I did an extended interview over the weekend and during that interchange it became obvious that when a newcomer encounters the concept of the – Job Guarantee – for the first time, they may only see it in a narrow way, as a job creation program and fail to see it the way that the concept was developed as an integral part of Modern Monetary Theory (MMT). When I started talking about the era in which I had first started thinking about using buffer stocks to maintain full employment, it became obvious that the sort of considerations that went into the concept of the buffer stock employment model (the Job Guarantee) had not been fully appreciated by the interviewer. That is no criticism. It is just an observation and a reflection of how long we have been pushing this MMT barrow. At the moment, all the talk is of ‘flattening the curve’ and that is exactly the function that I saw for the Job Guarantee as I toyed as a young postgraduate student and nascent academic with new ways of thinking about macroeconomics that would fight the Monetarist scourge that was dominating in the late 1970s. It was a different era and the challenges from a economic theory perspective were different. I think it is important to understand this context because, as the interview demonstrated, new ‘light bulbs’ go off when the concept of a Job Guarantee is put within the historical exigencies that were dominating when I came up with the idea. So the Job Guarantee flattened the curve long ago – the Phillips curve and that was, in my view, a highly significant development in the context of macroeconomics and makes MMT very different (in addition to a lot of other aspects). Unfortunately, while we knew how to flatten the curve back then, the Monetarist viral infestation continued and we have suffered the shocking consequences ever since....
Important in understanding the MMT JG. It's not actually as much a "job guarantee" as a price stability mechanism that operates based on a buffer stock to control price and quantity to guarantee full employment. Thus, it is really a full employment guarantee, where full employment is that everyone has a standing job offer backed by the currency sovereign. Most critics and many MMT advocates don't get this, but it is a key feature of MMT macro theory based on MMY institutional analysis. Bill gives the historical background. Is definitely not a policy option, and Bill describes how it was key right from the outset of MMT development. This is not new news, but Bill gives the historical record here. If you are interested in MMT, you should know this.
Flattening the curve – the Phillips curve that is
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia
1 comment:
Pretty obvious now a JG alone is inadequate...
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