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2 Rutgers J. L. & Urb. Pol'y 64 (2005)
A Comparison of the Macroeconomic Consequences of Basic Income and Job Guarantee Schemes

handle is hein.journals/rutjulp2 and id is 64 raw text is: 

Rutgers Journal of Law & Urban Policy


     A COMPARISON OF THE MACROECONOMIC
     CONSEQUENCES OF BASIC INCOME AND JOB
                  GUARANTEE SCHEMES


               William Mitchell and Martin Watts'



 I. INTRODUCTION

      In this paper we compare and contrast two policy responses to
rising income insecurity in the form of proposals to introduce a universal
Basic Income (BI) and proposals to introduce a Job Guarantee (JG). Both
challenge the prescriptions of the dominant neo-liberal policy agenda.
      In his 1987 Ely Lecture to the American Economics Association,
Princeton economist Alan Blinder described the failure to provide
productive employment for all those willing and able to work as one of the
major weaknesses of market capitalism. He argued that the failure had
been shamefully debilitating since the mid-197os, and that the
associated costs make reducing high unemployment a political, economic
and moral challenge of the highest order (Blinder 139).
      The situation remains that governments around the world have
abandoned the goal of full employment and are content to pursue the
diminished goal of full employability and to impugn the unemployed. The
dominant economic orthodoxy has, since the mid-197os, supported policy
makers and politicians who have deliberately and persistently constrained
their economies under the pretext that the role of policy is to ensure that
the economy functions at the so-called natural rate of unemployment.
Discretionary monetary and fiscal policy decisions have prevented their
economies from generating enough jobs to match the preferences of the
labor force, and enough hours of work to match the preferences of those
who are employed. The result has been persistently high unemployment
and rising levels of underemployment (Mitchell and Carlson). Ironically,
highly desirable, labor-intensive projects go undone to the detriment of all
(see Mitchell; Wray). The cumulative costs of the forgone output and
unemployment are huge and dwarf the costs of alleged microeconomic
inefficiency (Mitchell and Watts; Watts and Mitchell). A key outcome of

1 William Mitchell is the Director of the Centre of Full Employment and Equity and a
Professor of Economics. Martin Watts is the Deputy-Director of Centre of Full Employment
and Equity and an Associate Professor of Economics at the University of Newcastle, NSW,
Australia.


Vol. 2 * Fall 2005 * No.1

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