Wednesday, November 9, 2016

Roger Malcolm Mitchell — More proof that MMT’s JG is a bad idea

I think Roger misses the point that the MMT JG is to mop up the residual unemployment, which mostly affects unskilled workers, after automatic stabilization. It is key piece of MMT policy formulation but it plays a minor part over since it addresses a residual. A good policy would ensure that this residual is generally limited and the other matters that Roger mentions are addressed effectively and efficiently.

The key point is that there is always some unemployment in a capitalist economy and it is addressed either through a buffer stock of unemployed (ten dogs and only nine bones) or a buffer stock of employed (ten dogs and ten bones).

Monetary Sovereignty
More proof that MMT’s JG is a bad idea
Roger Malcolm Mitchell

1 comment:

Neil Wilson said...

"but it plays a minor part over since it addresses a residual"

That's not the case. It plays a central role and downplaying it is a mistake. It is the anchor between the financial economy and the real economy.

What Roger always fails to understand - because he's evangelist for his own inaccurate theory of interest rates - is that the Job Guarantee buys up labour hours *and deploys the resulting output to the public pool*. It stops individuals getting 'paid twice' by being able to buy somebody else's real output while at the same time retaining their own output. That is what causes resentment. It is why we resent rich people - they get to buy stuff and do what they want with their own hours. The workers don't - they have to exchange their hours for money. The Job Guarantee - as opposed to unemployment benefit whether selective or universal - is an exchange proposal in real terms.

Similarly having the JG there allows people to walk off a job. It guarantees there are always more jobs than people and removes the negotiating power from the private sector. It eliminates the parasite economy instantly.

The response to Roger is the same. Why are you afraid of the competition with a fixed living wage job? Just offer better wages and conditions. If you can't then you shouldn't exist as a private sector entity in an economy.

A functional economy that wants to be productive and reach for the stars *must* have a shortage of labour. That is what drives investment and progress.