4. Basic income proposals inherently fail – inflation
Tcherneva & Wray 05 (Pavlina R. Tcherneva – a macroeconomist specializing in modern money theory and public policy, with a focus on fiscal and monetary policy coordination, full employment policies and their impact on macroeconomic stability, unemployment, income distribution, and gende; L. Randall Wray - a professor of economics at Bard College; his current research focuses on providing a critique of orthodox monetary theory and policy, and the development of an alternative approach, “COMMON GOALS-DIFFERENT SOLUTIONS: CAN BASIC INCOME AND JOB GUARANTEES DELIVER THEIR OWN PROMISES”, https://heinonline.org/HOL/Page?handle=hein.journals/rutjulp2&div=10&g_sent=1&casa_token=&collection=journals)
In this paper we advance two arguments. The first is that basic income guarantees are unlikely to achieve the objectives of alleviating poverty, income inequality or poor standards of living, because the proposals have an inherent highly inflationary bias with disastrous consequences for the currency. An understanding of modern monetary systems elucidates why the provision of income without requiring that the recipient expends any effort in exchange drastically reduces the value of the currency. This onset of inflationary pressures, in fact, renders the basic income guarantee self-defeating. By implication then, the proposal cannot ensure the freedom and opportunity that BIG supporters claim it would. The poor bear much of the brunt of inflation and thus precisely those whom BIG aims to help suffer from that very same policy. We next argue that certain direct job creation programs, such as ELR, achieve most of the common goals that income and job guarantee supporters share, without introducing the crucial problem of inflation. We explain that such programs can be designed so that they are not coercive or demeaning. Neither should they be means tested. An ELR program is neither slavery, nor unemployment by another name. Using the Argentinean experience with job creation, we demonstrate how ELR can advance a sense of civic duty, citizenship, social cohesion, reciprocity, and community involvement while guaranteeing full employment-all without the harmful consequence of price instability. In addition the Argentinean experience demonstrates that an ELR program can contribute to the redefinition of the meaning of work, by commanding recognition that certain forms of labor, such as caring and community involvement, are socially useful. The Argentinean program Jefes de Hogar (Head of Household) has also promoted democracy by empowering individuals that had previously been marginalized. All of these consequences are considered highly desirable by basic income supporters.