As regular readers know, I idealize economist Dean Baker. But there is one issue that I have a frustrating disagreement with him. He argues that technological advances will make the economy better for everyone. This is true if you assume that the increased productivity that is brought about by these advances will be somewhat equally shared. Baker, of course, knows that they won’t. But he’s committed to making the argument that the problem is not the technology but the government policy (such as patents but also taxes and an almost endless list of other things) of taking or keeping money from the poor and giving it to the rich.
He is absolutely right about this. My frustration comes from the fact that he constantly attacks those that note that increases in technology are putting people out of work and making the lives of the poor even worse. The technology will continue to improve. Nothing is going to stop that and we can all be glad for that. But the fact remains that in the existing political-economic system, this is making things worse. And an end to patent protections won’t even begin to deal with the problem.
Another solution he’s fond of is work sharing. This is where, instead of laying people off in a recession, a company just cuts back on everyone’s hours and the government makes up the difference in pay. This seems to work rather well in Germany. In the United States, it has always been suffocated with so much red tape that companies rarely use it even when it is available. Regardless, it too isn’t going to solve our problem.
This has lead me to be in favor of something that Baker never talks about: guaranteed minimum income. And although I think Baker would be in favor of it, I think he also would consider it pie-in-the-sky and Loser Liberalism. But I was very pleased to see that Dylan Matthews over at Vox is taking the idea very seriously, A guaranteed Income for Every American Would Eliminate Poverty—and it Wouldn’t Destroy the Economy.
Unfortunately, the article is mostly just a response to Pascal-Emmanuel Gobry. And his argument is just that a negative income tax wouldn’t work because in the hand full of small tests, people didn’t work as many hours. Matthews responded with two main points. First, it wasn’t even true in all the tests. Second, the “not working as much” was basically just people staying unemployed slightly longer so they could get better jobs. Gobry seems to think that if everyone were guaranteed $5,000 per year, they would all stop working because, wow, with $5,000 per year, you’re riding high! Gobry is known for making big proclamation based upon nothing. And note what he’s actually saying here: giving workers more choices is a bad thing.
Matthews big point is that a guaranteed minimum income would not actually cost the economy that much: between 5% and 15% of GDP. Of course, it would mean that rich people would not be quite as rich and, let’s face it, they don’t need people like Gobry to stop this from ever happening. But the truth is that an end to poverty is available right now, and we don’t need any of Paul Ryan’s new bag of tricks to do it.
Matthews also made the point that people working less is not necessarily a bad thing. Let me take that further: people working less is the point of productivity growth. This idea that paid work is the only thing of value in the economy is madness. What especially makes me angry is that social conservatives should be in favor of this. Providing a guaranteed minimum income would necessarily mean that employers would have to pay people more because they could get a basic income by doing nothing. People making more money would allow, for example, one member of a marriage to stay home, manage the house, and raise the children. That’s a good thing!
Also, much of the greatest art and science ever created was done so by people who (because of the circumstances of their birth) had some kind of basic income. This is why advances in art and science have not traditionally been made by plucky youths born into poverty, even though there have always been a whole lot more of them. Gobry, like all conservatives, only ever wants to look at the down side of such policies. I think fathers and mothers being able to spend more time with there kids would be a great improvement. I think more great artists and scientists and thinkers would be a great improvement. Of course, so do conservatives. They simply aren’t willing to stop their immoral shifting of money from the vast majority of people to those who already have far more money than they can ever productively use.