Can Basic Income and Job Guarantees Deliver on Their Promises?

Abstract

Proponents of income and job guarantee schemes agree that public policy should provide some form of universal guarantees to all citizens. It is the nature of these guarantees that represents the sharp division in policy recommendations.

Income guarantee supporters champion the provision of an adequate standard of living by affording sufficient resources to all member of society. They argue that this objective can be achieved by guaranteeing a minimum income to all (a basic income guarantee, or BIG). Job creation proponents want to use an Employer of Last Resort (ELR) program to guarantee access to a job that could provide a minimum income to the economically active population. The key distinction between the two is that basic income advocates want to decouple the income-work relationship observed in modern economies, on the basis that economic justice and freedom require that resources be provided to individuals without the compulsion to work. Job guarantee supporters, on the other hand, want to address the unemployment problem, arguing that there are many people who want to work but cannot find employment.

This paper advances two arguments: first, that basic income guarantees are unlikely to achieve the objectives of alleviating poverty, income inequality, or poor standards of living, because the proposals have an inherent highly inflationary bias that would have disastrous consequences for the currency; second, that certain direct job creation programs such as ELR achieve most of the common goals that income and job guarantee supporters share, without introducing the crucial problem of inflation. ELR programs can be designed so that they are not coercive or demeaning. Neither should they be means tested. An ELR program is neither slavery nor unemployment by another name.

We agree with BIG proponents that basic income is needed for those who are too young, old, or ill to work and that a less generous form of BIG would not necessarily cause high inflation. However, we believe that the BIG idea of guaranteeing a decent standard of living by mailing a check sufficient to purchase that standard of living to all Americans will cause high inflation, if not hyperinflation, and reduce the incentive to work.

Keywords: basic income guarantee, BIG, employer of last resort, ELR, job guarantees, job creation programs