The ideal economy

Challenges for a new economy will also bring challenges for the theory that will undergird such an economy. A very important one is to find ways to set incentives and rewards to work that recognize, at least much better than at present, both the social value and the intrinsic rewards or distastefulness of different kinds of work. The foregoing discussion mentioned in previous issues of Opinion Sur has pointed up several tensions in the subject of work. These tensions exist:

– Between work that produces relatively little well-being but is well-paid, vs the need for much work that now receives little or no monetary compensation. The latter includes the production of food as well as the “caring work” that is often done by women, in basic health care, child care, and home activities.

– Between the need for income vs the fact that many jobs are not useful to society: Any newspaper you pick up makes it clear that people in our society are heavily dependent on having paying jobs, even though many of those jobs produce things that should not be produced (for any of the reasons adduced in my previous article).

– Between the work time offered by employers vs workers’ preferences about working time: many people work less than they want (usually because they would like to earn more, but sometimes—especially in the case of retired people—because they are bored or feel disconnected from society), while many others wish they had longer vacations or shorter daily or weekly work hours.

When this picture is looked at abstractly, the logical conclusion is that it would be desirable to discover or invent some better organization of the economy such that:

1. All children would have the means to develop their capabilities through nurturing love, quality education, nutritious food, clean water, secure health care, and adequate shelter—and this would be achieved regardless of the earning capabilities of their parents.

2. All adults would have access to basic survival and security.

3. Conditions of work would be such as to maximize the positive psychic rewards and to minimize, or fairly share, the work that is disagreeable.

4. Incentives and rewards to work would recognize the value of the work that is done, as well as any disagreeable aspects.

5. All the work that is needed would get done. And

6. Work that produces unneeded or harmful things would not get done.

If the first two conditions were fulfilled (as they now are in the U.S., partially, but insecurely, through a patchwork of state and federal “safety nets”, public education, etc.), this would reduce the pressure for jobs, jobs, jobs—hence making it more possible to consider implementing condition #6.

Another practical possibility is the use of public works programs, as recently suggested, by Eduardo Porter, in the New York Times (Jan 29, 2014, p. B1). Porter regards this proposal as very radical – “Many economists go pale at the thought of a mass program of public jobs to combat unemployment” – even though he points out the good results of the Public Works program that helped people survive through the Great Depression in the 1930s.

Porter does not even consider what some believe to be the most effective (though perhaps an even more radical) approach: to revise the social safety nets to include a basic income guarantee. This could be a significant step towards simultaneously achieving two important goals. It could greatly reduce poverty, thus replacing much of the burdensome and expensive apparatus of welfare, unemployment insurance, etc.; and, if designed with this intention, it could implicitly reward and enable some of the unpaid work on which every society depends, by lifting the requirement for all to take paid work.

A companion paper, “Basic Income for a New Economy,” puts forth such a proposal. It would be feasible in settings wherein a majority of those who do have paying jobs receive wages high enough so that they can satisfy their well-being needs and desires, with enough left over to allow the payment of fairly high taxes. The tax system would need to be revised so that incomes were taxed in a more progressive way. Moreover, consumption taxes would need to be carefully designed to add to the cost of consuming things that have negative impacts on the user, the workers, or society at large. The soda tax proposed by Michael Bloomberg in New York is a good example of a step in the right direction—and also, of course, illustrates the negative reactions to such an effort.

Economic theory cannot alone make such changes, but a change in economic theory—removing its support from the idea that the only fair or appropriate prices are those set by the market—can at least withdraw some support from those who oppose such steps.

A basic income guarantee would address the conditions 5 and 6 as listed above: getting done the needed work of society, while not wasting resources or burdening the natural environment with useless production.

Why is this all so hard to bring about? The condition that would require the most dramatic change from the economic system we have now is #4. This takes us back to the sixth challenge for the new economy that was set at the outset, which is also a challenge for the theory that will undergird such an economy. It must find ways to set incentives and rewards to work that recognize, at least much better than at present, both the social value and the intrinsic rewards or distastefulness of different kinds of work.

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