What If We Nationalized Payroll? Pavlina Tcherneva

As the coronavirus pandemic rages on, the US Congress appropriated a whopping $2 trillion budget to tackle it (about 10% of GDP). The focus was on expanded unemployment benefits and cash assistance to families, as well as grants and loans to small firms and large corporations in hopes that they will halt the torrent of layoffs.

Across the ocean, Denmark took a different approach. The Danish government announced that it would cover 75–90% of certain worker salaries for the next 3 months. However remote the possibility here in the US, it still inspires the question: Could we have followed suit? How shall we think about such a policy?...

Multiplier Effect

What If We Nationalized Payroll?
Pavlina Tcherneva | Assistant Professor of Economics at Bard College, Research Scholar at The Levy Economics Institute, and Senior Research Associate at the Center for Full Employment and Price Stability

See also

Global Inequality
Four types of labor and the epidemic
Branko Milanovic | Visiting Presidential Professor at City University of New York Graduate Center and senior scholar at the Stone Center on Socio-economic Inequality, senior scholar at the Luxembourg Income Study (LIS), and formerly lead economist in the World Bank's research department and senior associate at Carnegie Endowment for International Peace

A Recovery With Crippled Small Businesses Looks Awkward — Brian Romanchuk

We have just seen the beginning of post-COVID economic data, and the numbers are literally off the charts. My feeling is that aggregate numbers will be meaningless, and we will need to look at industry-level data. I just wanted to look a bit ahead, to the post-lockdown future. My main concerns revolve around the small business sector, which I fear will be taking a bigger hit than larger businesses. The issue is that small businesses are a major driver of employment -- and we are likely to start with elevated unemployment levels, even after the "re-start" phase hits....

Bond Economics
A Recovery With Crippled Small Businesses Looks Awkward
Brian Romanchuk

A "Wild and Dangerous" Scheme! — Sandwichman

I was hunting for the exact location of "Prince's Tavern" in Manchester in 1833 when I stumbled upon an Economist article from March 30, 1844 addressing the "practical consequences" of reducing the length of the factory working day from 12 hours to 10. I am always fascinating by the profound and enduring hostility of a faction of employers -- amplified by their mouthpieces in academia and the press -- to the reduction of working time. I'm amazed how often their bile and zeal leads them to compound the error of biased, unfounded assumptions with boneheaded accounting mistakes.

Sound like criticism of MMT today.

Econospeak
A "Wild and Dangerous" Scheme!

Sandwichman

Bill Mitchell — UBI–the hopeful not the surrender

I have long disagreed with Guy Standing about the solutions to unemployment. 20 years ago we crossed paths on panels and in the literature where he would argue that UBI was the way forward and I would argue that it was a neoliberal plot and that, instead, we needed to push for job creation. My view has always been that to surrender to the neoliberals on their claim that governments cannot generate sufficient jobs to satisfy the desires for work of the unemployed was a slippery slope. Standing continues to publish his fiction. In his latest Social Europe article (January 15, 2020) – Building a progressive alliance in Britain – he seeks to integrate UBI proposals with a recovery plan for British Labour. My view is that would not help Labour recover from the shots they fired into their own feet in the period before the December election by listening to the likes of Standing and those who advocated the Fiscal Credibility Rule and the reneging on the Brexit commitment. Standing’s aversion to job creation is in contradistinction with a recommendation from the Wetenschappelijke Raad Voor Het Regeringsbeleid (WRR or in English, The Netherlands Scientific Council for Government Policy) to the Dutch government to deal with the challenges of achieving “good work”, in part, by introducing a ‘basic job’ which in my parlance means by introducing a Job Guarantee. They are motivated by a deep vein of social science and medical research that extols the virtues of work beyond its obvious income generation qualities. Pushing a UBI in the light of that research is just a pitiful bailout...

Bill Mitchell – billy blog
UBI – the hopeful not the surrender
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

America’s Finest Economists Have Been Needlessly Undermining Growth, Study Confirms — Eric Levitz

A few lonely voices disputed this consensus. In their view, these two distinct mysteries weren’t actually distinct — or all that mysterious. The reason wage growth wasn’t rising as one would expect with the economy near full employment was that the economy wasn’t near full employment. And the reason the economy wasn’t near full employment was that all those prime-age workers who’d supposedly exited the labor force for reasons totally unrelated to the strength of the economy hadn’t actually exited the labor force for reasons totally unrelated to the strength of the economy.

In this view, both of the supposed mysteries stemmed from the same mistake: Economists had too much faith in the official unemployment rate. That rate counts only those who say they’re actively seeking employment as available workers. And yet many Americans who say they aren’t looking for a job (and are, therefore, classified as nonparticipants in the labor force) also say that they would like a job if one presented itself. Meanwhile, survey data show that even those Americans who say they aren’t looking for a job – anddon’t want one – can abruptly change their minds. Such workers often go from being “outside the labor force” to being employed without ever registering as “unemployed” in the government’s data.

This reality has a major implication: The pool of surplus labor that employers have at their disposal at any given time is much larger than the unemployment rate lets on.…

New York Magazine — Intelligencer
America’s Finest Economists Have Been Needlessly Undermining Growth, Study Confirms

Eric Levitz

Gina Heeb — There's a 'blue-collar wave' taking place in America — but it may not last

• Firms are having a more difficult time finding blue-collar workers than white-collar workers.
• The shortage is expected to continue to put upward pressure on wages for blue-collared workers.
• But economists say a tight labor market could incentivize companies to shift toward automation in attempt to reduce costs, lessening the demand for manual labor.

Business Insider
There's a 'blue-collar wave' taking place in America — but it may not last

Gina Heeb

Lawrence Mishel — Social Security data confirm same old pattern: Self-employment headcount has risen but economic impact remains small

One indication of the growth of self-employment activity has been the rise in the number of people filing Schedule C income and self-employment earnings in their annual tax filings. This growth has been cited to illustrate the escalation of self-employment and to suggest that Bureau of Labor Statistics (BLS) measures of self-employment are missing an important phenomenon. Tracking headcounts of tax filings, however, does not adequately reflect trends in the economic impact of self-employment since, as this analysis shows, most of the growth is activity for supplementary incomes....

Gig economy.

Economic Policy Institute
Social Security data confirm same old pattern: Self-employment headcount has risen but economic impact remains small

Lawrence Mishel | distinguished fellow at the Economic Policy Institute

Joshua Bateman — Why China is spending billions to develop an army of robots to turbocharge its economy

• Chinese President Xi Jinping has called for a robot revolution in manufacturing to boost productivity.
• Wages in China are rising, and it's becoming harder to compete with cheap labor.
• An aging population in China also necessitates automation. The working-age population, people age 15 to 64, could drop to 800 million by 2050 from 998 million today.
• Chinese robotic growth is forecast to exceed 20 percent annually through 2020.

Interesting article to read in full.

China's socialist ideology commits the elite to dealing with inequality in a way that capitalist ideology doesn't. It will be interesting to see how this plays out as it develops. I suspect that China will recognize that it is a demand problem long before the West does.

CNBC — The Edge
Why China is spending billions to develop an army of robots to turbocharge its economy
Joshua Bateman, CNBC contributor

Gaius Publius — Stephen Hawking on What Killed the World of the Jetsons. Prelude to Thoughts on a Guaranteed Jobs Program

I’m about to start writing about the new proposal from Stephanie Kelton and her colleagues at the Levy Institute on the guaranteed jobs program, a proposal, by the way, that’s starting to get some serious notice.

But ahead of that work I want to consider an extreme case, but not an unlikely one. What if, in the future, there simply aren’t enough jobs for everyone? What then?

Put more simply, what’s the underlying assumption behind the world of the Jetsons? The late Stephen Hawking, in his last Reddit AMA appearance, has the answer....

Naked Capitalism
Gaius Publius: Stephen Hawking on What Killed the World of the Jetsons. Prelude to Thoughts on a Guaranteed Jobs Program

Claire Connelly — Capitalism and the veil of ignorance

MMT.

Medium
Capitalism and the veil of ignorance

Claire Connelly 

Marshall Auerback — The Fed Is on the Verge of Making a Major Policy Error

Policymakers have helped to perpetuate an economic model that is ultimately unsustainable.

The article is based on Bill Mitchell's analysis of US unemployment.

AlterNet
The Fed Is on the Verge of Making a Major Policy Error
Marshall Auerback / AlterNet

Dean Baker — Morning Edition Tells Us That Most Workers Think Like Most Economists and Don't Worry About Automation

Productivity growth (the rate at which technology is displacing workers) had slowed to roughly 1.0 percent annually in the years since 2005. This compares to a 3.0 percent growth rate in the decade from 1995 to 2005 and the long Golden Age from 1947 to 1973. Most economists expect the rate of productivity growth to remain near 1.0 percent as opposed to returning back to something close to its 3.0 percent rate in more prosperous times.… 

It is also worth noting that the high productivity growth in the period from 1947 to 1973 was associated with low unemployment and rapid wage growth. If another productivity upturn instead leads to high unemployment and weak wage growth it will be the result of deliberate policy to shift the benefits of productivity growth to those at the top end of the income distribution (e.g. government granted patent and copyright monopolies, high interest rates by the Fed, and trade policy that protects doctors and other highly paid professionals from competition -- all discussed in Rigged [it's free]). It will not be the fault of the robots.

As usual the issue is distribution, discussion of which most conventional economists take off the table as taboo.

Beat the Press
Morning Edition Tells Us That Most Workers Think Like Most Economists and Don't Worry About Automation
Dean Baker | Co-director of the Center for Economic and Policy Research in Washington, D.C

Bruce Lesnick — The Unemployment Conspiracy

JG v. UBI

Counterpunch
The Unemployment Conspiracy
Bruce Lesnick

Bill Mitchell — US labour market steady but low wage bias continues

On December 8, 2017, the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – November 2017 – which showed that total non-farm employment from the payroll survey rose by 228,000 in November, slightly less than the October net increase. While the payroll data showed a fairly strong employment outcome, the Labour Force Survey data estimated a weaker rise in employment (57 thousand) in November. The labour force was estimated to have risen by 148 thousand after October’s results showing a sharp contraction. The BLS thus estimated that unemployment rose by 90 thousand and the official unemployment rate rose slightly from 4.07 to 4.12 per cent. There is still a large jobs deficit remaining and other indicators suggest the labour market is still below where it was prior to the crisis. I also update my ‘low-wage jobs bias’ to November 2017 and conclude that in the recovery, there has been a bias towards low wage and below-average wage job creation.

Bill Mitchell – billy blog
US labour market steady but low wage bias continues
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

David P. Goldman — Still no Phillpsy-Curve

New data shows continued weak inflation in US, Europe

Asia Times
Still no Phillpsy-Curve

David P. Goldman

US tax bill gets huge boost as McCain says yes

Bill Mitchell — Automation and full employment – back to the 1960s

On August 19, 1964, the then US President Lyndon B. Johnson established the – National Commission on Technology, Automation, and Economic Progress. He established the Commission in response to growing concern during the deep 1960-61 recession that the unemployment had been created by the pace of technological change. Ring a bell! He wanted to an inquiry to explore this issue and come up with recommendations on how to deal with the possibility that automation was wiping out jobs and the future would be bleak. Before the Commission had reported, the Federal government had reversed its fiscal austerity and the resulting stimulus had driven the unemployment back down to relatively low levels. The Commission noted that unemployment was largely the result of inadequate total spending and that the Government had the tools at its disposal to eliminate it. They considered that there would be workers (low-skill etc) who would suffer more displacement from technology than those with more skill etc, but that ultimately even those workers would be able to get jobs if the public deficit was large enough. In this regard, they eschewed pointless training programs that did not provide immediate access to jobs. Instead, they recommended (among other things) the introduction of a Job Guarantee (Public Service Employment) financed by the Federal government but administered at all levels of government. It would pay the Federal minimum wage and be available on demand. This is the preferred Modern Monetary Theory (MMT) approach and rejects solutions that rely on the provision of a basic income guarantee to resolve the problems created by unemployment.

Technological innovation has often been disruptive historically, but the disruption has always proved temporary, and progress ensued. The problem is not technological innovation. Evolution always brings new challenges along with new opportunities. The primary challenge is to adapt to change. Standing in the way of change is seldom successful.

The currency-issuing government has the responsibility of maintaining aggregate spending at a level sufficient to generate sufficient jobs overall.

This level changes as the pace of labour force growth and productivity changes. But the fact remains – the government can always purchase anything that is for sale in the currency it issues, including all idle labour.

There is never a reason for persistent mass unemployment. Mass unemployment is a political choice not a financial necessity.

This doesn't imply that technological innovation is not disruptive. It may be disruptive to those that lose their jobs, or are otherwise affected, such as new industries being born (tires) and old ones shuttered (blacksmiths, horseshoes, and horseshoe nails). There was huge disruption in customary employment as a result of the transition from the agricultural age that centered on farming to the industrial age that centered on manufacturing. We can anticipate something similar in the transition from the industrial (analog) age to the information (digital) age. For example, if leisure increases as a result of disruptive technology, so will work in areas that serve it. People won't just sit around — as long as they can afford to do something of interest.

A currency issuing government has the ability to address change in a timely way so as to minimize the effects of disruptive innovation by maintaining full employment and keeping the economy on track. It's a matter of maintaining demand so resources that technological innovation and increased productivity make available are not idled owing to lack of demand.

A currency issuer is capable of addressing this by maintaining the flow of money at the level of effective demand commensurate with supply at full employment to the degree that the private sector does not. In this sense, government uses its "power of the purse" to act as a buffer against unemployment.

Technological innovation increases the potential for prosperity and also leisure. Managing the transition involves political decisions along with a correct understanding of economics and government finance. Then it is a distribution issue

Distribution is a political issue with respect to who wins and who loses, rather than just an economic one. Currently, this is where the problem can be traced. Its' a matter of ignorance about economics and government finance, but also involves ideology heavily.

Bill Mitchell – billy blog
Automation and full employment – back to the 1960s
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Pedro Nicolaci da Costa — Fed rebel warns businesses to stop 'whining' about a shortage of workers

It’s an all-too common refrain among US corporations: we have jobs available, but simply can’t find qualified workers to fill them.

Economists, including top Federal Reserve officials, lend credibility to this dubious claim by arguing there is a "skills gap" among US workers that is preventing firms from finding employees with the right backgrounds.

However, ample research and basic common sense suggests that wage stagnation, which has dominated the US job landscape in recent decades, is a symptom of an anemic labor market, not a fully recovered one.

Credit to Minneapolis Fed President Neel Kashkari for pointing that out during a speech to business leaders on Monday.

"If you're not raising wages, then it just sounds like whining," he told a group of business people at a Rotary Club meeting in Sioux Falls, S.D., according to the Washington Examiner.

Business insider
Fed rebel warns businesses to stop 'whining' about a shortage of workers
Pedro Nicolaci da Costa

ht Brad DeLong at Grasping Reality
 

Aaron Berger — We should let the robots take our jobs - and then pay us all a basic income

Thinking outside the box, the box being wage-based capitalism. Are we in the phase transition to the next system?

Instead of "basic income," I would prefer "social dividend."

Business Insider
A 32-year-old investor with ties to Elon Musk wants to upend America with his crazy, utopian plan for the future
Chris Weller

World Economic Forum | Agenda
We should let the robots take our jobs - and then pay us all a basic income
Aaron Berger

CNBC
Sam Altman will spend big on a new political movement to fix US housing, health care and more
Tony Romm

Sandwichman — Here is a Little Economics Lesson

"Supply and demand."

Short.

Econospeak
Here is a Little Economics Lesson

Sandwichman

David F. Ruccio — Technology, employment, and distribution

I can make the case that things would be much better if the adoption of new technologies did in fact displace a large number of labor hours. Then, the decreasing amount of labor that needed to be performed could be spread among all workers, thus lessening the need for everyone to work as many hours as they do today.

But that would require a radically different set of economic institutions, one in which people were not forced to have the freedom to sell their ability to work to someone else. However, that’s not a world Autor and Salomons—or mainstream economists generally—can ever imagine let alone work to create.

Technological innovation increases the potential to substitute leisure for work, but that is ruled out institutionally and operationally in a capitalist system operated on wage labor. Rather than increasing leisure the gain from increased productivity goes to owners of technology and technology workers. This puts downward pressure on other workers and increases unemployment in less desirable work. The result is increasing inequality and social dysfunction.

Occasional Links & Commentary
Technology, employment, and distribution
David F. Ruccio | Professor of Economics, University of Notre Dame