Lambert Strether — The Jobs Guarantee, “Make-Work,” and FDR’s Civilian Conservation Corps (CCC)

One of the talking points deployed against a Jobs Guarantee[1] is “make-work.”[2] (I’m not proffering a complete sentence because deployment, in form of a jerking knee, is so fast that complete sentence cannot be emitted in time). This makes me crazy, because I was taught about FDR’s Civilian Conservation Corps (CCC) back in grade school, and while the CCC was not “A job for everyone who wants one,” the work the millions employed by CCC did was most definitely not “make-work.” So in this post, I want to take a quick look at the CCC, because not all readers may be familiar with it, and then take a quick look at what a modern CCC might do. (In other words, I’m recapturing a little history here — even perhaps doing a little bit of a rant — not doing serious policy analysis.)

Naked Capitalism
The Jobs Guarantee, “Make-Work,” and FDR’s Civilian Conservation Corps (CCC)
Lambert Strether of Corrente

Johnny Fulfer — It’s Time to Guarantee Jobs

The first half of the twentieth century was a challenging time for economics. The Great Depression wiped out incomes, investments, and most importantly, optimism. But when the traditional laissez-faire approach proved ineffective, the work of Keynes and FDR showed that there was another way. The New Deal employed American workers directly and restored confidence among business owners. Today, we could benefit from a similar program. It’s time for a new New Deal, or a Job Guarantee Program, that secures employment to all who are able and willing to work. We’ve done it before, and we can do it again....

Job guarantees are not unexplored territory. Maps exist.

The Minskys
It’s Time to Guarantee Jobs
Johnny Fulfer

C.J. Polychroniou — The 21st Century Doesn't Need a New Deal -- It Needs a New Economic Model

In today's global economy, neoliberalism reigns supreme, organized labor is in deep retreat and public debt has shot through the roof. In the face of these crises, is a global 21st century remaking of the 1930s-era New Deal what people on the left should be fighting for?

Contemporary progressive parties, such as Syriza in Greece and Podemos in Spain, have rallied around the idea of a "new New Deal," while the European Citizen's Initiative for a "New Deal 4 Europe" appears to have the backing of both Labor and Green party leaders in several European countries. In the US, Bernie Sanders has also been a strong advocate of this idea as the way out of our troubles.

However, a closer look at the history of the 1930s-era New Deal reveals that a new New Deal would do little to solve the underlying problems of capitalism and could even delay efforts to combat climate change through its emphasis on boosting growth via a new era of state capitalism.

Although New Deal-style programs have the potential to alleviate poverty in the short term, they are deeply limited by the core constraint that the raison d'être of active state intervention in a capitalist regime is none other than to save capitalism. Moreover, any program in the mold of President Franklin D. Roosevelt's New Deal would also be limited by its failure to give workers a greater say in decision-making.

The New Deal was a co-optation scheme to save capitalism rather than to reform or replace it. What's needed is a new economic model that empowers the people rather than privileging property owners under the bourgeois liberalism that arose as nascent capitalism replaced late-stage feudalism and which is now institutionalized through neoclassical economics as the foundation of neoliberalism.

Criticizing the existing economic model for its deficiencies is insufficient. A new model must be developed to replace it and it need to do more than co-opt workers by distracting them with bread and circuses, and political wedge issues.

The post is a short summary of what needs to be done.

Truthout
The 21st Century Doesn't Need a New Deal -- It Needs a New Economic Model
C.J. Polychroniou | Research Associate and Policy Fellow at the Levy Economics Institute of Bard College

Yves Smith — Bill Black and Stephanie Kelton: Is it Time for a New Deal Federal Jobs Program?

Video and transcript.

Naked Capitalism
Bill Black and Stephanie Kelton: Is it Time for a New Deal Federal Jobs Program?
Yves Smith

Matias Vernengo — How Keynesianism became a dirty word: not Hayek, the New Deal is the real cause

Noah Smith, now writing regularly for Bloomberg, had a piece on this subject. There are a few good points on how New Keynesians are really followers of Friedman, something Mankiw admitted long ago, and how everybody including conservative economists (meaning GOP economists like John Taylor and Ben Bernanke) are New Keynesians (these would be the potty trained GOP economists, not your supply-side fringe economists like Arthur Laffer). Note that this is essentially correct as pointed out here before, since New Keynesians accept fully Friedman's notion of a natural rate of unemployment, while Keynes explicitly said he wanted to reject the twin concept of a natural rate of interest. 

Noah also suggests that Keynes only wanted stabilization policies, and no redistributive policies, which is more open to debate. Keynes was certainly a moderate reformer trying to save capitalism from itself, and was no fan of the Soviet experiment. On the other hand, he was an Asquith liberal, meaning concerned with the expansion of the welfare system, and knew that laissez-faire, if it had advantages in the past, was essentially dead… 

On the main topic of his piece, however, Noah is simply wrong. He argues that the reason why:
"people think Keynesianism is socialism-lite [is] the fault of Keynes’s main intellectual opponent, Friedrich Hayek." First, while it's true that Keynes and Hayek had a few debates in the 1930s (but the key Keynesian author in these debates was actually Sraffa, not Keynes), prompted by Lionel Robbins plan to make the London School of Economics (LSE) an alternative to Cambridge, it is preposterous to say that Hayek was the main intellectual opponent of Keynes. In the GT, it was his own teacher Pigou, and the Marshallian tradition in Cambridge that Keynes was battling. In his personal debates Robertson was certainly more relevant than almost any other conventional (Marshallian) economist. Hayek was irrelevant.…

Matias traces the history. Good read.

Naked Keynesianism
How Keynesianism became a dirty word: not Hayek, the New Deal is the real cause
Matias Vernengo | Associate Professor of Economics, University of Utah

Edward Lambert — Institutionalist Economics did not come up short

Krugman's back at it: "No model." Edward Lambert calls him out on it.

There are two fundamental types of conceptual model used to express theoretical assumptions: the first is mathematical and the second is conceptual. 

Conceptual models have generally fared better than the mathematical ones with respect to policy for a variety of reasons, the basic one being that they can handle more kinds and orders of variables that are relevant, both quantitative and qualitative. Evidence? Keynes and the New Deal.

Krugman is specifically throwing Keynes under the bus? Or does Krugman think that the IS-LM model captures the essence of the General Theory?

Of course, monetarists will say that Keynesianism broke down with stagflation and monetarism repaired the lacuna with its math-based analysis — that showed that what happened in the financial crisis was impossible, or at least highly unlikely. 

Those taking a broader view warned otherwise. Like those influenced by Minsky's analysis.

What amazes me is that monetarists think that the policy rate is the single lever that moves the entire economy, which is neatly depicted in the IS-LM model.

Effective Demand
Institutionalist Economics did not come up short
Edward Lambert

Norbert Häring — George Soros‘ INET: An institute to improve the world or a Trojan horse of the financial oligarchy?

The financial oligarchy might also recollect that economics is their most important ally in shaping public opinion and policies in their favor. To prevent a loss of power as it happened hence, they might want to make sure first that economics will not challenge the notion of leaving financial markets mostly to themselves and will continue to downplay the role of money and the power of the financial oligarchy, and of power in general....

So far, the history and the actions of the Institute for New Economic Thinking, founded by George Soros and other members of the financial establishment, are compatible with the hypothesis that it might be a Trojan horse of the financial oligarchy, meant to control the movement for reform of economics. However, despite some limited evidence to the contrary, it is also still compatible with the counter-hypothesis that it is a bona fide effort to push such reform to the benefit of society at large. A restrictive policy of supporting independent initiatives with the same stated goals, and a recent tendency toward the promotion of the less radical reformist ideas make it opportune to monitor the activities of INET with an open but skeptical mind.

Real-World Economics Review Blog
George Soros‘ INET: An institute to improve the world or a Trojan horse of the financial oligarchy?

Norbert Häring | Co-founder and co-director of the World Economics Association

At least INET is better than the Peterson Foundation, Concord Coalition and Fix the Debt, which are quite transparently organized to prevent a repeat of the Pecora Commission, Glass-Steagall, and the New Deal reforms.

Pavlina R. Tcherneva — The Long Battle For A Living Wage Goes On

Short historical summary of going backwards.

New Economic Perspectives
The Long Battle For A Living Wage Goes On
Pavlina R. Tcherneva | Assistant Professor of Economics at Bard College

Pavlina has a new working paper up at Levy, too.
Reorienting Fiscal Policy: A Critical Assessment of Fiscal Fine-Tuning

Matias Vernengo — Currie and the 1937-38 recession

Someone please send this message to the people in charge now.

Naked Keynesianism
Currie and the 1937-38 recession
Matias Vernengo | Associate Professor of Economics, University of Utah

More Crazy

Fox attempts to fix its plunging ratings and look what happens.

AlterNet
Tea Partyers Boycott Fox News for Being Too “Left”
Jillian Rayfield | Salon.com

DS: "The new deal was a political gong show, not a golden era of enlightened economic policy. It shattered the foundation of sound money and inaugurated a régime of capricious fiscal and regulatory activism that inexorably fueled the growth of state power and the crony capitalism which thrives on it. But it did not end the Great Depression or save capitalism from the alleged shortcomings which led to the crash. In fact, the New Deal introduced a severe dose of economic nationalism and autarky at a time when the only hope for speedy recovery was a reopening of world trade and reestablishment of a stable international monetary régime.... in reality, the notion that the New Deal had pioneered a road map to recovery by means of countercyclical fiscal policy is mostly a postwar academic legend."

Zero Hedge
David Stockman On The New Deal Myths Of Recovery

Yves Smith — Obama Wants to Be the President Who Rolled Back the New Deal

The president wants to cut Social Security and Medicare to protect the investor class.
There is no more pretense possible. As we’ve warned for some time, Obama is eager to put a notch on his belt by being the President that rolled back the New Deal programs that helped create broad-based middle-class prosperity and dignity. He’s cast himself as an adult inflicting discipline on profligate Americans....

We now have the absurd spectacle of Paul Ryan’s budget being to the left of Obama’s on the issue of Social Security and Medicare. If the Republicans have an iota of sense, they’ll take full advantage of the weapon Obama has handed them. Every poll ever done over the last 50 years shows substantial majorities favoring continuing and increasing Social Security and Medicare provisions, and either increasing taxes or cutting other spending to do so....

But Obama wants his legacy and the public be damned. And Bill Clinton proves that being a front person for neoliberalism is a very lucrative post-Presidential line of work....

...the battle to get Obama’s fondly-desired Social Security cuts passed means persuading legislators to take a memorable vote that their constituents are likely to hold against them....

This “have old people die faster” plan will be contested. The normally complacent public is unlikely to sit by quietly and have its ox gored. Even the Times is not trying to soft pedal what is going on; it’s not using the anodyne language of “chained CPI” but “cutback” and in the headline, no less. 

AlterNet
Obama Wants to Be the President Who Rolled Back the New Deal
Yves Smith

Galbraith on the Great Depression and the 'Great Recession'

A new interview with Jamie Galbraith (and also Leo Panitch), on the possibilities of a New 'New Deal' (part II here). Not much of chance, by the way. Part of the story is that the New Deal was fundamental in institution building, and these very institutions saved us from a crisis similar to the Depression, creating less of a perceived need for continuous reform.

Naked Keynesianism
Galbraith on the Great Depression and the 'Great Recession'
Matias Vernengo | Associate Professor of Economics, University of Utah

"Starve the Beast"

Since the 1970s, the Republican Party has fallen increasingly under the influence of radical ideologues, whose goal is nothing less than the elimination of the welfare state — that is, the whole legacy of the New Deal and the Great Society. From the beginning, however, these ideologues have had a big problem: The programs they want to kill are very popular. Americans may nod their heads when you attack big government in the abstract, but they strongly support Social Security, Medicare, and even Medicaid. So what’s a radical to do?

The answer, for a long time, has involved two strategies. One is “starve the beast,” the idea of using tax cuts to reduce government revenue, then using the resulting lack of funds to force cuts in popular social programs. Whenever you see some Republican politician piously denouncing federal red ink, always remember that, for decades, the G.O.P. has seen budget deficits as a feature, not a bug.

The New York Times | Opinion
The G.O.P.’s Existential Crisis
Paul Krugman | Professor of Economics, Princeton University

David Stockman admitted this back in 1985, as reported by Tom Wicker in "Stockman leaks 'real' reasons for budget deficit."

...it now appears that the deficit was created by Reagan to do away with Democratic social programs dating back to the New Deal.

Who says so? David Stockman, the departing budget director, at second hand, and Friedrich von Hayek directly....

(h/t JK via email)

Marshall Auerback — So-Called Fiscal Cliff Is Baloney; Our Economy Can Recover if Obama Focuses on What We Really Need: Jobs!

Talk about deficits and tax cuts distracts us from the great New Deal lesson: An economy recovers when people go back to work.

Read it at AlterNet
So-Called Fiscal Cliff Is Baloney; Our Economy Can Recover if Obama Focuses on What We Really Need: Jobs!
by Marshall Auerback

(h/t John Zelnicker in the comments)

John Henry — A Federally-Funded Jobs Program?

In the current debates surrounding various job guarantee programs (in association with the Chartalist or Modern Money perspectives), it might prove helpful to review some aspects of the Works Progress Administration (renamed in 1939 as Work Projects Administration).  While the WPA was not a “job guarantee” program, it nevertheless points to a number of issues that are under current discussion, including those of the nature of the projects undertaken, impact on the larger economy, concerns surrounding bureaucratic impediments, etc.

Read it at New Economic Perspectives
A Federally-Funded Jobs Program? Lessons from the WPA
By John Henry

(h/t Clonal)