There’s been a lot of chatter in the econblogoshere around the idea of a basic income, what we’ll call a Guaranteed Income.
Herein, I’ll explain the way it works. There’s only one way it works. Deviations on the idea without the requirement to choose a job offer priced by someone else’s ROI… ruin it immediately.
Milton Friedman walked away from a Negative Income Tax because it wasn’t a full replacement for the social safety net. This is that exact situation.
The Basic Plan
Using Paypal and an OPEN SOURCE Monster.com style platform, the US govt. should block grant / waiver states (likely Texas first) to establish a Guaranteed Income.
I suggest $240 per week. Anyone who wants to work registers, receives a Paypal Debit Card, and each Friday at 5PM has their GI deposited.
All GI recipients are free to market themselves for whatever they prefer to do for work, but they must choose from hundreds of jobs being offered to them each week. If you don’t choose a job and work, you don’t get your GI.
After their first year, recipients get one week vacation with GI annually.
Job offers begin at $40 per week ($1 per hour). Offers increase by 50 cents per hour ($20 increments).
First fact: At $40 per week, there’s no able bodied / able minded person that some rational returns bidder won’t find use for. The 74 yr old woman in a wheelchair who wants to work to keep busy? Plenty of teleservice operators have work for her to do from home for $1 per hour.
Note: I solve for the criminally lazy. Identifying and fixing them is one of my plan’s advantages. I’ll get to it a bit later in the What Abouts section.
So minimum take home cash under GI is $7 per hour or $280. $240 is the social commitment paid out of taxes and $40 is the winning job offer.
To perfectly align incentives, for each $20 increase over the minimum of $40 per week, the govt. pays $10 less on the $240 social commitment, and the employed keeps $10.
A job offer of $100 has the state is paying $210 and the employee receives $310. A offer of $200 dings the state for $160 and auctioned receives $360.
The system ends at $10 per hour. The maximum offer allowed in the GI Auction is $280 and the govt. is still kicking $120 netting the auctioned $400 per week.
Here is the actual schedule I’m suggesting:
Winning Offer GI paid by govt. Payday: GI + Offer
$40 $240 $280
$60 $230 $290
$80 $220 $300
$100 $210 $310
$120 $200 $320
$140 $190 $330
$160 $180 $340
$180 $170 $350
$200 $160 $360
$220 $150 $370
$240 $140 $380
$260 $130 $390
$280 $120 $400
PLEASE NOTICE: Under my proposal, Fortune 1000 companies cannot use GI/CYB labor. So WalMart and their cohorts will now need to pay more than $400 a week, to keep workers from choosing GI.
Under GI/CYB, dedicated artisans, singers, pianists, muralists, bloggers, gardeners, bakers, yoga instructors, etc. now have their DREAM JOB.
Our creative class will market themselves as willing to take any $40 wk offer doing the thing they love most, as long as someone offers to pay them for it. Utilitarian hedonists unite!
Here are the basic rules:
1. Recipients can choose to take lower paying jobs.
2. Recipients cannot be made to work outside a radius of 5 miles. This is a guesstimate.
3. Employers must also establish their real identity and deposit money into system before they bid. No more craigslist roofing scams not paying after the worker is covered in tar.
4. Employers and their hires cannot be related or cohabitating.
5. Employers must accurately describe the job (check boxes) and cannot add to it after winning bid or require work not checked.
6. Feedback will be given both ways. If you are familiar with Ebay buyer / seller feedback, you understand what this accomplishes. It makes the whole thing work. If you are not familiar with this stuff, get familiar with it before you state your opinion on this plan.
7. There are no taxes paid by employer or employee. There are basic workplace protection requirements. Umbrella insurance is sold on the job offer site for folks bringing labor into their home.
8. Upon meeting some fair criteria, the criminally lazy can be suspended from GI program. Perhaps 6 weeks as first suspension.
9. Only individuals and incorporated SMBs earning less than $3M per year can bid. This is not subsidized labor for Fortune 1000. Under this plan, their labor costs go up. I am proposing Internet based #Distributism.
It costs us nothing. NO NEW SPENDING.
If 30M to register, our cost is $375B, assuming 30M take jobs at $1. Of course, the market will bear more. At $3 per hour the govt. is spending $312B per year. At $5 per hour, the govt. is spending $250B per year.
There is no more unemployment insurance. There is no more minimum wage. That’s why there are 30M in program.
If you quit / lose your full time regular job, you stay out of the GI program for as long as you wish and can afford to.
The savings on ending UI alone, CBO places at $94B for 2012.
This is welfare spending:
My plan uses the non-Medical welfare spending to fund GI/CYB.
SNAP, Heating assistance, Section 8 housing, all of these would be small bumps added to the worker’s GI. But again, in toto, we do not need to spend another dollar to employ everyone!
The savings from productivity gains in public sector that currently administers unemployment benefits at federal and state levels, I’m putting at $20B+ for 2012.
Main Street’s economic growth from this is ginormous. Since we have no unemployment, the only task of the Federal Reserve will be to keep us from productivity driven deflation, at first there will be some too. But, this means a quicker end to QE, and far smaller chance of them printing money in the future.
It also means Wall Street takes it in the shorts.
The goal here is to put the greed of private bidders to work to quickly identify which of the 30M are best at the jobs they are happily put too. When a family hires a babysitter, and after 6 weeks they have consistently rebid, that is known, expect the market to quickly clear to find the correct price of babysitters – trust the ones who clean to earn more.
The goal is a fuzzy system with less rules, so a neighborhood with 30 dog owners can offer $120 for someone to clean up their yards ($4 a yard), and the guy taking the job knows he can do all 30 yards in 15 hours, netting him $21 per hour for picking up dog shit.
The goal is Internet transparency. Workers and Bidders are encouraged to take pictures and video, document before and after, week after week. Consistent bidders with plenty of previous happy workers carry far more weight in judging employees than those with spotty records. If you don’t understand this, go buy and sell some stuff on Ebay.
Note the steep increase in happiness and labor relations: Good yet marginal workers now have many, many choices, where their own happiness is given much greater weight without ANY technocrat’s big agenda.
The upside is ENORMOUS.
1. While the govt. can’t bid it can now hire low cost services organized by SMB that hire from this pool. Suddenly the cost of public goods (clean parks, subways, etc) drops dramatically – making the cost of LOCAL GOVT. cheaper. This alone likely covers the total expenditure.
2. This is about recovering lost American productivity. This isn’t about just the 30M. This is about how you and I become more productive when we can use the 30M to accomplish more ourselves, and what those we work for can do with our new productivity.
3. Because GI recipients will disproportionately fall in certain areas, entrepreneurs in these markets suddenly have a labor advantage that is real. Businesses that want to hire need to move into these areas.
That whip smart drug dealer in the towers? He’s got a 30 story building full of low cost labor to organize and monetize for legal enterprise.
4. The signalling to the unemployed is REAL economics. This is not the unemployed doing socially valuable shit that Technocrats in DC think matters, this is 30M seeing what pays what in a sustainable way. There’s a real difference between what’s worth $2, $5, and $8 per hour.
5. The cost of goods and services in poor areas drops dramatically. Suddenly ghettos are cleaned up, properties are improved. Daycare drops to $50 a week. This is a super positive PPP in our sickest urban centers. Slums no longer are slums.
6. Overtime, this program allows us to move all aid like Housing, Energy Assistance and Foodstamps into it (even healthcare). If you are working for a boss who thinks you are worth the market rate, we’ll cover your nut. Otherwise, you are in trouble.
7. This program gives us a clear path to extending the age of retirement, first by choice, and slowly by law. It lets us ask even the disabled to work from home. I can all but guarantee 500K work from home customer service reps.
8. This plan SOLVES illegal immigration. Many are forced to self-deport or seek citizenship (many currently don’t). Now unnecessary illegal immigrants are being priced out or the market. It is only truly the jobs that NO ONE will take, that illegal immigrants can afford to stay and do. We’d ALL want them to stay. No more “jerbs” bs.
The what abouts?
What about the criminally lazy guy who just wants to milk the system and never shows up for work?
Ok, for those that don’t understand Ebay or cred systems, I’ll game this out.
That guy right now hides amongst 30M good people who want to work. The first step is to expose him. The second step is ostracizing and singling him out. The third step is firm but forgiving punishments until his behavior is altered.
On day one, he signs up with everybody else, and never shows up at job. His feedback is bad, he gives an excuse, or he ignores it. The bidder doesn’t lose anything. He’s just disappointed.
After 4 weeks of taking the $240 GI, never being rehired, and given negative feedback, the criminal lazy is suspended, cut off for 6 weeks on first infraction. Where does he go? How does he eat? Who’s couch does he sleep on?
Now all around him are 30M people waking up and going to work, getting their GI + Bid. They are happily employed, they are choosing between multiple jobs. They are productive members of society.
He lives amongst them and they hate him. They are getting louder and angrier with him. He’s no longer able to hide amongst them complaining about the bad economy. His support system crumbles.
Finally he breaks, after 6 weeks, maybe then 12, maybe then 26, he is put back to auction, and if he is rehired, he’s back in the game! Take pictures of the work he did, prove he arrived early, stayed late by his own choice! The system quickly exposes any positive effort and rewards it.
What about the scumbag slave labor boss?
They are quickly exposed. No one sells their labor to them. Your real name. Your real reputation. If you want to get “subsidized” labor, you better keep most of your hires happy.
What about criminal collusion between buyer and seller?
First, family can’t hire family. Cohabitants are out too.
But let’s say you and I are both criminally lazy and decide to collude. I will give up my GI, so I’m out $280 every week to begin with.
I have to put in $40. I bid, and you take the job. You don’t show up. You give me $40 back, plus some amount of the GI.
So instead of $240-400 you could earn doing lots of different kinds of jobs you might like, you have less than $200 for a no show job. Meanwhile, I try to do this with 10 others as well.
We are both criminals, but the buyer has committed a felony. The punishment will hurt enough to deter the crime. Hire more than one person, receive kick-backs, and be found not requiring them to work in the eyes of society, you go to prison.
The criminal who didn’t show up, is suspended from GI for 6 months.
The machine can see the recurring pattern so it only takes a few criminals being made of in each local market. Remember, the machine is already looking for rehires, since that is positive proof to future buyers. Where are the time stamped before and after pictures? Proof work was done?
And since you want to make more money that means proving you do great work, thats how you market yourself.
This gets to the idea of “what is work” - the answer is easy, it’s what people will pay you with their own money to do and that you will do. If someone will spend their money to pay you to dig holes and fill them up, that is work.
If however, the govt. used its money to hire you to dig holes, that wouldn’t be work, because no real individual spent their money. That’s why the govt. cannot bid. It’s also why public sector jobs are always slightly suspect to the private sector.
Finally, since the preponderance of goods and services in ghettos are suddenly far less expensive, the truly lazy noble artists of the world, have the ability to coast without joining the GI plan.
I don’t have an answer for I hired her to grow my pot in Colorado, nor I hired him to sleep with me in Nevada; except that states should really be the ones running this thing. I’m just putting this out there as the obviously correct solution to a wide variety of seemingly intractable problems. Technically, you (or your group or neighbors) are buying labor’s 40 hour week, so choosing to let them take time off, or hiring based on job completion, would need to be documented.
What about WalMart?
Since they cannot hire from the pool of GI workers, companies that currently pay minimum wage or near it, must now pay a premium to keep their workers from quitting and joining GI or fully automate.
Progressives should understand that having a choice of jobs profoundly changes the power structure without having to organize labor.
This is the neoprogressive labor moment.
What about the politics?
Every American middle class family who wants to bid on cheap labor loves it. Those surrounded by ghetto blight love it. SMB owners love it. The GOP loves it. The 30M who desperately want to work love it. The workers at WalMart love it. The anti-immigrant Mickey Kaus Dem crowd will love it. Silicon Valley will love it.
Public employee unions do not like. Management at Fortune 1000 do not like.
My plan delivers the protestant work ethic, ensures there are no idle hands, keeps all American talent expanding, and increases trust in a multicultural country. It is a profoundly American way to extend the social safety net, without becoming France or pretending we’re all as innately chummy as the “you look like me” Nordics.
Some final discussion
The basic problem with the American economy today is that a covered nut is a social justice construct. We have determined we OWE one another a covered nut for being an American worker.
Yet the value of a person’s labor can never be defined by fiat. More so, our workers are being competed with by global forces.
The cold brutal fact is many Americans aren’t worth what social justice crusaders are forced to pretend. They have to stop pretending.
We cannot take what is a noble goal of a covered nut, call it a minimum wage and expect genius entrepreneurs to be able to make a return on every American.
My plan solves all of this.
We cover the nut with a GI out of taxes because of our social commitment. Then to reduce the cost of the program, give entrepreneurs a honest competitive low end labor market, and provide lower cost services in poor areas, we auction the 30M.
If you struggle with grasping the likely market outcomes of this, just ask yourself, “what would I pay somebody $40, $60, $100 a week to do for me personally I don’t do now?”
If you ask any questions please start with, ‘If I was bidding I could afford and would want to pay…”