Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

My Thoughts

Workers need a Basic Income because work no longer pays

America’s workers need a basic because work no longer pays in our society. Surprisingly, modern America grossly undervalues work and criminally underpays many workers while glorifying the concept of hard work.

Bizarrely, our media is full of stories warning us about the danger of being a “nation of workaholics.” Yet the average manufacturing worker struggles to survive on $15.11 an hour, Pay Scale calculates.

Consequently, the average American manufacturing worker earns $120.88 a day; $604.4 a week, $2,4176.0 a month, or $29,011.20 a year. Therefore, low wages cast serious doubt upon the belief that restoring American manufacturing will bring prosperity to Middle America.

Meanwhile, the average retail salesperson earns $13.30 an hour, $106.40 a day, $532 a week, $2,128 a month, or $27,460 a year, data from the US Bureau of Labor statistics indicates. Yet retail sales is one of the most common jobs in America. In fact, retail sales is often the only job in many small towns.

Our Economy no Longer Values Work

In his fascinating book The War on Normal People, nerdy insurgent presidential candidate Andrew Yang (D-New York) offers a partial list of jobs and activities our market economy regards as worthless. Yang’s list includes:

  • Parenting
  • Teaching
  • Caregiving
  • Childcare
  • Elder care
  • Reading
  • Environmental work
  • Preventive care
  • Character building
  • Journalism
  • The arts
  • Helping the poor
  • Unskilled labor
  • Community building and networking
  • Preventive Medicine
  • Infrastructure
  • Public transportation
  • Small Business
  • Effective government

Taken from The War on Normal People: The Truth About America’s Disappearing Jobs and Why Universal Basic Income Is Our Future page 198.

The Most Important Work no Longer Pays in America

To Yang’s frightening list I add:

  • Housework
  • Local Government
  • Community
  • Community Service
  • Farming
  • Political Activism
  • Writing
  • Music
  • Noncommercial music
  • Entrepreneurship
  • Research
  • Military Service
  • Ministry
  • Social Work
  • Study
  • Education
  • Administration
  • Philosophy
  • The Liberal Arts
  • The Fine Arts
  • Literature
  • Public Service
  • Science
  • Basic Medical Care for Ordinary People
  • Crafts
  • Many kinds of Skilled Labor
  • Brick and Mortar Retail
  • Scholarship
  • Family
  • Religion
  • Non-electronic entertainment
  • Amateur Sports
  • Writing
  • Libraries and Books
  • Vocational Training
  • Mental Health
  • Nutrition
  • Counseling
  • Pets
  • News

Disturbingly, these activities are important, yet our economy assigns them absolutely no value.

In fact, teachers are driving Uber and working part-time jobs to pay the bills The Guardian reports. Meanwhile, the heartland is reeling from an epidemic of farmer suicides many observers blame on economic insecurity, The Guardian claims.

Mr. Market Hates Labor

Why does our economy criminally undervalue many kinds of important work? My answer is that we base compensation on the market, yet the market is a horrendous judge of value.

In fact, the great investor Benjamin Graham; and his star pupil Warren Buffett, became rich thanks to the simple mantra “Mr. Market is insane.” To explain, Graham describes the stock market as a lunatic that sometimes pays a fortune for worthless equities and nothing for valuable shares. In fact, Buffett is the world’s third richest man with a fortune of $84.1 billion because he understands the market is irrational.

The labor and job market operates in the exact same way. For example, the labor market paid Robert Downey Jr. $40 million for a simple acting gig in one movie; Captain America: Civil War, estimates. Meanwhile, the average high school teacher in Oklahoma receives $42,460 a year for the vital; and often emotionally draining job, of preparing teenagers for the job market, CNBC calculates.

Consequently, trusting Mr. Market to set pay and salaries is insane. If we rely on Mr. Market to set pay rates, people who do important work starve; while an actor receives $300 million for playing a superhero.

Can Basic Income Fix the Labor Market?

Basic income cannot fix the labor market but it can alleviate some of its worst effects. For instance, a basic income like Yang’s $1,000 a month Freedom Dividend could give Oklahoma’s high school teachers a $12,000 a year raise.

In addition, there could be fewer people willing to drive for Uber and Lyft, if everybody receives a basic income. Consequently, Uber and Lyft could have to increase their pay rates to attract and keep good drivers.

More importantly, employers could have to stop paying starvation wages for labor. Instead, workers will be more likely to walk away from shit jobs, starvation wages, and abusive employers, if they have a reliable supplemental income to fall back on. Consequently, employers will have to improve pay and conditions to retain employees.

Can Basic Income Fix Unions and Communities?

In addition, a basic income could increase unionization which can lead to higher wages. For example, union construction workers in the Midwest made $27.32 an hour; while non-union Midwestern construction workers made $19 an hour in 2018, estimates.

Workers with a basic income could be more likely to join a union; or strike, because they will have some money coming in while they are not working. In particular, workers will not have to worry about not feeding their families if the boss hears them mention the word union.

Cash-strapped organizations that perform beneficial services could receive more volunteers or workers; if average people had a constant source of additional income. For example, a church that can only afford to pay a food bank administrator minimum wage could find somebody to fill that role if there was a basic income.

Finally, we could offer people who perform vital roles additional basic income. For instance, we could double public school teachers’, volunteer firefighters’, first responders’, or military members’ Freedom Dividend to $2,000 a month, or $24,000 a year. Thus, we can reward those who serve our communities, our country, our families, our children, and their fellow citizens with cash rather than bumper sticker slogans.

How to Keep Capitalism and share its benefits with everybody

Ultimately allowing Mr. Market to set people’s pay is insane. However, history teaches that the free market is the only mechanism capable of generating the vast amounts of money our civilization needs to operate.

Notably, regimes that tried to abolish the market like the Soviet Union, the United Kingdom’s Labour welfare state, Mao’s China, and Castro’s Cuba, either collapsed or returned to the free market. Consequently, we need to preserve the free market but find some means of sharing its benefits with everybody in America.

Yang’s proposal of using a Value Added Tax (VAT) to finance a Basic Income or Freedom Income to all Americans could be that solution. America needs to learn that Mr. Market is insane and harness his power to solve our nation’s problems. If we do not Americans will turn on capitalism and destroy the engine that fuels our country’s prosperity.