Turn – Productive employment - A UBI encourages job retraining and increases productivity which stimulates the economy

Finally, there is the economic case for a Basic Income. On the macro-economic front, it becomes a very efficient means of stimulating the economy at times of heightened demand stress, ie deep recession. A simple way to increase demand is to top up the Basic Income for a period of time. Rather than quantitative easing supporting financial institutions, central banks can increase the money supply by funding government bonds to finance an increased Basic Income. So-called ‘overt monetary finance’ (OMF), which this would be a form of, has been advocated by Adair Turner and others, albeit with some provisos on management of banking credit to avoid unsustainable credit multipliers.59 This policy could have been very useful in 2008-09 (and something akin to it was attempted in the Australian ‘cash splash’).60 On the micro-economic front, there are grounds to believe that Basic Income could increase productivity. This mechanism would work in a number of ways. Firstly, rather than workers being forced into the first job that comes along as some conditional systems do, Basic Income enables a little more time to search for the right job. As an evaluation of a highly conditional Department for Work and Pensions scheme showed, hard conditionality does little to increase medium term employment rates and only increases number of days in work marginally in a two year period.61 So the benefits are minimal yet the UK suffers from endemic skills mismatch and this impacts productivity. For example, 58 percent of graduates are in non-graduate level jobs.62 The Basic Income would not resolve this issue, as there are strong structural factors, but 58 Erik Christensen, “Feminist Arguments in Favour of Welfare and Basic Income in Denmark,” in Basic Income European Network (BIEN) (Geneva, 2002), www.ilo.org/public/english/protection/ses/download/docs/chris.pdf. 59 Turner, Between Debt and the Devil: Money, Credit, and Fixing Global Finance. 60 Stephen Grenville, “Helicopter Money,” VOX, CEPR’s Policy Portal, 2013, www.bostonfed.org/economic/conf/conf30/conf30a.pdf. 61 Jonathan Portes, “The ‘Help to Work’ Pilots: Success, Failure or Somewhere in between?, National Institute of Economic and Social Research, accessed December 4, 2015, www.niesr.ac.uk/blog/help-work-pilots-success-failureor-somewhere-between. 62 CIPD, “Over-Qualification and Skills Mismatch in the Graduate Labour Market,” August (2015), www.cipd.co.uk/binaries/over-qualification-andskills-mismatch-graduate-labour-market.pdf. Creative citizen, creative state 38 POWER TO CREATE could mitigate it somewhat by giving more secure breathing space to individuals. Secondly, if workers have the ability to withdraw their labour, it provides more of an incentive for employers of low pay, low quality jobs to improve those jobs either by increasing pay, providing better conditions or additional support such as for training. Thirdly, there is a possible motivation effect. Workers would be in a particular workplace because they want to be, not simply because they feel coerced to be. This is a healthier basis on which to develop intra-firm productivity. Finally, the Basic Income facilitates short-term withdrawal from the labour market to improve formal skills and qualifications. This could increase potential productivity. Basic Income is not an economic magic bullet but it is possible to see significant potential macro and micro economic benefits.