Thursday, January 5, 2012
John Carney clarified his stance on the MMT JG
John Carney commented on Pavlina R. Tscherneva's post, What’s MMT About Anyway and is the Job Guarantee Crucial to the Project? at New Economic Perpectives, the Kansas City School MMT site. I am reposting John's comment here for the record since it concerns the entire debate that has been raging since John initially proposed it some time ago, as well as to elicit comments from commenters here that have been following this debate.
John Carney writes....
Since I've been one of the critics of the Job Guarantee, there are a few points I'd like to make in response to this.
1. I agree that (a) unemployment is a social evil, (b) it is a serious macroeconomic problem of capitalist economies, and (c) the private sector cannot deliver a long term solution. Our point of disagreement is not on whether the world is beset by evils but whether or not a state-created program--more specifically, the Job Guarantee--can eradicate the evils.
2. I've laid out some serious problems with the JG: (a) there's no evidence that enough suitable ready-made jobs exist or can be created (the typical MMT list doesn't work), (b) we cannot possibly know or reliably predict the full range of consequences that will arise from changing the terms of employment so starkly, and (c) we are basically in the dark about how this will interact with the vast web of complex regulations already in place.
3. Unemployment is much simpler than the JG. It does not require a vast nationwide apparatus of job inventors and supervisors. It leaves the work of job creation in the private sector, where most jobs will be created by small start-ups. We know already that large bureaucratic organizations are bad at creating jobs.
4. The JG creates systemic risk. If it is too generous, it could undermine the private sector. A private employer who 'overpays' is disciplined by the market in the form of lower profits. A public employer just has to guess.
5. It may be the a JG would be the preferable stabilizer if we could make it work. But if we cannot, perhaps we must stick with other economic stabilizers that we know are imperfect but operationally sound.
6. The burden of proof is on the reformer MMTers to show not just that unemployment can be eliminated and prices stabilized, but that we can be prosperous in this new and untried system. As Cullen Roche said, we know we can have widespread prosperity and improved living conditions with unemployment. We don't know if we can have prosperity with the JG.
7. Not all of us are would-be world-improvers. In fact, I tend to believe the urge to world improvement interferes with analysis and telling the truth. There's a long and respectable tradition in avoiding the urge to improve things.
I do appreciate the uncommonly civil tone with which we've been able to conduct this discussion. Maybe we all feel some sympathy for fellow fringe wing-nuts.