Kanoodling with the Enemy
A UBI guy visits a Job Guarantee conference
A little while ago, I wrote an article warning progressive politicians and thinkers that their push for a Federal Job Guarantee (JG), specifically as an alternative to Universal Basic Income (UBI, basic income), was misguided and dangerous. My main points were that:
- JG alone would be a bureaucratic boondoggle that hurt the progressive wing’s credibility for years.
- JG alone wouldn’t address the fundamental human right of choice and freedom that UBI does; a JG job, when the alternative is being evicted or going hungry, is still wage slavery just as much as a private labor market job. UBI is unconditional and enough to guard people against extreme poverty.
- The two policies would actually complement each other quite nicely, symbiotically enhancing their strengths and reducing their costs, boosting both economic productivity and human freedoms better than the sum of their parts. They shouldn’t be proposed as diametrically opposing ideas.
- If only one is put in place, UBI must have higher priority. UBI provides a human right in the ability to choose freely. JG enhances that right, but only if it’s already in place through a UBI, by providing more and better choices from which to choose.
I originally wrote the piece as a bit of policy counsel for Alexandria Ocasio-Cortez and her campaign staff, but I decided that it would be a useful message for everyone to see and turned it into an open letter. I had been lucky enough to meet Alexandria early on in her campaign, before anybody knew who she was, when I had a random free night and agreed to one of those requests to do phone banking for a local candidate. After the calls, we talked at a local bar, and boy did she impress me then. When I brought up UBI, as I always do, she was well-considered on the subject as well as many others, and her vision for society aligned closely with my own. From then on, I was a staunch supporter of this bartender from the Bronx.
I was surprised, though, when her star began to rise in the political sky and her public messaging started falling more in line with the JG messaging of the day. She wasn’t mentioning UBI directly in public speaking, but rather only hinting at similar values here and there in her word choice. If Ocasio-Cortez, who had spoken so well on UBI in private, didn’t feel comfortable pushing for it publicly yet, it made me realize that we in the UBI movement still have quite a ways to go as advocates in making the ground fertile for politicians to tread.
I’m happy to acknowledge that now that the midterm elections have passed, progress seems to have been made in that vein, and Alexandria and others have started mentioning the policy by name occasionally, and it even appears as a potential policy option in the Green New Deal she and the new class of badass elected progressives are pushing. Here’s hoping it starts to take a more prominent role in their thinking and starts receiving more than just a mention.
The smart politicians like Ocasio-Cortez have been doing it right, leaving the door open to UBI despite the dismissive, sometimes dogmatic and misinformed, attitudes of some of the influential and oversure economists and policy wonks giving them counsel. Bernie, too, has remained sympathetic and open, even mentioning it here and there, but he is very understandably maintaining his focus and energy on Medicare for All.
Other politicians like Kamala Harris and Corey Booker have started promoting almost-UBI policies that totally miss the essence and undercut the power of the idea, essentially amounting to an expansion of current programs like EITC, but at least they’re starting to try. Obama has been coming around, too, bringing UBI up in his fantastic Nelson Mandela speech this year. Progressive powerhouse Nina Turner had a well-considered answer for me at a public panel when the idea had been new to her a year before. Hillary claimed in her new book that she had considered it seriously. I think it’s a shame she didn’t consider it a little harder.
Politicians across the board are starting to tiptoe around the issue, and addressing it in their own ways. Not all have been in favor. I love Joe Biden (he’s a good person and a true civil servant in my estimation, not to mention charming and downright adorable at times), but he lost me when he listened a bit too hard to his economic advisors and came out surprisingly uninformedly against UBI. He’s stuck on this idea of the dignity of labor, and that it can only be found in the work force. In his old school, paradoxical, and still quite common worldview, people can’t be given “money for nothing,” because then they won’t work, and so they’ll be deprived of their dignity.
Since when, I wonder, has dignity been something extrinsically bestowed rather than internally upheld? Where’s the dignity in working if there’s a gun to your head? Dignity, the way I see it, is found only in voluntary work, which can only exist in the labor market for those free from daily existential fear. I won’t say it’s impossible, but Mr. Biden will have to do some serious reconsidering and make a pretty big apology to get back on the train. I am appreciative of all he’s done, but I think it’s time for him to step out of the way of progress.
Speaking of progress, a new wave of economists, politicians, and philanthropic foundations, thanks to groundbreaking studies like those done by the charitable foundation GiveDirectly, are either excitedly or begrudgingly admitting that direct cash transfers are often the most effective form of aid, as opposed to in-kind assistance or services. It’s only a matter of time before these policy influencers are thinking more directly in terms of UBI as the primary mechanism for delivering that cash. Every day, more people are seeing the light.
Into the Lion’s Den
At the time of writing my open letter, a troubling and sort of baffling rivalry had built up between the proponents of UBI and JG on line, with bitter 140-character character attacks and disingenuous dismissals going back and forth between academics, wonks, and supporters on both sides. I’ll admit that the words “job” and “guarantee” in the same sentence would put me on edge at that time, and that I had to find a more zen state of mind in order to resist joining in on the never-ending and self-righteous clapbacks and ownings that social media nurtures and neurochemically rewards. Articles were everywhere about how one or the other was a naive and awful idea, and how the author’s preference was the only true way forward. The comments sections and the twitter spats were where it got even uglier.
I wondered why the hell this was happening. After all, these are groups with very similar sets of goals:
1) Ensure everyone the ability to live in dignity.
2) Allow every citizen an actual fair shot at social mobility.
3) Make the labor market more of a free one by the introduction of competition and choice, in the form of more options for the ones providing the labor.
4) Spur more economic activity around societal values, rather than just shareholder profits. (UBI achieves this by granting every citizen the safety, and thereby risk tolerance, to pursue their own entrepreneurial aims. JG achieves it by financing ambitious and needed sectors in the economy that private markets wouldn’t find profitable enough or worth the risk, like green energy and infrastructure.)
So I went to a conference in NYC for Modern Monetary Theory (MMT), because, for some reason, JG had become the policy of choice for MMT economists and advocates. In fact, JG and MMT were and still are often treated as almost synonymous; you could rarely encounter one without the other.
What the hell is Modern Monetary Theory?
As a brief introduction to the concept, MMT is a new understanding of how our monetary system actually works since going off the gold standard to fiat currency in the 70s. It’s a little confusing and counterintuitive at first, but its implications are fairly profound. Boiled down to the simplest level, MMT is the understanding that our government, as the sole issuer of American dollars that are backed only by trust in our institutions, rather than by any defined material good like gold, is essentially like the bank in the Monopoly board game. All of the money in play in the game was at some point distributed (essentially “created”) by the bank at will. The money can never run out, because the bank can always create more. The actual paper notes are just to simplify transactions. It’s literally in the rules that when the bank has distributed all of the Monopoly bucks that the game comes with, the person playing the role of the bank can just write any dollar amount on a piece of paper and it counts as valid Monopoly currency.
What this means in real world practice is that the government doesn’t technically have to raise money through taxes before funding anything (or even at all in truth), and that taxation has a whole different purpose than financing. Because flooding the economy with endless cash, while possible, would lead to rampant inflation, the government’s fiscal responsibility is then to control the amount of money in circulation so that it appropriately reflects the amount of goods and services available to be bought by those dollars. We could pay off our social security debts any time we want, in theory, by simply creating the dollars, but if we don’t have the needed extra infrastructure and goods and services for our retirees to purchase, it would be financially irresponsible to do so. Those extra dollars would just cause inflation, diluting the spending power of the money everyone has.
When the government spends, it is literally creating money. Poof! When it taxes, it is literally erasing money from circulation. It doesn’t go into a government account somewhere. It is just deleted, subtracted from the national debt.
Under this new understanding, national debt is not bad, because to erase the national debt would be to erase the money in circulation (i.e. public assets). It would be like the Monopoly bank calling all the money back in the game; it would just end the game. Also under this understanding, deficits aren’t bad; they are necessary. A budget surplus would, in fact, would most likely be bad, because it would be pulling money away from the public and restricting economic activity. The real trick is to set debts and deficits at the optimal level, neither too high nor too low. Stephanie Kelton has a great video explaining MMT, the first one that really made it click for me, although she has a lot of work to do on her understanding of UBI.
(Note: It was Stephanie’s video that introduced me to the Monopoly money analogy, but in it she ironically failed to notice that part of the way Monopoly manages to function is through unconditionally distributing an equal amount of money to all players for passing Go, which is pretty damn analogous to UBI. Without that simple mechanism, the game would quickly grind to a halt. Similarly, UBI would go a long way in lubricating and catalyzing our economy, and would allow everyone the guaranteed ability to play the game.)
The basic role of taxation, then, is not to raise money, but rather to appropriately regulate the amount of money in circulation in order to prevent inflation. Furthermore, most MMTers believe, and I agree, that it’s important to implement that taxation progressively (i.e. mostly from the wealthy) in order to combat inequality and stimulate both spending and social health.
For the layperson, though, and for any politician seeking to communicate to the public, we shouldn’t expect that kind of semantic accuracy about fiscal mumbo jumbo. It’s not even that important, if you ask me, for people to stop thinking of policies as being funded by taxes, and it isn’t necessary for them to stop thinking of expenses that are unfunded by taxes as a net loss. In the latter case, we need only be able to describe why we should see that net loss as a temporary investment, and why we expect that it will produce more goods, services, and value in the long run. Then (presto!) we won’t need to teach every American the ins and outs of MMT and totally change their understanding of economics before we can attempt to pass any bold legislation.
MMT Does not Equal JG
So why does the realization that our economy runs on Monopoly money and communal trust necessarily lead one to support JG and only JG? It beats the hell out of me. MMT is about how fiat currency works, not about who should provide jobs to whom. It’s simply a way to better understand why and how we could actually finance something like a JG program, as well as the potential consequences of doing so. It plays the same role for a UBI. Or Social Security. Or the financing of an intergalactic space force. Or just a big old tax cut for the wealthy. In every case, the government creates the money out of thin air, levies taxes on the back end (or doesn’t), and we deal with the consequences, good or bad, of the resultant amount of money, goods, and services in our economy.
That’s why I went to the conference determined to try and make peace and understanding with these apparent ideological foes. I had to bite my tongue several times over that weekend, and a couple MMT/JG people were operating at a snark/condescension level 10, I guess as a defense mechanism to my being a dreaded UBI guy, but all in all I was pleased to find the vast majority of them quite reasonable and willing to be aligned with UBI once I explained to them what it really meant and laid out a proposal for a way forward between the two policies. You see, the mainstream media had left them with a ridiculous understanding of UBI that I would also never support, and it had left me and my UBI friends with a limited comprehension of JG that the JGers themselves would find inferior to their actual stances.
For example, through these conversations, I found many JG proponents eager to expand the definition of work to try and provide real freedom of choice to the public. That was novel and refreshing to me. And they were often open to the idea that UBI could serve this very function elegantly and spare bureaucracies like the one they promote the burden of defining and monitoring all valuable forms of work that people might pursue. Many were amenable to a combination of the two policies, each serving their proper functions.
I also gained a new appreciation for the merits in the JG idea myself. I mean, I would personally refrain from calling it a guarantee, because that to me sounds naive, but I now see investing in ambitious and social-values-driven jobs projects like infrastructure and green energy, and making those jobs desirable and competitive up to a minimum standard, as something we’d probably be foolish not to pursue as well as UBI, either simultaneously or soon after.
Hey, they ain’t so scary
So that’s what I learned in a nutshell. UBI and JG proponents can be pals. Mostly, I found these conversations very informative and encouraging. It felt like progress. Mission accomplished. May these movements of not-so-different-after-all progressives unite and proceed forward as allies as we reimagine the foundations of our human rights policy and the role of government in society.
I’m keeping this piece relatively general and short, but if you want to dive deeper and more specifically into my major takeaways from the conference and the many conversations I had with the attendees, organizers, and JG thought leaders therein, please click here.
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Our Grand Experiment
If you’re interested in helping Deia and me build the grassroots movement for UBI in America with our ambitious socio-economic experiment and documentary film series BOOTSTRAPS, please check out the work that Deia and I are doing, give what you can to the production fund (managed by Kartemquin Films), and invite others to do the same. All contributions are tax deductible.
A few of my favorite UBI articles by others:
On the Basics of Why UBI — Scott Santens
On How to Pay for UBI — Scott Santens
An Invaluable FAQ for All of Your UBI Questions — Scott Santens
On the Rich History of UBI — Karl Widerquist