Workfare, the Circular Chain of Superfluousness, Signals, the Rationing Problem, Skueomorphic Work Part 1

Wednesday, August 20th 2014

The Australian government plans to make "work for the dole" compulsory. For six months of every year everybody receiving income support will have to do community work.

  • If you're unemployed and under 40 you'll be working for 25 hours at around $10.20 per hour;
  • If you're 40 or over, you'll be working for 15 hours at about $17.00.

It's obvious why "workfare" schemes are government policy.

They're popular.

Here are some posts I collected. They're from the comments sections of various mainstream news web sites (the Australian, Courier Mail, Herald Sun, The Age and others):

Why should I work fulltime and pay tax only to fund those lazy individuals who have no desire to work - any job is better than none - and then in time with experience move on to something better

Somepeople think that we OWE them.

Or another:

People are like water: they move along the path of least resistance.

On any given day there are tens of thousands of jobs being done in regional and remote areas by foreign nationals who pay their own coin to travel thousands of kilometres to Australia for the chance at a reasonable job. On the same day there are tens of thousands of Australians sitting around in our capital cities and major regional centres collecting various kinds of welfare.

Why is this happening? Because our welfare industry makes it easier for Australians to sit around allowing the work to be done by foreigners. That is the path of least resistance.

Are these views representative? Probably. Essential Research's polling from 5 August 2014 reveals the notion's popularity:

Q. Do you approve or disapprove of the Government’s proposal to require people receiving unemployment benefits to carry out up to 25 hours a week of community service?

Essential Stats

Their summary:

68% approve of the Government’s proposal to require people receiving unemployment benefits to carry out up to 25 hours a week of community service and 25% disapprove.

Those most likely to approve were aged 55+ (81%) and Liberal/National voters (85%).

Those most likely to disapprove were aged under 25 (35%), Labor voters (40%) and incomes under $600pw (39%).

Even taking into account the poll's margin of error, lack of true random sampling, etc, this still shows a preference for work for the dole and schemes like it.

The idea that appeals to so many people is simple: everybody should do something in return for what they get from others. That's fair. Otherwise the lazy (dole bludgers) are exploiting hard workers (taxpayers).

Balanced Reciprocity

Marshall Sahlins thought there were three main types of reciprocity. He wrote about them in the 1972 book Stone Age Economics:

  • generalised reciprocity: a gift with no strings attached; usually this occurs between people with ties of kinship or close relations of other kinds; the giver continues to give even if the receiver doesn't reciprocate;
  • balanced reciprocity: direct exchange of equivalents without any delay;
  • negative reciprocity: haggling or barter; the most impersonal form of reciprocity, where each party is attempting to maximise his or her gains.

It is controversial area, of course, and many people have debated the motivations behind gift-giving, exchange, and so on. But one things seems likely. When humans were in small groups eking out a living from a prehistorical world, they couldn't afford to support idlers. Cooperation between members of the tribe was about everyone's survival. Cooperate or perish.

On some atavistic level, the discussion around workfare is about survival. Whatever the rationalisatioins - the work ethic, and so on - the discussion stems from Stone Age biology. Most people want to feel that there is some sort of balance in their relationships with others. If they feel like someone has taken advantantage of them the emotions can be overwhelming.

At scale, amongst relative strangers, the culture ends up reflecting that desire for balance. You give and you take in equal measure; making dispensation for whatever level of empathy you feel for the other. Moreover, social status should be in accordance with perceived contribution to the group (the related notion is, of course, meritocracy.

In many cases, these feelings work to bond small groups together. They can check the sometimes self-defeating excesses of self interest. They can be flexible - people can give and take over time, makign sure it balances out in the end. At scale, they inform the rules and cultural norms that hold together society. They often end up as moral edicts.

Here are some examples of how some people express it (also from various mainstream news site comment sections):

Sad and lazy dole bludgers. I cant believe so many people expect to be kept for nothing and to contribute nothing to society. Just have their hands out every fortnight when they go down to the bank to collect "their dole money". When are these people going to realise that money for nothing isn't a God given right. you actually have to give to get something in return.

Or this:

Good...get used to a routine...get used to getting up at 6am every day and travelling to work...get used to doing something productive...you want my tax money then do something for it...

Or this:

I think its unfair that I should pay for a 20 year old to choose to spend his time surfing on the Gold Coast while I work extremely hard and pay a ridiculous amount of tax to fund his alcohol and smokes. This system facilitates abuse and the creation of a welfare state. This government proposal is a great start which I support fully.

Or:

So you'd prefer that they sit at home, do nothing and get given money which has been taken from hard working taxpayers. Some of the conditions may be too harsh and may get watered down but it is not too much to ask for those on the dole to do 15-20 hours of work a week for their money.

Who knows, it may entice some of them to get a real job and put something back.

Too many bleeding hearts say it is demeaning to make them do crappy jobs for the dole but it wasn't all that many years ago that it was considered demeaning to bludge off the hard work of others.

Or:

If people have a lack of skills they only have themselves to blame. There are options for people on low incomes to study with govt help for their fees. Work for the dole doesn't apply to people in training or study. It also doesn't apply to people who undertake voluntary work. If I had no skills and no job the first thing I'd be doing is getting some training and applying for volunteer positions to gain some experience. Not that hard is it? Yet my mum cannot retire as [sic] the Red Cross shop she works in can't get any volunteers to help her. It seems this country is full of people that expect money for nothing.

All these people crying "tax the rich" and blaming companies for sending jobs overseas should learn to help themselves instead of blaming someone else for their problems. Why should I work 50-60 hours a week and then have half my pay (some idiot proposed more than 50%) taken away from me to fund some redneck or bogan causing mischief around Minto or Lalor Park?

And another thing, you dont't really pay net tax until you earn over 80k. If you are earning under 80k then you actually benefit overall, so all these people who think they deserve benefits because they've been paying so called tax their whole lives, get over yourselves. Should have saved for your older years.

Or, perhaps:

Aside from "trust fund babies" and the like, the vast majority of wealthy people have worked extraordinarily hard for that wealth. There is a direct correlation between effort and wealth.

Absolutely, there are groups within Australian society who have been marginalised - both socially and financially (eg Aborigines in rural / non-city communities). However, the majority of people who are "not wealthy" have had no such impediments. They simply do not have the drive or the intellect to generate great wealth.

And, that's completely fair enough. Not everyone in society needs to have drive and/or intellect. However, to then say that those same people should automatically be granted concessions simply because of that fact, or that those wealthy people, who have worked incredibly hard to get where they are, should effectively be penalised, is nonsensical.

Or:

Yes, there are ways to reduce tax. And most of those ways are completely legitimate and a necessary and healthy part of the system. The bottom line is that it is unbelievably expensive to run a business, or to be wealthy, in Australia. Far more so than most other countries in the world.

Most people who comment here latch onto easy, stupid arguments - eg "if you are opposed to extra taxes on the wealthy you're a liberal" or "if you want those extra taxes, you're a unionist'. The reason people make comments like that is that most people are profoundly ignorant, and do not actually understands how society, politics or the economy work.

And, finally:

I'm sorry but this attitude of "it's too much effort" has to stop.

I grew up in Woidridge and paid my way through UNi with a casual fast food job that I had to travel about an hour a day round trip to get to. I graduated on good marks in teaching and spent a year on contracts in the country till I got a permanent job after proving that I was willing to work my butt off and willing to go where the work was.

Being asked to step up and support yourself is not wrong. You may have to give up a lot that you love for a whole but hey, you can find your way back to it when you can stand on your own. Yes, this means the comforts, family, friends, the city life you are familiar with.

You don't get life handed to you on a platter. You jump through hoops and work your fingers to the bond till someone takes notice and gives you the chance to make something of yourself. It doesn't get easier but you learn to live with it and build up your resilience.

This is reality. It's about doing what you have to so you can make something of yourself. Sometimes it sucks and feels unfair but you get stronger once you cut out that attitude as well.

No disadvantage can hold a determined person back, believe me I've seen it for myself.

There is usually very little discussion of whether workfare is cheaper, actually gets people into work faster, and so on. For advocates, there is a principle at stake. It is a moral issue. And when emotions and morality get involved, politics takes over and rationality departs the scene.

(Many of the assertions in these quotes are inaccurate, but emotion relies on anecdotes rather than well-researched data; "facts" really turn into metaphors backed by strong emotion.)

Consequently, minus the debate over implementation details of a given scheme, there seems to be overwhelming political support for the idea of "putting people on welfare to work". It is deeply held feeling. Its unlikely to go away in the near future. It's the stuff of Stoneage Economics, of ancient brain chemistry.

Another idea will be referred to as well. Doing something useful, the argument goes, is important psychologically to the person doing the work. The comraderie of the workplace. The feeling of "putting back". This is the other side of reciprocity. Work makes people feel like part of the group, as if they belong. It puts them, in the rhetoric of the moment, in the category ... "taxpayers".

If people go to the local community centre, council park, library, men's shed, or whatever it is, and do some work for the community it will be a Good.

I say Good, capital G, because the "workfare is good" notion prevails regardless of whether or not the work helps people get paid work or not. And, sometimes, regardless of whether or not the work is actually what the community wants. Instead: work is seen a Good in itself. You get up in the morning, you turn up and work with others, you learn the habits of a working life. The utility of the work a person is actually doing is subordinate to the symbolism involved.

(More on that later).

First: what about other considerations such as cost effectiveness of workfare?

Nuances

If the idea f workfare is to actually get people off income support, then workfare schemes have mixed reults; varying from not doing much to having some small, short term effects on welfare rolls.

If the idea is to get people into work that suits them, then the research just hasn't been done.

In financial terms, it certainly isn't clear-cut that workfare is worth the cost of administering the workfare programs.

Jeff Borland, Professor of Economics at the University of Melbourne, was commissioned to do an assessment of the efficacy of Work for the Dole back when it was first introduced by the Howard government in the early 2000s. The results? He writes:

In the early 2000s, in work with my University of Melbourne colleague Yi-Ping Tseng that was funded by the Commonwealth Department of Family and Community Services, I examined how participation in Work for the Dole affected the amount of time an unemployed person spent in receipt of welfare payments.

We focused on the experiences of 888 Newstart allowance recipients aged 18 to 24 years who participated in the pilot phase of the Work for the Dole program from late 1997 to mid 1998. We were able to compare the group of WfD participants with Newstart allowance recipients who had the same characteristics (such as gender and age) and same labour market background (for example, living in a region with the same rate of unemployment, and having a similar personal history of welfare receipt in the past 12 months) but who had not participated in Work for the Dole.

The main finding from our study was that there appeared to be quite large adverse effects of participation in WfD.

Participants were less likely to move off payments. Six months after commencing in the Work for the Dole program, 71.4% of participants were still in receipt of unemployment payments, compared to only 59.1% of non-participants.

After six months this gap began to slowly reverse so that by 12 months the difference in the percentages who had exited from unemployment payments had narrowed from 12.3% to 10.3%.

But this meant that Work for the Dole participants were still substantially more likely to remain unemployed. A consequence of Work for the Dole participants moving off payments more slowly was that they spent a longer average amount of time in receipt of payments. By 12 months after commencing participation they had been in receipt of payments on average for 2.2 fortnights longer than those who did not participate in Work for the Dole.

source. You can read the original study, too.

In a 2009 UK government report, "A comparative review of workfare programmes in the United States, Canada and Australia", Richard Crisp and Del Roy Fletcher write:

There is little evidence that workfare increases the likelihood of finding work. It can even reduce employment chances by limiting the time available for job search and by failing to provide the skills and experience valued by employers.

Subsidised (‘transitional’) job schemes that pay a wage can be more effective in raising employment levels than ‘work for benefit’ programmes.

Workfare is least effective in getting people into jobs in weak labour markets where unemployment is high.

They go on:

Workfare is least effective for individuals with multiple barriers to work.

Welfare recipients with multiple barriers often find it difficult to meet obligations to take part in unpaid work. This can lead to sanctions and, in the most extreme cases, the complete withdrawal of benefits that leaves some individuals with no work and no income.

Some states in the US have scaled down large-scale, universal workfare programmes in preference for ‘softer’ and more flexible models that offer greater support to those with the most barriers to work. This includes a greater reliance on subsidised jobs that pay wages rather than benefits to participants.

But they do make the point:

Workfare has a deterrent effect which stops people claiming or encourages them to leave welfare before the workfare phase. This makes it harder to measure the tangible outcomes of welfare.

A report on a randomised pilot with 15,000 participants by the UK's DWP from late 2013 was analysed by Jonathan Portes. He makes the point that previous reports were not encouraging; they didn't show that workfare reduced time on welfare. Of the DWP's report, which he commends, he writes:

the bottom line – positive impacts, but small, and overall outcomes still very poor – is consistent with expectations and previous experience;

the small impacts of the programme mostly reflect the fact that this is just a very difficult client group to help back into work, with many people facing severe and/or multiple barriers (the NatCen evaluation also brings this out). By comparison, the FJF client group was mostly people who had been unemployed for a considerably shorter period;

The most encouraging result is that for OCM [Ongoing Case Managment], which produced slightly better results than CAP (Community Action program [workfare]). In other words, personalised support delivered by Jobcentre Plus advisors outperformed compulsory community work (“workfare”). We don’t have details on comparative costs, but I’d guess it was probably cheaper too.

Portes writes that if you take into account the additional cost of running workfare schemes, they may end up - in financial terms - being a net loss to the government. But no cost benefit analysis has been done in the UK:

Finally, following on from this, and given that the government plans to spend £300 million a year on a programme essentially identical to [one in the randomised trial], producing a proper cost-benefit analysis should be a priority. Given the impact analysis has already been done, producing a CBA on the lines of that produced for FJF would be quick and relatively easy. If DWP doesn’t do it, then either the Work and Pensions Committee or the PAC should make them.

I've looked around for other studies, but haven't found anything that deviates from the impression that workfare may not be cost effective - in that it costs more money than it saves. Particularly if you take into account the administrative costs borne by community organisations.

But:

  1. Perhaps a scheme that applies to everybody as opposed to just long term unemployed would have different results. A universal scheme might deter people (particularly short-term unemployed) from claiming income support. Perhaps that will make up for the expense of administering workfare for everybody else.

  2. Perhaps workfare makes income support more acceptable to people who don't believe people should "get money for nothing". In some ways, the argument might go, this acts as a defense of income support: you can hardly criticise a person on the dole if they work as much as you do. This bolsters the social acceptability of income support amongst groups traditionally against welfare.

Advocates of the new Australian Work for the Dole scheme don't seem to be able to reference any studies that show that a work for the dole scheme would be cost effective, however. The argument tends to the political, kind - relying on anecdotes and appeals to the emotions that surround reciprocity. From the Age:

[Employment Minister] Abetz said he had “seen all sorts of studies in relation to work for the dole” including “anecdotal evidence” from people who had participated in programs during the Howard government era.

Abetz said the expanded work for the dole program “clearly gets people into the work ethic, getting up in the morning, doing something useful during the course of the day, being able to look back on the day's activities and know that they've achieved something useful”.

He asserts: work is good for you, and implies you should do something in return for your income support.

He doesn't say workfare gets a person off payments and into a job any faster. He doesn't say it gives them qualifications that have been shown to improve employment prospects. He doesn't make a narrow financial case that it would save the government money.

Finally, and most importantly, he doesn't explain how "useful" is defined and by whom, either.

This is the heart of the problem with Workfare as its usually implemented.

The notion of "useful".

What Works

I've had some experience with the voluntary work programs for the unemployed (I've been a worker and a supervisor). They can work. But the programs that work have these characteristics:

  • they're tailored to the skills of the person doing the work;
  • they give everybody involved a great deal of flexibility - from the workers to the organisation overseeing the work;
  • they minimise the influence of big government bureaucracies.

"Useful" is decided by:

  • the person doing the work (it helps them learn new things);
  • the people he or she is doing the work for.

Nobody else.

Bureaucrats and politicians don't get to define what "useful" means.

But, sadly, politicians and bureaucracies want to control programs. Big Government schemes always have lots of paperwork and compliance requirements. "Useful" will be whatever some far-off bureaucrat in Canberra says it is.

And this is a big problem.

Borland, for instance, advocates much more flexible programs, mostly designed and implemented at the local level to help disadvantaged groups. Centralised public sector schemes, he says, just don't seem to work.

What are the characteristics of centralised workfare scheme? They operate under very general but nonetheless prescriptive rules. Workers have very little say over what they do. Community organisations have little leeway either.

The rules are too abstract and too too high a level. They deal with very general classes of people and general classes of work. And they end up being very prescriptive about:

  • how people are assigned to work for the dole jobs;
  • how people are trained;
  • making sure work for the dole is not competing with commercial interests;
  • how infrastructure is managed;
  • how workers are overseen and who can oversee workers;
  • how people should deal with disputes over everything from tardiness to quality of work.

... And so on.

People, for instance, often can't work unsupervised. No matter what the work or who is involved. So any work that involves working without a supervisor, or in an organisation that can't provide constant supervision, is out. You can't work in any commercial realm, or in any area that competes with commercial interests: so any actual experience of actual commercial work is out. Some community groups don't have time to fill in the paperwork, so they're out. A person with mental illness who doesn't report one day might be have her pay cut off, despite the fact a local supervisor knwos more about the situation and knows the person can't work. And so on.

Centrally controlled programs eliminate local knowledge and prevent flexible local decision making. That is: the expertise of people actually working with people on the dole is lost because they cannot act on it. They can't make an exception for one person. They can't treat different people in different ways. They can't do all the things any self-respecting overseer would want to do. Worse: overseers end up being policemen - ensuring compliance and being and blamed for sanctions. Skilled community groups either don't bother with all the paperwork or give up over time. Or they find they don't have any flexibility to do what they think ought to be done.

The effect is a centrally controlled make-work scheme that doesn't really achieve anything except the meet bureaucratic criteria. End result: you exclude most of the programs that would actually, well, get people off income support and into work they're good at. You force people into programs that won't actually help them out as much.

The simple notion that local knowledge and flexiiblity will be more effective than unwieldly red-tape and control by far-off bureaucrats shouldn't be controversial. There's ample evidence that centrally planned economies don't work because they are unable to make the most of the knowledge dispersed amongst the population. Centralised bureaucratic workfare schemes will probably fail for the same reasons the USSR couldn't price bread.

A more flexible scheme would probably allow for more varied and interesting work. And it would probably be much more effective at helping people get actual paid jobs. Or just helping people feel part of the community even if they can't find work.

But beyond the desire for central control, making work for the dole inflexible and relatively ineffective (compared to more flexible schemes) is part of another agenda.

The Other Agenda

Tony Abbott put it this way when he was introducing changes to welfare when he was in the Howard government:

Work can be made more attractive than life on welfare by changing the rewards of work or by changing the conditions of welfare. No government could cut unemployment benefits, because living on $170 a week is hard enough already, but this Government has changed what's expected of people who have been on benefit for some time.

Work for the Dole marks the end of the era of permissive welfare. It's the most important single change to the culture of employment and unemployment since 1972. Budget changes specifying that all job seekers under 40 on benefits for more than six months must do Work for the Dole or other structured activity, and undergo new cycles of activity as long as they stay on benefit, complete the new institutional architecture begun with the Job Network in 1996.

These changes are designed to make work more attractive than the alternative without increasing labour costs and without making anyone on welfare financially worse off. Another way to make work pay is to make non-work not pay. If the alternative to working for a wage is working for the dole, there's much more incentive to take work, particularly the entry-level and temporary jobs that employers often find hard to fill even when unemployment is high.

Note that he doesn't talk about "changing the rewards of work", he is saying he wants to make the dole less attractive than "entry-level and temporary jobs that employers often find hard to fill even when unemployment is high". (My emphasis).

So rather than making "entry-level and temporary" jobs more appealing (better pay, better conditions) you make the dole more painful in comparison to a "entry-level and temporary" jobs.

Unfortunately there aren't enough "entry-level and temporary" jobs to get everybody off the dole.

There are about 750,000 people on unemployment benefits and about 160,000 jobs available.

This group of people seeking work acts to keep the supply of low-level labour high, particularly if they are compelled to apply for every job out there (40 jobs a month). This keeps wages at the bottom lower than they would otherwise have been.

It's a cynical interpretation, I admit.

To defeat the cynicism, the government needs to run randomised pilots of several different schemes and go with the one with best results. With "best results" meaning the most number of people into the highest paying jobs.

If they just adopt a generic, inflexible, centrally controlled scheme that doesn't give workers and community organistion control over things, then the scheme is about sanctions (getting people off the dole), deterrence (stopping people signing up) and keeping wages at the bottom low.

The rest is just PR and exploiting the Stone Age economics that dominates many peoples' minds.

Or is it? I think there is a genuine concern that the Welfare State can stifle progress. Jim Manzi puts it this way:

The problems of the welfare system are well understood by conservatives. First, there is the moral hazard created by providing for needs such as retirement savings that individuals could otherwise meet on their own. Another is provider capture, in which the public servants become important political players in their own right, as witness teachers’ unions that use the public-school system for their own narrow, self-interested ends. Still another problem is the habituation of the people to protection from uncertainty by a benevolent external power, a condition that can result in broad corrosion of initiative and the partial conversion of an entrepreneurial culture into a managerial one. In sum, the welfare state can undermine the very capitalist system it is intended to support.

He goes on:

It is possible, of course, that the development of the modern welfare state has been the result of a terrible wrong turn. Had it not reached full flower in Europe as various Marxian and other collectivist ideologies were being promulgated, or had the United States somehow avoided the “contamination” of the New Deal, perhaps the welfare state as we know it would never have come into being. Alternatively, one might argue that the welfare system was useful or necessary in years gone by, but that today’s higher level of absolute wealth, technological achievement, and social evolution has made it obsolete. But it would be foolhardy, from a conservative perspective, to eliminate a system so central to day-to-day life and long-term planning — and especially to do so all at once, acting on an unproved theory.

While it is always possible that some future society will find a way to cultivate widespread wealth and stability without a welfare system, or that existing welfare systems will wither away, the welfare state appears to be concomitant with the growth that capitalism creates. As far as can be determined from history, the idea of an advanced capitalist society without a welfare system is misplaced nostalgia — or more accurately, an anachronism. It is like wishing for a commercial jet aircraft without wing stabilisers.

Summary: the Four Pronged Argument Against "Permissive Welfare"

  • the business argument / the other agenda: the better the safety net the less leverage employers have with employees;
  • the big government is bad argument: welfare expands government into a pettifogging bureaucracy that takes over peoples' lives and stifles capitalism and society more generally;
  • the work ethic argument: giving people money for nothing creates an incentive to do nothing, you corrupt the culture of work more generally;
  • you sap the social consensus for a safety net if people feel their hard work is being taxed to pay others to be idle.

I don't think the argument is really much more complicated than that.

A Better Program

Here's an idea for a cheaper, better program.

Community organisations register for work for the dole using an online form, supplying an ABN.

Perhaps only registered non-profits should be allowed to apply. More controversially, perhaps businesses could split the cost of employing workers with the government for a time (a good way to handle commercial apprenticeships and training).

Community organisations would then advertise projects online.

Anybody could work on any of these projects for much or as little as they wished. Community organisations would be able to ask wokers to move on if necessary, too.

Participants could rate projects online.

Once a week, staff at the community organisation would mark off the number of hours completed by workfare participants. They'd do this via a web site or app.

The worker would then confirm the number of hours he or she worked. The worker would do this online, too. If the worker has no internet then the worker could this it at centrelink, a library, by calling a phone number, etc.

This would all tell the ATO than Joe Bloggs completed n hours of workfare.

If Joe Bloggs earned money above the threshold for then those hours would be stored. That's where the process would stop for him.

If Joe Bloggs had insufficient income, then the ATO would pay Joe Bloggs for community hours worked (up to whatever limit in hours is in place or unti his income hit the income support minimum). The community hours counted would include hours previously stored hours.

So if Joe Bloggs had a job and did work as a volunteer fireman, he could log those hours as a fireman with the ATO. If he found himself unemployed, he would be paid for those hours over time, giving him time to look for work and so on.

Once Joe Bloggs had too few stored hours, he could work at a community organisation to record the hours needed to get income support.

The hourly rate? It would be the weekly welfare payment divided by the maximum number of hours permitted for workfare per hour.

So if the payment is $250 a week, and the maximum number of workfare hours is 15, then the hourly rate would be just under $16.66.

Just let everyday people get on with helping each other. A person has to complete *n humbers of hours work, they have done their bit for society.*

Of course, some people are unable to work.

In which case they'd need a medical certificate.

An assessment from a medical specialist would lead to a reduced number of hours of work.

The medical specialist would use an app to submit the report and adjust the number of permitted working hours.

The pay calculation? It would be the weekly welfare payment divided by the maximum number of hours permitted, plus a top-up.

So if a person was assessed as only able to work 4 hours a week, the earnable amount would be $16.66 * 4, or up to $66.64. The top-up would be the difference between the earnable amount and the welfare payment. In this case $250 - $66.64 or $183.36.

Some people would be exempt from working altogether and just get the welfare payment.

Of course, some would say this creates an incentive to get medical certificates and thus avoid work. With every medical certificate there'd be a program of support negotiated with the medical specialist. The welfare payment would be contingent on doing that.

For conservatives this does these things:

  • the big government is bad argument: it replaces most of the bureaucracy with an algorithm, and defers decision making to the community rather than to big government agencies;
  • the work ethic argument: there are no people being idle - they are all giving back for their income support;
  • the social consensus for a safety net: income support applies to everyone via the tax system, you get credit for voluntary work even if you're earning above the income support threshold, nobody gets paid for nothing. Even people who can't work have to try and get help and support as best they can in return for their income support.

Many of those commenters would be happier. They would know people were doing useful stuff instead of just engaging in make-work schemes designed by far-off bureaucrats. People on the Work for the Dole would be able to do work that related to the work the community wants done. The community would have more man-hours put into to useful projects - as defined by community organisations and participants.

You could make the central admin a mostly algorthmical affair, some sort of hybrid negative income tax and "employee of last resort" scheme administered by the Tax Office.

You could eliminate Centrelink and most of the job network altogether. You could afford to expand funding for organisations helping people with emotional difficulties, disabilities, and so on, and stop funding as much paperwork.

Of course, big government still remains. But it's a strange argument that says government should not provide a safety net. Everywhere and always where there is a successful market system there is a safety net of some kind. You may as well have one that minimises the bureaucracy and defers decision making to the community at large.

The scheme does not meet the requirements of the "Other Agenda", however.

  • the business argument / the other agenda: the better the safety net the less leverage employers have with employees.

However, if:

  • the employer pays a higher hourly rate than the income support payment hourly rate;
  • the work suits most employees better than the community work.

... then the incentive is to work for that employer rather then do community work. That type of employer has nothing to worry about.

However, this scheme does put a base under wages and conditions. For me, that is a feature of the scheme.

For others it's a flaw. They will make the argument that people who have no work should be left to their own devices, to fall back on friends and family and so on. Or, if there is income support it should be more painful than the worst, low paying job. Which can be translated to mean: people are compelled to work for commercial organisations paying poverty wages in relatively bad conditions (or resort to crime).

Once that translation is made by enough voters, government always steps in. It provides support to employees (minimal conditions, pay, and so on). It interferes. Bureaucracts get involved. Government may even make payments to low paid employees in dollars or in kind. Or, perhaps, even to business itself (employment incentives, etc). This expands the role for government into business.

You end up shifting welfare payments from people to businesses and end up with business on indirect welfare instead. What about businesses that pay their employees properly or provide good working conditions? They are disadvantaged. You create an incentive to be less productive over time.

I think that is a losing argument once it is isolated from other three and seen for what it is: a path to business welfare and lower productivity. It fails because it rewards businesses for favouring labour over automation (leading to lower productivity), it creates business welfare, and its loses most voters because it advocates the removal of a safety net they like to know is there.

But none of this, the entire scheme or anything like it, deals with the real problem.

The Real Problem

A few people paying each other do work for them. But they're not in one organisation. They're just freelancing for each other.

  • Anne does a job because Geoff pays her to do it.
  • Geoff pays Anne because it allows him to do a job for Lucy.
  • Lucy pays Geoff because it allows her to do a job for Hugo.
  • Hugo pays Lucy because it allows him to do a job for ...

Well, you get the idea.

To Anne, her work is a means to an end - to get paid by Geoff. Geoff's work is a means to an end, too. It helps him get paid by Lucy. And so on down the line.

Anne, Geoff, Lucy and Hugo do their jobs because someone else pays them to do them. Their work is a means to an end. They don't do their jobs because their work has inherent value to them personally.

All the exchanges in the list above are a means to an end. Nobody did anything that was directly useful to anybody else.

For the people involved:

  • They can't rely on their own assessment of their work's use-value (it has no inherent value to them);
  • They can't rely on the person paying them to assess their work's use-value either (it has no inherent value to the buyer, either!).

It would impractical for them to think too deeply about the actual use-value of the work they're doing. They can only act on the work's market value, e.g. what other people are willing to pay them for it.

Indeed, when push comes to shove, market value is the only thing they can act upon.

The relationships are:

Anne -> Geoff -> Lucy -> Hugo

Lets say people only know about people they either pay or work for. Anne knows Geoff, but is unaware of Lucy. Geoff knows Anne and Lucy, but is unaware of Hugo. And so on.

Now, for the sake of argument, imagine that our chain of work is circular. We close the loop: Anne pays Hugo to do work for her. His work helped her get paid by Geoff.

Anne -> Geoff -> Lucy -> Hugo -> back to Anne

Anne won't realise that Lucy exists. So she might not realise that the chain is circular. Similarly Geoff wouldn't know Hugo existed. He won't know the loop exists either. In fact, nobody in the chain would be aware that the chain was circular.

So we have a completely superfluous chain of work being carried out without anybody realising it. Everybody is diligently carrying out the work as if it's useful because it the only practical course - they're just "responding to the market", as they say. No-one is being stupid or deliberately inefficient. (Indeed, the work could require real effort and skill.)

The Circular Chain of Superfluousness is important to grok. It has three characteristics:

  • Participants can't rely on their own assessment of their work's use-value (it has no inherent value to them);
  • They can't rely on the person paying them to assess their work's utility either (it has no inherent use-value to the buyer, either).
  • they can only respond to market values;
  • nobody is aware that the chain is circular.

In 1921, William Beebe observed a millions of ants travelling in a circle over 365m in cicumference. They were worker ants stuck in an ant mill:

An ant mill is an observed phenomenon in which a group of army ants separated from the main foraging party lose the pheromone track and begin to follow one another, forming a continuously rotating circle. The ants will eventually die of exhaustion.

Here's a video:

Any stigmergic system is prone to fail in similar ways: a market system could be just the same thanks to information cascades and feedback loops.

Supermart

Now imagine Anne, Geoff, Lucy, and Hugo inhabit a simplified world where Supermart accepts cash for food.

Obviously, food is something that is inherently useful to Anne, Geoff, Lucy and Hugo. They need to eat! Now imagine Supermart also stocks other things, too. Videos. Plush cushions. And so on. Things that all have "use-value" to Anne, Geoff, Lucy and Hugo.

What if Supermart is an automated system - a complete chain of production of distribution? That is: the human labour component is very low or non- existent?

How does Supermart allocate food, and so on, to its customers? It can stock a lot - but not enough for everyone all the time. So it charges prices to ration the goods.

Supply and demand sorts out the prices.

Stock standard stuff, right?

The way Anne, Geoff, Lucy and Hugo sort out who gets what is by negotiating prices for their work with each other in the chain. Sometimes individuals bid up the prices Supermart charges, sometimes Supermart reduces prices because demand is lower.

But they all keep working to pay for the things they need, even though they don't actually need to do anything. They do it so they have a say on how Supermart rations the goods - who gets what.

Now, imagine that, in this simplified world, Supermart is doing all the actual work and producing all the goods that have use-value.

Supermart is not a person, it's a machine. It originated from a complex market system involving humans, true. As more parts of Supermart were automated, the system could use more complex data and processes to produce goods and services.

The humans, whose culture is not as quick to move (by many orders of magnitude), can't adapt. To solve the problem, the designers of the system retained the parts adapted to the humans. In our metaphor, Supermart does this by retaining traditional prices.

Prices end up a way to interface with humans.

For supermart, prices are a way to gather information from the humans. It tells it what what to produce, for whom and when.

For the humans, prices remain a way to negotiate who should get what. The humans earn money to buy things, and this set prices through supply and demand.

The humans have no other way to resolve who gets what other than by - and I use air-quotes here :-) - "working".

Supermart could be designed to ration the supply of goods and services in all sorts of other ways. It could supply credits people could use up, or allocate what it produces via some other mechanism (random! :-)). But if it did that it would bang headlong into the Culture of Work and its grand negotiation over who gets what.

If the participants aren't aware of the Circular Chain of Superfluousness they might start to get upset that peole aren't being, say, rewarded for work. And this would set off all sorts instinctual responses. You may even end up with workfare schemes :-).

So Supermart just carries on charging prices and Anne, Geoff, Lucy, and Hugo carry on "working". The reason for the work existing is simply that the participants aren't aware of the Circular Chain of Superfluousness and they can't agree on any way of rationing the fruits of technology except by "working" for it.

(I left out the notion that someone might own the production and supply system or be CEO of Supermart - thats beyond the scope of this metaphor :-) ).

The Conflation of Instincts for Reciprocity & Utility

The conflation is inevitable and necessary. At this point in history, how do we distinguish between the three or otherwise calculate use-value except through complex networks of exchange?

The Circular Chain of Superfluousness seems inevitable:

  • people need to sate a psychological needs to be feel useful and feel like part of the group;
  • cultural habit (the work ethic, reciprocity, etc) dictate that this happens via work;
  • people can't conceive the network of exchange as a whole, so they can't rationally calculate use-values of things they don't use themselves;
  • people can't admit they're work is useless because their income is at stake and they have little influence over the entire network;
  • people bid up prices in some areas and so have to keep working to outbid each other for things (such as real estate).

Essentially, this human make-work scheme, the Circular Chain of Superfluousness, looks a lot like a Topocractic network.

As technology improves and does more work for us, rather than a marked increase in leisure, people are compelled to work in the confines of the topocratic bureaucracy, and others experience an increase in poverty.

This is system is known as the Bullshit Industry :-).

Once the network becomes denser, the scope for intermediaries decreases. And with that goes much white collar work and traditional unautomated business.

Labour as a Cost

Yes, you might say, but people treat labour as a cost. Yes indeed.

What you are relying on is that people will optimising the network to reduce to price of attaining things of inherent value from it. The most efficient chains win, the least efficient are weeded out. Creative destruction reigns.

A consequence this is that networks become denser; people try to remove as many middle men as possible. Superhubs emerge, then they, too, are removed.

But what if technology is advancing at a pace that is faster than the chains can be optimised? Because these chains are as much a result of a cultural kludge (government and private bureaucracy) as technology.

The difference between the network density that is technological possible and what actually exists is, for the most part, decreed by the Bullshit Industry.

If technology is moving faster than the culture of work, it is invariably held back by the kludge, even used to enforce the Kludge. The network is deliberately kept more sparse; to defend existing social structures.

For a time, that means gains in productivity are not necessarily felt in gains in leisure time.

It also means gains in harnessing collective intelligence are stymied.

This is a probably a stabilising force in some ways, but only if it is acknowledged. Otherwise it becomes a form of neo-luddite control masquerading as pseudo-morality and ends up hysterical.

Signals, the Rationing Problem, Skeuomorphic Work

But no metaphorfest is complete without a car metaphor.

Once we used our muscles to actually steer cars (that is: we laboured).

Now, in modern vehicles, a machine interprets our steering as a signal.

It does the the actual steering for us.

It doesn't amplify our physical effort: it eliminates it.

The car relies on us for the bit it can't do yet: working out where to pooint the car.

This is labour of a kind - mental work - but there is no reason this labour won't be eliminated, too. (And fairly soon. Broadly, it has been eliminated by mapping apps, but the second by second details of negotiating a car park or a mysterious, unmapped country road still requires human thought.)

To mix the metaphor of the car and the Lucy and co., the work the characters do is sending signals to Supermart. The signals tell Supermart what to produce and when. In this sense it is real work. But it is also not "work" as we've come to understand it, in that its entire purpose to negotiate who gets what. It is metaphorical, cultural work. It is skeuomorphic work. From Wikipedia:

A skeuomorph is a derivative object that retains ornamental design cues from structures that were necessary in the original. Examples include pottery embellished with imitation rivets reminiscent of similar pots made of metal and a software calendar that imitates the appearance of binding on a paper desk calendar.

The sort of work Lucy anc Co. were doing has a similar character.

Skeuomorphic Work is the work we do to cope with the fact we can't find any other way to ration the fruits of technology to ourselves. Inevitably it is work involves people using up time (a universally recognised and measurable number) to do something that other people can use to produce more work for other people or is directly fed to machines as signals.

Metaphors about cars and Supermarts aside, systems of trade are obviously much, much more complex and multi-dimensional :-). And we're nowhere near entirely automated systems of production and distribution (such as Supermart).

But I can't help but think that as more tasks are automated, we will end up making skueomporphic work for ourselves. This work will be the competition to generate the signals to the underlying technological substrate, all to tell our machines what to produce, when to produce it, and for whom.

I started out with a ramble on workfare partly to test your endurance (mission accomplished!) and partly to show how people end up thinking about the problem of unemployment, the the problem of the culture of the Work Ethic, and the problem of rationing. My own idea for a better program being a case in point. It's not an entirely stupid program, but it is quite stupid. Because it doesn't deal with the inherent problem that is emerging. It in no way deals with the problem of the seeming inevitability of skueomorphic work.

As work that produces things of use-value is automated, work done to purely produce signals increases to help people negotiate who gets what. Telling the useful work from skueomorphic work is, of course, diffcult. The strange thing is that skueomorphic work is often hysterically volorised for emotional reasons - fear of not being able to generate signals, fear of being left out, fear of ending up on some awful government-mandated workfare scheme, etc.

Some would make the argument that as production and distribution increases in efficiency (because it treats labour, amongst other things as a cost), eventually you'll see prices fall and people will be able to work less and less and get the same number of goods and services. This is probably true. Long term. But in the medium term, the transitional period, we end up with a much sillier situation where we collectively invent work for ourselves without really realising it.

(Of course, eventually signals will be gathered via observational computing and eliminate the entire process, but that's another story).

It's quite possible you could find whole series of exchanges whose entire purpose is a means to an end - Circular Chains of Superfluosness. At no point does anyone actually get anything inherently useful out of the chain. More often, however, you may get sections of chains that are supefluous, even though the chain delivers something inherently useful at the end.

In networks where the average node has fewer connections this is more likely to happen, because people can't take the shortest route to what they value for their use-value. They have to go via middle men, intermediate nodes. This increases the scope for superfluousness and the scope for superhubs (which have many connections) to extracts rents (think: Amazon, Google, Big banks, etc).

This is cultural momentum - collective habit. Its power over people is in that deep need to feel useful to others and be part of tribe. For a sense of fairness. Linked to this is everything from the Calvinistic Work Ethic to notions of the meritocracy to feelings of various types of reciprocity.

So Anne, for instance, feels useful as a result of Geoff paying her for her work. In that sense her work has inherent value psychologically even if it's superfluous technically.

Problem is: the psychologicsl effect is partly (if not wholly) contingent on her remaining unaware of her work's superfluousness.

The problem comes when the proverbial car starts driving itself (perhaps by observing where we usually go and so on). At which point humans face the culture of work faces an existential crisis; an ability to acknowledge its impending doom.

Circular Chains of Superfluousness lodged in the Kludge can work to mitigate this to some degree. But the danger is that a slow building hysterical response by the culture of work will lead to silliness (and perhaps even stupidity or cruelty) on a grand scale. More workfare than a New Age of Leisure. More Soviet than Star Trek.