Tuesday, September 1, 2020

Three Reasons to Read 'The Deficit Myth' — Joshua Kim


Interesting from the perspective of effectiveness. Joshua Kim knew nothing of MMT before reading The Deficit Myth and apparently little training in economics or finance. He was under the illusion of the conventional view.

The Deficit Myth convinced him of the major points regarding public finance and macroeconomics, but not with respect to the job guarantee. This is anecdotal evidence that making the argument for the MMT JG is a challenge. Maybe he should go on and read Pavlina Tchernova's new book, The Case for a Job Guarantee (2020). (It's already out of stock at the publisher's web site, so apparently demand exceeded supply expectations.)

Short and worth a read.

Insider Higher Education
Three Reasons to Read 'The Deficit Myth'
Joshua Kim

13 comments:

Ralph Musgrave said...

I quite agree with Joshua Kim’s claim that “Kelton spends little time addressing . . . . . the labor market crowding-out effect of a guaranteed federal jobs program.”

Strikes me as obvious that if JG offers DOUBLE the existing min wage (which is what the Levy Institute lot propose) then there will be a mass exodus from relatively unproductive jobs which do at least pay for themselves, with relevant quitters getting relatively well paid, but even less productive JG jobs.

Obviously (as JG enthusiasts claim) SOME employers will raise the pay of those on min wages to match the new and much higher min wage. But not all will be able to do that.

Matt Franko said...

You’d just have to raise non-govt prices Ralph....

Big Mac would have to go to $10 or something.... Jiffy lube oil and filter change to $150...

One time adjustment....

Matt Franko said...

“apparently little training in economics or finance. He was under the illusion of the conventional view.“

You’re trying to synthesize the word “illusion” with “uneducated” or “unqualified” ... why bring in the word “illusion” here? Doesn’t make any sense...

Says he’s trained in sociology or something like that ..,

There is no “illusion” going on here...,

Maybe get some training in Finance and Accounting Science....

Matt Franko said...

Just like there is no deficit “myth”....

Peter Pan said...

Everyone knows of the deficit saga...

Unknown said...

What do you actually mean by "knows" Peter Pan?

Peter Pan said...

knows of ~ heard of ~ acquainted with ~ scuttlebutt

Unknown said...

There's a big hole in a scuttlebutt (barrel)like "knowing" there's a load of arse in deficit scaremongering or there's not! That's the kind of "knows" I'm referring to!

Peter Pan said...

Most people I know don't give a flying fuck about the deficit. They leave it to "the experts". Also known as the "usual suspects".

NeilW said...

"then there will be a mass exodus from relatively unproductive jobs which do at least pay for themselves"

They don't - by definition. If there is an exit.

What actually happens with the Job Guarantee is of course this

https://new-wayland.com/blog/look-ma-no-tax-from-zero-to-full-employment/

You can have a play doubling, tripling and halving the JG wage as much as you like here http://jg.model.new-wayland.com

Just don't forget to hit "reset" after changing the parameters. The JS isn't that good...

Calgacus said...

Ralph, what is "productive" or profitable and "what pays for itself" are socially determined, mainly by government taxation and spending, like on the JG. So by definition, the JG work is productive. There was a similar debate during WWII when GDP was being invented, largely for military purposes. Sanity won out, and government spending, like military was included in the definition. No military spending might mean no country to have a GDP. Thinking that the "private sector" is the productive sector which the public sector parasitizes on is the opposite of MMT. And just plain nuts - empirically and even logically. There is no way to make sense of this popular, especially among economists, self-contradictory belief.

Also minimum wage jobs much more than pay for themselves these days, because the employers have and use monopoly or rather monopsony power over employment. What would happen is that McDonalds and Walmart would quickly raise their wage, especially in poorer areas, to the JG wage plus a penny. And Walmart understands this. A few years back they stopped really opposing minimum wage hikes because they realized they're such a big cross-section of the US economy that they would make more money, not less, with a higher minimum wage increasing demand and maybe even employment. Bernie jawboned Amazon a while back and Bernie won - Amazon workers got a raise. No sweat to Amazon etc. No inflation, no sky falling down.

Ralph Musgrave said...

Neil W and Calacus: JG jobs are necessarily unproductive relative to normal jobs (public and private sector) because employers (public and private) so to speak "create the most productive jobs first". Put another way, if a potential job is regarded by public or private sector employers as scarcely worthwhile, there's a good chance it won't get created.

In contrast, once the JG employment subsidy is available, many of those "scarcely worthhile" jobs become worthwhile.

Note that I am NOT saying that therefor JG jobs are not worthwhile: arguably a JG job (assuming there is nothing better out there) which involves an output of just one dollar an hour can be worthwhile, if it's what someone wants to do and if it confers work experience.

But we certainly should not be into the business of destroying $5/hr jobs (because the JG wage is $10/hr) and creating one of those $1/hr jobs as an alternative.

Calgacus said...

Ralph, you are missing my main point. What is a dollar or a dollar's worth, outside of its existence in a tax-driven, government spending monetary system? A JG DEFINES the dollar, better than ever before. As equal to X time of basic labor.

Public and even "private" job creation has little to do with such judgments, everything to do with political power. The most valuable jobs - to anyone not insane - are precisely those that are not done. Private splendor and public squalor - or poisoning and worse - and all that.

It won't destroy the jobs anyways. If the JG wage is set too high, like $200/hour, there will just be inflation until the JG becomes a more normal size.