Mainstream economists are now talking about a guaranteed basic income and\or a job guarantee program as a way to avoid dealing with the systemic stupidity and corruption of our whole debt finance-based economic system.
Creating a universal basic income as a means of addressing unemployment and productivity problems has become the topic du-jour as workers become increasingly separated from the means of production, with even modest salaries failing to cover the cost of living.
Consequently, Australian taxpayers have had to take on a greater burden of debt to support themselves.
A universal basic income works as a partial or complete substitute for the existing welfare or social security system, in which every adult citizen is paid a flat rate fee by the Government - regardless of whether they are already working, and regardless of their age, ability, gender, health status or skill level.
Sounds great! Free money for single mums and guys like this who hang around toilet blocks in parks:
Leading economists claim creating a universal basic income is throwing money at a problem in lieu of actual solutions.
Besides which, from a cost of living standpoint, it could lead to inflation by increasing demand for goods and services.
Well yes, if you just print more money without producing anything, I guess it would. Thanks for the pro-tip, "leading economists"!
So, they say, let's do this instead:
A job guarantee program would act as a "Buffer Stock Mechanism" - a term coined by Australian economist Bill Mitchell, Professor of Economics at the University of Newcastle - to describe stabilising the cost of labour.
A job guarantee program would make the public sector the employer of last resort to provide jobs for the unemployed population in areas of the economy and community where demands are not being met: aged care, child care, education, retail and small business etc.
OK, now we're putting Afghani toilet loiterers in child care centres and making it impossible to fire them. Sounds legit.
A job guarantee program would connect income with things people - and communities - need and allow them to be part of the social contract, to participate in transforming their communities and their livelihood.
But by throwing its hands up, claiming 'we can't afford it', the Government is tacitly admitting to a broad sector of the population that there's little if anything it can do to help increase their earning potential.
Australia's unemployment rate sits around 5.6 per cent.
[Professor Mitchell] estimates a job guarantee program would cost Australia $22 billion a year (net) to employ around 595,000 unemployed people. It would also be taxed at the same rate as income.
Something tells me we the Budget will not be returning to surplus any time soon.
"This would bring the official unemployment rate down to 2 per cent of the available labour force and eliminate hidden unemployment," the Professor wrote recently.
The problem with these proposals is that they don't address the money question. Money doesn't grow on trees and isn't issued by governments; it grows in bank accounts by a process of financial chicanery controlled by the private banking system for its own profit and power.
Essentially, when banks are given this power, they are given de facto ownership of everything. We can only harness our productive capacity with their consent and by inefficiently renting the means to do so (money) from them. We then have to take out more loans on the next business cycle to cover the interest from the previous one, which means that for all this accumulating debt not to completely strangle the economy, everyone, from government to business to households has to be borrowing more and more money all the time.
It's why we pay a third of our income in taxes, why we spend our lives paying off mortgages and living off credit cards, why productive jobs get outsourced to low-wage countries, and why you'll probably never be able to retire.
So you're an employer. You borrow money to employ more workers to make commodities for the domestic market. How are your workers or anyone else's going to buy your product when you disburse only a fraction, however large it may hypothetically be, of your revenue in wages and salaries? Amount A (=incomes generated through work) cannot mathematically purchase something with a price of A+B (B=retained earnings, interest charges and taxes).
Here it's framed as an issue of the obsolesence of manual jobs, which it partly is, but that's only one aspect.
Amazingly, mainstream economists have never thought of this. Bring it up and you will be told that unless it's expressed in a mathematical formula you don't know what you're talking about.
Economists did not predict the financial crisis of 2007, nor did we predict that advent of secular stagnation that has followed. Those events have shaken the economic and political world. Our theories need work. Maybe a lot of work.
But those events, and the failings of economists, have given a bunch of cranks the chutzpah to claim that they do know the answers – and that they knew them all along.
Some people might say that failing to foresee the result of speculating in securities backed by home loans to uncreditworthy blacks means you have some chutzpah yourself to be pontificating about economics. But I say give this man a hearing...
These folks sometimes refer to themselves as “heterodox economists”, “neo-chartalists”, or proponents of “modern monetary theory”.
Support has even made it to the UK Labour Party, with Jeremy Corbyn’s proposal for “people’s quantitative easing”. This would see the Bank of England simply “print” the money that would be used “to invest in new large-scale housing, energy, transport and digital projects”.
But, alas, some supporters are peddling falsehoods that warrant a blanket response.
Modern monetary theory, a term coined by Australian economist Bill Mitchell, says the following: (1) Countries that control their own currency cannot default on sovereign obligations because they can always print more money. (2) Thus, said countries can provide unlimited resources, pay for whatever they want, and create full employment. Nirvana, here we come!
This Mitchell guy is getting some airplay, huh? But he obviously doesn't know that it's the Reserve Bank that sets monetary policy, not the Government, which is a cap-in-hand debtor to (((international finance))).
But basic errors of fact aren't the real problem here, apparently:
There are many ways to critique this notion. For starters, it is not formal, it is made in prose and is subject to all the pitfalls that come with attempts to make precise statements with imprecise tools.
But here’s the essential substantive problem. Suppose a government wants to pay for some “stuff”. If the government prints money and doesn’t back that by issuing bonds then there is inflation. That inflation leads to the government needing to print more money to pay for the stuff. Which leads to more inflation. And pretty soon that leads to wheelbarrows of cash being pushed around, hyperinflation, the destruction of all savings in the economy, and (in some notable cases) world war.
Yes, here we have a professional economist saying (presumably) that WW2 was caused by the hyperinflation of 1923, and had nothing to do with, say, the Allies' failure to resurrect their economies by piling up debt. I'm sure he has a mathematical formula to prove it, too.
For a recent example, just take Zimbabwe: in late July 2008 a Zimbabwean (second, or “ZWN”) dollar was worth 688 trillion times less than it was in August 2006.
That's right goyim, this
Has nothing to do with this.
So here’s my challenge to the modern monetary theory crowd. Please state a formal, precise, economic model in which a monetary authority can extract an infinite amount of real resources through seigniorage. Or be quiet.
Is this formal and precise enough for you?
A < A + B, where B > 0.
(Hat tip: C.H. Douglas)
The solution is obviously to somehow get debt-free money into circulation. "But no, goyim, that would be inflationary! You have to pay us interest on your money that then becomes an ever-increasing component of prices, which is totally not inflationary at all."
Of course, if you just print more money, or lower interest rates without producing anything for that money to purchase, you do end up with inflation. But if new debt free issue is created to fund productive investment, that doesn't apply. At the moment our biggest industries are export-oriented or non-productive fake "industries." Doing what the RBA is doing and throwing money after these is indeed a bad idea that can only result in a bubble.
As hinted at above, the biggest cause of inflation isn't demand-pull, it's cost-push. It's the ever accumulating debt burden on the economy as a whole that makes the cost of living continually increase like a force of nature that no one questions. Of course inflation gets out of control when too many people have jobs! The only way this debt-driven economy can expand is by exporting goods overseas in return for money, or by investment in bubbles like the housing one which is being artificially sustained long past bursting point by mass immigration and boomer tax-havens.
As to whether we should have a guaranteed income, I can't see it working right now. Can you imagine the non-White baby boom? The way things are in Current Year, it would be essentially a form of dysgenic redistributive taxation.
In a Whites-only society, however, it could work and would ultimately have to be implemented as a way to solve chronic purchasing power deficit which would still persist, albeit on a smaller scale than at present, if the burden of interest repayment were removed from the productive economy. It would be fine as long as the money was paid only to responsible, male heads of households, and all forms of degeneracy were kept rigorously in check.
Another idea on the same principle would be a kind of price subsidy, a reverse-GST applied at point of sale. Or you could have a reduction in working hours and working years across the board, so that instead of finding ways to keep 70 year-olds in the workforce people could retire at 50. Also, we could stop putting women out to work in their childbearing years, and re-establish the natural order between the sexes.
Alternatively, we could go with the job guarantee option. But again, for that to work you have to have a relatively high IQ population with a good work ethic. Make-work jobs for the unemployable would have to be of a frankly punitive nature. We would be bringing back the work-house concept—which doesn't strike me as inherently a bad thing, though it's probably not what this liberal Professor Mitchell has in mind.
In summary, the solution doesn't fit within the debt finance paradigm, the multicultural paradigm or the liberal human rights paradigm. Only a social nationalist state will be able to solve the economic problems of our age.