I noted yesterday that I was appearing at a Seminar via Zoom with my MMT colleague, Pavlina Tcherneva, where we will discuss the concept of a social contract and where Modern Monetary Theory (MMT) fits into that, especially in the context of our idea of employment guarantees. The seminar – MMT and the new social contract: Lessons from Covid-19 – will be held on Saturday, February 27, 2021, from 10:00 Australian Eastern Daylight time and you can find details of how you can participate – HERE. I was thinking about what I would contribute to this workshop and rather than just rehearse the standard discussion about the Job Guarantee I have thought going back to square one would be a good place to start. This is especially a good thing to do, given that I increasingly see progressive people embrace the concept but try to do ‘too much’ with it. That is, place too much emphasis on it, especially in the context of Green Transitions. Pouring all our activist and political energy into getting a Job Guarantee up is not a sensible strategy for reasons I will explain. Second, a lot of critics, especially those who talk big on Twitter about ‘Bill Mitchell wanting people to starve’, clearly haven’t gone back to understand the roots of the concept and where it fits in. So today, I want to further clarify some significant issues that arise when both sides – pro and con – come in contact with the concept of employment buffer stocks for the first time and think they know all about.Bill Mitchell – billy blog
As a matter of fact, I always applaud initiatives that propose to introduce a buffer stock of jobs and use it to replace the current unemployment buffer stock approach that devastates the lives of people and wastes human potential.
But I caution against making these initiatives out to be ‘game changers’....
Some historical thinking about the Job Guarantee
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia
There's a big weakness in Bill's "buffer stock" analogy. It's that with buffer stocks in the traditional sense (i.e. buffer stocks of wheat or crude oil) the stock is HOMOGENOUS. Labour is quite different. Every employee and potential employee has different skills, different IQs etc.
ReplyDeleteThat means that as the stock of a traditional buffer stock falls, the same stuff continues to be available. It's not the same with labour. As unemployment falls, it becomes increasingly difficult for regular employers or a JG employer to find PARTICULAR types of labour, skilled labour in particular.
If you have hard time getting skilled labour then learn from history and start internship, educate your own labour.
ReplyDeleteToday’s lazy employers who want everything served has to get real.
"As unemployment falls, it becomes increasingly difficult for regular employers or a JG employer to find PARTICULAR types of labour, skilled labour in particular."
ReplyDeleteThat's a strength not a weakness. The lack of substitution drives forward innovation - because as MMT demonstrates a quantity expanding firm outcompetes a price expanding firm every time.
Because we no longer respond to the "what about the jobs" arguments from firms, market action and anti-trust/competition authority action can be more robust against firms pushing prices rather than innovation.
The JG anchor is at the unskilled level against firms without much capital depth. Standard market competition works elsewhere.
S400,
ReplyDeleteThe problem with educating your own labor is that your labor can walk out the door with that human capital investment to your competition. Businesses have used non-compete clauses to protect their investment, but now they are being used to abuse workers.
The White House released a report this morning that illuminates another part of the complex problem of stagnating wages—the rise of non-compete agreements and their spread to low-wage employment. Non-compete agreements, or “non-competes,” are contracts that ban workers at one company from going to work for a competing employer within a certain period of time after leaving a job. They can make sense when a worker has trade secrets or intellectual property in which the employer has invested. But they make no sense when applied to health care workers, retail and restaurant employees, and other low wage employees. All they do is limit opportunity and shackle people to an employer who will have less incentive to give a raise to retain them.
Employers are imposing non-competes in occupations with no possible trade secret justification—even doggy day care providers! The Treasury Department has found that one in seven Americans earning less than $40,000 a year is subject to a non-compete. This is astonishing, and shows how easily businesses abuse their power over employees and restrict their rights, as they increasingly do with forced arbitration clauses that take away the right of workers to seek justice in the courts. In both cases, workers often accept jobs without ever knowing that they have signed their rights away.
The Treasury Department has done groundbreaking work to show that non-competes have a measurable, negative effect on wages, as one would expect from a practice that limits employee mobility. The report also provides evidence that non-competes can reduce entrepreneurship and innovation.
“The problem with educating your own labor is that your labor can walk out the door with that human capital investment to your competition.“
ReplyDeleteWell they didn’t do that in Sweden when that was the policy of choice. Instead people were very loyal to their employers.
S400,
ReplyDeleteIt's a different job culture in Europe.
Labour laws are one big predictor of corporate tenure, said Andrea Bassanini, a Paris-based senior economist at the Organisation for Economic Co-operation and Development. It is much harder to hire and fire people in Europe than it is in North America, so people in Europe tend to stay with the same employer for longer, he said. Emerging markets like Brazil and Korea have strong economies and that often means more job opportunities. Cultural views of work and variations in unemployment benefits are also factors in job tenure.
Germany seems to be the best in Europe (from a 2012 article).
German employees are more likely than other Europeans to remain loyal to their companies and to stay longer on the job, a new study finds.
The average length an employee in Germany stays at one company is 11 years, the newspaper Welt am Sonntag reported, citing a new study conducted by the Institute for Employee Research (IAB) in Nuremberg.
Bring back indentured labour!
ReplyDelete”German employees are more likely than other Europeans to remain loyal to their companies and to stay longer on the job, a new study finds.”
ReplyDeleteThat’s because they’ve never really abandoned the old intern system that used to be the way before neoliberal ideas took over where responsibility is pushed away from yourself while crying like giant baby.