An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
"The only people who believe it is 20 million people engaged directly by the government are those that have an ideological aversion to it."
I think there might be a difference between those who think the JG is a good/reasonable way to deal with unemployment when one gets close to the supposed NAIRU, and those who see it as a way to directly eliminate unemployment even when it's running into the tens of millions. For example, Wray believes that the JG should be implemented immediately, even if it means employing (or indirectly employing through non-profits) up to 30 million people.
Others find this a bit alarming and think that it would be better to reduce employment within the private sector first through other policies, and then implement the JG to mop up the remaining unemployed as we get close to the NAIRU or thereabouts (and thus switch over to a NAIBER policy).
Wray seems to think that any approach other than the immediate implementation of the JG would end up being very inflationary, but I'm not certain this is necessarily true.
It might be that some combination of normal Keynesian stimulus and gradual implementation of the JG would work best.
Rather than getting skilled unemployed people to go into the JG (doing generally low-skiill work, which might be a waste of time for them), it might be more effective if a fiscal stimulus resulted in them being directly re-hired into their profession.
With the JG stimulus, the money is essentially injected into the economic 'base', and then ideally 'filters up' - but this approach could potentially take a while to get get the economy moving again if it is not substantially complimented by other fiscal policies aimed at reviving specific industries or encouraging investment, for example.
That is not actually what Randy said. If was giving a hypothetical, saying that government could do this, not that he recommends it under present circumstances. The MMT position is to use the sectoral balance approach to the amount of offset for demand leakage needed and provide that. The MMT residual is then mopped up with the MMT JG. Spreading the notion that MMT recommends the MMT JG alone to address unemployment now sowing a false meme. Don't fall for it.
Have you links to Randy advocating immediately implementing the JG? I have the impression that MMT central Bill, Randy, Warren, Stephanie, Pavlina, Marshall, and Scott,all envision an MMT program including immediate implementation of a full payroll tax holiday, one-time State revenue sharing grants of at least $500 per person, and the JG. Since the JG is likely to take at least 6 months to implement. It strikes me that by that time the other two measures will have reduced U-3 to at least 5%, perhaps much less because of expectations about the JG coming online shortly.
In any event, I think we're looking at a JG that will never exceed 10 million and that within 6 months of JG operation will be down to a 3 million at most, and maybe less than that.
Btw, Randy's annual JG Cost estimates are 1% or less of GDP. That's about $160 B. At 30,000 per person average, that's 5.3 million people on the JG program, not 30 million. The "or less" means that the cost could well fall to 0.5%, which would be less than 3 million people.
Btw, see Phil Harvey's paper on likely costs: http://www.philipharvey.info/fundingjob.pdf
Randy: OK so let us say we have ELR in place, do we need big government? No. ELR by itself will probably run 1% maybe 2% of GDP. That is exceedingly small. ELR workers will do a lot of the things we want government to do. Is it enough? I doubt it. But, again, this is mostly a political matter. Now there is a question about instability. As a rule of thumb, Keynes and Minsky lead us to conclude swings of the budget ought to be big enough to offset swings of investment (adjusted by swings of the trade balance). That gets us up to a minimum government budget of 10% to 20% or more, depending on the amount of countercyclical swings you build into the budget. Still quite small. Add more and season to taste. I want good wine flowing from all fountains. So add another few tenths of a percent or two. What do you want? I think we will end up with a government that is 20%-50% of GDP depending on taste.link
7 comments:
'Medicare for All' is the National Health Service - and that doesn't solve the unemployment problem anywhere else in the world.
Job Guarantee is more of a 'somebody-will-pay-your-wages' guarantee than anything else.
The only people who believe it is 20 million people engaged directly by the government are those that have an ideological aversion to it.
And again the only progressive alternative is that you pay these people the same amount of money for doing nothing.
Or you support extermination of the poor.
Thanks, Neil. I couldn't agree more!
"The only people who believe it is 20 million people engaged directly by the government are those that have an ideological aversion to it."
I think there might be a difference between those who think the JG is a good/reasonable way to deal with unemployment when one gets close to the supposed NAIRU, and those who see it as a way to directly eliminate unemployment even when it's running into the tens of millions. For example, Wray believes that the JG should be implemented immediately, even if it means employing (or indirectly employing through non-profits) up to 30 million people.
Others find this a bit alarming and think that it would be better to reduce employment within the private sector first through other policies, and then implement the JG to mop up the remaining unemployed as we get close to the NAIRU or thereabouts (and thus switch over to a NAIBER policy).
Wray seems to think that any approach other than the immediate implementation of the JG would end up being very inflationary, but I'm not certain this is necessarily true.
It might be that some combination of normal Keynesian stimulus and gradual implementation of the JG would work best.
Rather than getting skilled unemployed people to go into the JG (doing generally low-skiill work, which might be a waste of time for them), it might be more effective if a fiscal stimulus resulted in them being directly re-hired into their profession.
With the JG stimulus, the money is essentially injected into the economic 'base', and then ideally 'filters up' - but this approach could potentially take a while to get get the economy moving again if it is not substantially complimented by other fiscal policies aimed at reviving specific industries or encouraging investment, for example.
That is not actually what Randy said. If was giving a hypothetical, saying that government could do this, not that he recommends it under present circumstances. The MMT position is to use the sectoral balance approach to the amount of offset for demand leakage needed and provide that. The MMT residual is then mopped up with the MMT JG. Spreading the notion that MMT recommends the MMT JG alone to address unemployment now sowing a false meme. Don't fall for it.
Have you links to Randy advocating immediately implementing the JG? I have the impression that MMT central Bill, Randy, Warren, Stephanie, Pavlina, Marshall, and Scott,all envision an MMT program including immediate implementation of a full payroll tax holiday, one-time State revenue sharing grants of at least $500 per person, and the JG. Since the JG is likely to take at least 6 months to implement. It strikes me that by that time the other two measures will have reduced U-3 to at least 5%, perhaps much less because of expectations about the JG coming online shortly.
In any event, I think we're looking at a JG that will never exceed 10 million and that within 6 months of JG operation will be down to a 3 million at most, and maybe less than that.
Btw, Randy's annual JG Cost estimates are 1% or less of GDP. That's about $160 B. At 30,000 per person average, that's 5.3 million people on the JG program, not 30 million. The "or less" means that the cost could well fall to 0.5%, which would be less than 3 million people.
Btw, see Phil Harvey's paper on likely costs: http://www.philipharvey.info/fundingjob.pdf
Randy: OK so let us say we have ELR in place, do we need big government? No. ELR by itself will probably run 1% maybe 2% of GDP. That is exceedingly small. ELR workers will do a lot of the things we want government to do. Is it enough? I doubt it. But, again, this is mostly a political matter. Now there is a question about instability. As a rule of thumb, Keynes and Minsky lead us to conclude swings of the budget ought to be big enough to offset swings of investment (adjusted by swings of the trade balance). That gets us up to a minimum government budget of 10% to 20% or more, depending on the amount of countercyclical swings you build into the budget. Still quite small. Add more and season to taste. I want good wine flowing from all fountains. So add another few tenths of a percent or two. What do you want? I think we will end up with a government that is 20%-50% of GDP depending on taste. link
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