One comment on a recent Conversation article about public housing says that “I don’t really want to live in a society where the government will provide all our needs, where incentive is stifled and ever-increasing taxes are required to fund ever-increasing demands”. Regardless of the merits of this view or what it might imply about public housing, I got to wondering how the idea that providing for everyone’s need might deaden incentive sits within a system whose whose basic assumption is that human desires have no bound. If people really do have infinite desires, no amount of providing for people would ever satisfy them, and an incentive to strive for more would always exist.
Of course one might deny that people have infinite desires, or maybe insist that everyone should be kept in poverty so as to give them an incentive to work up to subsistence level. But this undermines the whole project of economic growth and in any case I haven’t heard anyone volunteer to give up their wealth so as to have an incentive to work for the bare necessities.
As it happens, Ross Gittins’ column in the Sydney Morning Herald this weekend (8-9 August 2020, Business p. 5) asks whether or not people receiving unemployment benefits have an incentive to work, which saved me having to do my own research into the degree to which people remain motivated to work even while they receive payments from other sources. According to Gittins, “growing evidence [suggests] that paying decent rates of unemployment benefit doesn’t discourage people from taking jobs” and “just 6 per cent of employers said they were having difficulty recruiting due to a lack of applicants”. (He speculates that these 6 per cent may be jobs with poor and possibly illegal conditions, or poorly advertised, but they could also be very specialised jobs.) Gittins goes on to point out that even the more-than-usually-generous payments made during the COVID-19 pandemic are still significantly less than the minimum full-time wage, so (he argues) those receiving such payments still have an incentive to work for even more.
Gittins doesn’t cite the exact “growing evidence” behind the impact of unemployment benefits on motivation, but it’s consistent with the view that people generally want more even if they already have a little bit, and the quest for economic growth only seems to make sense if this true.
Commentators worried about a lack of incentive to do paid work might just as well worry about people like me, whose work and savings pay well enough that we can afford to opt out of doing even more work. Yet hardly anyone seems to worry about a lack of incentive to work being faced by people with incomes even ten or a hundred times as great as mine.
I suspect that comments like the one quoted at the beginning of this entry are grounded in a fear that I have infinite ambition and the wherewithal to pursue it while everyone else would rather just sponge off “my” tax money to satisfy their measly desires. The “heroes” of Atlas Shrugged, for example, seem to be of this view. People probably do vary in the level and sort of their ambition, but if there’s anything to economic growth and Gittins’ analysis, very few people live in cheerful poverty or even at subsistence level when there’s a chance for better.