Monday, August 1, 2016

David L. Glotzer — Employer of Last Resort: a Completely American Solution to Unemployment

An Employer of Last Resort, also known as a job guarantee (JG), is exactly what it sounds like. It is a promise by the government through either private partners or government institutions to provide a job to any worker who is able and willing to work but cannot find suitable (or any) employment in the private sector.
In December of 2014, well before his decision to run for President, Bernie Sanders appointed Stephanie Kelton to be the Chief Economist for the Democrats on the Senate Budget Committee. Dr. Kelton is a Research scholar at the Levy Economics Institute of Bard College, the founder and Editor in Chief of one of the world’s most prescient economics blogs New Economic Perspectives and an Associate Professor at the University of Kansas City Missouri. She is also one of the leading proponents of a federally funded ELR.
As one of the world’s most prominent experts in the field of Modern Monetary Theory (MMT) she is fully aware of the policy options available to a sovereign country which issues its own free floating currency. That is a country like the United States which issues money in its own unit of account- the Dollar- and does not tie the value of the currency to any commodities like gold or to foreign currencies through a peg (like the Chinese do with the Renminbi).…
Counterpunch
Employer of Last Resort: a Completely American Solution to Unemployment
David L. Glotzer

12 comments:

Andrew Anderson said...

The victims of government subsidized private credit creation should not have to work for restitution. What's so difficult to understand about that?

Should we have generous infrastructure spending? Sure but beyond that just give the citizens cash.

Btw, the proper abolition of government provided deposit insurance, a huge subsidy of private credit creation, should require $trillions to be equally distributed to all adult citizens. Where then are JG proponents wrt to that and the elimination of other subsidies for the banks? Conspicuously silent?

Calgacus said...

The victims of government subsidized private credit creation should not have to work for restitution. What's so difficult to understand about that?

Sigh. The JG is not restitution for that. The JG is restitution for the existence of a monetary economy. Monetary economies that do not provide a way for people to EARN money by doing stuff, by their labor, when they want are insane. This includes your less-than-entirely baked proposals.

Sure but beyond that just give the citizens cash.

This is a joke. Giving everybody piles of cash for nothing = hyperinflation. The labor theory of value is essentially true. A dollar is just a way of saying - I'm buying X amount of somebody's labor. "Give everybody cash" is like deciding to abolish slavery - by making everybody MASTERS. Yeah, right.

The only thing that's not funny about it is how so many people over the age of 8 take UBI etc seriously. And as usual, they get everything backwards - the fascistic, authoritarian UBI is "freedom", while the genuine prospect for freedom, a JG is thought of as controlling, regressive, "petit-bourgeouis", obsessed with working, wage-slavery etc. The height of comedy is reached when these are soi-disant "Marxists" - who may even know some Marx by heart, but clearly haven't understood anything, or read Marx or Trotsky etc on this.

The things you recommend are but band-aids, applied to a stubbed toe, to somebody with a gunshot wound. Worse - because without the real restitution, the JG, they would greatly enlarge financial & economic instability and volatility - the best to expect would be continued banana-republicification, corporatism etc.

Tom Hickey said...

The big objection to JG from the left is that it is either a form of workfare, or else subject to morphing into workfare, so nip it in the bud.

The big objection from the right is make-work and an invitation to boondoggling.

I doubt this argument can be won convincingly without a specific policy proposal and debate. Both those objections need to be walled off in the proposal.

Calgacus said...

I strongly disagree. The problem is the reverse. The argument must and "can be won convincingly without a specific policy proposal and debate". IMHO "without" is the only way to convincingly win the argument.

People are blinded by detail, can't see the forest for the trees. A good con game relies on really Big Lies, on people outsmarting themselves. The way to argue is to argue simply and make objectors realize they are saying & doing things which a not-very-bright child would laugh at. That's how effective deceit works. The left or right objections are entirely irrational, reminiscent of defenses of slavery. If the objectors like AA understood what they were saying, they wouldn't say it.

The left objection is ridiculous - it is not an argument against JG or workfare, but against any kind of work, which can become workfare. It is tainted by the desire for a UBI/BIG - i.e. the desire for everyone to be a master, to live off the works of the poor saps, who are declared not to exist. The should read Lem's The Futurological Congress. That's what a real UBI/BIG would be.

The right objection is also ridiculous - all work is make-work. The question is who is going to make you work - capitalist oligarchs and their disgusting desires, their boondoggles or people themselves, working for their natural and human needs, desires and goals. Both objections suffer from the common defect of undersimplification, IMHO worse than oversimplification these days.

Tom Hickey said...

If you don't meet and overcome objections then the political alternative is to educate people who've not formed objections faster than than those who have objections can transmit them.

Politics is about debate of policy. Debate involves both reason and persuasion.

Generally economists don't choose to become politicians, so it is a matter of winning over politicians as well as educating them, and that involves convincing them that they can selling the policy without investing too much political capital.

Neil Wilson said...

"The big objection to JG from the left is that it is either a form of workfare, or else subject to morphing into workfare, so nip it in the bud'

The big objection to UBI is that it is a policy that leaves what people do to the 'free market'. That free market consisting of religious fundamental extremists and far right groups. The result is even more armed, radicalised marginalised individuals on murder sprees.

Point that out to a few UBI fans and watch them immolate. It's most entertaining.

Andrew Anderson said...

It is tainted by the desire for a UBI/BIG - i.e. the desire for everyone to be a master, to live off the works of the poor saps, who are declared not to exist.

Not desiring to be a slave is not the same as desiring to be a master, don't you know?

Tom Hickey said...

Not desiring to be a slave is not the same as desiring to be a master, don't you know?

Some would argue that not being a slave is being the master of oneself (individual sovereignty).

Over himself, over his body and mind, the individual is sovereign. — J. S. Mill, On Liberty. Parker, 2nd ed, 1859, p. 15.

Tom Hickey said...

Basic income, whether universal or targeted, and the JG are policy proposals based in part on economic analysis. Other considerations are also relevant politically. In the final analysis, a policy formulation has to be submitted to the legislature in the form of a bill to be voted on — as well as sold politically at a cost of political capital.

Right now, I have no idea what such a bill would look like in the case of either a basic income or a JG. A bill would be written by the staffs of the bill's sponsors iim consultation with relevant experts.

In the US, such a bill would originate in the House of Representatives and if passed, be sent to the Senate. If Senate accepted the bill, it would be sent to the president for his signature or veto. If the Senate rejected the bill, it would die in the Senate. If the bill was amended, it would be returned to the House and likely negotiated. If passed by both houses, it would sent to the president. With the president's signature it would become law and part of US economic and social policy.

Calgacus said...

AA (& Tom):Not desiring to be a slave is not the same as desiring to be a master, don't you know? That was my point. I'm glad you put it well.

But a UBI - that just gives the citizens cash - is and must be a ludicrous and entirely malignant proposal to "make everyone a master (& nobody be a slave)". The UBI comes from remaining in the prison of an ancient binary either-or that makes one unable to conceive that one can be neither a slavemaster, nor a slave. Unable to see that it is possible to play nicely with others in doing the work of the world, that one hand can wash the other. Of course, the UBI includes the powerful psychem (see Lem) necessary to not see the slavery it implies, does imply in any really-existing case now. To fantasize that the "cash" the UBI would give would be something other than (fake) "restitution" to real people, really sweating (and worse) to do real work (of course as usual the more onerous, the worse restituted, especially in a world that degenerated from its present state to the UBI.) A UBI is not pro-freedom, but virulently anti-freedom. Unless it expresses a hidden desire to be a master of slaves, there is nothing that deserves to be called economic analysis behind the vile UBI. The only way a society with a UBI could "work" is if the UBI was pure play-acting. In this case, we still have - and should have - slavery too, because people pretend to be slaves in plays and movies.

Speaking purely economically, at the very best possible a UBI would mean that the amount of the UBI would = the entrance fee to the monetary-production economy ('quoting' Wray, from memory). The state gives you a zillion dollars & then asks for a zillion dollars back to do anything, to have a job, rent or own a house or car, etc. Why bother?
A (targetted) BIG might be called an evil too, but it is one that every society has always found, and will find to be a necessary one. It's usually called "welfare", and even the most brutal of economists - or Dickens's Scrooge acknowledged its necessity. Everyone was once a helpless child and many/most someday become more dependent on others. But is infancy or senility the human ideal? It's hard to say what is stupider, what is less enlightened, a serious proposal for a (universal, untaxed) UBI or the idea that a targeted BIG (like a negative income tax) is Something Really New, something other than a proposal that cars should have 4 round wheels that touch the ground.

As for what a US JG bill should look like, it should be in the Constitution, like the 13th Amendment. I suggest similar conciseness, directness and seriousness. The original Full Employment Act of 1945, which was watered down into the Employment Act of 1946 was a start. (Later amended as the 1978 Humphrey-Hawkins Act, largely drafted by James Galbraith). The employment provisions of the Universal Declaration of Human Rights of the same era are another. The main thing IMHO is to Keep It Simple Stupid. Say it so everyone can understand, everyone can quote it, everyone can laugh at & ask "Have you no shame?" to the inevitable experts & wise men who will twist it into saying its opposite. The devil is utterly not in the details of the proposal, no more than it was in the abolition of slavery - but entirely in the enlightenment, the understanding and the decision based on it.

Tom Hickey said...

I agree that the Bill of Rights should be amended to include the Universal Declaration of Human right, including the right to employment, education, and health care. But amending the Constitution is difficult, and it is probably more of a long term project. Moreover, constitutional amendments are concise and it is left up the courts how to interpret them.

I think that it is possible to propose and pass bills relating to universal education through federal grants, universal health care (Medicare for all), and a job guarantee in which the government is the employer of last resort however that is structured. Such legislation can be quite specific.

No MMT economists have asserted that a JG is incompatible with some form of basic income as a welfare transfer or benefit. In many cases I prefer guaranteed benefits rathe than blanket cash transfers.

For example, people unable to work need to be supported for example, and no child should be forced to live in poverty own to the parents' circumstances. Giving parents transfers won't necessarily remove some of those issues, Guaranteed benefits like school lunches and child care are also needed.

In fact this is all relatively simple to design and organize. The issue are cultural and ideological resistance and the opposition of vested interests.

Many states are already doing some these things but there is no national standard and state provision has too be funded by states that are currency users rather than issuers. The federal government as issuer needs to fund there programs, e.g., through grants to states, with the states managing them iaw guidelines to that ensure equal treatment nationally.

A UBI doesn't make sense on a lot of levels that others have pointed out.

Bob said...

Canadians do not have the right to employment, shelter or food. This is in spite of having a Charter of Rights replete with flowery language that could easily be interpreted in that way.

A UBI is not synonymous with a gift economy, but it is closer to that ideal than the JG is.