Thursday, May 17, 2018

Dean Baker — More Thoughts on a Job Guarantee: What Is At Issue?

Let's be clear. What is really at issue is whether a buffer stock of employed is sociao-economically superior to a buffer stock of unemployed


A buffer stock of employed is far more efficient in that it employs available resources that would otherwise be idle (wasted). In addition, the funds that go toward supporting the out of work ignore the productive capacity of the unemployed. As the right is so find of pointing out, this incentivized unemployment.


A buffer stock of employed is more effective on many levels:
  • economically by increasing production and therefore increasing resources available for use 
  • socially by recognizing human dignity and the right to a job
  • politically by contributing to public purpose, which includes the common good and general welfare of society as a whole.
Issues versus means

The issue that dominates macroeconomic debate with respect to policy is whether growth, full employment and relative price stability can be achieved simultaneously. 
  • Conventional economics says not with out defining full employment down to include a buffer stock of unemployed. 
  • MMT says it is possible to achieve the "holy grail" of macroeconomics using job guarantee (Hyman Minsky) to create a buffer stock of employed to mop up residual unemployment after applying functional finance (Abba Lerner) based on stock-flow consistent modeling (Wynne Godley) in the context the fiscal space that the present floating rate monetary system provides.
Policy formulation

The "issues" that Baker (and Bernstein) put forward are not issues in the same sense as the core issues above, but rather they are challenges to be met in policy design.

Policy design always involves tradeoffs. What we need are some actual proposals of bills to debate. Otherwise, a lot of what passes for debate is just gassing.

JG vs basic income

It should be obvious from the examination of issues above that adoption of a job guarantee is unrelated to the adoption of some form of basic income or citizens dividend, or other forms of welfare. These do not impact the issue of achieving actual full employment defined as a everyone that is willing and able to work has a satisfactory job offer if willing to accept it. It's a choice.

Some form of basic income or citizens dividend could also be provided, but this is a welfare issue that is irrelevant to addressing the issue of full employment. They should be neither confused nor conflated in the economic and policy debates, as they presently are, muddying the waters.

Beat the Press
More Thoughts on a Job Guarantee: What Is At Issue?
Dean Baker | Co-director of the Center for Economic and Policy Research in Washington, D.C

See also

This author is apparently unaware of the literature and the state of the debate. Par for the course on the so-called left. OK, she is a addressing one paper, but from what she writes, it doesn't seem that she is up on the field or the economic and policy debates.

OXFAM Blogs — From Poverty to Power
Which is better: a guaranteed job or a guaranteed income?
Eleanor Chowns | Teaching Fellow, Department of Social & Policy Sciences, Bath University


Noah Way said...

A buffer stock of unemployed is far more useful as it

- creates downward pressure on wages, increasing profitability
- provides a permanent [lazy, criminal, etc.] underclass for political purposes
- provides willing [optionless] canon fodder for an "all volunteer" military

Andrew Anderson said...

Again the conflation of not being a wage slave with "being unemployed" and "not working". (And why are the rich excepted from these charges? And if the rich are legitimately excepted then why shouldn't the rest of us be excepted?)

What about self-employment? Including at worker owned co-opts for economies of scale? Why aren't those much more viable options than they are?

Could it be that unethical financing has largely precluded those options and reduced most, through not fault of their own, to a fate they don't deserve, i.e. a choice between wage-slavery or poverty?

Then is the solution guaranteed wage-slavery or is the solution fundamental reform of the fiat and credit creation systems and restitution for the victims?