Slate’s Matt Yglesias is out with another caricature of post on the Job Guarantee (JG) and, guess what? He still doesn’t like what he sees. He’s all for guaranteeing income to people who can’t find jobs, but he’s opposed to making receipt of that money “conditional on performing make-work labor for the government.” As one of the leading proponents of the JG, let me say this for the nth time: THE JOB GUARANTEE IS NOT ‘MAKE-WORK.’ This is not a reaction to Yglesias but a core principle of the earliest literature on the Job Guarantee (e.g., here, here and here). There is no way that anyone familiar with even a sliver of the vast collection of books, articles, essays, working papers, policy briefs and blog posts on the JG could, in good faith, continue to claim that the JG is “make-work.”New Economic Perspectives
After straw manning the JG, Yglesias expresses his enthusiasm for a Basic Income Guarantee (BIG). He prefers simply handing out money to the jobless because it’s not as “messy” as the JG. (I’ve already argued why such objections should not be taken seriously). But more importantly, like many BIG advocates, he assumes that the BIG will magically solve the fundamental problem of economic insecurity.
Here are sixteen reasons why this assumption is wrong.
16 Reasons Matt Yglesias is Wrong about the Job Guarantee vs. Basic Income
Pavlina Tcherneva
23 comments:
I'm glad Yglesias supports generous unemployment insurance.
It looks like Yglesias didn't read a word of Pavlina's original response.
My comment on that post:
I think MY's disagreement stems from the fact that he doesn't want to add to number of "government workers" (a largely inefficient group of people who spend their time getting in other people's way). And I am very sympathetic to that point of view. I'd much rather encourage private sector hiring, which is what wage subsidies would do. This will avoid creating more government/authority figures.
@ marries
The purpose of the JG is to provide a buffer stock of employed rather than a buffer stock of unemployed. What is required to do that is not government hiring but government funding of the residual that lack a job offer in the private sector. There are various ways to implement and administer this, but the important things are government funding for residual employment that keeps the economy at full employment less transitional. This eliminates the inefficiency of a buffer stock of unemployed.
No reason not to use other means to encourage private sector employment but in the end the residual unemployment falls to government to resolve. Some MMT economists encourage subsidizing non-profit sector employment for instance. I suspect that most economists think that subsidizing labor of for-profit private sector firms distorts the labor market.
I'd much rather encourage private sector hiring, which is what wage subsidies would do.
Why should we believe the private sector is up to the job. We can't transform the US and global economy with just more Chipotle Grill and Amazon.
or telemarketers... door to door sales... roadside sign wearers...
I'd rather have a BIG than telemarketers...
With any solution other than a JG some people willing and able to work still may not have a job offer at a living wage. The only way to get to full employment — a job offer for everyone willing and able to work — is for an employer of last resort to provide that offer when there are no other options at a living wage.
Now some will say that there is no economic need to provide a living wage. However, if a living wage is not provided then either some people starve or government subsidizes the firms that hire them at lower than the living wage. But such subsidies distort the labor market and economic calculation by allowing companies to produce at below true cost.
This statement of hers is at least borderline monetarist:
"3. Under BIG, production drops, consumption rises, and so do prices. Suddenly, the value of the BIG grant has been eroded."
Paul Ryan may like this one:
"poverty is not just a function of lack of adequate income. Providing income alone does not eliminate poverty."
I dont think this is a either/or situation...
My experience has been that many of the homeless at least that I come across are basically unemployable... they have forms of what I interpret as 'disabilities' or some form of mild mental illness perhaps undiagnosed... they imo should qualify for at least a form of a BIG in 'disability' payments... some might be able to do small jobs which if they want to they should have a JG...
And we should provide for earlier and more robust public pensions....
This is all jumping the gun anyway. None of any of this will become policy as long as we have morons in charge who think "we're out of money!"
rsp,
I posted a lengthy response at NEP, in the unlikely event that anyone cares. :D
Re: buffer stock of employed. In reality, the proposed JG would merely provide a buffer stock of UNSKILLED workers.
Pavlina recently admitted -- and I'm glad someone finally admitted it -- that the JG was not designed to provide jobs for skilled workers.
So there would be no buffer stock of mechanical engineers, no buffer stock of butchers, no buffer stock of cowboys, no buffer stock of bulldozer operators, no buffer stock of loggers, no buffer stock of skilled manufacturing workers, etc..
When was the last time we had a major inflationary event attributed to UNSKILLED workers?
Tom, if we define "full employment" as a "job offer for everyone willing and able to work," then pre-Civil war slavery was the greatest full employment plan evah! There were no unemployed slaves!
MMT continues to assume that labor is a fungible commodity. Labor is no such thing.
I say we should define full employment as a LOCAL job offer for everyone IN THEIR CHOSEN FIELD and AT THE GOING RATE FOR THAT FIELD. The MMT JG does not come close, unless it is radically revised to include a JG for every job category, at the appropriate minimum wage for each job category.
Dan Lynch,
Re your claim that JG would not provide skilled work, unskilled work is arguably better than no work for an unemployed skilled person. Moreover, not EVERY JG would be unskilled: the fact is that plenty of WPA jobs in the 1930s involved people using their skills.
However, I’m not suggesting that Bill Mitchell, Randy Wray or Pavlina Tcherneva get everything right: strikes me they make numerous mistakes. In fact I’ll be doing a long post on my own blog shortly which sets out their mistakes.
> eliminates the inefficiency of a buffer stock of unemployed
Tom, I disagree. Employing the "buffer stock" as you call it does not imply any improvement. It depends on what the workers will do. If you believe, as I do, that they are likely to do *harmful things*, then it is better to have them *not* do that. For example, suppose the JG offered optional TSA or NSA employment? Are you going to argue that that particular implementation also increases efficiency? I don't think so.
Also, when I raise these issues, it's common to duck behind "well, many implementations are possible... we wouldn't implement *that* one." I don't think we have any confidence that we can win that fight. Consider the traditional ways that the government has employed unemployed people. They range from prisons and drafts (most bad) to hiring teachers that a private school would not hire (yay?).
Sorry Roger, I don't have an itch for government to "transform society." I'm happy just giving people money and having them transform it in little ways instead.
I think we have to acknowledge that we wouldn't even be in a depression if unemployment insurance were not so stingy.
Tyler yes and Social Security where they keep raising the age and insist on "pay go" so the retirement subsidies there are weak....
then they keep losing their minds on Medicare/Medicaid as those are in perpetual deficit.... so they keep pressuring those flows to the down side...
rsp,
The JG is not meant to solve all economic problems. IT is very specific — a job offer for all willing and able to work at the wage of unskilled labor.. They would not need to be employed as unskilled labor but employed at their skill level.
No reason that government couldn't or shouldn't hire more skilled temporarily at the pay level of their their skill level, or provide them with a full scholarship for further education, etc.
But I don't think that all these issues can be solved at once either. Just getting minimum JG passed would be a step forward.
But as we know, the problem is neoliberalism and the issues it engenders extend far beyond unemployment. Eradicating all traces of neoliberalism and the attendant neo-imperialism and neocolonialism is the goal, and euthanizing the rentier at the same time.
@ marries
Sorry to have misspelled you name last time. My interactive spelling checker prefers "marries" and I didn't catch it.
I think that the efficiency argument is very strong economically. Many presume that people working is less efficient that people not working with their self-esteem, finances, skills, and resumé deteriorating and trillions of dollars in aggregate wasted with a buffer stock of unemployed.
The argument that those employed by the buffer stock of employed would be worse off then idle or that the economy would be worse off in aggregate, or that society would be worse off just doesn't cut it unless one concocts a scenario that supports the argument. If we can send humans to the moon and ships to Mars, certainly we can gainfully employ all who are willing and able to work.
The neoclassical assumption is that lowering the wave level will produced full employment. There is no evidence for that an ample evidence against in a modern monetary production open economy. There is strong justification that government can afford to hire those whom the private sector does not choose to hire. Designing the appropriate program for different contexts isn't rocket science.
Well, I'll be dipped. "marries" again after I corrected it. I'll have to have a talk with that spelling catcher.
Marris
The problem is that the "efficiency" argument comparing govt vs. pvt sector is simply a straw man. Even if you subsidize the pvt sector, there will ALWAYS be some workers that are a residual, as Tom says. So, the question is whether leaving THOSE workers unemployed is more efficient than having the govt finance a job for them. Whether that job is in the pvt or govt sector, it's still more efficient than unemployment.
Thanks for commenting, Scott.
I can't figure out how many people see inefficiency at the micro level but don't see it at the macro level.
How can a buffer stock of unemployed be more "efficient" than a buffer stock of employed when it involves greater loss to waste than the $ cost of providing a buffer stock of employed, even if the $ cost is considered a subsidy rather than public investment. Even considering it a subsidy the saving is significant when taking the buffer stock of unemployed into consideration as permanent fixture of policy.
And that is just the efficiency argument. There's also the moral argument and the effectiveness argument.
I would like to hear comments on a utility infrastructure plan designed to address climate change, unemployment and infrastructure needs in the digital age. In recent years super storms have wreaked havoc on power and utility lines sometimes during very cold periods leaving millions of people without heat or light for days on end. Why not grant relevant utility companies a 10 year tax holiday to put above ground lines underground where geography permits? It would create many high paying jobs for people in the construction industry while hardening infrastructure from the destructive effects of Mother Nature. At the same time it would beautify urban, suburban and ex-urban areas by burying the mass of unsightly copper and fiber optic cables strung on telephone polls. My neighborhood is starting to look like one of those emerging market countries with over loaded telephone polls.
Ryan proposes "Universal Credit" for the "poor":
http://www.thefiscaltimes.com/Articles/2014/01/17/Paul-Ryan-s-New-Idea-Really-Smart-Will-It-Fly
Dems better get their shit together on in this pronto.... GOP can "smell the coffee"....
rsp,
A utility infrastructure plan sounds like a good idea to me, Ed.
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