Peter May — Counter-cyclical Job Guarantee or Universal Basic Income as An Economic Stabliser?

Whilst I agree, could politicians not be persuaded that, rather than a largely useless National Citizen’s Service, we could have a instead have a ‘Job Guarantee’ or perhaps better sold as a ‘Guaranteed Job Opportunity’ for everyone of school leaving age. Of course many will be going to university but some might like to take advantage of some work experience before arriving in full time education.

Indeed with effort and thought perhaps a Job Opportunity could also be guaranteed to graduates, who would no longer feel the need, necessarily, to be baristas and barmen whilst looking for something else.

All this would, I’d suggest, appeal to those worried by the work ethic as well as to Job Guarantee advocates, when the appallingly harsh system of current ‘welfare’ sanctions is, as they will be eventually, abolished. The Job Guarantee could thus gain credibility and be less influenced by any state ‘useless job’ scenario.

In general though I am still of the conclusion that the psychological – or in current parlance, the mental health benefits of a Universal Basic Income, are a clincher. In fact, it seems to me that a Job Guarantee is, in many ways, reinforcement for a basic right wing agenda of prosperity through hard work, which, in reality, is by no means a guarantee of any such thing.

I therefore come increasingly to the conclusion that a Job Guarantee should be a youth employment opportunity guarantee, largely as a young person’s introduction to wider society.

I agree with Peter May that "guaranteed job opportunity" is more suitable terminology than "job guarantee." The emphasis needs to be on opportunities rather than jobs. Would you prefer an opportunity or a job?

In the first place, "guaranteed job opportunity" is more precise and more exact than "job guarantee." Secondly, it avoids the stigma of "make work," as May notes.

However, the post makes clear that Peter May doesn't fully understand the MMT position on the JG in terms of the macro theory, or the relationship of a guaranteed job opportunity, a universal basic income), and a guaranteed basic income.

First, and most importantly, the guaranteed paid work opportunity at a "living wage" (compensation package) replaces the present buffer stock of unemployed with a buffer stock of employed, which more economically efficient in that it doesn't idle real resources that are available, and it also delivers a substantial cost saving. Moreover, the wage functions as a price anchor for price stability.

Secondly, a universal basic income is inflationary. It also violates the principle of targeted government spending, being universal. The spending should be based on need and also targeted toward spending rather than saving if it is to maintain effective demand at full employment.

Thirdly, a guaranteed basic income establishes a floor above the poverty level for everyone in the society. This also serves to stabilize effective demand at full employment. There is no incompatibility between a guaranteed job opportunity and a guaranteed basic income. They address different problems, issues, opportunities, and challenges. They are potentially complementary rather than being mutually exclusive.

Inflationary pressure when the economy is at full employment and full capacity, and imports are not creating a sufficient buffer against price level  increase, should be addressed by using functional finance, that is fiscal policy, including the tax rate.

The macroeconomic theory of MMT explains this approach to policy formulation based on economic efficiency through employment of available resources.

What about environmental stability? That is a matter of policy that will have to be addressed based on conditions. MMT doesn't dictate how to employ real resources. It simply shows the policy space available to do so.

Previously, the work day was unlimited, then limited to about 12 hours and now it is generally eight hours in the US. With increased productivity due to technology, more leisure becomes available. The concept of "work" is a fluid one socio-economically, and emergent conditions suggest that it now needs to be revisited.

Leisure could be increased and consumption resulting therefrom can be redirected toward achieving and maintaining sustainability rather than wasted through manufactured consumption, giving "consumer society" new meaning.

Progressives need to think in terms of systems and causes, rather than addressing symptoms ad hoc.

Progressive Pulse
Counter-cyclical Job Guarantee or Universal Basic Income as An Economic Stabliser?

Peter May