Tuesday, May 29, 2012

Rodger Mitchell — Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem

As many here will know, Randy Wray recently posted MMP Blog 50: MMT Without the JG? Conclusion at New Economic Perspectives. Rodger Mitchell brought up several objections in the comments there on which I and others engage him. However, Randy had indicated in the post that he preferred focus on the substance of the post rather than other ideas. So Rodger took the argument to his place for further discussion. I am linking to it here, since I think that the objections are worthy of discussion.

Read it at Monetary Sovereignty
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem
by Rodger Malcolm Mitchell


Anonymous said...

It seems that we can give money to people for nothing, pay for their school while paying them to do it as well as the other things he listed and it isn't communism but JG is. I think his argument is very poor.

Anonymous said...

I agree ano
Comparison with communism is just an empty slogan. He doesn't address any of the real questions. I don't think he thinks you can have 0 unemployment with low inflation.

Anonymous said...

Like all of us, Rodger has his set of blinders

JK said...

I think each of you will get a proper response from Rodger Malcolm Mitchell if you comment over at his blog.

Anonymous said...

i totally agree with the comments above.

i also think that his problem is that he has a preconceived negative notion of the what a JG would look like and he just doesn't like it and doesn't really have a legitimate argument against it--in fact, nobody does--cuz it can be structured in any number of ways that would satisfy any of the stated concerns that anti-JG'ers purport to have.

i personally think that the JG debate is really a non-debate. i also think that congress was way ahead of the MMT crowd and established a JG a long time ago, that being a job in the US Military and i think that one of the main roles of the US Military all this time has been an Employer of Last Resort.

Jonf said...

It does appear that Roger cannot let any comment escape his response. He is passionate, I'll give him that much.

Tom Hickey said...

@ Anonymous

You forgot to add the "prison program." Those people, about 3 million in the US now, are not counted among the unemployed either. That number has shot up since the war on drugs and most of the people incarcerated belong to minorities (which are headed for the majority demographically in only a few decades).

Tom Hickey said...

Regarding the JG, one has to keep the focus on whether the opponent accepts involuntary unemployment when the JG shows it is not necessary, thereby accepting inefficiency. IN short the issue boils down to either a buffer stock of employed or a buffer stock of unemployed.

If the opponent claims that it is possible to have no involuntary unemployment consistently without inflation, then ask just how, exactly. No macro theory other than MMT claims to be able to do this. BTW, narratives and approximations not allowed. Specifics please.

Clonal said...

Rodger had had some interesting things to say about the emratio in the population, and in men and women the other day

Adding to that, if I look at the ratio of "people not in the labor force" to "the civilian labor force" as shown here and then look at the U6 rate, I have to come to the conclusion that the true unemployment rate in the US today is 24%, and the U-6 decline from 2010 is illusory, and at best reflects an increase of 1% to U-6.

Folks, the U-6 has not been declining, as stated, but rather that this decline is only the people being forced to move out of the labor force!

Clonal said...

The above phenomenon was not there in in the 2001 recession, or any of the previous recessions. This is an entirely new phenomenon.

NeilW said...

Rodger is a great guy, but he believes in his set of ideas and will not be persuaded to change them.

As do the core MMT people. It's very difficult to enter into a discussion about the degree of compulsion required in a Job Guarantee and whether there is an operational difference between that and a BIG with enough voluntary jobs on offer for those that want them.

The supposed system objections against JG are all classic "I don't want it so I'll invent some strawman" objections. Every argument against it from both the BIG and 'unemployment is good for you' crowd is easily accommodated in a fairly straightforward distributed operational design.

Anonymous said...

@ tom hickey

"You forgot to add the 'prison program.'"

i'm assuming, by that, you mean that that is in fact a JG. if so, then i agree. the same could be said of the "national security" or "police state" apparatus.

"Those people, about 3 million in the US now, are not counted among the unemployed either." right. and perhaps part of the reason for that is that, apparently, a lot of them are in fact NOT unemployed.

this brings up a few things that most people here are not familiar with.

first, as you imply, the high rate of imprisonment is a good way to hide unemployment. some people believe that the repression under the so-called "cultural revolution' under chairman mao in china way back when was done for precisely that reason.

but, on the other hand, i have also heard that most american-made household appliances are at least in part constructed by prison labor here in the US, so a large prison population would hide de facto slavery.

most people here in the US are under the false impression that slavery is illegal outright, but if you read the constitution you will see that only "private" slavery is illegal. "public" slavery, which happens here via imprisonment, is NOT illegal.

Anonymous said...

@ neil

"Rodger is a great guy."

totally agree. but, by his own account, he used to be a businessman.

i think the problem businessmen have with the JG (but are generally too ashamed to admit) is that if you allow it, it'll be too cushy a job, so much so, that nobody will want to work for the private sector anymore, unless of course, they dramatically increase wages and, even if they get people to work for them, they won't be productive, cuz they know if they get fired, there'll be a cushy, albeit lower-paying job waiting on them.

so, their issue with the JG is that it would take away the only "stick' the business class has to "discipline" labor, namely the threat of homelessness and starvation, not to mention shame.

Leverage said...

Yeah it's a shame the military-policy-prison JG complex is socially acceptable but more beneficial job schemes are 'communism'...

I mean, you can be against or pro-JG, but supporting one sort of JG scheme under total repression (economic repression which drives criminality, and violent coercion by the state police apparatchik) and not an other is totally retarded.

Greg said...

I posted this at Rogers

"Regarding your claim that recessions cause unemployment; That implies that recessions are something other than a decreased number of transactions for new goods in a marketplace.
As I’ve always understood them recessions are what we call a period of reduced sales, and this is reflected in GDP. Obviously when businesses nationwide are selling less of their stuff than they expected to sell they need to make changes. Some of these changes are laying off sales people or others, some of these changes might be trying to enter other markets and some of these changes might be lowering the price of their product to attract those customers who buy mainly on price. The question still remains; why do sales suddenly drop off economy wide? Are all recessions just balance sheet phenomena? Are there not “real” components to recessions?
So while your claim may be true in one sense, it is also true that the mass laying off of employees makes the recession into a downward spiral, so its also true that unemployment “feeds” further recession. Unemployment and recessions are inextricably linked and must be dealt with together and AT TIMES one must take the bull by the horns and simply say “No more unemployment” to stop the downward spiral.
All nine of your suggestions are ideas I am 100% behind but if you think that a JG would be a political fight try getting numbers 1-5 on your list to even be discussed as a whole.
Im not a hardcore JG type (I dont think….. maybe I am) but to me its very simple, asking the private market to hire everyone that wants and is capable of doing productive work is going against the basic principles of free enterprise. Free enterprises looking to make a profit should always be about doing the most with the least amount of people. If they are always working towards doing more with less they will always be working towards laying people off, this is where a type of JG should step in in a modern capitalist economy.
Im actually all about scrapping our capitalist model altogether but im not ready for THAT war………………….yet!
I think humans have accomplished quite bit with a varying number of political and economic systems and America is one of about 3-5 places I would consider living but I dont hold its overall system in as high esteem as others do. We’ve had some great ideas and some not so great ones (Chicago school economics being one of the worst ideas ever conceived) but I still hold out hope that Americans will be pragmatic when push comes to shove and live up to Winston Churchills quote ” America always does the right thing…. after they have tried everything else”

beowulf said...

"i think that one of the main roles of the US Military all this time has been an Employer of Last Resort."

Actually the military is more selective than most colleges.

"75 percent of the nation’s 17- to 24-year-olds are ineligible for [military] service for a variety of reasons. Put another way, only 4.7 million of the 31.2 million 17- to 24-year-olds in a 2007 survey are eligible to enlist. According to the Pentagon, the ineligible population breaks down this way:
•Medical/physical problems, 35 percent.
•Illegal drug use, 18 percent.
•Mental Category V (the lowest 10 percent of the population), 9 percent.
•Too many dependents under age 18, 6 percent.
•Criminal record, 5 percent."

Anonymous said...

Wasn't aware that colleges pay you to attends classes. I though you actually you had to acquire loans to attend them.

Colleges are bankers employers of last resorts.

Anonymous said...

yeah, someone seeking employment in the military is a "jobseeker," whereas college students (here in the US) are "customers."

employers are always going to be pickier about potential employees, than businesses are about potential customers.

Greg said...

Nice breakdown beowulf

So if we legalize drugs then we eliminate about 25% of the people who are ineligible for military service, thats a good start.

Excellent points about college and the military anon.

Tom Hickey said...

"Actually the military is more selective than most colleges."

Was that before or after the military recently reduced the standards and found that they were attracting gangs who wanted to acquire military training? :o

Letsgetitdone said...

I left a number of replies to Rodger's comments on Randy's blog posts. In brief I think he's way off base, and I've outlined the many reasons why I think so there. I think Rodger's objections come down to a preference for an abstract "good economy" over one with FE at a living wage and PS. the giveaway, is when he said that UE was acceptable under Bush.

Tom Hickey said...

Joe, one either accepts involuntary UE or one doesn't. There is only one policy solution with a solid macro foundation supporting it and it is the MMT JG. Otherwise one is OK with a buffer stock of involuntarily unemployed. We should just press opponents of the MMT JG into admitting it, or else putting a competitive solution on the table.

Clonal said...
This comment has been removed by the author.
Clonal said...

A quotation from Thomas Paine (courtsey:William Hodge)

"When shall it be said in any country of the world, my poor are happy; neither ignorance or distress is to be found among them; my jails are empty of prisoners, my streets of beggars; the aged are not in want, the taxes are not oppressive...when these things can be said, then may that country boast of its constitution and government."

Anonymous said...

I can't help but think that a jobs program might have an important psychological impact. Some people don't want a check just handed to them. Not having a job makes them feel like less of a man. Just a thought. Theres always something that needs doing and even something that isn't taking away from the private sector.

Clonal said...

The problem with purely private job creation is that any logical for profit business will replace human workers with cost effective automation. This is to be lauded both from the perspective of efficiency, as well as from the perspective of reduction of drudgery. However, what is lost on the proponents of private job creation is that this leads to the pauperization of the people that are not hired, and to great disparities in income and wealth. Some way has to be arrived at the eliminates this pauperization and immiseration, and prevents the resulting accumulation of wealth and privilege.

This phenomenon has been clearly demonstrated in the US over the last 40 years of ever increasing automation.

Tom Hickey said...

@ Anonymous

Right. Some eligible people don't even apply unless they are up against the wall because of this.

Tom Hickey said...

@ Clonal

This is why I oppose the JG in principle, even though I support it as the best option under the current system.

The solution is to cease considering labor a commodity and treat labor for what it is, the most important factor of production. Moreover, as productivity increases with innovation, so should distributed leisure.