Beowulf comments on the employment mandate
beowulf
OK, lot of moving parts here.
1. Full employment target was set in the Full Employment & Balanced Growth Act of 1978 (also know as Humphrey-Hawkins Act), “16 and older” scale is the U3 rate that’s the headline unemployment number every month, if BLS still reports “20 and older”, I’ve never seen it. For what its worth, Humphrey-Hawkins also sets “not more than 3%” as the inflation target.
2. The “reservoir of jobs” is more of a suggestion than any sort of mandate. Quite intentionally, Congress required the President to come back and ask for further legislation to appropriate funds.
3. The original post-war legislation, the proposed “Full Employment Act of 1945″ had contained the automatic appropriation for a job guarantee, it was removed by the time the final bill (which also created the President’s Council of Economic Advisers”) was enacted as the Employment Act of 1946.
4. 1946 Act was watered down at the behest of the conservative Keynesians as exemplified by the Committee for Economic Development (led by former NY Fed chairman Beardsley Ruml and Boston Fed president Ralph Flanders, elected later that year as a GOP US senator from VT). From then on there was a schism between liberal Keynesians who wanted to fill output gap with jobs programs and social spending versus conservative Keynesians who wanted to fill output with tax cuts and military spending.
5. The essence of MMT is that the govt holds the currency monopoly which makes the budget deficit irrelevant so long as we’re short of full employment (0 output and 0 trade deficit) Or as Wynne Godley put it:
Carl Christ, of Johns Hopkins University, had the brilliant insight that should an economy ever reach stationary equilibrium, all stock variables as well as all flow variables would be constant; and that if all stock variables, including government debt, were constant, government receipts would have to equal government payments… There is an obvious shortcoming to the original Christ formula in that it applies only to a closed economy. This defect is easily remedied by adding exports to government expenditure (injections) and imports to taxes (leakages).”
http://findarticles.com/p/articles/mi_m1093/is_n1_v41/ai_20485331/
6. The (liberal Keynesian) job guarantee would adjust “flow variables” on expenditure side, the (conservative Keynesian) automatic payroll tax holiday would adjust them on the tax side (in either case, the full employment goal becomes closer by accounting for trade deficit by either revenue-neutral tariffs or a cap and trade regime).
Pragmatic Capitalism
8 comments:
I can't speak to the Works Progress Administration in the US (didn't a Galbraith work on that?)but the Full Employment White Paper in Australia seems to be MMT to me. The rationing (in it) constrains bottlenecks that could lead to inflation. And I have a link to the paper here: http://t.co/3u8890RT
As that is my main concern with the JG politically - it'll be inflationary, no it wont - it is implemented and inflation comes indirectly from somewhere and is blamed on the JG
Re: Galbraith - not the WPA but the Humphrey-Hawkins Act.
I beleive Galbraith was on the Price administration during the war.
If and when Congress stipulates that tax revenue is not required for government spending, Beowolf's Conservative Keynesian approach seems the most expediant politically. Removing social security and medicare taxes should make absolute sense to anyone who understands what's going on.
JG will be a very tough road.
Senexx,
You guys seem to do a better job handling the basic blocking and tackling (as they say in American football) of public finance than we do.
I'm curious, aside from the universal Medicare system, what sort of benefits/ tax credits/ public jobs are available to unemployed Australians?
My response here is anecdotal Beowulf. I say that because at present my answer would be none. There's probably an answer I'm not sure what though.
I would add that our version of student debt seems to work well though, now called FEE-HELP (formerly HECS) works as a government income-contingent loan. You pay your tuition up front, get 25% off, or defer it & only pay x% when you earn Y income on your tax & that gets progressively higher.
Our Workfare or work for the dole & benefits are indefinite as long as you comply with forms usually looking for four to ten jobs (depending on your location) every two weeks (fortnight) & in 6 months time you'll have to do work for the dole which ultimately involves working for a non-profit as a volunteer (so as not to take a job from another) & there is no time limit to the benefits like 99ers.
There is an asset test of both liquid and hard assets but it doesn't apply to owner-occupied homes and the liquid test is way too low to be liveable on without work (so I assume people lie to a certain extent)
There is a wage subsidy you can get that basically pays half your wage for 6 months if someone will employ you but the business does not get that money until the 6 months is up.
*and that's my just crawled out of bed answer*
"6 months time you'll have to do work for the dole which ultimately involves working for a non-profit as a volunteer (so as not to take a job from another) & there is no time limit to the benefits like 99ers."
Thanks for the info. Anyway, that's how to back into a JG here. Repeal (the post-crash) 99 week extension, which would limit unemployment benefits again to the standard 6 month limit. At the same time, offer a workfare job with a govt agency or nonprofit to anyone willing to work as long as they're willing to work.
Funding it is the challenge. Obama's knack for pre-compromising has really crippled his administration. If he had come out in favor of a Job Guarantee, the GOP would have countered with a large payroll tax holiday or some other kind of tax credit... Obama would have caved, but it'd have been OK.
Since instead, Obama started with a payroll tax credit and then offered a payroll tax holiday, he left the GOP nothing to take back to their partisans except NO.
That's OK.
Doesn't really work here though as the workfare at the NFP you still only get the standard welfare benefits and the whole job search still applies.
I confess I don't have a full grasp of the politics you just desribed.
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