reasonable job” wage rates, and if the wage rate is too low to be “reasonable”, give everyone who asks a check to make up the difference. If it turns out that there are no “reasonable jobs” at all then that wage rate is zero, so everyone who qualifies just gets the full welfare check. This system (a simple version of BI) avoids subsidizing these sorts of jobs, by just giving people that money instead.
This proposal sounds to me like you are not aware of how our present system actually works.
The idea of a market economy isn’t that it’s the job of the government to hand out jobs. It’s not the role of the government to produce jobs. It’s rather employees who need labor to get things done, that they want to have done.
As a result, a person who seeks welfare is generally expected to apply to jobs a write job applications. Do you find the practice of telling a welfare recipient to write job applications to be wrong or do you just don’t know?
If the current system had no other benefits, except unemployment benefits which were available for a limited time and on condition of writing job applications, then yeah I’d consider it cruel and prefer mine. Mostly I was responding to entirelyuseless’s comment. They pointed out that UBI might hurt society by removing the incentive to work, so I tried to devise a similarly simple system that would support unemployed people without removing the incentive.
Why is it cruel to have to write job applications?
Yeah, I think it’s wrong that benefits run out after a certain time and you have to be writing job applications that whole time. I think “work or die” might be viewed as fair, because society needs work as entirelyuseless pointed out, but “find work or die” crosses the line into unfair.
No, but this is a strawman in any case. To a very good approximation, no one dies of hunger in the USA except some anorexics and victims of child abuse. That includes people who refuse such job offers; they do not die.
I would not necessarily be opposed to your proposal if it were fleshed out in a reasonable manner. I am not saying that we cannot do some specific things to make things better. That is different from attempting to replace the whole market system with a different system.
One thing you cannot do, however, is to make sure that only effort is rewarded and that luck is either evenly distributed or distributed only to poor people. Many people currently make efforts to put themselves in a position where they have a better chance of good luck, and if luck will not be rewarded, they will no longer make those efforts, so average utility will be lower.
I think a free market combined with benefits for poor people could go a long way in mitigating the “money-weighted utility” problem. It wouldn’t be neat, but we’re trying to optimize a complex thing. How much happiness should be given for free, and how much should be used as a carrot to make people create more happiness? That’s a question about human nature and there might not be any mathematically clean way to answer it.
You are confused. Full employment is not defined as “everyone works”. Full employment is defined as “everyone who’s looking for work can find it”. People who are not looking for work are not counted as unemployed.
For example, at the moment the US unemployment rate is 4.7%. But the employment-population ratio is only a bit above 60%. So 40% of the US population between 15 and 64 does not work. But the unemployment rate is below 5%.
That’s called “minimum wage”, isn’t it?
Nope.
The market is good at creating value and allocating resources in such a way as to maximize value produced. A job is a cost. You should prefer a lot of value and few jobs. That’s what high productivity of labour means.
There are two theories of unemployment:
1) They don’t want to work
2) They can’t find work
Historically there were periods of almost full employment, so the inherently lazy people postulated by the first theory don’t seem to exist. So we’re left with the second theory. But then it’s immoral to require that people find work or starve. It would be more moral to pay them welfare when the government can’t find any reasonable job for them, for some reasonable legal definition of “reasonable”.
Counterexample: pensioners. (And yes, I can be quite sure that some of them are both able & qualified to work, because a non-negligible number of them do work.)
Pensioners have paid into the system, though. Yes, it’s a Ponzi scheme that no one sane would want to enter into in the first place, but they’re still entitled to get something out.
I agree with the normative statement that pensioners who pay in are “entitled to get something out”, but it’s a new claim. My comment, like the bit of entirelyuseless’s comment to which it responded, was about an empirical claim.
The fact remains that there is a big group of people in Europe who can, in fact, claim government cash even if they declare that they have worked, and could work, but just don’t want to work. Insofar as entirelyuseless’s general point was that someone has to work to keep an economy going, that point is well taken, but the empirical claim about Europe is materially false.
(And, regarding the more general argument, if there were a basic income, the vast majority of people claiming it would likewise have paid into the system, through general taxation. So the fact of paying in doesn’t do a very good job of distinguishing a BI from a pension scheme.)
How so? To my mind, a defining property of a Ponzi scheme is that it’s fraudulent, deceptive (or at least opaque) about where it finds the money that it disburses. But — in my European country, anyway — the government publishes annual accounts for its pension fund, which are, as far as I know, uncooked books. Check ’em out.
Most people are worried about cost of UBI. It seems like you’re more worried about reduced incentive to work. How about this system then. No UBI, but anyone can ask the government for a “reasonable job” (livable wage, not too far from home, compatible with health situation) and receive welfare until a “reasonable job” is offered to them. How to find the job, and whether it’s public or private, is up to the government. Any disputes like “I took the job and then quit because it wasn’t reasonable” get resolved in court.
I think not all cases of redistribution deserve to be called slavery. In particular basic income isn’t necessarily slavery because it can be financed by things like unimproved land rent, which should never have been private to begin with (see this picture). That ties in with the Soviet use of the slogan, which was partly aimed at royalty and landed nobility who only 50 years before could literally own people.
More generally wealth depends on work and luck which are usually hard to disentangle, but some examples of luck are very pure and it seems like a no-brainer to spread them around. Diminishing marginal utility of money shows that if a piece of luck falls from the sky, it’s better to share it with poor people than give it to one rich person. For example the government should auction off the right to search for oil and pump it, and use the proceeds for UBI, instead of giving dibs to the children of whoever owned the land before internal combustion was invented. That kind of approach can yield a surprisingly huge amount of money.
Going back to the original topic, I think a big part of the market’s recursive dynamics is also pretty much luck. My preferred solution is to carefully find ways to redistribute luck, while still rewarding effort. It’s not easy, but neither is being poor under the current system.