Sunday, March 18, 2012

Randy Wray — Introduction the the Job Guarantee or Employer of Last Resort


I don't ordinarily post links to New Economic Perspectives, since I assume that those interested in MMT already check it regularly. But the MMT JG has been a hot button topic lately, so I am calling attention to this post.

Read it at New Economic Perspectives
MMP Blog #42: Introduction the the Job Guarantee or Employer of Last Resort
by L. Randall Wray | Professor of Economics, UMKC

19 comments:

Ryan Harris said...

Brilliant, as always. Doesn't give an inch and uses reflection against the critics.

Matt Franko said...

"I think that once the program is fully understood the only opponents will be those who enjoy seeing others unemployed. As I have argued, we cannot rule out cruelty. It is part of the human condition. So I do understand that some people like to witness the suffering of others—those they consider to be “undeserving”. Cruelty will always exist. But we should never let the cruelest people in our society dictate public policy."

I very much agree with this line of thinking... what I would look for though is that the ones who enjoy to watch the suffering will never be the ones who will fully understand the JG.

"18 their comprehension being darkened, being estranged from the life of God because of the ignorance that is in them, because of the callousness of their hearts,
19 who, being past feeling, in greed give themselves up with wantonness to all uncleanness as a vocation." Eph 4

These are the ones who will never get it.

Prof Wray again: "But we should never let the cruelest people in our society dictate public policy."

"4 If indeed, then, you should have tribunals for life's affairs, the contemptible in the ecclesia, these you are seating?
5 To abash you am I saying this. Thus is there not among you one wise man who will be able to adjudicate amidst his brethren..." 1 Cor 6

These contemptible morons should not be allowed anywhere near the authorities of civil government...

resp,

Anonymous said...

Wow, that was a bit strong Matt. I take it that was tongue in cheek.

Jonf said...

I am looking forward to this series. I have a sense this is a program long past due. I rather suspect there will be continued opposition, out of ignorance and cruelty. Dr Wray will do away with the ignorance part, I think, but who can account for those who wish misfortune on others? Likely they will have a plethora of objections, all sounding very lucid but all a sham.

paul meli said...

"Wow, that was a bit strong Matt"

You think that's strong after observing the neo-liberal lynch mobs in action?

Dan Kervick said...

People don't just support unemployment because they enjoy seeing some people unemployed. They support it because they believe that chronic involuntary unemployment is socially beneficial because it holds labor costs down and propagates an anxious, hustling "stay hungry" mentality that promotes industry. Just as societies punish criminals to make sure people obey the law, they threaten people with unemployment and destitution to promote hard work.

Some people are Social Darwinists as well. They tend to support a system of chronic involuntary unemployment for the same reason some people support throwing deformed babies into the ocean. They think the system separates the weak from the strong, and by rewarding the strong leads to a healthier society.

There are good "economic" reasons that can be given for promoting full employment. But the strongest ground for resisting the pro-unemployment forces is the moral ground of a commitment to human dignity and the value of each individual in the human family.

Leverage said...

Well, it's a war of ideology.

There will be mad people trying to sabotage any attempt to make the economy more forgiving and any progressive policy. They are mad, trying to make them understand is futile, they have rationalized it all already.

But I'm confident they are just a loud minority, and most people see how not giving alternatives to people is bad for everyone in the end. Just like almost everybody has a sense of social justice, fairness and wants a more egalitarian (in the wealth sense of the word, ie. more wealth for everybody) society, they just don't agree on how to get there (we may have to work a little bit more about what we consider wealth though, wealth != consumption/money, not only at least).

With strong arguments in favour of one policy over other most people will agree. But you never know, in USA there seems to be a lot of insane people who think things are like they are because of socialism! I have hope for other nations though, when they realize they are not broke!

Tom Hickey said...

According to Ravi Batra, one of the characteristics of the acquisitive mindset is mocking the less fortunate. This eventually results in social unrest and an uprising of workers against the acquisitors that make up the ruling elite. Since the worker mindset is not geared for rule, the cycle begins again with the ascendancy of the warrior mindset, which assumes power.

It is important to note that the four major mindsets are warrior, intellectual, acquisitor, and laborer, and they are define not by class, caste, occupation, or social role, but by the characteristics of different mindsets.

Tom Hickey said...

"Dr Wray will do away with the ignorance part"

There is actually a lot of ignorance involved and some is the result of denial and some is willful ignorance.

"It is difficult to get a man to understand something, when his salary depends upon his not understanding it!"
— Upton Sinclair, I, Candidate for Governor: And How I Got Licked (1935), repr. University of California Press, 1994, p. 109.

Matt Franko said...

" the cycle begins again with the ascendancy of the warrior mindset, which assumes power."

Tom, I see a parallel; from wiki:

http://en.wikipedia.org/wiki/Lucius_Cornelius_Sulla

"Sulla's dictatorship came during a high point in the struggle between optimates and populares, the former seeking to maintain the power of the oligarchy in the form of the Senate while the latter resorted in many cases to naked populism, culminating in Caesar's dictatorship. Sulla was a highly original, gifted and skilful general, never losing a battle; he remains the only man in history to have attacked and occupied both Athens and Rome. His rival, Gnaeus Papirius Carbo, described Sulla as having the cunning of a fox and the courage of a lion - but that it was the former attribute that was by far the most dangerous. This mixture was later referred to by Machiavelli in his description of the ideal characteristics of a ruler.[2]
Sulla used his armies to march on Rome twice, and after the second he revived the office of dictator, which had not been used since the Second Punic War over a century before. He used his powers to enact a series of reforms to the Roman constitution, meant to restore the balance of power between the Senate and the tribunes; he then stunned the Roman World (and posterity) by resigning the dictatorship, restoring normal constitutional government, and after his second Consulship, retiring to private life."

resp,

Tom Hickey said...

Most counterarguments to a JG and social welfare in general are based on economic efficiency as a criterion. Productivity is basically about efficiency, for example.

As Peter F. Drucker points out the basic criteria of management are efficiency and effectiveness. In The Effective Executive (1993), Drucker's main point is that efficiency is doing things the right way, and effectiveness is dong the right things. Effectiveness is about purpose, policy, mission, goals, and objectives, which determines strategy and tactics. Strategy and tactics are concerned with the use of resources to execute the plan that is determined by policy, which ultimately is determined by values. Good strategy and tactics use available resources as efficiently as possible to effectively achieve prioritized objectives that lead to policy goals. Efficiency is in the service of effectiveness, and efficiencies are adjusted and even sacrificed in the process as necessary to accomplish the mission.

Efficiency, being concerned with means, can itself never be a policy goal. Effectiveness determines efficiency, not the other way around.

Moreover, efficiency is quite different in different contexts. Nature is brutally efficient and those who are less competitive are don't survive to pass on their DNA. However, although humanity is a part of nature, civilization enables humanity to rise above the laws of nature and to live in accordance with natural law as the expression of human nature.

Sages of every time and clime have said that the basic law of human nature is love. They caution, however, that love is be perverted by self-interest and to the degree love is perverted by selfishness, it becomes lust — lust for fame, power, fortune, and pleasure, for example, which what economics consider utility.

Social Darwinianism and arguments from efficiency are just wrong as factual claims in that their basic assumptions are without support other than as assertion of norms, that is, they are normative rather than positive, as they falsely claim to be.

Effectiveness is fundamentally normative because policy is determined by values. Therefore, different value systems underlying different ideologies will yield different conceptions of what is effective in ordering life.

A key question in social studies as far as policy goes is, what kind of society does one choose to live in and how compatible is this with human nature. Obviously, different conceptions of human nature based on different value structures will yield differences in policy goals and therefore of what the criteria of effectiveness should be.

Science deals with what is and can be, and what is broadly called "philosophy" deals with what ought or ought not to be based on what can be. Of course, keeping these straight in so far as possible is essential to clarity. However, supposing that they exist entirely independently is folly, for everything that human beings do is related in some way to purpose, and purpose presupposes preference structures that includes values.

Tom Hickey said...

Good one, Matt.

Batra points out that at the beginning of each cycle it is generally the high type of the ruling mindset that prevails. Gradually this declines, until the a low level of the mindset is reached and then that mindset loses power to the succeeding high type mindset. The cycles continue in that fashion as a general rule, although there are many exceptions historically.

Sulla was a good example of the high type of the warrior mindset, which is high-spirited, valorous, honorable and magnanimous rather than brutal, ruthless, power-loving, and self-serving.

Anonymous said...

Wow Tom, you pretty smart. Must be all that there book-lernin and book smarts you got goin on up in there

Clonal said...

Also somewhat relevant is Mark Schmitt's fireside chat - How to Move Past the Myth of the Job Creator

Quote:
In last week’s episode of “Fireside Chats” on Bloggingheads, Roosevelt Institute Senior Fellow Mark Schmitt chatted with Eric Liu, co-author of the new book The Gardens of Democracy. In the clip below, the two discuss the tired meme of the job creators and that “the economy should revolve around a tiny number of rich people,” as Eric puts it. That’s not why people go into business, Mark points out, paraphrasing a lapsed job creator. “If they’re successful they may create jobs, but that’s not what they’re setting out to do,” he says.

Even after the lessons of the Great Recession, Eric points out, we still seem to believe that “it is from [rich people] that wealth and jobs and employment and prosperity spring,”

Tom Hickey said...

Basic management theory and practice, Anon, what the US excels at.

Matt Franko said...

Anon,

No.

Resp,

Andy said...

Matthew
I agree totally with your sentiments. They are also, as far as I am aware, completely in line wit the view of the people who came up with MMT in the first place.
Resp

Ryan Harris said...
This comment has been removed by the author.
Tom Hickey said...

Traveling around the world and comparing the US to other cultures and past civilization, the US strong on quantity and low on quality. Americans in general don't appreciate quality and have not developed a culture or civilization commensurate with the economic and political might of the US and its place in history. Americans have even managed to degrade quite a bit of the county's natural beauty, in which it is fortunately abundant. Overall mark, meh.

It is surprising for an immigrant country. One would expect people with highly developed cultures to produce and expect higher quality. Event the industrious and practical Germans have produced high culture. Americans, not so much. Nice roadside billboards though.