The Whole Point

By | July 29, 2018

The problem with the “economist hat” is that it makes otherwise smart people very, very stupid.

If I put my economist’s hat on, there is an incentive problem with the basic income plans, unless one is very very careful. And that incentive problem is that for many people the basic income looks better than working in low-pay jobs or perhaps in any jobs.

Yes, that is the whole point! UBI is effectively a price floor, in economic terms, as I am sure she knows since she is in fact an economist. A binding price floor imposed by UBI would definitely change the labor market, though economists are ideologically restricted from understanding the full scope of changes over time — just that minimum wage is bad, mmmkay?

Economics causes brain damage, alas. Avoiding technical jargon for now because I don’t have time to make a million links to Wikipedia, but over time the entire labor market will shift. The same jobs (will mostly) still get done, effective redistribution will occur, and the real consequence is that the very rich and some of the petite bourgeoisie will be somewhat less rich.

This is why economic ideology doesn’t wish to allow for UBI, etc.

The Australian minimum wage is currently $18.93 an hour and yet office building still get cleaned, they still have fast food restaurants, and somehow work still gets done.

(If you don’t get my point, a min. wage and UBI are both similar price floors. But a UBI could be the floor below the floor.)

I am not sure that UBI is the right solution. A job guarantee would probably be better, with a combination of the Marshall Plan focused internally with the best parts of the space race because we’re going to need all that and more to combat climate change.

But I do know that modern economics is capable of telling us very little useful about any of this.