Sunday, November 19, 2017

Brian Romanchuk — On Using NAIRU To Analyse A Job Guarantee

Professor Simon Wren-Lewis wrote "Some thoughts about the Job Guarantee," in which he makes an attempt to analyse a Job Guarantee using the NAIRU concept. The analysis suffers from the well-known defects of NAIRU.
In the article, he argues that a Job Guarantee implementation would cause a one-time upward shock to wages. He argues that this is not "acknowledged" by MMT authors, even though it appears this effect is common knowledge to anyone who has read the MMT literature. As a result, that is a curious argument. However, he then flips to an analysis where the Job Guarantee has no effect on inflation....
Bond Economics
On Using NAIRU To Analyse A Job Guarantee
Brian Romanchuk

18 comments:

Ben Johannson said...

Notice even the supposed "left", as demonstrated by the comments at Wren-Lewis' site, assume a JG must duplicate the arrangement and relationships of a capitalist enterprise.

The real failing of our age is its Panglossian universality as a result of mediocre imaginations.

Matt Franko said...

“mediocre imaginations.”

Not in other disciplines... these people are the B and C students who then went on to college....

These people are not the A-Team....

Ben Johannson said...

Matt, more and more I agree with you.

Noah Way said...

A job guarantee is simply a guarantee of slavery and a perpetuation of the myth of meritocracy. If it ever comes to pass it will be institutionalized as minimum wage for civil service. Which of course means that it will never come to pass.

An income guarantee would free people to do what they need to do to be productive in society - raise families, pursue education, etc. Why is a mother penalized for staying home to raise children?

Neil Wilson said...

"Why is a mother penalized for staying home to raise children?"

Why do you think that isn't a job? When a child is born a job of work is created until that child is old enough to look after themselves. Somebody has to do it.

"An income guarantee would free people to do what they need to do to be productive in society"

Why do you think the workers who produce the goods and services purchased by the income guarantee should remain in work on Friday to produce goods and services for you when they could just take the day off? After all you are giving them nothing of real value in return.

That's why you need to give up hours for the service of others, because those you want the stuff off are doing the same. And they ain't going to bother unless you reciprocate.

We resent the idle rich because they do not earn their money, and we most certainly resent the idle poor. That's why idleness is a different evil to want.

Ben Johannson said...

Job Guarantee should be re-branded to a Worker's Guarantee and the project modeled on worker-operated co-operatives.

When the capitalist sector induces a downturn, workers applying to the WG should be paid to attend a series of school modeled on Mondragon University, where they learn how to run a worker co-op. They can then join a publicy-owned but worker-operated co-operative tasked with addressing an identified social need for the local community. When a majority or two-thirds or whatever threshold is set wish to go private, they can "buy" ownership of the co-op.

This way every capitalist failure results in shrinkage of the capitalist sector and expansion of a democratic sector.

Matt Franko said...

Ben Venezuela is ripe for a project like that right now...

Matt Franko said...

They could produce no frills personal care products and some food staple items...

Matt Franko said...

“We resent the idle rich “

C’mon Neil you have to put an age on that..

What if somebody is 65 and saved and now are “”rich!” ... do we resent them? Are they to be expected to work until they are in a wheelchair?

C’mon...

Ben Johannson said...

Venezuela is a state-capitalist system. They would definitely benefit from democratizing their enterprises.

Calgacus said...

Yup, Neil. The BIGgers have it backwards. Their ridiculous income guarantee is a form of slavery, whereas a JG is the most anti-slavery proposal imaginable. One involves and respects individual choice and individual rights. The other doesn't.

The Income Guarantee intellectual is the modern equivalent of the pro-slavery intellectual. The arguments are the same, except that the pro-slavery guys understood what they were saying so much better, were more logical and are well worth reading. The moderns? - 100% magical thinking.

Everyone understood things so much better back then. Like ex-slaves. They are on record as complaining about Mr. Lincoln (not very logically, him being dead and all, see Howard Zinn say) Not because he didn't give them an income guarantee, but because he didn't give them a chance to earn a living, a job guarantee. Illiterate slaves knew perfectly well who would be paying for income guarantees, for they had just been liberated from providing one.

Neil Wilson said...

"What if somebody is 65 and saved and now are “”rich!” ... do we resent them?"

Yes. That is starting to happen. The young resent the baby boomers because of their selfish attitude - largely that they think they have earned their massive pensions and large houses.

There is a reason the state pension age keeps rising - even with advanced automation. And that's because your retirement years are expected to be a particular fraction of your life - 'paid for' by your contribution to life previously, not how much paradox of thrift you've caused. Those who actually produce do not consider it fair that it should be any longer.

Fairly shortly there will be a demographic switch point and pensioners will start getting taxed heavily to pay for the lack of infrastructure they have left for the younger generation. All that pointless saving will come home to roost.

Calgacus said...

I would say that if the young resent the baby boomers, or pension ages keep rising, it is solely because of education in bad economics, which caused the "paradox of thrift" and economically and otherwise unhealthy societies. Matt is right here. In the USA boomers overearned their pensions. The turning point everywhere was in the 70s-80s; the decision makers of that era were not boomers and are all dead.

The demographic switch point of boomer retirement, even with their too late and too small pensions, should make societies and employment healthier. That's what the bad guys have been afraid of for decades, so they never stop infecting everyone with the fear and resentment they manufacture.

Matt Franko said...

Slavery was under the gold standard..

Tom Hickey said...

Over 40 million people caught in modern slavery, 152 million in child labour – UN

Matt Franko said...

Turd world doesn’t count Tom..... all zombies....

Calgacus said...

Slavery was under the gold standard.

Meaning what, that with "fiat" money, wishing for things makes things so by magic? So no doers are needed, just wishers?

Metal standard or not is an irrelevant triviality.

Ben Johannson said...

Slavery is legal in U.S. prisons. About 1.2 million Americans are slaves.