Warren Mosler comments
I optimize total real output of goods and services over my time frame.
Australia had full employment when the rail road pretty much took anyone who wanted to work, and in the US when the military did much of the same.
By what channel do you see productivity of the work force higher due to unemployment? And even if that was the case, that productivity would have to be high enough for the added output of new private sector workers possible with a jg to somehow reduce the output of the rest of the labor force that would have been working.
the reason we haven’t had full employment has been fear of inflation as unemployment gets ‘too low’with a jg being a more liquid buffer stock, it can provide a price anchor with a smaller jg pool than unemployment with unemployment as the price anchor.
Agreed, there isn’t much evidence that being able to support more aggregate demand and more workers in the private sector via a jg pool needing to be smaller than an unemployed pool would result in more real output. But seems the burden of proof is on someone saying more people working in the private sector will produce less real output due to productivity losses? Especially when there are additional reasons to try a jg vs unemployed- better price anchor, reduced social stresses and reduced real social costs, etc. etc?
Or are you suggesting that an economy fully employed with maybe 3% in the jg pool
could be substantially less prosperous than otherwise and therefore that risk isn’t worth taking?If so, you’re entitled to your opinion and we move on,
both recognizing we could be wrong, as jg is uncharted waters and there could be unknown risks to productivity large enough to undo the positive effects of more people working in the private sector producing real goods and services on demand, and the remaining, smaller jg buffer stock employed as well, vs an otherwise larger pool of unemployed producing no output and with known negative externalities that we know is capable of prosperity for the majority.
And we’re both still MMT. No escape from that!!!
4 comments:
I think that MMT is not asking the real questions around the J.G is it 'optional'? And is it the best method of price control?
J.G as a method of price control is incomplete without an appropriate framework that describes how fiscal policy should operate. More precisely what limits should be imposed upon the wage-structure.
Questions, questions.....
Shaun, MMT economists have dealt with this in the professional lit. Most "MMT" proponents haven't read much of the lit. So we have different views of MMT, even though the MMT economists are very clear about it as a comprehensive and coherent approach to full employment and price stability, with an empirical basis.
Nice one!
This is a great clarification from Warren.
To be clear, my issues are not about the likely performance of the JG. It's much more about the politics and execution.
Big government programs scare me in general - and workfare is particularly problematic.
I am going to call it workfare for now on. I suggest we find an even better term than workfare. Job Guarantee is even worse than workfare.
Also, I'd say the MMT economists still haven't shown a link that I can follow easily, there is something wrong with the work, presentation, or the marketing.
If they can't convince strong supporter Mike Sankowski of the Traders Crucible, how can their papers convince even the mildest skeptic of MMT?
Here is where beowulf could probably help considerably.
Senexx says this is a political disagreement, but I think it's both more and less than a political disagreement.
In the end - we're totally on the same team, so there should be no worries there.
First, it's a disagreement about the actual link between operational MMT and the JG price anchor. It's not clear either one requires the other to me.
Then, it's about marketing/adoption/politics. If I can get people to accept MMT operational realities and it takes another 10 years to get workfare enacted, that's fine with me.
I agree that workfare is a saleable argument to the US congress but nor is it workfare.
Employment of Last Resort sounds desperate, as does Workfare which is why I'm sympathetic to the term Job Guarantee (as are all the other academic proponents today).
Is a JG needed to describe the creation of money - no. Is it needed to describe what happens next that creates a buffer stock of unemployed to control the NAIRU. Yes.
If you can get people to accept the operational realities of MMT and it takes another ten years to get the Job Guarantee enacted - that's fine provided you don't drop it as a goal.
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