Is Basic Income Basically Unproductive?

Under a Job Guarantee GDP will always be higher and not just because you get paid more

The expenditure calculation of Gross Domestic Product (GDP) consists of the sum of Gross Private Consumption Expenditure ‘C’, Government Purchases, Gross Private Investment ‘I’, and Net Exports (X - M).

GDP = C + I + G + (X - M)

G is government purchases, but it excludes all transfer payments — since they don’t add to production they just move it around. That means it would exclude any Basic Income payment.

However a Job Guarantee is a job and the government is purchasing output from the individual with the Job Guarantee Wage. In this case the payment does add to GDP and is included in G.

If we said that a government payment of 100 units created consumption of 1000 units, investment of 100 units, and net exports of 100 units then a basic income GDP would be:

GDP = 1000 + 100 + 0 + 100 = 1200

whereas a Job Guarantee, where the payment is a wage in return for output, would be:

GDP = 1000 + 100 + 100 + 100 = 1300

So for the UK, the Job Guarantee wage of £375 per week would add that amount additionally to GDP each week for every person on it, whereas an equivalent £375 Basic Income payment would add precisely nothing in addition. (Not that anybody is proposing a UK basic income at the living wage level. Even amounts as low as £80 per week are spoken of in hushed tones to avoid scaring the horses).

You get a greater GDP under a Job Guarantee because people perform a service or produce output to get the wage. Just like any other job.

The Job Guarantee — a living wage, larger GDP, less tax to pay. Why settle for anything less?


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