Sunday, 19 April 2015
Getting the Job Guarantee right
Ok, while trying to explain to doves and hawks alike how the voluntary (MMT) Job Guarantee would look like, we need to get something immediately out of the way. The JG scheme does NOT abolish welfare! If you hear or read anyone arguing in favor of a mandatory JG program, or one that does away with welfare checks, then those sources have nothing in common to what I and many other heterodox blokes and women are arguing for.
Here are some counter-points to the criticism I've received on the JG from various people over the internet.
1-JG is financed like anything else, from federal/national government spending, NOT from taxes.
2-Permanent and involuntary unemployed is always bad economic policy; it burdens society with needless social and psychological ills that cannot be measured in money terms. Not to mention skill erosion and the fact that there will always be more to do than people to do it. This deprives future generations of technology improvements, infrastructure and capital goods that could have been created, had government not been foolish to prolong the downturn instead of taking active counter-cyclical measures to shorten private debt deleveraging and ease its social impacts.
3-Jobs are not bones. Income is bones. You did not understand the dogs/bones metaphor, the message of which is that microeconomic solutions cannot solve macroeconomic problems and vice-versa.
4-A great many of society's ills are created by the continued use of antiquated technology. You cannot seriously think that government is worse than the private sector, since both these sectors are run by flawed human beings, not benevolent robots. If you're a believer in rational expectations theory, then I'm not sad to say that a posteriori reasoning (empirical evidence) completely debunks it.
5-I'm not sure where you got the "majority rule is terrible" line. At decentralized level, transparently and democratically, people can well learn from their mistakes. It's not going to be just clueless politicians or cabal of bankers deciding what the community needs; you're going to have the press in on it, you're going to have citizens' associations, you're going to have engineers etc. Also, we've seen what untransparent and undemocratic (elite) rule has done to the world at macro and micro level; it made greed a virtue, welfare a sin, raped the environment, socialized losses, privatized profits and exacerbated them in a downturn no less. A wise man said that the unregulated free movement of international capital endangers the self-government experiment we call democracy.
6-Your objection to the JG because of 'people having to file in more taxes' is weird, in my opinion. More people will file in taxes whether they're employed by the government or by the private sector.
7-The largest 'dead weight' in the economy is what we have now, regardless of the cycle. What happened after government spending as % of GDP fell more and more with the takeover of monetarism? The wealth gap grew, relatively high unemployment became the rule, wages became stagnant and lost track with productivity, the FIRE sector made uber profits at everyone's expense (private rent extraction), and labor lost much of its bargaining power.
8-The JG would not even be that expensive to begin with. Greece alone, for instance, instead of paying what it is now on interest on its debt, that figure alone could fund the JG and achieve full employment for the country. Let's not forget the spending multiplier - and income the private sector will see from people actually being able to spend money on stuff because they have the income.
9-Nobody is arguing that the JG is the miracle solution or panacea. But when analyzing the ROI of anything, one has to take into account all the costs vs all the benefits - money comes last, social, economic, environmental, and psychological cost/benefit ratio matters the MOST. The JG provides NET benefits.
10-I not only support the JG, but a basic income as well. I desire the leisure economy and population stability, in which the robots free us from our toil. Are you familiar with Thorstein Veblen?
I will conclude this post by leaving a link to Scott Fullwiler's 'Simulating the Logic, Effects, and Costs of the Job Guarantee