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I think we will look back into economic history to our times in surprising disbelief at how simplistic our central bank policy is. A bit like how we laugh at ho
by pa7x1 6y ago
I think we will look back into economic history to our times in surprising disbelief at how simplistic our central bank policy is. A bit like how we laugh at how doctors used leeches to treat various ailments.
From 1929, central bankers learnt that liquidity can be a terrifying disease in an economy, 2008 showed that printing helps and here they go with their newly learned tool trying to fix all problems. Now they have to figure out that if you only inject that liquidity from the top, the inflation appears in certain kind of assets (mostly financial) and has a hard time reaching the rest of the economy, causing ever-rising inequality.
I think a more refined approach will be developed at some point, where they will start using two levers to steer the function of the economy. Money printing from below via UBI and regulating the inflation of day-to-day assets and money-printing from above and regulating the inflation of financial assets. This could allow finer control balancing target inflation rates of different assets and preventing rising inequality to tear down society.
- gallegojaime 6y agoUBI as a macroeconomic lever to pull is an intriguing idea - hadn't thought of that consequence. Although it figures changing the amounts would get extremely political.
- RobertoG 6y agoThere is the idea of job guarantee as an automatic stabilizer too. The government grants a job to anyone that wants to work at a minimum wage salary. When unemployment grow, the government automatically expend more in the economy because more people access to the job guarantee. When the economy recovers the private sector take workers away from the job guarantee through paying a little more than the minimum wage (or the same and better conditions) and the government spending is reduced. It's both an inflation and an unemployment stabilizer. UBI doesn't have those properties.
- deleted 6y ago[deleted]
- jmaygarden 6y agoWhat's the incentive to perform if you cannot be fired? A "guaranteed job" might as well be a simple unemployment check.
- dredmorbius 6y agoJob satisfaction / better jobs. The guaranteed job need not be pleasant. Hell, many already aren't. But a job would be guaranteed and would meet basic needs.
- generatorguy 6y agopeople would rather be unemployed than have an unpleasant minimum wage job.
- dredmorbius 6y agoThat becomes an interesting dynamic expecially between universal guaranteed income and universal guaranteed employment. But the original question was how to provide incentive. Assuming able-bodied persons must provide some work, opportunities for advancement, more pay, or more favourable environment, and the prospect of less attractive work, remain. Military and similar environments provide models, e.g., latrine duty. Most people would prefer some useful occupation, I suspect, however humble. And again, with guaranteed employment, even the worst job would provide a livelihood.
- RobertoG 6y agoThe reasoning is that many studies show that people that have not worked for a while have a difficult time being hired again. There are different ideas, but, I suppose that you could see it like a training program too. Also, there are some supposed psychological benefits to work. And there is always something to do at the local community level, so it would not be totally unproductive work.
- JSavageOne 6y agoThe incentive is in the reward you get for performing well. Also I don't think it's necessary that a job guarantee make an employee immune from being fired. I'd imagine a job guarantee would have all kinds of jobs ranging from relatively simple (eg. cleaning) to more complex (eg. science). If you're in a more demanding department and underperforming, you could get fired and have to apply to another job in another department. For example, the military is sort of like a job guarantee in the sense that anyone meeting the physical bar is effectively hired. But any military member can get discharged.
- _nalply 6y agoSo the government creates a lot of bullshit jobs when neccessary.
- RobertoG 6y agoI don't think they have to be necessarily, or, at least, totally, bullshit jobs. Also, it's not only, even not mainly, a social program, but an automatic stabilizer in the economy. It gives power to the workers too, because there is always an, even if with low pay, alternative available.
- jostylr 6y agoBut that assumes the jobs guarantee is providing a reasonable job environment. Presumably these jobs would have bosses who can be cruel or can be prejudiced. And this being the job of last resort means they would not have an alternative. I don't think there is a great track record of jobs being run by the government (or farmed out by the government to other organizations) as being idyllic workplaces. Also a bs job is soul crushing and work-ethic destroying. The only true power comes from being able to walk away from the control of anyone else, being able to simply say "no". For that, one needs a UBI.
- lnsru 6y agoSoviet Union had this job guarantee. It didn’t work well. Motivation of people forced to be somewhere all day was very low.
- RobertoG 6y agoI don't see the parallel, a job guarantee is supplying jobs to people that otherwise would be at home.
- JSavageOne 6y agoThere's a huge difference between guaranteeing everyone who wants a job a job, and forcing everyone in the entire country's population to work for the government while setting their salaries the same and not rewarding productivity.
- llamaz 6y agoI have no desire to defend the Soviet Union, but out of curiosity, do you think our current system rewards productivity? I'm thinking along the lines of the movie "Office Space". I don't know much about the USSR, but I don't think they set everyone's salaries the same or distributed money equally, or any other nonsense like that.
- dredmorbius 6y agoTax assets directly.
- marcell 6y agoIt’s interesting that there’s an unstated assumption behind your comment: we need a central authority to plan some, maybe many, aspects of the economy.
- pa7x1 6y agoWell, the fact of the matter is that the central authority exists and is taking active corrective actions on the economy right now. My observation is that the tools and levers they use to steer the economy are limited and there are consequences to this self-inflicted limitation. If this central authority is even necessary is an entirely different discussion. My current view is that the economy viewed as a dynamical system is subject to strong positive-feedback loops and these are known to cause ugly behaviors in the solutions of a system (the equivalent of boom and busts in economics). Introducing forces contrary to those positive-feedback loops to stabilize the economy may make sense theoretically. The jury is out if central bankers can do this, know how to do it or if the political incentives are there to even make it happen.