Thursday, 11 July 2013

Economic equivalence: job guarantee and basic income

Recently there has been much discussion about whether a basic income [guarantee] or a job guarantee (JG) is the better option when unemployment is high, under-employment is pervasive and wages are low. Chris Dillow, Izabella Kaminska, Paul Krugman and I have all argued for basic income on the grounds that modern capitalism either is, or will be, incapable of generating sufficient work to provide a living wage for everyone: while the Modern Money Theorist (MMT) school argues strongly for a JG, claiming not only that it meets the moral objective of ensuring that everyone who wants to work can, but that the public sector providing jobs for the "reserve army of unemployed" can act as a form of automatic stabiliser.

I do not propose to discuss here the moral arguments for job guarantees versus basic income. Chris Dillow has addressed the argument that basic income encourages "mass skiving" very well in this post, while various papers from MMT theorists have identified the fact that most people want to work - that providing for oneself rather than being dependent on others is important for human dignity. Personally I don't think the two views are incompatible: if most people want to work, as MMT suggest, then even if they are provided with a basic unearned income they will still find useful and productive things to do that could earn them additional money. And I don't think anyone from the basic income side would dispute that the public sector might need to help those who are not self-starters to find useful and productive things to do. The idea that people need to be compelled to work is fundamentally inconsistent with the idea that "good" work is fulfilling, enjoyable and contributes to self-esteem. Some people no doubt would choose to watch TV all day, though whether this is due to laziness or demoralisation is an interesting question. But both the "job guarantee" and "basic income" schools agree that in general people want to work and should be supported to enable them to do so. They differ only on how that support should be provided.

However, MMT make claims for JG schemes that go beyond moral arguments and disagreements over the best method of delivering work. In this post on Economonitor, Randall Wray claimed that basic income was inflationary. And he and his colleagues in the MMT movement have adopted the concept of a Job Guarantee as the principal counter-cyclical fiscal policy tool in their macroeconomic theory. When unemployment is rising, so the theory goes, the public sector will buy up all the idle labour and put it to use in public sector or not-for-profit projects. This supports demand and therefore acts as a form of fiscal loosening. As the economy returns to health and the private sector starts hiring again, the excess labour hired under the job guarantee scheme finds private sector jobs, shrinking the public sector and acting as a form of fiscal tightening. It all sounds pretty sensible, doesn't it?

The principle of JG as a fiscal policy tool rests on the following assumptions.

1) The public sector is not financially constrained. It can create all the money required to pay workers under a job guarantee scheme.

This does of course imply that the country has its own central bank which has full control of currency issuance and that the government is able to finance all spending by central bank money issuance. This is not true in the European Union (yes, I do mean the EU not the Eurozone, and yes, it does include the UK).

2) There is no limit to the numbers or the types of job that can be provided by the public sector.

3) The sort of public sector projects that would typically be staffed by job guarantee workers would never be undertaken by by the private sector, so there is no risk of "crowding out".

I have considerable issues with all three of these. To my mind they raise serious questions about the relationship of the public and private sector and the nature of the work that each undertakes.

Firstly, if the public sector really is financially unconstrained, why are there any jobs at all that can be taken on by the "army of unemployed" in an economic downturn? Why would there be a reserve buffer of public sector projects that in good times don't need to be done?

If money is not a constraint and the amount of work is unlimited, then the only constraint on public sector projects is availability of labour (apart from self-imposed constraints such as byzantine regulations and idiotic planning restrictions). But if the financial sector is financially unconstrained and there is so much useful and productive work to be done, then shouldn't it routinely outbid the private sector for labour? After all, the private sector is financially constrained - which is why it doesn't create enough jobs for everyone - so the public sector should always be able to get the labour it needs. There can't be any real labour constraint if there is no financial constraint. Yet the MMT theorists argue that job guarantees should be temporary jobs only, paid below the equivalent private sector level so that when employment picks up the JG workers return to the private sector. And they insist that that job guarantee projects should not "crowd out" private sector ones. The only explanation I can think of for this is that the MMT theorists don't consider public sector work to be as important as private enterprise. This is worrying. The public sector provides vital infrastructure without which private enterprise cannot operate, such as roads, rail networks, education (developing the labour force of the future), health care (keeping the workforce working). Is this work really not as important as private enterprise? And couldn't much of it actually be done by the private sector anyway, at least in good times? Most of it is not cyclical, either. Are we really only going to have teaching assistants and elderly carers in recessions? Are we really only going to do essential repairs to schools, hospitals and roads when there are lots of unskilled unemployed people in need of work? What a terrifying prospect.

At the moment there are indeed many public sector jobs that need doing. But that is because dereliction of duty by politicians and executives in the public sector, and public sector budget constraints (unreal though MMT believe them to be), mean that essential infrastructure investment has not been done and public sector staffing is too low to do everything that is really needed. So yes, at the moment the unemployed could usefully be put to work doing things that have been left undone over the last few years. But this does not form the basis for a long-term flexible staffing arrangement. Once the public sector realises it is financially unconstrained, it has no reason to leave things undone in future. So in order to create a buffer stock of jobs for future unemployed, the public sector would deliberately have to leave things undone, or under-staff key functions such as education. This is madness. Either things need doing - in which case, if you have no financial constraints, you do them - or they don't.

It may be that what JG proponents have in mind is some sort of two-tier job classification in the public sector: the vital jobs that are needed all the time, and the less important ones that only get done when there are unemployed people to do them. And there is the additional constraint that these less important jobs must not be ones that the private sector could take on (remember the stipulation that there must be no "crowding out" effects). I find myself struggling to imagine what these jobs might be that are so unimportant that the public sector doesn't bother to do them except when there happens to be a surplus of labour, and so unproductive that the private sector doesn't want to do them even in good times.

Of course, there are always things that are "nice to have" but aren't essential. Unemployed musicians could provide concerts for schoolchildren: unemployed artists could brighten up run down areas with street art. I feel somewhat sad that these things would only be available when times were hard, but I agree that they are hardly vital functions. But I'm really not convinced that there would be enough of these "nice to have" things to occupy an army of unemployed, many of them unskilled. I suspect that what would happen in reality would be that the public sector would routinely under-staff itself and use the "army of unemployed" not as an automatic stabiliser, as MMT suggests, but as a cheap form of public sector labour, enabling them to cut costs by delaying essential repairs and maintenance until there were enough unemployed to do the work. And if - as some have suggested - the countercyclical labour buffer would exist ALL the time to a greater or lesser extent, then the temptation to drive down wage levels in the public sector as a whole to the JG level would be enormous. The JG level is supposed to be well below private sector remuneration levels to encourage them to move back to the private sector when employment picks up. But if there were always unemployed available to do public sector work - admittedly varying amounts of it - why would you bother to employ permanent staff at all, or if you did, why would you pay them any more than the JG level? Financially unconstrained the public sector may be, but there are enough politicians out there on cost-cutting soapboxes to ensure that the public sector will remain under pressure to keep costs down, if only so that taxes can be cut for those who fund politicians' campaigns. The result surely would be dissatisfaction and high turnover among public sector staff. I know the counter-argument to this is that only lower-skill functions such as teaching assistants, nursing auxiliaries and elderly carers would be affected, but does continuity and job satisfaction not matter for them and for the people for whom they care? Just because a job is low-skill doesn't mean it is unimportant. And anyway, who says teachers can't be unemployed?

This brings me to another important point. The unemployed are not a homogenous group. Yes, a lot of the unemployed at the moment are unskilled - but that is because they are pushed out of jobs by people with greater skills, even if those skills are not needed for the job. If a JG scheme existed, we might expect that the skilled might be less willing to accept unskilled jobs, and the "unemployed army" might become more diverse. In which case we then have a problem. Is the public sector going to provide basic unskilled jobs to the skilled - in which case those people run the risk of skills decline and long-term unemployment? Or will it attempt to match skills to jobs, since it supposedly has no limit on the numbers and types of job that can be created? If the latter, then the statement in the above paragraph that only lower-skill functions in the public sector would have high turnover and depressed wages can't be true. It would be essential to keep wages depressed at ALL levels in the public sector to ensure that people did return to the private sector when appropriate employment was available. And there would be a real risk of chronic under-staffing of vital work such as teaching and nursing in the expectation that skilled unemployed people would be available to plug the gaps - and if they weren't, then either permanent staff would have to cover or the public sector would have to resort to private sector agency staffing. Once again, we hit problems with lack of continuity of care and the possibility of poor or inconsistent service.

Some versions of the JG scheme include microfinancing of the self-employed, and allowances for training. And some envisage that people would be able to devise their own "jobs", although they would have to be approved as suitable by those who run the JG scheme. This seems more sensible to me - but it is getting much closer to the concept of basic income. And this is where I want to address Wray's complaint that a basic income would be inflationary.

Wray's claim that basic income is inflationary rests on the assumption that people on basic income wouldn't work. As I've already explained, I don't think this is true. Yes, people on basic income would have to find things to do rather than be given things to do - although they could be helped. That doesn't mean they would do nothing, or that what they would do would be unproductive. And if the majority of people on basic income were doing useful and productive things, then it is hard to see how a basic income would be seriously inflationary.

However, it is fair to say that a basic income does directly reflate the economy. Indeed as I've noted elsewhere, it is intended to do exactly that - to support demand. In that respect it is exactly the same as a JG. Wray's belief that basic income would be inflationary but a JG would not seems to stem from his idea that JG would be countercyclical, whereas basic income would have no cyclical effects. This would be a fair criticism if JG really did act as a countercyclical fiscal measure, but as I've explained above, I don't see how it could in practice. Therefore both basic income and JG have the same potential to be inflationary, because they both directly support demand. They should both be used therefore in conjunction with appropriate monetary policy and possibly countercyclical taxation, too (although this is perhaps of less value because of Ricardian equivalence). Tcherneva additionally suggests that JG wages should be variable to prevent the inflationary effects from debasing the currency. This is a nice idea in theory but I seriously question whether it could ever be implemented in practice. Cutting incomes that are already close to poverty level purely to support the currency is likely to be politically difficult and is certainly unacceptable from a humanitarian perspective.

So to me, at any rate, it seems that basic income and JG would be likely to have similar economic effects.* I find it surprising therefore that the debate between the two sides becomes so heated. It seems to me that the fundamental difference between JG proponents and supporters of basic income lies not in their economics but in their view of human nature.

JG proponents are essentially managerialist. They think that people have to be told what to do or they won't do anything useful. Basic income supporters, on the other hand, are liberals: they believe that if people are supported and their basic needs are met, they will find useful and productive things to do.  I suppose which you prefer really depends on how much of a control freak you are. Personally I would prefer a basic income, and I admit that is because I am shockingly liberal and really don't like being told what to do. But even a JG scheme would be better than the present situation, where the threat of unemployment is used to force people to do unsuitable jobs for rubbish wages. Sadly I suspect neither a JG nor a basic income is likely to happen in reality. There are too many vested interests who are well suited by the use of unemployment as a labour market discipline.

Related links

The case for basic income - Stumbling & Mumbling
Time to take basic income seriously? - FT Alphaville
Sympathy for the Luddites - Paul Krugman (NYT - paywall)
The changing nature of work - Coppola Comment
A surprising case for basic income - Samuel Brittan
Are more jobs the answer? The BIG bait and switch - Randall Wray (Economonitor)
Basic income vs capitalism - Chris Dillow (Pieria)
The wastefulness of automation - Frances Coppola (Pieria)
Job guarantee: it's really not that difficult - 3spoken
Employment guarantee programs: a survey of theories and policy experiences - Kaboub
Beyond full employment: the employer of last resort as a institution for change - Tcherneva
Job guarantee or basic income? - Tcherneva
Final report 2008 - Centre for Full Employment & Equity (Australia)
In praise of idleness - Bertrand Russell ("chill, dudes....")
Adios, el bonko - Guerilla Economist (nicely sceptical of both basic income and JG!)

* I should add though that JG could actually have deflationary effects if public sector wages were kept permanently depressed in order to encourage migration of JG workers to the private sector. JG is I think a more complex tool and its effects would be less easy to predict than basic income.


  1. Unfortunately this is nowhere to be found in the mainstream discussion. If only the American/European public was deciding between "job guarantee" or "universal basic income".

    Instead it's "austerity hardcore" or "light austerity" we're stuck choosing between.

    So while it's nice to debate whether we should have utopia-X or utopia-Y, it's immaterial to the political reality we currently find ourselves in.

    Excellent post nonetheless. I'm a fan of the UBI myself, with regulations and incentive schemes that promote job retraining, education, etc. Variants of this can be found across Scandinavia with wonderful results.

    1. Both basic income and JG proponents are trying to shift the Overton window in essentially the same direction. Which is why it is sad that they disagree so much.

  2. Hi Frances, just two comments:

    1. MMT doesn't think govt is unconstrained. It's constrained by inflation. Without including that in the discussion, their theories and policies don't make sense.

    2. Another great post would be: expanding both the minimum wage and the EITC (scope and quantity), compared to basic income and/or job guarantee.

    On the former, see here:

    In either case (MW+EITC, BI and/or JG), putting our eggs in multiple baskets seems sensible and prudent.

    1. Hi Steve,

      I took the inflation constraint as read. But that's why I find it surprising that Wray and others don't think JG could be inflationary. Tcherneva does - she points out in her JG vs basic income paper that both are potentially inflationary - but then argues that JG can be used as a countercyclical buffer, negating its inflationary impact. It is that argument that I am questioning as I don't think it is viable in practice.

      Minimum wage and EITC are indeed another potential way of achieving the same objective, which is offsetting the tendency of modern capitalism to ration work when profits are under pressure. Actually Neil Wilson's post (3spoken, in the links) was heading in this direction as he isn't really talking about a true JG.

    2. Thanks, that makes sense.

      Just to expand on expanding the EITC:

      1. For it to serve the stabilizer function, it needs to be indexed to some measure of unemployment, NGDP, or the like.

      2. It needs to be expanded in scope, so it fully embraces all classes of workers, not just families with children.

      3. The indexing should alter payment amounts, not eligibility, because that is easily administered through employers' payroll systems. I use Intuit Payroll, for instance, and it's simple to update tax tables/percentages there (if it's firm-specific, so Intuit hasn't already done it for me.)

      4. To increase salience -- people actually seeing more/less weekly income and thus spending more/less, sooner -- EITC payments should be tallied and delivered on weekly paychecks just like FICA. You'll never see much incentive-driven effect if it's delivered through the long-lagged opacity of annual tax returns. (This used to be available through "Advanced EITC" (quite the misnomer IMO), but that was eradicated for fiscal-year budget shenanigans in 2011, and in any case only about 1% of EITCers used it, because nobody knew about it).

      This approach seems like it is in or near the Overton window. Despite some "incidence" arguments against it (which 1. are largely addressed by a higher minimum wage, and 2. can actually be framed as arguments in its favor -- employer incentives to hire), I think the progressive community should coalesce here and push very, very hard.

    3. The UK already has minimum wage and EITC. My main problem is that it encourages employers, with the collusion of employees, to bid down wages in the expectation of state top-up. The minimum wage puts a floor under this, obviously - which is why it is essential as a complement to EITC - but it doesn't address the upside. The UK median wage is in secular decline: obviously correlation doesn't indicate causation, and there are many possible causes of this (some of which I've discussed in other posts), but it is at least a partial explanation, I think.

      However, the same would apply to any form of basic income. And to JG, because it in effect puts a floor under the price of labour. I don't know what we would do to address this, really. If employers and workers believe that the State will maintain income levels, they will inevitably collude to depress wages.

      The other obvious problem with any form of State counter-cyclical income support is political interference. We've seen this in the UK in the last three years. How the Chancellor can claim to have allowed automatic stabilisers "free play" when he has lowered the upper wage limits for tax credits, reduced eligibility and tightened conditions, I really don't know.

  3. Agree with most of what Frances said.

    MMT folks can be very dogmatic about their JG, even though no two MMT'ers seem to agree on the details of the JG. That's a huge turn off for me.

    Bear in mind that Minsky's ELR was originally devised to address the economic issues of the 60's, when unemployment was 4% and largely affected minorities and low-skilled workers. We face different problems today, with many skilled, older workers permanently displaced by free trade and austerity.

    I favor a JIG -- a New Deal type jobs program geared toward young and low skilled workers, coupled with a means-tested BIG. My BIG would be set right at the poverty level, while the jobs program would be a living wage a bit higher than the BIG, so people would still have an incentive to choose work.

    My JIG would provides a universal safety net, and the JIG work would be truly voluntary, whereas MMT advocates cutting off benefits (if benefits exist in the first place) to anyone who refuses to work. I can think of any number of legitimate reasons why I might not be willing or able to work in a JG program.

    Of course these programs do not have a prayer of happening in today's political environment. But we must be able to offer constructive proposals to fix the economy, otherwise what purpose do we serve ?

    1. Neil Wilson is on to something in Randy Wray's recent piece but it needs to be fleshed out a lot more. It also needs to be put in more layman terms.

      The JG is just so conservative compared to the BIG, but under current political conditions would be considered quite liberal. This is why you start with a JG and move to a BIG under Peter Cooper's JIG. It slowly moves the overton window. The BIG moves it in one fell swoop that will likely see a huge political backlash.

      However, MMT would dispute that you have to told what to do under a JG, you can choose any of the jobs available under the JG and change from one to another if you desire. Bill Mitchell has done a study on the types of jobs that could be available under a JG and they're wide ranging.

    2. Senexx Arturo

      I like Neil's idea. It neatly avoids the problem of the State defining what "work" is - which for me is the core problem with a JG as Mitchell defines it. That to my mind gives way, way too much power to bureaucrats, with obvious opportunities for corruption and abuse. You only have to look at how command economies treat artists and musicians whose output doesn't meet State criteria for what constitutes "art" or "music".

      I should add that the UK's Inland Revenue does define what it considers "work" - and I constantly struggle to fit what I do into their definitions. Human endeavour is far too creative, innovative and fast-moving for bureaucrats to keep up with it.

    3. Frances,

      It doesn't matter what you think 'work' is. It matters what your peers thing 'work' is and that what you are doing fulfils their criteria.

      Otherwise they will politically agitate to undermine the income support, or the job guarantee - as we have seen with state pensions, child benefit, housing benefit and other income support. Plus they may change their own behaviour in response to yours and withdraw their labour from production.

      So whether you like it or not what 'useful work' is that is sufficient to attract a social payment, is defined by the others in your society. You, as an individual, have no choice in the matter. You conform to the current requirements, or you will find the provision weakened and eventually eliminated by your peers who disagree with your choices. They are the majority and that carries the day in a democracy.

      And that means that in a pioneer influenced society like the US the required level of job guarantee work will be nearer breaking rocks than it would be here in the UK - where we might be able to squeeze in a bit of social artistic work and a bit of singing with a bit of luck.

      And that means that work being 'anything you want' - as required by any sort of citizens income - just isn't going to happen here in the UK or anywhere at the moment. The societies just aren't socially mature enough to stand for it.

      The psychology and sociology underlying this requirement for quid pro quo is starting to be understood. Watch the first ten minutes or so of the 'What Makes Us Human' Horizon programme on the Beeb for a taster.

    4. I'm not talking about what "my peers" think. I'm talking about what bureaucrats think. That is a very different matter. The fact is that bureaucratic institutions don't keep up with the reality of people's lives - whether their working lives or their family lives. That's why tax credits are so complex and so many mistakes are made. ANYTHING that involves bureaucrats deciding how people are, or should be, living and working is bound to be inadequate - out-of-date and inconsistent.

      So let's work for social maturity rather than passively accepting envy and jealousy as an inevitable part of our society. For that is what we are talking about.

  4. I wonder if this ties in to the discussion we had by email about the movement of people. Sort of the flip side or another perspective or something.

    1. Good point. All income protection programmes reduce the incentive for people to migrate.

    2. "All income protection programmes reduce the incentive for people to migrate". That's questionable.

      The cohort that migrates tends to be disprotionately made up of the ambitious and those with a need/desire to generate large amounts of free cash. For these people, the guarantee of a low domestic income is unlikely to change their mind.

      One potential difference between the two approaches is that a BI could feasibly be paid for a limited period (say, 2 to 3 years) to emigrants as a form of seed capital. The return on this investment would be that they either repatriate with valuable skills, or that they provide ongoing remittances.

      In contrast, a JG might actually encourage greater emigration - i.e. if your choice is a low-paid job digging ditches or working in a restaurant abroad, many might see the latter as more attractive,

    3. Frances and I had quite different views on the subject. Made for an interesting, even lively, exchange of some quite lengthy emails about it taking up the best part of a morning a month or so ago. Good times!

  5. I believe most of the real employment issues has to deal with employee disempowerment, and in said context, baseline income programs will tend to destroy the welfare of people slightly wealthier than the people such programs are intended to benefit.

    I believe the best first steps are aggressive actions taken against wage theft, and racial/gender discrimination (such discrimination is intended to lever lower wages for everyone). Couple that with a higher minimum wage ($15) and fewer loopholes, such as the exemptions for servers earning tips. Aggressively make civil suits more available for lower income people, reversing all that tort reform nonsense. Fast, effective resolution of employment violation will pull lots of cash out into the economy, and also drive interest in securing labor peace. More union powers, obviously. Lastly, put in place a system that penalizes underhousing in localities, since this is one of the traditional way of sucking every last dime out of an impoverished workforce. A UBI, for instance, will find its way into slumlord pockets sooner rather than later without comprehensive housing policies.

    When the underclass can defend themselves a bit better than they can now, then UBI, JIP, these things can really work...

  6. Do we mean "income guarantee" for the 'unemployed' or income guarantee regardless of employment status (i.e. checks from government for all)?

    1. Thanks Kevin, I should clarify that. We mean universal basic income guarantee. It would of course replace existing welfare benefits including state pensions (which are a form of basic income).

  7. Good article Frances and one that has inspired me to comment. There are many good things us humans can do to improve our lives but will not happen due to our monetary system which based on debt creation and resultant need to make profit.

    For instance Compassion (in care) and Beautification (in the environment) are two areas where the quality of all our lives can be improved immeasurably by JG or BI but will currently only get token attention because they little or no profit.

    We're at a mental crossroads here where the heart is asking big questions of the mind. We've walked this economic path for a long time now and it has taken many of us out of poverty but the way ahead looks cold, dark, stormy and ominous.

    Do we stay on the path because it's what we've done for 200+ years and we "trust" in it, or do we step off and walk across the uncharted tall grass fields where we see glimpses of sun, warmth and happiness on the horizon.

  8. Hi Frances,

    Malcolm Sawyer made some very similar criticisms to yours in 2003 in the Journal of Economic Issues.


  9. A lot of prices out there are set as they are because they're what the market will stand. If we go the UBI route won't those prices simply rise to reflect the fact the market will now stand rather more, thus wiping out any benefits of the UBI?
    What if all the low-paid workers in the water industry, say, or in food production and supply, down tools and decide to stay home watching tv now they've got their UBI? How are we going to feed ourselves and, er, find the water to wash the dishes after? There's a whole lot of low-paid jobs society depends on so what do we do when the workers don't want to do them? If we pay the food supply workers more to compensate, and the drawers of water too, then prices will necessarily go up which will absorb our basic income so after a bit the increased income won't buy us any more than the old income did. We'll be back to square one. I'd like to see a way around this but so far I've not thought of one that I'm comfortable with. It would be nice to think people will do some jobs from a sense of public duty in the same way it's assumed cathedrals were built in the Middle Ages but I don't want people working for free from a sense of social obligation while behind the scenes there's some gloating capitalist who's being enriched by their labours. I don't want to see exploitation.

  10. Although I agree that the MMT view that many people "need" to work and this is nonetheless not against the Dillow idea, I agree with the latter that Basic Income (or JB) may prove to be unaffordable for the state (especially in the EU as you rightly point).

    From my point of view, both JG and BI should be temporary measures (or measure since they are both saying the same story) to boost aggregate consumption which would in its turn boost private investment and create more jobs. This is the reason the Argentine solution presented by the MMTeers has functioned. Yet, like the QE example, it loses its power the more it is implemented and the more severe the problem becomes.

    BI's (or JG's) success and effect on inflation would depend on its size and structure. If it encompasses all the populace then it might be inflationary if it works in the helicopter money sense (i.e. people work and get a basic income in addition to their wages). If it is their only source of income then it shouldn't be inflationary, even if everyone is receiving it (I think it is rather similar to an economy in full capacity). My understanding is that both JG and BI would be aimed at the unemployed and not the general populace thus making them both temporary (in the sense that a person should theoretically not receive either throughout his life).

    One objection though: Although I do not like taking things to the extreme, what would happen in the occasion that people choose to live off the JG scheme (which would mean less hours of work for less money)? If 90% of the populace decides to do so then we would face severe deflation. Why bother work when I know that if everyone does so we would be able to live off just like when I was earning more?

    At the moment, I believe that both are rather non-applicable solutions as they stand. Nevertheless, if we are talking about a world like the one you mentioned in your Pieria article, where production is not severely affected by the workers' willingness to do work and people will receive an income throughout their lives, then it could really work.

    1. Re “unaffordable”, if JG employees get about the same as they would have when unemployed, there aren’t any big additional costs. Moreover, if JG employees produce something instead of producing nothing, we’re all better off. So the notion “unaffordable” evaporates.

      Re your second paragraph and your claim that JG suffers from diminishing returns – well, doesn’t everything?

      Re your fourth paragraph and the idea that everyone might choose to live on JG work, that wouldn’t happen if the JG wage is kept down – and most JG advocates believe in keeping the wage around the minimum wage or around unemployment benefit level.

    2. Yes from my point of view the JG would be getting something for nothing. Another issue though,(especially if JGeers were producing something) would be if they were taking the jobs of "normal" public sector workers (something Frances mentions in her post as well). The social consequences would be awkward to say the least.

      Diminishing returns is one thing and no effectiveness is another. That was what I was trying to say there although I may not have put it very well.

      Even if the JG wage is kept down, if by some strange twist of fate 90% of people would say "I'll live just on JG" then prices would adjust to that; and fast. In addition, this could also be gradual: as more people decide to live off JG (or BI for that matter) then we would witness a rather persistant deflation. Minimum wage is sufficient for many to be honest. Many are living with much less as well; and I am talking about developed countries not third world. Thus the scenario I pose, although strange culturally or socially (for now at least) is feasible for homo economicus.

    3. One thing that might happen if the list of "acceptable" jobs for a JG were too restrictive would be growth in the black economy. This would show itself as people choosing to remain on JG (or BI if that were available too as a lower-level safety net, as Wray has suggested recently) for extended periods of time. I suspect you would also get collusion of employers with this - as indeed we do with workfare schemes currently.

      Question though - and this is a serious one in the light of my previous post: if the future of work is that most people will not work "for a living", but will live comfortably on basic income and do lots of useful and productive things mostly for free, then is persistent deflation really that much of a problem? Deflation is natural in an abundant world, after all.

    4. That is why I specified that the world we live in makes a difference. If we live in a world that production is made by robots, machines, automatons or whatever they may be called then there will be no need for deflation to be experienced. The central planner (which reminds me that neoclassical macroeconomic economics would be very handy during those times - not an idea I particularly like!) would just print/distribute the income based on population or other aspects. Then, this would mean that either very low inflation or stable prices (depending on the population change). Those who wish to work would work and gain more (theoretically) and the rest would be living off some larger-than-basic permanent income.

      Yet as production is at our current era constrained more or less by the labour force (not demand though!)we might experience this deflationary pressures.

      The one thing that worries me is too much free time may lead to unwanted behaviours (fights, etc). Yet, if consumerism is deeply rooted in our conscience by then, we would all want to work to get more goods. We are still not thinking like rational agents (and I hope that we never will) but I fear that if we put too much value into consuming then we may feel like working is our "duty" and mission in life.

  11. If under JG the unemployed are to be allocated to public sector employers let’s say for free, why not also allocate such labour for free to private sector employers? I.e. if the marginal product of labour in the public sector is going to be zero, why not also make it zero in the private sector?

    If those two marginal products are not equalised, then that is prima facie a misallocation of resources because it means labour can be shifted from one sector to the other with an increase in GDP being the result.

    Moreover, the evidence from studies done around Europe ten or twenty years ago is that those who do temporary subsidised jobs in the private sector subsequently fare better in the labour market than those doing similar jobs in the public sector.

    Plus the private sector is better at employing relatively unskilled labour than the private sector (i.e. public sector jobs tend to be more skilled).

    1. I agree with you that temporary jobs in the private sector are better for the unemployed than public sector "workfare". But there is a serious moral hazard problem for private sector employers which could result in downwards pressure on all wages and growing State involvement in the private sector.

      When the state subsidises excess labour to work in the private sector it encourages firms to substitute JG workers for real employees, forces down wages for private sector employees to JG levels and discourages genuine private sector job creation. All forms of countercyclical subsidy are extremely difficult to eliminate in practice.

      I did consider this as an alternative to public sector JG, but it founders on the moral hazard problem.

      I don't really agree that there are hard and fast distinctions between "private sector" and "public sector" jobs. Public sector jobs in the UK at the moment tend to be more skilled because the unskilled ones have been outsourced to the private sector. All that shows is that skilled workers in the public sector are better able to defend their position than unskilled ones.

    2. Re “downwards pressure”, obviously that’s a danger, but my feeling is that that problem can be controlled by strictly limiting the NUMBER of JG people per employer. Moreover, the motivations of public sector employers aren’t VASTLY DIFFERENT to those of private sector employers: both aim to maximise output and minimise costs.

      Another element that would help control “downward pressure” is to limit the TIME for which JG person stays with a given employer. I.e. what needs to be avoided is an employer making LONG TERM use of a PRODUCTIVE employee at the taxpayers’ expense. Plus that time limit makes sense in that JG employees ought to be getting experience in different types of work because the mere fact that they’ve become unemployed is an indication their existing skills or experience may have become obsolete or are surplus to requirements.

    3. But this just adds more layers of state command & control to the private sector. How would the state decide what an acceptable number of JGers per firm was? How would it decide how long a JGer should stay with a firm? It would have nothing to do with economic need and everything to do with the beliefs of bureaucrats.

    4. Frances, My answer to your point about “more layers of state command” is that JG amounts to allocation of labour by the bureaucracy ANYWAY. I.e. the only argument is over how best to do that allocation.

      Let’s start at the beginning. In a perfectly functioning free market (a somewhat unrealistic concept, but never mind) there is no unemployment. Various inefficiencies arise, some imposed by political forces and some inherent to real world markets, so unemployment occurs. And one way of dealing with that is to allocate unemployed labour via some sort of bureaucratic system, like JG.

      As to what the maximum number of JG people per firm should be, I’d just plumb for some round number like 5%. That may be crude, but all bureaucracies work on the basis of simple rules. As to the maximum time with one firm, again I’d plumb for 2 months. But if someone wants to advocate 3 months, I wouldn’t raise any big objections.

  12. "After all, the private sector is financially constrained - which is why it doesn't create enough jobs for everyone - so the public sector should always be able to get the labour it needs"

    is the central fallacy of this entire discussion.

    In Britain the private sector is currently only investing about 45% of its profits, down from 70% in the 1970s. Hence the huge growth in corporate cash balances.

    1. Lack of (perceived) profitable investment opportunities is a financial constraint.

  13. Dear Frances, you have not correctly reported what I said in my piece. You say "In this post on Economonitor, Randall Wray claimed that basic income was inflationary, and produced evidence from Alaska in support of his argument." That is not true. My whole argument was that Alaska's Permanent Fund could NOT be used as evidence by BIG supporters because the payment is far to small (878 dollars a year) to qualify as a BIG. I DID NOT use data from Alaska to prove anything except that BIG proponents use a bait and switch if they try to use Alaska as evidence that BIG "works". I have problems with a number of the points you make about JG/ELR, but they have all been dealt with elsewhere. My (our) main point is this: Provide a job offer to anyone who wants to work, and use BIG (or other income maintenance) to deal with all the rest. That resolves most of the problems we have with BIG and should also resolve most of the problems you have with JG.

    1. Dear Randall,

      "But all else would not be constant if we paid “every man, woman, and child” in the US, say, $87,800 per year. Because we’d add just about two or three zeros to all prices and wages in the US—at least within a reasonably narrow margin of error. We’d simply raise the price of that life of leisure the BIG proponents promise, until we’d priced out the couch potatoes who are now willing to live on $878 a year in Alaska without work, but would want the same $87,800 that a BIG actually requires. (To be sure, it will get messier than that, but you get the idea. It amounts to little more than a quick devaluation of the currency. It could even be much, much worse than this if we all together decide to become couch potatoes to live out the BIG promised life of leisure–and then that $88k would buy just about nothin’.)"

      You did write that, yes??

      Apologies if I have misunderstood, but it sounds awfully like inflation to me.

      The idea of using JG and BIG together interests me, because they could be regarded as complementary. I'm glad you are thinking about that. I will probably write about it too - but it will be in the context of my other writing about the effects of automation on work as we know it.

    2. Dear Frances: What you attribute to me bears no relation to this second quote. I did not provide "evidence" from Alaska that BIG would be inflationary. I used a hypothetical in an argument that BIG would be inflationary. I argue that the "evidence" from Alaska sheds no light on BIG and that BIG proponents should not use "evidence" from Alaska to support their arguments about BIG.

    3. Dear Randall: Well, you did extrapolate from the Alaska experiment. But as it is not directly relevant, I am happy to remove the line about "evidence". However, you did say BIG was inflationary.

  14. Research in developing countries suggests that income support encourages entrepreneurship.

  15. "Tcherneva additionally suggests that JG wages should be variable to prevent the inflationary effects from debasing the currency. This is a nice idea in theory but I seriously question whether it could ever be implemented in practice. Cutting incomes that are already close to poverty level purely to support the currency is likely to be politically difficult and is certainly unacceptable from a humanitarian perspective."


    If either the BIG or JG proves to be inflationary, couldn't this be managed using an Automatic Payment Transaction tax?

    This could serve as the policy variable that is used purposefully to reduce the rate of spending and/or the supply of net financial assets.

    Imagine a world where BIG replaces the existing state welfare system and where the variable ATP replaces all taxation. With both in place, policymakers would have simple counteracting policy tools/variables to deal with deficiencies in effective aggregate demand and excess inflation. This could be rules based or automated depending on the state of the economic system.

    Also, it would incentivize the entire system to increase productive potential and efficiency in order to maintain the rate of spending without causing inflation. Otherwise the "penalty" for inflation would be a higher ATP rate. As a result, the basic income net of taxes would be linked to a productive mix of consumption and investment spending.

    This incentives and makes transitioning the economic system from a labor intensive to a mechanical/automated system feasible without risking mass poverty or declining living standards for the majority.

    1. I think we have to be a bit careful about tax incidence. Payment transaction taxes are typically incurred by intermediaries who pass them on to customers, employees and investors. They can therefore be highly regressive.

      There is however an argument for greater use of indirect taxes (such as VAT). The Mirrlees Report in the UK advises this.

    2. Thanks for the response.

      Could a combination of a VAT tax policy tool in conjunction with a Basic Income policy tool deal robustly with effective aggregate demand management and inflation?

      Is so, wouldn't this partially take care of the inflation argument that is used to counter basic income?

      It would could be framed as an "if-then" framework. If effective demand is too low (judged by the rate of inflation and productive capacity utilization), either reduce the VAT tax variable or increase the BIG dispensed amounts. If the system is full operating at a capacity where demand is causing inflation, then increase the VAT.

      I'd like to think that this would incentive a more efficient supply side, since this would lead to declining inflation which would result in either reduced VAT or increased BIG. This would create a feedback loop between supply side investment and effective demand.

    3. I admit I quite like the idea of flex VAT. That's pretty much what Mirrlees recommends - also suggests higher income tax rates at higher income levels to counter VAT's regressiveness. That fits well with BIG too.

    4. What about using land value taxation and nationalise badic utilities to prevent the JG or BI being taken by rentiers.

  16. Frances, that's a somewhat elastic use of the word 'constraint'.

    If capitalists have the funds to invest but choose not to, then there is no contraint. It's a choice.

    The private sector will be unwilling to 'outbid' the public sector for labour because it chooses not to invest. But the public sector returns from the same investment (say building a bridge) are greater than those for the private sector even under exactly the same terms, costs of funding, etc.

    Ths is because the public sector uniquely obtains a return from investment not available to the private sector in the form of higher tax revenues and lower welfare payments arising from all increased activity.

    The solution to this apparent conundrum is neither BIG nor JG, but public sector investment.

    1. I'm certainly not disagreeing with you about the need for public sector investment. When the private sector is unwilling to invest, the public sector must step in. But the private sector would regard lack of investment opportunities as a financial constraint.

  17. Would the BIG be completely unconditional or could it work with some basic means testing? If it was only conditional on citizenship, then I can think of a few problems with it:

    1) Parents. If every citizen starts getting the income from the time they're born, then that could create an incentive for people to have more babies. So a classic "welfare mother" scenario, which as a liberal I'm not too bothered about but it strikes me as a "loophole" that could be exploited politically by opponents. Also, while in the short run more babies is good for the for the country, in the long run it could prove unsustainable for the planet.

    2) Waste. Isn't a BIG "wasted" on people who don't need the income to live, i.e. high income workers and the rich? It's also inefficient for demand, as the wealthy don't spend as much as the poor.

    3) Taxes. Everyone getting free money sounds like a good idea, but it has all to come from somewhere and I imagine higher taxes would be needed. What are the best taxes to raise? And what bad incentives could it create? If we "soak the rich" to pay for it, what happens when the rich are not incentivized to make more money or move away?

    4) State support. Would a BIG replace all forms of state support, or could it work alongside some public services? I'm thinking here of the NHS in particular, I don't think we should give up on a system that has, on the whole, worked so well and it's so cost effective, specially when compared to systems that rely on private insurance i.e. the U.S. I read a paper recently by a bunch of academics on the BIG, and one contributor worried about precisely this; she thought that a BIG, in place as the sole state support, could still leave many people disadvantaged and maintain (or even create) high levels of inequality.

    1. Juan, re your points:

      1) Despite the media myth of welfare queens, there is no evidence that people have more children as mini revenue streams. There is some evidence that council housing priorities (i.e. families first) cause some couples to accelerate births, but no evidence that this results in a aggregate increase in eventual family size.

      2) No more than a personal tax allowance is wasted on the rich. In practice, a basic income for a high-earner is simply offset by tax.

      3) The money isn't free. It is a quid pro quo for the propertyless obeying the state and (for example) not looting the rich. If the state/capitalism cannot provide jobs, then it is obliged to provide some sort of dole or else suspend democracy. The argument for a basic income versus "welfare" is ultimately a pragmatic and moral one - i.e. it is cheaper and less pyschologically damaging to provide an unconditional income than to demonise "scroungers" and waste money through a coercive bureaucracy.

      4) The clue is in the use of the word "basic". The BI would be supplemented by other services on an as-needed basis, e.g. housing, disability, health etc.

    2. I agree with all your points, I was basically testing the soundness of the thing by throwing out a few obvious arguments.

  18. Wish I knew what JG is (and JB).

    I'll vote for a 2 stream economy:
    1) Basic Income for all those that prefer listening to music and couch sitting over lots of money.
    2) A go-getters economy for all those who want to use their talents, be bossy, and get a big income.

    As people shift their zeitgeist, as they will always do, we can emphasise one type over the other

  19. Frances, many thanks for this - although I agree with MMT on a lot of things, I've always found their backing of a jobs guarantee as opposed to basic income a bit mysterious on a theoretical (as opposed to political) level. Now I think I understand it better. And the politics too.

    It highlighted, though, a problem MMTers might be having in gaining wider discussion - most claim that it is a descriptive, not a prescriptive theory. The Job Guarantee however, is not only prescriptive on the macroeconomic level but in practice, as you point out, could be used (and felt) in a highly prescriptive way on the individual level. What I didn't realise was quite how much.

    No, the Alaska dividend doesn't count as an example of a 'basic' income, but like child benefit in this country and experiments with larger payments in Canada India and Africa, it is a good example of how a universal payment system can run.

    Yes, we need better infrastructure which perhaps can best be organised on a larger scale, and we need it consistently maintained and improved - both bricks and mortar projects and services like healthcare and education. What I don't understand about MMT's version of the jobs guarantee, is the lack of linking times when this was happening (like the 1960s) with general private prosperity (despite/because of far higher taxes on corporate profits). This surely proves the state wouldn't really have to do the kind of constant tinkering with wages and positions proposed - what a horror show if it did. Private business flourishes when the state looks after (whether through directly organising or commissioning) roads and other transport, education, healthcare, etc. MMTer Michael Hudson makes this point often, but it doesn't seem acknowledged by Wray's notion of the jobs guarantee.

    What it boils down to is whom you trust to organise human activity - the state, the market, or more self-defined humans, whether individuals or groups. Perhaps a mixture of all three is needed, depending on what it is. I don't want to get into that argument right now. What I see, with the help of MMT and other thinking, is a mass transfer of the control over resources from people who have little to begin with, towards those who have more than they could even know about in detail, much less usefully manage.

    People are dying for lack, not of ability to work, skills, or natural resources around them, but a lack of money to mobilise both their consumption and labour. To me that means we had better get more money to the people, whatever the possible consequences in theory - and the most efficient way to do that would be an unconditional basic income. Then we can all think about what actually needs doing, and what kind of world we want to live in, what needs to be organised on a state level, and what more locally, what can be usefully the object of private enterprise and what cannot.

    Although it's common amongst economist supporters to say 'Great idea, but it'll never happen', I can only wonder why UBI seems so impossible when practically speaking it could be set up nationally within a month. Why are the last 30 years of benefit reforms, involving more conditions, ever-increasing complexity (Universal Credit only pretends to solve this), and now the constant threat of sanctions, with ever more obvious corruption on the part of the private agencies providing the Work Programme, to say nothing of massive spends to change and tinker with these systems - considered somehow more 'realistic'? Alright, most politicians don't get it yet - but rather than shrugging about impossibility, why not demand it? Or at least ask the EU to look into it here:

    1. Brilliant comment.

      We have no shortage of goods, and no shortage of useful and productive things to do. And actually we don't have a shortage of money either. We just have problems distributing all these things equitably (I hate the word "fairly").

    2. Brilliant comment.

      We don't have scarcity of jobs, and we don't have scarcity of useful and productive things to do - although they might not be what we think of as "jobs". And we don't actually have scarcity of money, either. But we do have real problems ensuring equitable distribution of all these things (I hate the word "fair").

  20. Agreed, qualms about the equity/fairness angle. I agree totally with that approach from a personal moral perspective, but it's not a good rhetorical lever, and that may be because it's not really the crux. The 'Pubs are right (and we agree with them): raising all boats is the win-win thing.

    Rather, to say we have problems ensuring *an (economically) efficient* distribution. It's required to make the pie bigger.

    Okun is utterly wrong. The supposed tradeoff between equity and efficiency is a chimera. (Though of course local instances do exist.)

    No country has ever entered the modern-and-prosperous club without institutions to redistribute income/wealth and achieve/maintain that distribution. Not one, ever. That's pretty strong evidence of...something...

    That (re)distribution seems to be a necessary (but of course not sufficient) condition for growing prosperity. China's working hard to move there, for instance. (And even that rather conservative shop, The Economist, is constantly pushing them in that direction.)

    Ed Lambert's work, by the way, seems like it might explain this requirement coherently.

    When Labor Share does not rise in the Growth Model

  21. From my point of view it is the wrong time to be arguing about basic income guarantees at a time when we are faced with such a large and daunting backlog of unsolved global problems, and such a massive shortfall in the public investment of resources and labor power. As far as I'm concerned, we need something like a global war effort to re-engineer the systemic social breakdown and planetary debacle we have set in motion. If we assess things from the standpoint of the work that needs to be done, rather from the standpoint of the level of work opportunities that private enterprise in its indolent and disorganized hustling deigns to create, then we easily see that there is more than enough labor need warrant a job for each and every healthy, adult human being on this planet.

    The fact that capitalism won't generate sufficient employment opportunities to provide a job for everyone, or organize its own income delivery systems in such a way as to provide fair and decent incomes for everyone it does hire, is a given. That has always been a routine deficiency of capitalism. Capitalism is to portion of our economy based on the private ownership of, and decision making over, the means of production. Modern economies throughout the past centuries have only managed to approach full employment and broad, shared prosperity when their capitalist sectors have been supplemented by vibrant and expansive public enterprise sectors.

    Public enterprise is needed not just to man and operate social services, defense systems and justice systems, Interestingly, but is required to set broad strategic economic directions and fund the research and development of core technologies and infrastructural innovations. Marian Mazzucato's new book The Entrepreneurial State compelling documents the dominant state roles in most of the innovations that have occurred in our lifetimes.

    A basic income plan might seem compassionate, but it is the path to social division, dependency, inequality and a caste system. Every politically sustainable and enduringly just society must be based on a social contract of some kind where one one is required to exchange some kind of work in exchange for a share of the work output produced by others.

  22. I think by now we all accept that 'joblessness' is extremely costly to society and can lead to extreme examples of some of the worst and darkest moments in human history. While welfare has its place and taxes play a vital role in the world we live in today, providing jobs to those who are 1) willing and 2) able that maintain/increase human dignity should be a priority if we are to increase the standard of living and quality of life for all.

    I believe that in the world of today governments own the currency and impose the money-creating mechanic and have laws which they enforce with extreme force to maintain control of what government wants to control, this world requires a hybrid mix of private-public cooperation to flourish. From post WWII New Zealand (up to 1984) to Singapore of today I see examples of what this kind of cooperation can produce.

  23. One problem with the JG idea is reality: it's been tried, many times at various scales in various countries, and almost universally found to be far from a panacea due to collateral damage. The JG proponents response to that seems to be either that (1) we're theoreticians and reality is there to be ignored (2) previous programmes were run by idiots and we "just" need to get an army of geniuses to run them and it will work smoothly. Of course you might have trouble getting a JG proponent to actually volunteer to be the social worker who runs a JG programme on the ground...

    One of the collateral damage is people who have negative productivity. An example that I experienced first hand is a long term unemployed guy who was allocated by the local administrator of a then fashionable JG programme to help my school's admin person. The guy, while jovial and obedient, was too thick to do any useful work but it slowed down the admin person who needed to constantly monitor him and keep him artificially busy, so had less time to do her usual work, that is 1 worker + 1 JG staffer ends up with a total productivity of say 0.7 worker due to the productive worker having to babysit the JG "worker" and possibly undo the damage they leave behind. It wasn't even that the JG administrator badly allocated, the guy was genuinely very low IQ and had a very low ability to self-organise, and not muscular either, so would have been equally useless for manual work. Frankly there's probably no job in a modern society this guy could do with productivity net of supervision above zero. Whatever we do to help these people has to be done on compassionate grounds and cannot be done based on the basis that useful output can be extracted from them. An adjacent category is people who find themselves in unemployment programmes because they have mental health etc problems and for some reason or other fell off the disability support system (e.g. no support for this particular condition, being in denial of the illness, etc).

    In addition to sadly unproductive people, you will also have a proportion of people who will be motivated to do as little work as possible, for ideological or character reasons, but join the JG to collect the money, and switch employers every time they hit a boss who want them to work they'll just switch until they can achieve non-work (why work when the job is guaranteed anyway?). But if the job "guarantee" is to be a guarantee it has to take everyone, otherwise if it can eliminate people who are unproductive, we're back to square one: the unemployed are those who can't hold a "guaranteed" job. The only other way you could fix that is running the workhouses like prisons which is also very costly in supervisory staff and politically dodgy.

    If you think that a couple of percent of the full workforce fall into these categories, and you have 5-10% unemployment, you'll find that the unwilling and unable to work will make a sizeable proportion of a typical JG work gang, possibly spoiling it for the actual people for whom the system would be adapted, or else you need an army of supervisory staff, and where do you stop, is it OK to allocate say 5% of your workforce, away from directly productive jobs, to police a JG programme?

    1. Cig, That’s a huge number of words you’ve used to set out a problem with a very simple solution. The solution is to let employers sack “negative productivity” or totally useless JG employees.

  24. It is also best to explore different options to counter an unstable economy.

  25. Wow! I am impressed by the thoroughness of your critique of Wray and his MMT minions. Your criticisms are well stated and convincing, for the most part, but I think you can avoid going to this depth of analysis just be realizing that Wray is paid for his efforts promoting the chimera of full-employment by the institute for which he works, the Institute of Full-Employment and Price Stability. You may think this is a personal attack against Wray, but I believe it is just full-disclosure. How much were you paid to spend all this time working through the dynamics of basic income and job guarantee programs? Probably nothing, but Wray is on a payroll, and probably a handsome one at that. This is not ad hominem, just heads-up ball.

    Also, I agree with you that JG would be just as inflationary as BIG, given the assumptions of a cyclical economy which Wray uses. But these assumptions are fallacious. When the ideas of Frederick Soddy and Irving Fisher -- along the lines of Kucinich's proposed legislations for American Monetary Reform, or Michael Kumhof's "Chicago Plan Revisited" -- are implemented along with the establishment of a universal unconditional Basic Income Guarantee (and a single-bracket tax-rate on INCOME ALONE (without reporting to the government of how individuals spend their money, since no deductions are possible), then the US Treasury can carry out its mandate to insure price stability, without consideration of full-employment, on a scientific basis, and the "business cycles" currently destroying the economy will be eliminated. Prices will be stable from the beginning to the end of a century, and with the BIG, everyone will have some measure of purchasing power beyond the bare minimum.

    Francis L. Goodwins

  26. Good and novel arguments. I think you missed the biggest and most obvious one in favour of UBI:

    If JG's become effectively useless make work programs then you are wasting the "employee's" time, and you are likely making him tired outside of work hours. If he spent 1 hour per week looking for a needed job instead, or gardening, or educating himself, or dreaming of a startup business or entertainment/art project, he would be contributing more to society than through a make work program.

    It doesn't matter if he spends 8 hours watching tv per day if the alternative is digging an equally useless hole in the ground. At least with TV watching, he would not require an extra 2-3 hours of travel and rest.