John Carney: My point about the lack of demand for the products of the JG is related to inflation. The JG will increase aggregate demand without increasing aggregate supply of market demanded goods. This isn’t a judgment about the inherent worth of the the JG goods. It is a judgment about the inflationary tendency of the JG.
Tom Hickey: I may be dense but I don't get this. The US economy is a primarily service rather than a production economy. All the funds that flow through the service sector do not result in inflation even though no real goods are produced in the service sector. As far as I can see, the JG would slightly increase the service sector. I say "slightly, since if it were implemented as part of MMT macro policy based on sectoral balances and functional finance, then the residual of people involuntarily employed in the private sector would be contained even in downturns in the business cycle. Moreover, the financial cycle would be blunted by reforms such as Warren Mosler has proposed. What am I missing here?The position of MMT on full employment and price stability is that for full employment to exist in the face of a non-government surplus, that is, more saving by non-government, summing the domestic private sector and foreigner sector, then government must offset that with a corresponding deficit, or the market for all goods and services capable of being produced with available resources will not clear, and an output gap will open, resulting in less than full employment. Conversely, if effective demand exceeds the ability of the economy to expand to meet it, then inflation will develop.
As long as there is involuntary unemployment, then the economy has real resources available and can expand to meet effective demand if stimulated. Government hiring those who are able and willing to work but have no job offer at a floor wage will automatically result in an expansion of employment in the direction of full employment (less frictional) and the workers will produce services demanded.
There is only a problem is one excludes government from the economy. However, government is one of the major participants, as Y = C + I + G + (X-M) states.
For the sake of the argument, let's suppose that instead of a domestic JG, those unemployed were required to report for the military until they got a domestic job offer. Would that be inflationary?
What about the vast military-industrial complex that is funded by government and produces no goods and services for the domestic economy? Is that inflationary?
45 comments:
I would think the military complex does have an inflationary bias.
I don't think it matters if it is a good or service. The point is that you want to increase the quantity of things in the economy that the private sector wants to buy.
Regarding the first point, let's put it this way. Mosler says govt spending has an inflationary bias, and taxing the opposite. Military is a form of govt spending. Some amount of taxes would be needed to offset its inflationary bias, all other things constant (presumably).
I would think the military complex does have an inflationary bias.
Of course it does. My point is that no one wants to talk about it. In comparison an MMT JG would be limited.
The point is that you want to increase the quantity of things in the economy that the private sector wants to buy.
Government is not "in" the economy? What about Y = c + I + G + (X-M). Sure looks to me like it is. Why is the private sector so special here when government (federal, state and local) makes up a huge portion of the economy with military, education, health care, administration, etc. all necessary services that contribute to public purpose?
Some amount of taxes would be needed to offset its inflationary bias, all other things constant (presumably).
Right. At or near full employment taxes would be used to moderate effective demand by withdrawing NFA. At under full employment taxes can be cut to stimulate effective demand.
Using the sectoral balance approach and functional finance swings in involuntary unemployment would be moderated.
There is a big element missing. first, many of these unemployed have purchasing power (either through savings or through unemployment benefits). having them work in the job guarantee program probably won't significantly effect their purchasing power (with the exception of health benefits being covered freeing up purchasing power). The flipside is that the Job guarantee will provide more services and build infrastructure. This will lower the cost of living for non-job guarantee workers and thus push down on the amount workers need to be paid without pushing down their living standards (or conversely increase their productivity by increasing their standard of living). Similar cost savings will be made for businesses through providing infrastructure (transportation costs etc). This also ignores the reduced social costs of making chronically unemployed people employable. I think that the job guarantee, by itself, has a deflationary (but not debt deflationary) bias. In fact, i suspect that the job guarantee wage will have to be periodically raised as "unskilled" productivity rises so that the dollar stays "pegged" to a certain amount of unskilled labor output.
The point is, the indirectly reduced labor costs and directly reduced transportation, energy and raw material costs (eg: infrastructure, weatherizing and efficiency improvements, recycling respectively) to firms should not be ignored when trying to figure out the inflationary/deflationary bias of a job guarantee.
"Government is not "in" the economy? What about Y = c + I + G + (X-M). Sure looks to me like it is. Why is the private sector so special here when government (federal, state and local) makes up a huge portion of the economy with military, education, health care, administration, etc. all necessary services that contribute to public purpose?"
It is in the economy in the sense that it pulls NFA out of the economy through taxes. Without taxes though, G spending has an inflationary bias, all else constant. Nathan brings up good points to the contrary.
When you say moderate swings, how does that address inflation? Do you mean there would be a one-time inflation kick, and then from there on out it would be moderated?
When you say moderate swings, how does that address inflation? Do you mean there would be a one-time inflation kick, and then from there on out it would be moderated?When you say moderate swings, how does that address inflation? Do you mean there would be a one-time inflation kick, and then from there on out it would be moderated?
Off the top of my head, if the JG were instituted with UE as elevated as it is now there would not inflationary effect to speak of. Instead, the economy would kick into higher gear and the output gap would close. As it closed, then the sectoral balance approach and functional finance could keep things in line
Of course, that's the theory. Numbers would have to be put to different scenarios to model them and contingency plans developed based on that. It's not possible to know exactly how things will develop, since we are still in the midst of a financial crisis, with things uncertain in many parts of the world that pose potential risks for the US economy.
My own feeling is that deflationary scenarios are more likely than inflationary ones for the foreseeable future, as I have set forth in previous comments here and elsewhere. But contingency plans need to be ready in any case.
The distinction between goods and services is irrelevant: I am sure that when Carney said “goods”, he meant “goods and services”.
Carney’s point was as follows. The wage paid to JG employees is extra demand. Actually that is a weak point: to the extent that JG employees get no more than they get on unemployment benefit, there is NO EXTRA demand. He would have been on stronger ground citing the extra demand stemming from the capital equipment and materials required for JG schemes.
Anyway, assuming the economy is at NAIRU, that extra demand will be inflationary.
Tom says “JG would slightly increase the service sector..” and argues that therefor JG would not be inflationary. Nope: because some of the extra demand stemming from JG would spill over in to extra demand for GOODS (in particular the above mentioned equipment and materials). Assuming unemployment is at NAIRU, that’s where Carney’s inflation comes from.
I.e. traditional JG is not good at breaking thru the NAIRU barrier. On the other hand JG a la Ralph is (needless to say) brilliant at breaking thru the NAIRU barrier. See:
http://ralphanomics.blogspot.com/2011/12/unproductive-employees.html
BTW Tom: there’s no link above to the relevant Carney article is there?
"Off the top of my head, if the JG were instituted with UE as elevated as it is now there would not inflationary effect to speak of. Instead, the economy would kick into higher gear and the output gap would close. As it closed, then the sectoral balance approach and functional finance could keep things in line."
Nathan has good points, but for the sake of argument, let's assume he is wrong.
What do you mean by FF could keep things in line once we're at FE? If the JG is inflationary in the sense that it is adding NFA without a concomitant increase in goods/services the private sector wants to exchange its money for, doesn't FF mean we will have to raise taxes? And so we're back to the typical view of taxing to expand govt, and how palatable would that be?
"Carney’s point was as follows. The wage paid to JG employees is extra demand. Actually that is a weak point: to the extent that JG employees get no more than they get on unemployment benefit, there is NO EXTRA demand. "
UE benefits usually only last .5 years I believe.
None of this matters. Warren knows the JG is secondary to MMT. He has told me this personally. He simply says that best way to optimize output is via the JG, but he is very clear that the JG is not central to MMT. In other words, MMT doesn't need the JG. The JG needs MMT.
Since it's a political non-starter and will be for decades, we might as well focus our energy on furthering the MMT message and actually finding ways to eventually influence policy. All of this JG talk makes us look like a bunch of irrational extremists. As many commenters on my site have said, we look like the Rothbards in the Austrian camp! Is that what you want?
We need to get back to the progress we were making in recent months and stop distracting people with the idea that we think the US govt NEEDS to hire every breathing man, woman and child. If we continue to do this to ourselves we'll bury the theory before it even gets anywhere. Bill should have never implied that MMT = JG. He was wrong. Warren has specifically stated that so let's stop pretending the JG is central to MMT. It's not and it's becoming an enormously destructive distraction.
Cullen
@ Anonymous
If the economy operates at "full capacity" when JG is introduced, there could be a once-off inflationary episode (unless offset by a tax hike).
I and John B Lounsbury lay this out in pain-staking detail in The Job Guarantee Brouhaha, published yesterday as a response to one of Carney's articles.
Link fail. Another try - The Job Guarantee Brouhaha...
With respect I disagree with Cullen. I think we all agree that a buffer stock is a part of MMT. Warren has stated as much - just take your pick of which one.
If anyone prefers a buffer stock of unemployed they're entitled to but it makes them an ass.
I don't know about you but I have followers from Spain, Brazil, Australia, the United Kingdom and elsewhere - MMT is applicable to all sovereign economies.
On that note, I was a bit terse with Cullen (along with others) on buffer stocks the other day. I apologise.
I acknowledge the JG is a difficult political proposition for the US but so was and in some respects is Universal Healthcare. Other countries are more advanced in this regard.
For some the JG is just a matter of temporal logic - as in we need it now but we don't in the upswing. It is like misunderstanding tax and welfare benefits as automatic stabilizers. That is like saying we can abolish welfare benefits during a boom.
I look forward to seeing how full productivity may lead to full employment in Cullen's forthcoming article.
And as Joe Firestone points out a full employment Job Guarantee is not mutually exclusive from achieving full productivity.
It seems to me that whether the JG is inflationary or not depends on what kinds of jobs the government is providing and whether the goods and services produced by those jobs are being sold in the marketplace or are just being delivered to the public for no additional cost.
Suppose, for example, the current demand for widgets stands well below trend because of a general drop in aggregate demand due to a recession. Suppose the government decides to make widgets itself and directly hire people to make widgets. It adds money/NFAs to the economy in the form of wages for the widget workers. But it is also supplying more widgets. The country's workers have more income overall now, and take more money into the marketplace to buy things; but there are also more goods now in the marketplace. No inflation.
Widgets just stand in here for any collection of marketed goods or services the government might produce. If the government is functioning just like any other employer in producing goods and services people really want to buy, then when the government spends on the production of those goods and services it should have no more inflationary bias than when a private company spends on the production of additional goods and services people want to buy.
If instead, though, the government hires people to produces goods and services that, while valuable, are simply delivered to individuals or the public at no additional charge - fore example, the improvement of public property and infrastructure, the provision of free public services, etc., then the additional many introduced in the form of wages is not used to buy back the additional goods and services that are produced. So the effect in this case might be, not higher rate of inflation, but a one-time boost in the price level.
Where I wrote:
"then the additional many introduced in the form of wages is not used to buy back the additional goods and services that are produced."
I meant to write:
"then the additional money introduced in the form of wages is not used to buy back the additional goods and services that are produced."
I should clarify by adding that because the additional money is not buying back the additional goods and services, it goes into the marketplace to buy existing goods and services.
Thanks for the link, Hugo. Good job.
I half agree with Cullen. I agree that JG is separate from the monetary aspects of MMT: e.g. it would be easy to implement JG under a non-MMT monetary regime. They did that with the WPA in the 1930s didn’t they? I also agree that we will look stupid if we claim anywhere near 100% of the unemployed can or should be put onto JG work: that is just plain unrealistic.
But there is no harm in debating JG in the abstract and trying to get the theory behind it right.
"buffer stock of unemployed" is an oxymoron.
Think of the old "govt cheese" giveaway here in the US that Reagan did back in the 80's:
IMO that cheese would have been considered a "buffer stock" in the way most are talking about labor here ie "buffer stock of unemployed"
The govt did not originally pay $0 for the cheese from US dairy industry. they paid a POSITIVE PRICE (ie the govt PREVIOUSLY DETERMINED THAT THE CHEESE HAD GREAT VALUE AND THEY BOUGHT IT UP) for it and then took it into inventory in US govt warehouses. this is not a "buffer", it is omo by the govt in the dairy industry.
The cheese never left the warehouses until it was GIVEN away by Reagan due to "taxpayer on the hook" beliefs about storage costs, ie it was looked at as "cheaper to just give it away to senior citizens".... so back then the govt bought up all of the surplus cheese at govt determined minimum price that the private sector cared to sell it. Govt inventoried it and eventually just gave it away for free probably when "free market" prices were well above the "anchor" price the govt originally paid for the cheese.
So to say "buffer stock of unemployed" would be like saying back in the 80's, instead of paying dairy farmers for their surplus cheese, the govt would have just went around and collected up the cheese from the bankrupt farmers for free instead of just letting it go to waste and then just gave it away... ie chaos.
This would not have been a "buffer stock of free cheese". You wouldn't term it that way; maybe "disaster recovery"?. Govt can not establish a "buffer stock" of anything at price $0.
Resp,
The problem here is Carney doesn't understand what a buffer stock is.
If the JG actually functions as a buffers stock, its inflationary impact will be smallest when the economy is doing best and most likely to have rising inflation, and vice versa (program is largest when inflationary pressures are lowest). Indeed, in my simulations that made the assumption the buffer stock mechanism was working, when the economy was booming and most prone to inflation, the JG was reducing inflation since it was at that moment that spending on the program was declining the fastest.
Now, it's another story entirely to argue that the JG will function as a good buffer stock--that is a serious undertaking and it's quite possible to design a large-scale jobs program that does not do that. But note that in that case MMT economists would also be very critical of such a program for similar reasons that Carney is now.
Ralph Musgrave pretty much captured what would be my response here.
If the JG really doesn't result in people having more spending power than they would receiving unemployment benefits (something I think would make the JG extremely unpopular), then sure, you don't have to worry about inflation.
And, yes, military spending is inflationary.
Why does a buffer stock of unemployed make anyone an ass? It seems to me that the asses are the Marxists who insist on spreading the wealth.
Ralph: BTW Tom: there’s no link above to the relevant Carney article is there?
My bad. Thanks for the heads up.
I edited the post to include links to John's and my comments at heteconomist.com, On the Market Evalution of Productiveness, where they appear.
John,
I think you are failing to take into consideration that the JG is supposed to pay people to produce goods and services. So yes, of course it adds to the purchasing power of currently unemployed workers. But it also adds to the total stock of goods and services available. There is more money in circulation, but it is chasing more goods and service. In other words it increases the value of Q in the equation of exchange. No inflation need result.
When companies hire unemployed workers to produce some new or additional goods and services, is that process necessarily massively inflationary? Or even necessarily inflationary? No. Especially not in a recession when there is so much underutilized capacity in the economy. I don't see why the ordinary process in which enterprises provide additional income to workers in exchange for the production of additional goods and services suddenly becomes inflationary when the enterprise is a government enterprise and not a private sector enterprise.
It seems to me that in the back of your mind, you can't get away from the picture that the JG will only pay people to stand around and drink coffee. It's not. It can be an ordinary commercial process in which the employer happens to be the government.
Now it might be the case that the JG employs people not to produce valuable goods and services which are sold in markets, but instead to produce valuable goods and services that are are delivered to the public as public goods and services. Then there are two possibilities: either (i) the government imposes taxes which serve to regulate aggregate demand from another direction - thus preventing inflation, or (ii) the government does not impose any additional taxes in which case the additional purchasing power delivered to the JG workers as wages does generate a boost in the price level. But I think you would agree, wouldn't you, that that boost in the price level just represents a sort of tax imposed on everyone for the public goods and services that have been produced.
By the way, we should all be more careful about distinguishing a one time boost in the price level from inflation - which is a sustained rate of annual increase in the price level.
What this all comes down to is that whether the JG delivers the optimal bang for the public buck depends on how valuable are the goods and services produced by the program. I have argued before that there are tremendous public gains to be made here, because their are enormously valuable goods and services that the private sector routinely fails to deliver, and is fundamentally incapable of delivering.
What do you mean by FF could keep things in line once we're at FE? If the JG is inflationary in the sense that it is adding NFA without a concomitant increase in goods/services the private sector wants to exchange its money for, doesn't FF mean we will have to raise taxes? And so we're back to the typical view of taxing to expand govt, and how palatable would that be?
Presently, budgeting is done without any knowledge of sectoral balances and functional function, so there is no knowledge of why a deficit is required so that the sectoral balances will sum to zero at FE, and therefore there is no rationale for the budget other than political jockeying over special interest desires.
We can probably assume with some degree of confidence that if the budgeteers had a clue about that they were doing, then they could come close to a budget that was appropriate to the functional circumstances of reconciling growth, employment and price stability, using automatic stabilization inso far as possible.
However, it may be impossible to continual accomplish this without a residual of involuntary employment. MMT economists say it is not possible, as I understand them.
There then there is the question of what kind of a buffer will be used. The least efficient one is a buffer of unemployed due to the waste involved in idling resources.
I was granting that the JG may be somewhat inflationary for the sake of the argument. IF that were so, it would not be that big a deal in comparison with the cost of idling resources. The economy has been able to get along fine with moderate inflation rather than low inflation.
However, Warren holds, as I understand him, and I believe that the MMT economists do too, that a JG in not inflation but rather moderately deflationary. In other words, inflation could be higher without one as an inflation control mechanism.
Cullen you are conflating two separate issues that the MMT economists have distinguished.
First, there is the MMT macro theory that addresses reconciling the traditional big three issues in macro; GDP, FE & PS. According to them, the JG is an essential of the macro theory that they developed.
Secondly, there is the issue of using MMT macro as a policy tool, The MMT economists have said that while implementing the full MMT macro policy solution with JG is the preferred course, it is not absolutely essential to do so as a practical matter, and they admit that as a practical matter full adoption in e fell stroke is unlikely. So they agree that some of the MMT solution can be applied separately. But as Warren said, if the JG is omitted, don't blame "MMT" if there is inflation along with it.
I think you are overstating the case based on what I have heard from them.
Hugo, I've promoted The Job Guarantee Brouhaha to a post. Thanks for calling attention to it.
Conservatives are concerned about a JG being inflationary when work is being elicited and therefore some service is being added, albeit wrt to advancing public purpose. Government is putting NFA into the economy and using private resources sold to government, the time, energy, intelligence and skills of those hired on.
Contrast with with a basic income guarantee or "negative income tax" that is essentially a transfer payment involving no work and no production of goods or services. NFA is inject into the economy with not counterbalance. Yet, the negative income guarantee or negative income tax was advanced by many economists across the political spectrum.
In 1968, James Tobin, Paul Samuelson, John Kenneth Galbraith and another 1,200 economists signed a document calling for the US Congress to introduce in that year a system of income guarantees and supplements.[28] ....
Winners of the Nobel Prize in Economics who fully support a basic income include Herbert Simon,[30] Friedrich Hayek,[31][32] James Meade, Robert Solow,[33] and Milton Friedman.[34]
Wikipedia/Basic Income/Advocates
Why all the furor over a JG now?
One further consideration on the JG as a means of improving our economy's overall efficiency and equity as well as acting as a price stabilizer: To the extent that private sector enterprises are required to compete more aggressively with government enterprises for workers, in the context of a full employment regime, they might have to pay their workers more than they are currently paying them. They will also likely have to make a greater commitment to retaining workers over time, through good times and bad times, because once they release workers from their payrolls, they will have a more difficult time getting them back.
Current incentives are for businesses to cut costs by suppressing labor costs at the bottom, running lean workforces, and extracting ever higher levels of productivity. At the same time the ratio of executive to worker pay in the United States has reached astronomical levels compared to those in other advanced countries with comparable or higher standards of living and well-being. Returns of rental income through the stock market are also high, despite the declining condition of those in the bottom half of our economy.
Would employers respond to the more competitive labor market by passing on higher costs to their customers in terms of higher prices. Not in a situation of recession, intense competition for survival and deeply deficient aggregate demand. The market won't bear it.
What is more likely is that they will respond initially by looking for cost reductions in places they haven't been forced to look before: from the salaries, bonuses and benefits of their most highly paid employees, and from profit margins.
However, the boost in demand and purchasing power from the fully employed workforce will be a boon to business opportunity, and in the long run will be better for business as well, even if it does act to exert downward pressure on the returns from business going to the currently most privileged beneficiaries in the contemporary business landscape.
Dan K: It seems to me that whether the JG is inflationary or not depends on what kinds of jobs the government is providing and whether the goods and services produced by those jobs are being sold in the marketplace or are just being delivered to the public for no additional cost.
The WPA and CCC jobs produced a lot of public investment in road and bridge construction and repair, park improvement, conservation, and so forth, not of which was sold to the public, However, it was valuable investment in the future for public purpose that the public is still receiving a real return on in terms of use value.
The issue of product is a canard that distracts from the issue of what the actual outcome is in terms of transfer of private resources to public use with commensurate injection of NFA into the private sector. As long as the economy is able to expand to met the increase in effective demand due to the injections, no problem. The sectoral balance approach and functional finance take care of that.
Why all the furor over a JG now?
I think this is a fascinating question, Tom, especially since the JG - compared to the public dole - is the program that would seem to be more consistent with the work ethic that is allegedly part of the moral foundation of modern capitalism. It's strange that the JG seems like an extreme policy to many people who have no problem with other forms of government provision of income.
My hypothesis is that the hostility to the job guarantee is due to the fact that there are many people who are committed to the long term public policy strategy of keeping worker bargaining power at an absolute minimum, keeping worker dependency on employers at a maximum, and removing any competitive pressures coming from government.
I think we see a similar phenomenon in the health care issue, where many people in the business world seem to prefer a system in which companies remain required to provide health care for their employees, even though this significantly increases the cost of employing people. The dependency of the work-force on employer-provided health care is a key source of power in the endless power struggle between employers and their employees.
Tom,
Right how can they go against something the illustrious Milton Friedman advocated?
I think Beo has commented that Nixon was ready to do it until his political enemies got him thrown out...
Resp,
LVG: Why does a buffer stock of unemployed make anyone an ass? It seems to me that the asses are the Marxists who insist on spreading the wealth.
LVG, I as astonished that as a business person you don't seem to understand the cost of idle resources and their deterioration in value over time, as well as the resulting opportunity cost of the buffer stock of unemployed wrt to the buffer stock of employed.
I suppose that in your view Milton Friedman was a Marxist-Socialist for advocating a negative income tax as a basic income guarantee, which is a transfer payment rather than payment for work.
As long as the economy is able to expand to met the increase in effective demand due to the injections, no problem. The sectoral balance approach and functional finance take care of that.
I agree, Tom. But different ways of structuring the program can have different effects on the price level, and different effects on where the expansion takes place. I tried to sharpen up this line of thought in my subsequent response to John Carney.
Notice that if everyone who is unemployed is hired by the government, that diminishes somewhat the ability of the private sector to expand, since it is then more challenging for the private sector to lure workers out of a government job than to lure them out of unemployment. That's absolutely fine, so long as the public sector enterprises are producing something valuable. That's where the expansion of output comes. Otherwise, it would represent an increase in aggregate demand without a comparable increase in aggregate supply generated by either public and private enterprise - so we just get inflation with little additional production, and a net drain of financial assets back to the government sector as the higher prices automatically generate higher tax revenues.
But as I mentioned in reply to John, it doesn't matter if the goods and services produced by the JG are not bought and sold, but are instead bestowed on the public as public services of various kinds - child care, infrastructure repair, beautification, public arts, etc. - so long as they are valuable to the public. In this case, the price level will suffer a one-time rise, but that's OK, because the increase in prices just represents a a sort of tax on the products that are sold in the market that pays for itself in terms of the valuable services that are delivered to the public. It's a reallocation of public expenditure of real resources away from privately vended goods to publicly provided goods.
Agree, Dan, and I would throw into the mix the presently existing massive externality of the working poor who are receiving government assistance since they are not receiving a living wage to support them and their families. This amounts a to subsidy to firms involved, sometimes massively, like Wal-Mart, which became a scandal.
Prices and wages have to adjust to remove negative externalities or else business will continue to receive huge financial subsidies as well as be able to capitalize gains and socialize expenses like pollution, that don't have a price. That is to say, price must reflect true cost including externalties if we are to claim to have a system based on market capitalism.
Otherwise, it is a form of soft fascism, with government and business collusion that amounts to corporate statism. The road to serfdom runs two ways, and in fearing totalitarian socialism the US has fallen victim to state capture and soft fascism, which is turning into harder fascism as protest rises.
Let's call a spade a spade. Confucius called it "the rectification of names" millennia ago, and Plato warned against sophistry. This sleight of hand and "ledgerdemain" is nothing new. We've seen it before in many other guises.
> Hugo, I've promoted The Job Guarantee Brouhaha to a post. Thanks for calling attention to it.
Thanks for that, Tom!
I.e. traditional JG is not good at breaking thru the NAIRU barrier. On the other hand JG a la Ralph is (needless to say) brilliant at breaking thru the NAIRU barrier.
I'm with king ralph on this. The govt's unique selling proposition is spending money into creation and not its HR acumen.
LVG,
Because ultimately it involves deliberately keeping the involuntarily unemployed via coercion of the state.
There is no market clearing wage for labor, at least not at a lower and lower value, as this leads to the fallacy of composition that I explained in a previous response.
Working under the assumption that you read the linked post and responses, the comments by Taylor are also a fallacy of composition thus why I did not respond to them.
We would go around in circles.
Tom, made moves in your direction in an attempt to engage you further but you were not willing to accept his assumption with caveats so the conversation could not progress beyond intended pejoratives from yourself.
I hope you continue to read the MMT literature and continue learning instead of throwing up walls. I shall not be engaging you further.
Have the best of days.
Matt,
I don't know if buffer stock of unemployed is an oxymoron but used in context of MMT terms it is correct.
I do not like the term either, as that is what you imply, as it commodifies labour. Labour is a not a commodity.
These are people. People are not commodities.
Matt,
I don't know if buffer stock of unemployed is an oxymoron but used in context of MMT terms it is correct.
I do not like the term either, as that is what you imply, as it commodifies labour. Labour is a not a commodity.
These are people. People are not commodities.
Senexx, as I have often said, I an neither an economist by training, nor have I read widely in it. I did not become interested in the details of economics until the GFC, when I encountered MMT as the best explanation. I an an amateur MMT'er and no one should go by what I sayI don't have the background to know when I am going out on a limb or making a mistake.
So the Fed's inventory of USG securities is a "buffer stock"?
That they use to buy and sell in OMOs?
Resp,
Tom, we're in the same boat but as far as I'm concerned, you're on the money. Your logic is sound.
I will not hesitate to pick you up if I think there is a flaw.
Matt, that area of discussion is a big weakness of mine - so I cannot say.
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