Morgan Warstler's Bold Gambit to Auction the Unemployed

     I've always said that he's one Righty I like-though it might take a while if you don't know him. However, now he's gone and given some real breadth and shape to his "Auction the Unemployed" scheme and while I'm not necessarily buying in yet-I'm nothing if not cautious-I am very intrigued. I don't know if anything can bring the Right and Left together but if anyone can, Morgan may be the guy.

    He gives himself accolades, of course, and I say take them! I'm never against anyone taking a bow if he can deliver.

   " I hate to toot my own horn but… toot, toot.

   "Funny story to start, Matt Busigin, a lib who considers himself a labor specialist

    http://www.macrofugue.com/

  

   "He wanted a full plan post from me and had it ready to publish on his site, when I objected to his calling my plan “government run” in his intro, and when I explained to him how clearly small government this plan is… he literally had to reread my plan to wake up, he freaked and told me to publish it on my own site."

    "What a bad reader. What a wimp. Don’t fall into the trap, in terms wonks can understand READ THE BILL, or GTFO."

     "People who really read it… @rortybomb he’s on board. So is @interfluidity (waldman). Basically ANY progressive who’s first true focus is the plight of the lowest, and not the public sector. Because my plan delivers one benefits at the expense of the other."

     "You won’t see this mentioned by Matty or Ezra or PK, (not yet) or anyone who calls themselves wonks, because this does exactly what they claim to want, but doesn’t do what they really want – this plan make technocrats and those who think of themselves as technocrats lower social status."

     "I’m taking all comers! I’m slapping it on the table and daring anybody who claims to do econ to match me."

     "Expect crickets."

     "(crickets)"

     http://www.themoneyillusion.com/?p=19982&cpage=1#comment-233730

     I'm very interested if Rortybomb and Interfluidity are on board-I wonder if they'll write anything. For the most part I'm not such a trusting soul. So I have reservations about Morgan's demands. 

      "Herein, I’ll explain the way it works.  There’s only one way it works.  Deviations on the idea without the private sector auction ruin it immediately.

      "Milton Friedman walked away from a Negative Income Tax because it wasn’t a full replacement for social safety net.  This is that exact situation.  We either do it my way, or it won’t work, and isn’t worth doing."

       http://www.morganwarstler.com/post/44789487956/guaranteed-income-auction-the-unemployed

        My only problem is I'd want to be sure it works first before signing on-which would be something of a dilemma as he's not willing to sign on unless we end MW and UI first. 

        The plan really is reminiscent of MMT's JG though Morgan considers MMT anathema. Here is the outline of the plan:

        "Using the Paypal and Ebay platforms, the US govt. should establish a Guaranteed Income of $240 per week. Anyone who wants to work registers, receives a Paypal Debit Card, and each Friday at 5PM has their GI deposited.

      All GI recipients have their labor weeks auctioned online."

      "Job offers begin at $40 per week ($1 per hour).  Offers increase by .50 cents per hour ($20 increments)."

      "At $40 per week, there’s no able bodied / able minded person that some rational returns bidder won’t find use for.  The 70 yr old woman in a wheelchair who wants to work to keep busy?  Plenty of teleservice operators have work for her to do from home for $1 per hour."

     
     "Note: I solve for the criminally lazy.  Identifying and fixing them is one of my plan’s advantages. I’ll get to it a bit later in the What Abouts plan.

     "So minimum take home cash under GI is $7 per hour or $280.  $240 is the social commitment paid out of taxes and $40 is the winning job offer."

     "To perfectly align incentives, for each $20 per week offer increase over $40, the govt. gets back $10 of our $240 social commitment, and the auctioned employed keeps $10."

     "So, on a offer of $100, the govt. is paying $210 and the auctioned receives $310.  A offer of $200, hits the govt. for $160 and auctioned receives $360."

    "The system ends at $10 per hour.  The maximum offer allowed in the GI Auction is $280 and the govt. is still kicking $120 netting the auctioned $400 per week."

    "Here is the actual schedule I’m suggesting:

Winning BID        GI paid by govt.              Payday: GI + BID
$40                      $240                               $280
$60                      $230                               $290
$80                      $220                               $300
$100                    $210                               $310
$120                    $200                               $320
$140                    $190                               $330
$160                    $180                               $340
$180                    $170                               $350
$200                    $160                               $360
$220                    $150                               $370
$240                    $140                               $380
$260                    $130                               $390
$280                    $120                               $400

At this point people tend to have lots of questions.  Since I’m writing this to woo progressives let’s start here.  Companies like WalMart will now  need to pay more than $400 a week, to keep workers from choosing GI.

Here are the basic rules:

1. Recipients can choose to take lower paying jobs.
2. Recipients cannot be made to work outside a radius of 5 miles.  This is a guesstimate.
3. Bidders must also establish their real identity and deposit money into system before they bid.  No more craigslist roofing scams paying after the fact.
4. Bidders and auctioned cannot be related or cohabitating.
5. Bidders must accurately describe the job (check boxes) and cannot add to it after winning bid or require work not checked.
6. Feedback will be given both ways. If you are familiar with Ebay buyer / seller feedback, you understand what this accomplishes.  It makes it the whole thing work.   If you are not familiar with Ebay, get familiar with it before you state your opinion on this plan.
7. There are no taxes paid by employer or employee.  There are basic workplace protection requirements. Umbrella insurance is sold on Ebay for folks bringing labor into their home.
8. Upon meeting some fair criteria, the criminally lazy can be suspended from GI program. Perhaps 6 weeks as first suspension.
9. Only individuals and incorporated SMBs earning less than $3M per year can bid.   This is not subsidized labor for Fortune 1000.  Under this plan, their labor costs go up.  I am proposing Internet based #Distributism.

The costs

     "Expect 30M to register so approx $375B is our cost assuming 30M are auctioned at $1. This is of course lower than the market will bear.  At an avg. bid of $3 per hour the govt. is spending $312B per year.  At $5 per hour, the govt. is spending $250B per year."

     "There is no more unemployment insurance.  There is no more minimum wage.  That’s why there are 30M in program."

     "If you quit / lose your fulltime regular job, you stay out of the GI program for as long as you wish and can afford to."

    "The savings on ending UI alone, CBO places at $94B for 2012."

    "The savings from productivity gains in public sector that currently administers unemployment benefits at federal and state levels, I’m putting at $20B+ for 2012."

    "The economic growth from this is of course ginormous.  Since we have no unemployment, the only task of the Federal Reserve will be to keep us from productivity driven deflation, at first there will be some too. This means an end to QE and a much quicker end to the bad debt crisis."  

     Effectively this maintains the roughly $7 minimum wage we currently have, The difference is that the government now picks up $1-$6 out of the $7. So I don't know that Busigin was so off base in thinking it's a government run plan-I would agree that he should be willing to discuss this whether he agrees with it or not. I mean it may not be government run on the Ebay side-however the government funds it. So in truth it's less that the MW is gone as it's cost is transferred from business owners to the taxpayer. 

     Morgan does make the point that this lower wage is only for what he defines as small business owners (SMB). Wallmart and Dunkin Donuts effectively are pushed up into a $10 MW. If this works as he thinks it would this would be a good deal for workers:

    Guys, it is better to imagine yourself as a job seeker, to understand the outcomes here…

   "To the avg. seller, think blue collar men with high school education, it doesn’t ever feel like an auction. You log in and see TONS of standing job offers for $40 ($280), likely just as many for $80, and even $280 ($400) for guys with skills to do light construction."

   "Compared to the status quo, the horror show we have today, you are choosing from a feast of job offers, week after week".

   "As labor goes, you have real hedonic benefits, real psychic happiness that spikes and stays up, for the rest of your life."

   "Bosses now have to perform for you. You have a feast of choices. If you have a some friends you enjoy their company, you all like working together, this system make that possible."

   "The average blue collar high school guy, at $280/$400, to the outside world, you are a $7 per hour handyman. Society has an immense demand for a $7 per hour handymen. That’s a new housing boom. That’s a lower cost of rehab, a lower cost of rents, that’s ghettos that no longer have broken windows."

     "Imagine what 2M $7 per hour handymen can do to improve 130M households year after year.

Add in another 1M $6 per hour for landscaping, personal organic gardening, pool cleaning."

    "For you city dwellers, think what happens to the price of Uber or Sidecar. In an appified world, there is is push button low cost get it when you need it local muscle."

      http://www.themoneyillusion.com/?p=19982

      I agree. It is better to put yourself in the job seeker's position. If it works as he thinks it will, it's a good deal. In Morgan you see a kind of utopian striving for the optimum society. I don't use "utopian" in a bad sense I would agree I'm a kind of social optimizer myself. 

      There are different strands of his political philosophy. He's a conservative however he has also come to take the liberal critique seriously. His wager is that this is a way to deal with the social evils of poverty, inequality, and unemployment in a conservative way: that is to say, a market based solution to unemployment. In the comments I argued-as I will still argue-that his GI is not so different than the MMT JG. His reply:

      "see if you can list WHY this isn’t like MMT, that’s a really valuable little exercise. I dare ya. This is about competitive technocracy. There’s no “big idea” WPA labor supply left for technocrats, instead we’re letting the top 20% that PAY ALL THE TAXES, direct the excess capacity that is available."

    

       So he put it back on me to explain it's difference. I'm still not sure. The obvious difference is the auction. However, I think it has more in common than he realizes-not sure if he's actually read their proposal in any depth. The main difference is that this will be done through Ebay. He no doubt sees MMT as all about big government. 

       Still even his plan requires the government to fund this. As I'm sure he knows, many conservatives won't like this plan. They will see it as "government run." After all the taxpayer is now picking up most of the minimum wage bill

        Another strand of his philosophy is-and this I think is particularly Utopain-is his belief in the productivity of technology in particular. His belief in technology is very much symptomatic about someone who's heart remains in the 90s.  Back then when no one even really understood what the Internet was there was this hope that the Internet and computers in general would enable companies to do anything thanks to the power of the Internet.

         So in all this is a belief not just in the power of the market but the power of technology. Morgan fervently believes that there is all this latent productivity in technology and the market, if only big government would get out of the way. 

        As I said I'm not explicitly endorsing this yet-I need more time to chew it over-however, I'm certainly not rejecting it either. Whether or not it works as he thinks it will, it's very useful as a thought experiment. 

        If there's anything I question is whether the auction will really work: what if they have an auction and there are few bids? Implicit in this is the assumption that there is all this work that the SMB need done but they aren't willing/able to pay for it with $7 but can for $1-$6. 

        I wonder how much such work there really is. If you need something done but aren't willing to pay $7 is it very important to you? Is there really anything of value that needs doing for $1 an hour that you can't do yourself? I don't know but I wonder. 

        In many ways this is about the minimum wage. If you believe as Morgan and most conservatives do that  the MW is a job killer then of course you believe there is a lot of work to be done between $1-$6 an hour. However, liberals like me don't think the MW hurts employment very much if at all. So if you believe this you should be more pessimistic that there really is all this pent up productivity. 

      That's the only real question I would have for now: I don't know that he's not right and that there wouldn't be all the jobs he thinks there are just that it's a debatable point. 

       Overall, though I like this proposal a lot-it's very thought provoking. Whether it works or not it's agreat thought experiment. I must admit that unlike many conservatives Morgan is a great game theorist and thinks things through down into the weeds of the thing.

       That's why I called him above a "political philosopher." I consider myself one as well. Not only that but I might even be willing to call myself-believe it or not-a conservative in Gary Wills' sense. 

       http://www.amazon.com/Confessions-Conservative-Garry-Wills/dp/0140055630/ref=sr_1_1?ie=UTF8&qid=1363102141&sr=8-1&keywords=garry+wills+confessions+of+a+conservative

       What's interesting is that Morgan talks about distributism and so does Wills in his "Confessions of a Conservative." I might call myself a conservative in Wills' sense. 

        A conservative as I understand it should do what he can to minimize social difference and social conflict. The goal of policy should be to mitigate and defuse social tensions where possible. This is why a true conservative-totally unlike most American conservatives and their Republican party-is concerned about things like growing poverty, rising unemployment and too much inequality: he realizes that this can only go so far before it explodes: then we're in the situation that Wills put in in his Nixon Agonistes: "the Center cannot hold."

       http://www.amazon.com/Confessions-Conservative-Garry-Wills/dp/0140055630/ref=sr_1_1?ie=UTF8&qid=1363102141&sr=8-1&keywords=garry+wills+confessions+of+a+conservative

       The trouble I have with most conservative Republicans is they don't worry about tomorrow, just today. If they can win a victory today that antagonizes the social polity they don't question where that will take us tomorrow. True conservatism is not reactionary and it does not believe or aim for no social change-as if it's possible. There will be social conflict-there's no utopian dream of avoiding it-the point is to minimize it where possible. 

        It seems to me that Morgan's philosophy may be in this better conservative tradition.