Thursday, May 12, 2016

Pavlina Tcherneva — A Global Marshall Plan for Joblessness?

Because the social and economic costs of unemployment spread and reproduce in complex and pernicious ways, it ought to be treated like an infectious disease. The policy response should aim at inoculation against unemployment, not at countering its effects.

Today, when governments tackle the issue they focus on counteracting its impact after mass layoffs have already occurred. Monetary and fiscal measures are fine-tuned to produce investment-led growth, but they are usually too weak and always too late.
But instead of accepting rising levels of unemployment, a preventative policy of inoculation is needed, which avoids accepting unemployment as natural in the first place. Such a policy requires providing decent jobs at decent pay to all who want to work on as-needed basis: A Global Marshall Plan for the unemployed.
Yes.

I am a big fan of non-profits. This would be doable using chiefly non-profits. Of course, there would be some corruption, which would likely be a major objection, but that's not a reason not to do it.

I am also a big fan of thinking globally and acting locally. This is the kind of bold initiative that is called for, e.g, in light of The Universal Declaration of Human Rights, article 23.
Globally, the pro-employment policy du jour is export-led growth. Traditionally pursued to promote industrialization, today many developing countries and even industrial giants such as Germany and Japan rely on exports to compensate for lower domestic demand. In the U.S., President Obama has launched the first ever national plan to increase exports in the name of job growth, the National Export Initiative (NEI).
One of the first lessons learned by introductory students in economics (and evidently quickly forgotten after graduation) is that benefits from trade are reaped in conditions of fullemployment. Since for every net exporter there is a net importer, in the absence of global full employment trade will necessarily produce winners and losers. Job gains in a net-exporting country will correspond to job losses in a net importing country. It is impossible to tackle unemployment on a global scale by pushing export-led policies around the world. Instead, we should be devising policies to produce and preserve full employment in conditions of free trade.…
No workfare, no bullshit jobs, no compulsory work, no digging holes. A global Marshall plan would offer employment opportunities to the unemployed in every country, while addressing country-specific problems. As the world faces the consequences of climate change, the Marshall Plan can be the big-push policy that puts the unemployed to work in a Global Green New Deal program. Whether it involves green projects, infrastructure projects, community projects, or care projects, there is no shortage of projects that need doing.
New Economic Perspectives
A Global Marshall Plan for Joblessness?
Pavlina Tcherneva | Assistant Professor  of Economics at Bard College, Research Scholar at The Levy Economics Institute, and Senior Research Associate at the Center for Full Employment and Price Stability

19 comments:

Random said...

Hmm. I am sceptical this could work. I prefer Neil Wilson's plan to introduce full employment in your own nation and then offer open borders to nations that also have full employment and welfare up to your standard.

Random said...

I will try and explain my reasoning here. There are several studies that show that *in general* tax morale is strongly influenced by whether 'tax funded spending' benefits the taxpayer's own group (not even the taxpayer personally), and that the worst tax morale exists in countries that were ruled by foreign conquerors or otherwise by "other" elites that spent tax revenues on their own group. That tax morale is thus lowest in countries ruled for a long time by foreign conquerors.

BTW Randian/Libertarian arguments against taxes are based on a curious variant of the argument, where it is a majority of knaves that exploits a minority of heroes.

I think that the basis for tax morale is not fairness but reciprocity: the idea that 'tax funded spending' is *potentially* available to the taxpayer or their relatives and friends, instead of always benefiting the same minority of "others".

In a slightly different wording, many/most taxpayers don't mind some redistribution or a lot of social insurance within their own "tribe", but *resent one-way redistribution to another "tribe"*.

Thus the malicious arguments used by reactionaries; for example in the UK where tax spending is described as solely reserved to a specific elite of "others" who have 3 generations on benefits, who are given so much money that they live in mansions with many spare bedrooms, whose benefit income is much higher than average income.

In a nutshell, humans are tribal.

Andrew Anderson said...

One would think a job is some kind of privilege instead of what it really is: wage slavery if the worker has no other real option.

Matt Franko said...

Marshall Plan key characteristic : US did not accrue foreign claims in its execution. .

andy blatchford said...

I know Neils plan Random, but there was nothing in it that says we shouldn't help other Countries up to our standards. I would suggest for them to have any chance then richer Countries *must* help.
Sure we are 'tribal' but these tribes have got a lot bigger through history.

Ralph Musgrave said...

JG, which is presumably what Pavlina has in mind, has been tried dozens of times and usually ends up as a mess and gets abandonned. We need to work out the reasons for those failures before spending billions on some sort of world-wide scheme.

Tom Hickey said...

Ralph, it was hugely successful during the Great Depression as a key feature of FDR' New Deal. But it was meant to be temporary and WWII made it obsolete since then there was such a manpower shortage, women were put to work. Women were not allowed to word after marriage in the US. My mother married late had a supervisory position (unusual for women) that she loved but was told to quit when she got married. There are still some diehards that would like to go back to the days when women didn't work to address chronic unemployment.

andy blatchford said...

"Been tried dozens of times and usually ends in failure"

Could you give as examples of those 'failures' Ralph? Not sure I remember any.

Andrew Anderson said...

There are still some diehards that would like to go back to the days when women didn't work to address chronic unemployment. Tom

You conflate having a job with working - as if housewives, particularly mothers with children, sit around all day eating bon-bons and watching soap operas.

In any case, a mother with children should not have to have a job; she already has work to do - raising her children. For that matter, most men should not need jobs either but the legalized theft of family farms, businesses and the commons has made being a wage slave the norm for most men.

Simsalablunder said...

"We need to work out the reasons for those failures before spending billions on some sort of world-wide scheme."

Give JG as much time as todays unemployment nonsense have had. A few decades that is.

Calgacus said...

Random: I prefer Neil Wilson's plan to introduce full employment in your own nation and then offer open borders to nations that also have full employment and welfare up to your standard.

Fine, but the second clause is unnecessary - based on preposterous projections of immigration and its effects. "Open borders" has nothing to do with a JG, one way or the other. One should beware of this proviso because it seems to come from the irrational idea that the Job Guarantee is a benefit offered by the state towards the jobless. In reality, and obviously, based on basic MMT - the benefit goes the other way. A JG is a worker subsidizing the state.

I do think Tcherneva's essay deserves some skepticism - it verges (probably unintentionally) too close to the idea that global action is necessary, that each nation cannot go it alone and just offer a JG, just practice functional finance, period. Which the idea I criticize in the above paragraph also does.

In either case the problem is adding on the unnecessary bells & whistles, obstacles to the simple, pure logic of the JG. Where the devil is not in the details, but in the decision to overcome the attitude of learned helplessness that the bells & whistles only foster.

Ignacio said...

There are still some diehards that would like to go back to the days when women didn't work to address chronic unemployment.

Tom, I'm completely in favour of women working if that's what they want. But we should address the biggest scam of neoliberalism: two incomes in a household to have the same purchasing power as one income had in the 50's and 60's.

This has been the greatest productivity theft of all, usually hidden behind liberal arguments.

Ignacio said...

We should start by giving housewives an income... The hard part is measuring which income and who should receive it.

This is usually the problem with many public programs. But is a problem because public institutions are underfunded and lack personnel and organisation due to budgetary limits.

All goes back to the same obsession with running out of money...

Ben Johannson said...

Nations cannot go it alone in a highly integrated global system. Those that try find themselves quickly bleeding out to those that do not; benefitting, those nations then proclaim they have no reason to follow suit because they're doing fine.

Andrew Anderson said...
This comment has been removed by the author.
Andrew Anderson said...

Nations cannot go it alone in a highly integrated global system. Ben Johannson

Disagree. If, for example, the common stock of all large US corporations were equally distributed to all US citizens and government-provided deposit insurance and all other privileges for financial institutions properly abolished then excessive concern about jobs and exports would disappear and those corporations (except for perhaps the financial ones) would continue operations as normal regardless of the rest of the world.

So justice is doable one nation at a time. A JG, a mere pragmatic solution typical of the amoral, not so much.

So it turns out that justice is far more practical that pragmatism. Who coulda guessed?

Tom Hickey said...

Going it alone implies autarky, and that is impossible for most nations, since just about everyone needs to import some natural resources that are not present at all or in sufficient abundance locally.

Calgacus said...

Ben Johannson:Nations cannot go it alone in a highly integrated global system. Those that try find themselves quickly bleeding out to those that do not; benefitting, those nations then proclaim they have no reason to follow suit because they're doing fine.

Tom Hickey:Going it alone implies autarky, and that is impossible for most nations, since just about everyone needs to import some natural resources that are not present at all or in sufficient abundance locally.

"Going it alone" = autonomy = (monetary) sovereignty. Autonomy /= Autarky. What is necessary is buying and selling stuff internationally, the normal way, nothing fancy. And nothing else. Autarky = no trade or nothing with nobody nohow - like the Earth - Mars relationship.

If the above are meant as a criticism of autonomy, the normal and usual state of affairs - most nations are not North Korea - which it is rather obvious what I meant, then the answer is: Nonsense. Would be nice if people at a "blog with a focus on Modern Monetary Theory" did not dismiss the MMT position out of hand, did not thus advocate learned helplessness as a way of life.

"Andrew Anderson" got some things right. Thinking about things in moral terms helps - is essential in practice. Justice is doable one nation at a time. Why on earth should opening one's economy, going from autarky to autonomy, (magically) hurt one? No reason at all.

People should see that the burden of proof is on the makers of bizarre - and untrue - assertions of catastrophe if one nation just practices functional finance all by its lonesome.

Tom Hickey said...

Economists, even if they happen to be MMT economists, are naïve to the degree that they confuse economics with politics. International trade is an aspect international relations which means geopolitics and geostrategy. Politics is about accumulation and deployment of power. Economics is about accumulation and deployment of wealth. Wealth gives power and power secures wealth. It's mutual augmenting.

America dominates the world through economic power and influence as much as through military might, which is a type of wealth. Wealth includes real wealth and financial wealth but real wealth is determinative. Capital goods, that is, technology, is not only wealth but produces wealth. The chief technology is military. The US is a superpower economically and militarily owing to its advanced technology and its output — guns and butter.

The degree to which economic power and influence is insufficient in achieving compliance internationally, hybrid means are engaged to product regime change — a "neutron bomb" that removes the adversary but leaves the country's wealth undamaged. If that doesn't work satisfactorily, then military power is brought to bear. This is a last resort since war destroys existing real wealth. But in the end the issue of dominance-submission is decided on the battlefield, as history goes to show. The world is now in the midst of that dynamic as the US extends dominance and does not brook non-compliance.

In the EZ Germany is dominant but submissive to the US. The UK is now sitting on the fence as the Brexit vote looms. Unless the UK leaves the EU it will find itself not dominated directly by the US as it is now but by Germany and then the US, if the EZ/EU doesn't implode first.

The notion that all this is going to just take care of itself if only countries act independently in opting for MMT economic policy (whatever that is, since it has not yet been articulated comprehensively as such for adoption) is about as daft as expecting that pursuit of self-interest is socially optimizing.

Right now, global affairs are heading in an ominous direction geopolitically and geostrategically. Rather than being a fix, economics is an irritant in that neoliberalism conflates economic liberalism with political liberalism, even though it pays lip service to "democracy."

At this point I see MMT, and Post Keynesianism for that matter, as having zero input in the great game. It's disruptive to the agenda of the Western powers that be, and none of the countries in the line of fire seems to get it, although China is probably the closest in using fiscal policy.

It will take a miracle to turn this ship around peacefully. The people on the bridge are not interested in it.