I guess we could at least recognize the logical consistency of the right. Fiat currency leads inevitably to hyperinflation because it does not have gold behind it. Fine. True regardless of what government spends on: Wall Street. Obamacare. Military. Welfare. JG. Basic Income Guarantee. Hasn’t happened in the past (even in the 1940s when budget deficits reached 25% of GDP) and no sign of it in the near future.
What is more troubling is the criticism from the Left. The Left has no problem with QE (helping homeowners) or Wall Street Bailouts (had to save the banks) or Military (security in the age of terrorism) or Welfare (gotta help the poor) or even the Basic Income Guarantee (time to end the “work fetish”).
But, provide Jobs to those who Want To Work? Hell NO, We Won’t Go!
Why not?Economonitor — Great Leap Forward
Let’s Compare the Job Guarantee to the Alternatives, NOT Against Some Distant Utopian Vision
L. Randall Wray | Professor of Economics, University of Missouri at Kansas City
Good stuff by Randy, and nice recapitulation of Pavlina's piece.
ReplyDeleteI like the implicit recognition that defenders of BIG are often motivated by the idea that the unemployed are unemployable and should be ejected from the workforce and then managed as some dependent population of unskilled, un-jobbed, dole serfs.
That's why it's so popular with some elements of the elite neoliberal left. It comports with their elitism and often unacknowledged racism. It also fits in with their quasi-aristocratic disparagement of work itself.
And extra points to Randy for only using the term "buffer stock" once, and only in that case in a negative context to disparage attempts to turn the poor into a buffer stock of under-consumers so we can protect the environment.
Distant Utopian Vision? You mean serfdom?
ReplyDeleteTHAT utopian vision?
May we choose any improvement, NOW, over any utopian vision next generation?
Or, youth will & their future will keep voting with their feet.
There are many alternatives to an MMT JG:
ReplyDelete-- Keynsesian policies
-- progressive taxation to redistribute wealth
-- a Steve Keen debt jubilee
-- a JIG
-- Rodger Mitchell's 9 point plan (or however many points he is pushing these days)
-- indexing payroll taxes to core inflation and the unemployment rate
-- indexing the retirement age to the unemployment rate
And so forth.
As for "distant utopian visions," need I remind the MMT community that the JG was proposed at least 51 years ago (the 1963 March on Washington). At the time, it seemed like a "distant utopian vision."
Far from being a politically viable option, the MMT JG is controversial and there is zero chance it will be passed anytime soon. If a JG program is passed someday, rest assured that it will be a miserable UK-style workfare program, not an idealistic JG.
What's called a JG is actually a core part of human culture going back to the dawn of tribes, bands and even family structures.
ReplyDeleteNOT having "Total Participation" is the exception, not the norm.
and yes, there are 1001 ways to accomplish the core aim, reducing the Output Gap
Let's not quibble, just get on to reducing that gap?
Dan,
ReplyDeleteYour claim that “JG was proposed at least 51 years ago” is a bit of an understatement. In the 1930s (about 85 years ago) it wasn’t just “proposed”: it was put into effect in the US in the form of the WPA.
And 2,600 years ago Pericles in Ancient Athens put the idea into effect. At least according Plutarch, “Pericles undertook vast projects of buildings and designs of work, it being his desire and design that the undisciplined and mechanic multitude… should not go without their share of public salaries, and yet should not have them given them for sitting still and doing nothing.”
But Bill Mitchell seems to think he invented the idea in the 1990s!! At least in section 13.2 of a publication called “Creating effective labour markets…” (link below) he says, “The JG proposal was conceived independently by Mitchell (1998) and Mosler (1997-98)”. See:
https://docs.google.com/file/d/0B7djNI9-uVaDMDU2MzNhYTktNWZhZC00MzJjLWJlMjMtNGQ1ZTUyMmQyY2Nj/edit?pli=1
Surely the "JG" is easily a feature of tribal culture that is at least 100K yrs old?
ReplyDeleteThe Mitchell-Mosler claim to originality is the idea of the JG as a buffer stock of employed v. a buffer stock of unemployed. The concept of price anchor was added to that to arrive at the MMT JG to round out the (Godley) SFB approach and (Lerner) functional finance instead of sound finance.
ReplyDeleteThe MMT claim is that in a modern economy there will be a residual of unemployed without government acting as ELR, so the choice is between buffer stock of unemployed and the inefficiency that involves and a buffer stock of employed that guarantees full employment in the sense that anyone willing and able to work has a job offer at the JG compensation.
According to the theory, no need for a JG in tribal cultures since no government and no taxes, so no involuntary unemployment was created in the sense of someone willing and able to work not being able to find a job.
ReplyDeleteHistorically, mass unemployment is a bug of capitalism, unless one is a capitalist, which makes it a feature as a control on wages and labor bargaining power.
Reality check: In America a JG is still a distant utopian vision.
ReplyDeleteyeah but banks rule the monetary roost so therefore there is no rationale for the JG or something... oh no wait that's idiotic drivel I just spouted there. Sorry.
ReplyDeleteAnd 2,600 years ago Pericles in Ancient Athens put the idea into effect. At least according Plutarch, “Pericles undertook vast projects of buildings and designs of work, it being his desire and design that the undisciplined and mechanic multitude… should not go without their share of public salaries, and yet should not have them given them for sitting still and doing nothing.”
ReplyDeleteSo, would the building of the Egyptian pyramids suffice as an example of a JG?
The MMT JG is the guarantee of a job for those willing and able to work. "Able to work" alone is workfare. "Willing and able to work" makes the MMT JG voluntary. It is designed to eliminate involuntary unemployment by ensuring that a job offer is able to all "willing and able" to work. It sys nothing of those unwilling or unable to work. Different MMT economists have different ideas about that. I think Bill Mitchell is on the only one that would require work of those able whether willing or not by making acceptance a requirement for benefits. The others would make the MMT JG voluntary and supplemental to other aspects of the safety net.
ReplyDeleteTom - Do you think that a voluntary MMT type JG that provides jobs to everyone "Wiling and able to work", would be successful if people still had an option to receive welfare benefits?
ReplyDeleteThat is the contention, Ed, and there seems to be good evidence of it. Many people actually want to work and prefer work to just receiving a check. But it also depends on how the program is configured. It is in accordance with MacGregor's theory x, it won't work so well. If it s configured iaw theory y, it will work pretty good. If it is configured jaw Maslow's theory z it will work even better. But as Maslow pointed out, these are not cookie cutters but rather theories of motivation that need to be adapted to context. I have little doubt that this could be done effectively if properly funded and organized. It's an organizational management issue.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteIn a sense, as would the deification of Pharoes, to create the excuse to distribute grain, pay & training to all the skilled workers & engineers (& geometry mathematicians) needed to build a pyramid.
ReplyDeleteGood practice, between irrigation projects.
Last I read, consensus archaeological data indicates that the Egyptian pyramids were built by well paid craftsmen.
ReplyDeleteSalary records have been found.
Dan Lynch: the JG is a "Keynesian policy" - especially if one calls Keynes's own recommendations Keynesian policy. The JIG is the JG. The rest aren't solutions to the problem, the real problem, and some could make things worse.
ReplyDeleteRoger: I agree with you. It is a core part of human culture. Forcing people unwillingly into unemployment as modern societies do is insane. The only thing crazier is the mainstream idea that we don't commit this crime, and incessantly. Wray has earlier written at Economonitor that he views it as an aberration in human history. "Primitive" societies understood themselves better, and with more of a scientific spirit, did not concoct illogical and anti-empirical theories culminating in mainstream monetary nonsense.
While criticizing the ludicrous and sterile imperial pretensions of neoclassical theory, the MMT academics (e.g. a paper by Kelton & Henry treating ancient Egypt a bit) underrate the generality, power and application of concepts crystallized in MMT, as does Tom imho here. The core of it is just understanding things so simple they repel the mind, but which humans have always understood - but now more explicitly and abstractly and concretely. (Those papers on ancient Egypt imho are a really good way to get MMT, though.)
Last I read, consensus archaeological data indicates that the Egyptian pyramids were built by well paid craftsmen. If I remember what a tourist called Herodotus was told by them ancient Egyptians, quite well paid. In onions and in nights with the Pharaoh's daughter at least. Even she was part of the Total Participation. :-)
"Even she was part of the Total Participation"
ReplyDeleteParticipation is the key. We need participatory democracy and a participatory society economically. That means rethinking American in terms of the ideal that we espouse, "government of the people, by the people and for the people." That is just an ideal so far, and it is largely owing to the institutional structure — power structure and economic structure.
We can jiggle some with those to make things better than they are now, but that is not a lasting solution as we see with what happened to the Keynesian phase of US history. It elicited a gigantic conservative push back driven popularly by an appeal to good ol' frontier individualism even though the frontier is long gone and the frontier's people were successful through total participation — we are in this together — rather than rugged individualism anyway — every man for himself and his chattel, including women and children.