Monday, April 30, 2018

David Dayen — Whether America Can Afford a Job Guarantee Program Is Not Up for Debate

Disappointing. David Dayen surely knows that as currency issuer the federal government faces no limitation on the amount of currency it can issue, but he doesn't mention it.

The Intercept
Whether America Can Afford a Job Guarantee Program Is Not Up for Debate
David Dayen

See also
With Senator Bernie Sanders in the forefront, some Democratic members of Congress are planning a bill to guarantee jobs that pay $15 per hour, not including mandatory benefits packages, for all Americans. Legislative details have not yet been announced (!), but several sets of plan have been published recently, including on the website of the Sanders Institute, which was founded by Jane O'Meara Sanders, wife of the senator. Here, let's run through a couple of the more prominent plans, and then list on criticisms that have been bubbling up--with a focus on critiques from writers typically identified as being on the political left....
Conversable Economist
The Job Guarantee Controversy
Timothy Taylor | Managing editor of the Journal of Economic Perspectives, based at Macalester College in St. Paul, Minnesota


Ralph Musgrave said...

Timothy Taylor clearly doesn’t know much about this subject. He says “If a central government job guarantee is such a great idea, then why wasn't it already done in social democratic countries of Europe long ago?” That sentence is in bold, so he clearly thinks he’s making an amazingly insightful point.

The simple answer to his question is: “It was”.

For example, it was “already done” in Switzerland “long ago”. For some info in JG type schemes in Switzerland, see:

Re the UK, see for example:

But there’s a vast amount of other literature. Incidentally I actually worked on a UK JG type scheme about FIFTY years ago.

Next, the European country that was spending the most (as a % of GDP) on JG type schemes (at least in the 1990s) was Sweden. That spawned a large literature needless to say.

And finally I don’t know whether Ancient Greece qualifies as one of Timothy Taylors “social democratic” countries – probably not. But it is “European”. Pericles implemented what was clearly JG type scheme there around 2,600 years ago.

To summarise, Timothy Taylor is about 2,600 years behind the times...:-)

Detroit Dan said...

Tom-- I don't understand your disappointment with Dayen. His whole point is that we can afford it -- it's not even up for debate. Moreover he says,

"America controls its own money supply and modern monetary theory suggests that the country need not actually pay for all federal spending. "

Tom Hickey said...

I don't understand your disappointment with Dayen. His whole point is that we can afford it -- it's not even up for debate.

That's true but it comes across as something that has little to do with MMT. It does little to change the framing of the debate, that is the really important thing.

Stay in the opponent's frame and you'll lose every time.

Matt Franko said...

Dan, This Dayen uses the phrase “pay for” which is right out of the Peterson moron’s lexicon....

Ralph Musgrave said...

The claim by Dayen that because the state can print and spend money, ergo JG is easily affordable is not really true. (I'm pretty sure Randall Wray made that claim a few years ago).

Obviously if the economy is not at capacity, then it's possible to print and spend money on anything we like: JG, aircraft carriers, you name it. I.e. there is nothing special about JG which makes it "easily affordable because we can print money". Put another way, if we have to pay for the skilled labour, materials etc needed for a JG system, then we have to have less of something else, e.g. aircraft carriers or whatever, at least in the first instance. Quite separate from that is the possibility that ULTIMATE effect of JG might be to increase GDP.

Tom Hickey said...

MMT economics have addressed the expected effects of the proposed JG program in articles and simulations, and Bill Mitchell has a book on it. It's not just a matter of a huge injection of government spending that adds to M1 money supply. That spending is a flow that flows in many directions through many channels that have socio-economic effects in addition to actuall full employment.

A key idea (assumption) behind the MMT JG is that government is purchasing or renting resources that the private sector has no use for at the time and when the private sector does have a use for them, then they will be bid back since government does not raise its offer.