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What We Read Today 26 February 2014

Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary "reading list" which will include very brief summaries of why each item has gotten our attention. Suggestions from readers for "reading list" items are gratefully reviewed, although sometimes space limits the number included.

  • Retail Sales Cannibalization (Mike Shedlock, MISH's Global Economic Trend Analysis) The retail sector is cutting employees and costs to drive to lower prices. MISH sees this as deflationary.

The next eleven articles (Behind the Wall) are about basic income, job guarantee and related issues. This is a philosophical issue, that situation represented by the fact there are no articles here with graphs or data tables.

  • The New Populism Needs to Get This Straight (Joe Firestone, New Economic Perspectives) Joe Firestone has contributed to Global Economic Intersection. The Left joins the Right in displaying ignorance of national sector accounting.
"A guaranteed income would reduce the humiliations of the current welfare system while promoting individual responsibility."
There is no reason why in a society which has reached the general level of wealth which ours has attained . . . security against severe physical privation the certainty of a given minimum of sustenance . . . should not be guaranteed to all without endangering general freedom. . . . There can be no doubt that some minimum of food, shelter and clothing, sufficient to preserve health and the capacity to work, can be assured to everybody. -Friedrich A. Hayek, The Road to Serfdom, p. 37
  • Negative Income Tax (Jodie T. Allen, Library of Economics and Liberty) Discusses the work of Milton Friedman, Daniel Patrick Moynahan, Richard Nixon, Gerald Ford and many others in this area. For some of these plans it was simply based on the idea of income redistribution from higher incomes earners to lower incomes. The redistributive ideas ended with the "Reagan Revolution".
  • Basic Income (Wikipedia) At the core this idea is one creating debt free money and has been supported by many notable political figures and famous economists for hundreds of years. It encounters opposition from some who feel it violates the Puritan work ethic and from those whose livelihood is derived from usury and other lending-at-interest practices.
ERE reports that "Although it varies with the company and the job, on average 250 resumes are received for each corporate job opening." In addition, out of every 1000 people who view an online job posting, 100 people will apply, 4 - 6 will be selected for an interview, 1 - 3 will be invited for a final interview, 1 will be offered the job, and 80% of those who get a job offer accept it.
  • Death to Machines? (Robert Skidelsky, Project Syndicate) Robert Skidelsky has contributed to Global Economic Intersection. Skidelsky reduces the paradox of machine replacing man to the need to balance reducing real costs of goods produced through productivity gains and with the need for real income to derive consumption. While the Luddites of the early 19th century over-simplified their plight of lost labor to be the fault of machines, Skidelsky maintains they deserve some recognition for the recognition that their problems were not to be resolved by "laissez-faire nostrums". Note: This is a repeat from a previous "What We Read Today".
  • Should the government pay you to be alive? (Leon Neyfakh, The Boston Globe) It sounds radical, but the ‘guaranteed basic income’ almost became law in the United States—and it’s having a revival now, with some surprising supporters.

To some advocates of the basic income policy, this is an idea we have to start getting used to. Jobs, they suggest, are disappearing not just because of a temporary recession, but because technology is making it increasingly easy to build an economy with fewer laborers, thus driving the earning power of less skilled workers below the poverty level. This amounts to a looming disaster, the argument goes, unless we as a society commit to making sure everyone has enough to survive regardless of their employment status.

Put another way, the fact that humankind has advanced to the point where we need so much less human labor to maintain the same level of productivity can be seen as a positive, as long as we can let go of the belief that a full-time job is a prerequisite for a complete, meaningful life. If we live in a nation that can afford it, say the most utopian of the basic income thinkers, shouldn't we give people the option of working less, or at least prevent them from having to scramble to stay alive?

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