Tuesday, 18 February 2014

Why is Job Guarantee so difficult to understand?

I find people's misinterpretation of the Job Guarantee amusing. Not at all sure why it is quite so difficult to grasp.

Simplifying a little, Job Guarantee declares by fiat that all those that were previously short of an 'ordinary job' have an 'ordinary job' and a wage. Job done - no more unemployment. By decree.

That's why there isn't a 'Phillips curve' or NAIRU in MMT. Because both of those rely upon the traditional notion of 'unemployment' and there is none in MMT. Therefore they can't apply as standard. The 'trade off' changes to reference those on the Job Guarantee scheme instead.

So you have to alter the ideas to take into account that the nature of a Job Guarantee buffer is different from an unemployed buffer. Which means there both is and isn't a trade off curve in MMT. Only confusing if you fundamentally don't want to see the difference.

The Job Guarantee (JG) is counter-cyclical auto-stabilising social security with a twist.

The twist is four fold:

(i) people can choose to go onto social security via the JG. This disciplines the standard economy. All of a sudden 'no deal' is an option in the normal business jobs market and that makes the job market behave, well, like a market.  The JG operates much more completely than a 'minimum wage' ever can, but doesn't disrupt the wage structure entirely as an income guarantee would. Minimum wage can't provide an income if there aren't the jobs, and needs enforcing by a police force, whereas an income guarantee (at the very least) cripples the spending half of your auto-stabilisers - requiring taxes to be hiked massively on the other side to make the numbers add up.

(ii) Because they are working, the number of people on a JG becomes less of a social issue - no more 'bring down unemployment', no more 'shirkers'.  Therefore normal businesses can be allowed to go bust, not pay redundancy, etc because the JG will catch people who lose their jobs during a retrenchment. That disciplines the spending and wage channels since there need be no bailouts or the 'special industries' that pump-priming requires. Overpaid workers get an imposed wage cut when they are forced to move to the JG as do greedy bosses. 'Corporate confidence' is no longer of overriding concern.

(iii) People on the JG are working and producing output - so they are more socially productive than on unemployment benefit or income guarantees. And because they are seen to be working they become cheaper to hire from a normal business's point of view (there is always less hiring risk if you know people are working). That eliminates a current risk cost completely from the economy (the 'long term unemployed' issue).

(iv) Forcing businesses to compete for staff should accelerate the capital development of the economy, and replacing jobs with better machines is what we want the private sector to do. People need to be expensive to use, and jobs in the normal business jobs market must not be sacrosanct. Business models that fail, must be allowed to fail without any sentimentality. To pinch a DevOps phrase, we need to ensure that businesses in a capitalist economy are treated like cattle, not pets.

There are quite a few other benefits as explained in the literature which heavily drift into sociology and social cohesion and the nature of the way humans are (like their innate need to see reciprocation - which is why 'give people income' schemes will always fail).

Job Guarantee has always struck me as a pragmatic solution to a difficult mismatch problem. It's very easy to implement - certainly here in the UK, where all the basics are already in place - and does what it says on the tin. But ultimately we will only find out with a full blown field trial.  And that's what we now need to press for.

40 comments:

Dan Lynch said...

Because you can't create appropriate jobs out of thin air, Neil, especially given the proposed funding formula requiring that 80% of the JG budget be spent on wages.

What sort of job would you create for a butcher? A machinist? A cowboy? A logger? A manufacturing engineer? And so forth.

And why should these skilled workers be paid only minimum wage? The WPA program paid different wages for different skills.

The reality is that you can't create appropriate, relevant jobs on command. So instead they would end up creating make-work jobs, i.e., picking up litter. Maybe the litter needs to be picked up once in a while, but it doesn't need to be picked up every day, hence it is make-work.

Make work jobs are not an appropriate use of skilled labor. It's demeaning and unproductive.

All the arguments that people make for the JG can also be made for slavery, or for totalitarian labor camps. There were no unemployed black people in the pre-Civil War South.

A JG would not be truly voluntary unless the individual has a viable alternative. That is why I advocate a JIG rather than a JG. And the work part of my JIG would be modeled more along the lines of the WPA than the MMT JG.

Neil Wilson said...

Of course you can create an appropriate choice of jobs. It's ridiculous to suggest that you can't.

Because of course the majority of people on the JG will be unskilled and from the secondary job market. And anybody else, almost by definition, likely has an obsolete skill set.

A derivative trader will not be trading derivatives on the Job Guarantee because those skills are obsolete and serve no public purpose. A lawyer that ends up on the Job Guarantee for whatever reason will find work using their legal skills at, say, the Citizen's advice bureau - because that has a public purpose.

The Job Guarantee will use people's *transferable* skill set and help them transition to a different role. That's one of the reasons Warren Mosler calls the Job Guarantee a 'transition job'.

The Job Guarantee wage is set as it is because that is what the people coming to it are worth. There is no better bid in the market, otherwise they would not be applying to the Job Guarantee.

There is no tariff sheet in society that says one skill is more valuable than another. What you consider valuable, somebody else may consider is a waste of time and space. Who decides? Who is Solomon?

As I said in the post, and MMT economists have said dozens of times, JG at the living wage avoids disrupting the market wage structure. That's why it is as it is. There is no other bid, and no other acceptable way of deciding relative value.

The JG is as voluntary as any other work in society. Only those that believe that they have no obligation to work believe otherwise and start making ridiculous comparisons to slavery and other such unhelpful comments.

Society disagrees with you, and in a democracy the will of the majority carries the day. So you will be working for a living unless you are granted exemption by reason of age or infirmity.

cig said...

If the JG is voluntary, can I just turn up, and browse the web all day on my tablet (that I bring myself, at no cost to you -- I plan to spend all day reading MMT blogs)?

If I cannot do that, the job is not guaranteed, as it is conditional: if I stop following your orders, I lose my job. You cannot call a job that I can lose a guaranteed job.

If I can do that, it's not a job and I could as well stay home or in the pub, and you give me my wage anyway.

You cannot remove the market even if the state pays wages: a job is where someone willing to give orders (demand) meets someone else's willingness to follow orders (supply). And this will never clear exactly (some people will never find someone they can acceptably obey or command).

That's why we don't need JG but an unconditional and universal basic income, which achieves the achievable goals of the JG, without the inevitable collateral damage and cost of a workhouse infrastructure.

I would like JG proponents to actually try the thing: pick 20 random unemployable people from the street, and try to keep them all in something resembling work for 3 months. The experiment shouldn't even cost much (20 x 3 months living wage, which most JG proponents could easily fund out of pocket). If you still support JG after that, I'll happily eat my hat.

Neil Wilson said...

"You cannot call a job that I can lose a guaranteed job"

Yes I can and I have. It's a guaranteed alternative job offer.

It's just like any other job. If you break the rules, you lose the job and the income.

Just like if you steal a car, you lose your liberty.

Society has rules. Most people don't find that a problem.

"I would like JG proponents to actually try the thing: pick 20 random unemployable people from the street, and try to keep them all in something resembling work for 3 months."

We already do. It's called offender rehabilitation - or Communty Payback. In other words we can find lots and lots of work for criminals to do for nothing. Think how much can be achieved by those who are merely down on their luck who are getting paid!

South Yorkshire delivered 221,225 hours worth £1.4 million pounds to the community for 1900 offenders.

From the report:

"Darrel was at Barnsley Wood Recycling on an unpaid work order between 16 May
and 20 July this year.

Barnsley Wood Recycling was set up in 2011 to create employment and training
opportunities for people who struggle to find work. It is a social firm and part of the
Yes2ventures parent company.

This placement was ideal for Darrel and he embraced the work, following
instructions and working to the best standard he could achieve. The order sparked
an interest in the company and he got more involved with the business of Barnsley
Wood Recycling. As he was unemployed whilst carrying out his unpaid work order
he asked if he could work as a volunteer once he had completed his hours.

He has since been working there on a voluntary basis three days a week. He is
learning new skills in recycling and restoration of timber furniture, skills that he can
use throughout the rest of his life. Darrel has learned how to use a router to ‘sign
write’ carved wooden signs which the business has since sold to a local school.

If things continue as they are Yes2ventures, the parent company, would like to
employ him to work at Barnsley Wood Recycling."

Would you like that hat with or without sauce?

Ralph Musgrave said...

“Job done - no more unemployment.” Neil, that’s contradicted by a later phrase of yours where you say, “people can choose to go onto social security via the JG.” Well if they can “choose” to do JG, then ipso fact they can choose to remain on unemployment benefit. I.e. there will still be some unemployment.

“Whereas an income guarantee (at the very least) cripples the spending half of your auto-stabilisers..” Why on earth? If someone is given £X/wk in the form of min income, then their weekly spending will be much the same as where they are given £X/wk in the form of JG wage. That of course assumes JG spends nothing on materials, capital equipment etc.

But if JG does spend on the latter, there are problems (way beyond the comprehension of Bill Mitchell and Randy Wray). The problem is thus. If JG spends on materials etc, and assuming the economy is at the traditional capacity level (i.e. the capacity level that would obtain absent JG) then such expenditure is inflationary. Of course that can be dealt with by cutting demand. But that involves destroying regular jobs so as to create JG jobs: hardly the object of the exercise.

The latter little conundrum is actually soluble. But I wouldn’t expect 99% of the advocates of JG to understand the problem there, never mind understand the solution.

“Forcing businesses to compete for staff should accelerate the capital development of the economy, and replacing jobs with better machines is what we want the private sector to do.” Is that English? I mean how do you replace a job with a machine? Plus if lots of machines replace lots of jobs, that (at least on the face of it) means fewer jobs.

But if you’re saying that a high minimum wage (or JG wage) results in regular employers all increasing output per head, I’m all agog. How far do we take this? If we quadruple the minimum wage do we take it that the output of the lowest paid will by some magic increase fourfold and that there’ll be no increase in unemployment or the number doing JG jobs? If you can substantiate that claim you’ll get a Nobel Prize.

Why don’t they apply that solution in Bangladesh: just pass a law saying everyone shall be paid the average US wage. Lo and behold Bangladeshies quickly see their standard of living rise to US levels.


Neil Wilson said...

There is no contradiction Ralph. You've just wilfully misinterpreted things as usual.

If you're going to do hole picking, you need to make sure you've understood what somebody was getting at first.

The stuff in the middle we've been through dozens of times and I'm sick to death of hearing the same repetition which has no basis in fact.

Key phrase for you: 'we need to ensure that businesses in a capitalist economy are treated like cattle, not pets'.

And the concluding remark is juvenile.

Very disappointing.

Ben Johannson said...

@Neil,

Is there some reason an unemployed butcher must do the work of a butcher in a JG position? I've found myself rather confused that so many implicitly assume this. Surely there's nothing to prevent use of the program as a sort of national apprenticeship, helping workers develop new skills and move into other sectors of the economy.

Tom Hickey said...

Look, the JG is not proposed as the solution to all employment issues. It is a very specific proposal that creates an paid employment opportunity for unskilled labor at a compensation level that serves an anchor for the currency in terms of labor time, addressing employment and price stability simultaneously.

According to Bill Mitchell, who has probably written most on this issue, the JG is intended to mop up the residue of unskilled unemployed which is the first cohort to lose employment and the last cohort hired. And some of this cohort is at present pretty much unemployable. The JG program could be a step in lining this cohort or at least some it for a job.

If others choose to take advantage of it, that is their option. Moreover, it doesn't preclude unemployment benefits, or a BIG of some sort, or a host of other things.

The JG is not designed to address higher level issues of unemployment. But I believe that the fundamental principle holds that government has the ability and obligation to run full employment.

Capitalism is not an excuse for unemployment, which is the excuse given now, i..e., unemployment is voluntary since workers are unemployed because they will not reduce their wage demands enough. That is, if the labor market were flexible, then there would be work for all willing an able. This is a BS assumption, since it does not guarantee employment even with highly flexible wages. It just means a race to the bottom in wages for available jobs.

The employment is issue is the knottiest issue in capitalism, which treats labor market as a commodity market. As long as this system is in place, it cannot be fixed satisfactorily. It needs to be replaced. Or government has to step in and hire those that are unemployed at their skill level for the going wage in the industry.

But before that happens, and it won't be soon by the looks of things, steps can be taken to improve an inherently bad situation. That's the way I see a JG.

Neil Wilson said...

"Is there some reason an unemployed butcher must do the work of a butcher in a JG position?"

None whatsoever.

But there does seem to be a thing amongst pump primers that once you've trained to be something then you must be artificially maintained doing that until the end of time - and continue to get paid the same as ever.

The idea that something declines in value or becomes obsolete seems to be an anathema.

That was the reason pump priming failed in the first place - propping up useless businesses, industries and skills long after the sell by date.

Don't understand the thinking behind it.

Tom Hickey said...

On the other hand, there is efficiency in keeping people aligned as closely as possible with their existing knowledge and skill. The "retaining" meme is largely a right wing meme that explains UE based on structural rather than cyclical.

In addition, what is happening now is that people losing their jobs to offshoring or technology advances are being "retrained" at a much lower skill/wage level. It's the dumbing down of the US workforce, on one hand, and the employment of many workers way below their capabilities.

The assumption that capitalism is automatically efficient when markets are free is BS when market "efficiency" results in social dysfunction and waste of potential.

Joe Firestone said...

Neil, a really nice summary posts and good replies to the naysayers!

PeterM said...

I'd be hesitant to make any sort of JG compulsory. If the economy were sensibly managed we'd be looking at unemployment rates of less than 5%. Possibly 2% would be short term unemployed in the process of finding another job.
There would be some who would volunteer for a job but, after all that, there would be a small but very hard core of very hard to employ workers.
They may have drug or alcohol addiction problems possibly combined with mental health issues.
I think we'd need to tread very carefully on the issue of compulsion.

Neil Wilson said...

There is never any compulsion under an MMT style Job Guarantee. There is a world of difference between using the power of the state to force people to do something, and a social expectation that if you are fit and able to work then you should take a job that is on offer. It is the latter that the MMT Job Guarantee employs.

If you are infirm, then the Health and Social Care system will provide the social security. If you are elderly you will receive the Living Wage as a State Pension. Beyond that what social security is on offer is a political matter for the society in which the Job Guarantee runs.

Taking the UK as an example an unemployment rate of 5% is currently 1.6 million people. In addition to that there are another 2.2 million people who are inactive because they are infirm. It's unreasonable to suggest that there is a group of people out there larger than the population of the cities of Leeds, Bradford and Wakefield combined who are similarly infirm but have not been picked up by Social Care.

The fact is that they simply haven't got a job to go to and we need to provide one.

The Job Guarantee along with the Health Care and Pension systems provides complete social security. The only choice that is likely off the table is the one where you are fit and able to work, choose not to work *and* you still expect to receive a full living wage from the state.

And that fits with what public opinion will stand at this point in history. They are not in the mood to permit that choice.

Anders said...

Neil

The UK minimum wage pays £252 for a 40-hour week. Where would you see the JG wage being set?

Neil Wilson said...

I'd start at the UK living wage with a strict warning to commerce that I'd expect that to be paid for by increased production and investment, and that any price rises would trigger competition commission investigations and/or additional taxes on profits.

Carrot and stick.

QP said...

How would the JG work operating in just one country within the EU with it's free movement of labour..?

Neil Wilson said...

You'd probably derogate from the freedom of movement of labour.

Preferably, you'd just leave the EU since it is a dead end political project. that no longer serves any useful purpose.

PeterM said...

"But ultimately we will only find out with a full blown field trial. And that's what we now need to press for."

Yes a field trial in some of the areas of high unemployment would 'cost' very little. It would be interesting to do analysis of how much it actually 'costs' the government.

My guess is that it wouldn't be much at all when everything is included. Even in their own neo-liberal terms they'd probably come out ahead.

Do we have any sympathisers in, or potentially, in positions of power?

We'd just need to emphasis that the JG wasn't supermarket-shelf-stacking work for the dole. It would be a proper job. Everyone would pay NI and income tax etc.

Neil Wilson said...

I'm hoping that the Labour idea actually represents a 'foot in the door' approach, and that they have wrapped it up in neo-liberal rhetoric because they are frightened.

Perhaps I'm just feeling optimistic this weekend.

I'm hoping that if they get in power that it won't be a private sector subsidy programme, that it won't only be in place for a year and that it won't be perceived as a punishment.

PeterM said...

"Overpaid workers get an imposed wage cut when they are forced to move to the JG"

I do like the idea that everyone should work and receive a fair share of the wealth they've created. But there's a big problem in defining "fair".

In the UK JG workers will inevitably end up working in the public sector doing pretty much the same jobs as, often unionised, non-JG workers but at a lower pay rate.

Have we really considered the kind of problems that will create? The non-JG workers will be worried their wages will be undercut. The JG workers will want to join the union to get the same pay rate. The non-JG workers may well refuse to work with non-union labour.

In other words, if there's to be a workable JG, we have to address the issue of equal pay for equal work and we have to allow JG workers to join trades unions.

Otherwise MMT will lose all it left support.



Neil Wilson said...

There are lots of reasons why things will never work. There is always a reason why not.

However if you do nothing then you end up with the current situation.

Ultimately if JG is going to work, then the work on offer has to satisfy the criteria of everybody else in society, and an agreement has to be reached as to the type of Jobs that are considered socially acceptable for the JG wage.

Specifically it has to avoid competing with existing jobs, both private and public - to the extent that people running 'ordinary' jobs should be able to instigate a tribunal to decide if JG work represents inappropriate competition.

For me the JG work has to be completely outside the existing public sector, and is more like the work that the probation service tends to undertake - but with a much softer edge.

The key to any Job Guarantee is to find work that is considered an acceptable 'contribution' to others (which is why the 'spend the money I'm given job implicit in Income Guarantees can never happen) but it specifically in addition, and not in competition, with what is currently going on.

And yes that is a tightrope. But it is a tightrope that has to be walked regardless if we want to end poverty and unemployment forever.


Neil Wilson said...
This comment has been removed by the author.
PeterM said...

Neil,

I didn't actually say a JG "will never work". In fact JG schemes have worked in the past and could work in future.

Whatever might be thought of the former Communist countries, it has to be said that they didn't have unemployment because they'd worked out how to make the JG work. They didn't have to segregate JG workers by creating a new sector which was neither public nor private. In fact there was only the public sector. Everyone was just required to work. There wasn't any even a need to call that requirement a JG. So it would seem that the problem may be that in the West we have an over powerful private sector.

As has already been said, if we employ JG workers on harsh compulsory (in the sense used by the British Labour Prty in connection with their scheme) terms, the existing workforce will be unlikely to co-operate, and are quite likely to kill any meaningful scheme before it starts. On the other hand if we allow JG workers the same pay rates as the existing workers, with all the benefits of union membership etc then the capitalist class will try to kill the scheme. They won't want their £7 per hour workers running off to earn substantially more than that on a JG.

So if the JG scheme is going to work something has to give. We don't necessarily have to have full communism back with everything else that entails but capitalism will have to learn to survive without paying lower than socially acceptable pay rates. If well known coffee chains, or fast food providers, or book sellers or whatever decide they want to pack up and leave then so be it. The organisations can be nationalsised and staffed with unionised JG workers!

Neil Wilson said...

Pretty much spot on I think. It's difficult to thread a JG needle, but it is do-able. And it is the only option that has a chance of working long term.

" They won't want their £7 per hour workers running off to earn substantially more than that on a JG."

That was Kalecki's argument as to why it could never happen politically. However there is the question as to how the capitalist class can stop a JG without the voters believing the propaganda.

The JG is set at the living wage specifically to avoid disrupting the private sector wage structure too much. Yes those that pay too little or have crap jobs will be disrupted - but that's kind of the point.

And those that lose jobs in a recession will drop down to the living wage - removing excess demand from the economy. Again that is exactly as designed. Obsolete skills have to be purged somehow

You will get that in the public sector as well, as those functions the current politicians consider obsolete are purged and the workers drop onto the JG. Less so I would think because of the more unionised nature of the public sector.

For me JG allows you to have a more dynamic economy because you don't have to worry as much about shutting things down or letting things fail.

Tom Hickey said...

The fact is that jobs are not necessarily compensated at the same rate. In fact, asymmetrical pay for the same work it is rather normal.

The system is already very unfair and it works reasonably well, although some people feel that they are getting the short end of the stick.

Desire for perfection is the enemy of the good.

The JG doesn't have to be perfect in all respects. It just has to work.

PeterM said...

Tom,

No-one is arguing for perfection, but on the other hand, creatng lowly paid unskilled jobs for the unemployed, many of whom have achieved the level of qualification which would have given them a wide range of career options, had they been born a generation previously cannot be considered acceptable.

We need a better defined goal than "just has to work".
The JG has to mean that someone who has trained, achieved suitable qualifications etc can reasonably expect to find work, at an appropriate pay level, to match that training, as used to be the case.

It also has to mean than young people are guaranteed the chance of either a higher education or an apprenticeship. Getting them to pick up litter is fine in the short term but it just won't do in the long term.

Neil Wilson said...

"The JG has to mean that someone who has trained, achieved suitable qualifications etc can reasonably expect to find work, at an appropriate pay level, to match that training, as used to be the case. "

Specifically not in the JG. If there is no suitable employment in the existing private and public sector then by definition those skills are obsolete at that pay level.

The JG pays the living wage in order to deflate bubbles. Otherwise I'd be on bubble wages from the 2000 dot-com boom - paid for by the public sector.

And that would be unacceptable, as well as systemically dangerous.

It's the Job of the JG to provide work that others find acceptable for the living wage. If you have higher pay expectations, then you must engage with the existing private and public sectors to get that wage.

That's not to say JG won't use higher skills if they are available and some public use can be found for them (there won't be any JG derivative traders for example). But it won't pay any more - deliberately - so that it doesn't disrupt the wage structure.

And constantly categorising JG jobs as 'picking litter' is pejorative. For example, there will be JG paid software developers working on open-source products I have no doubt at all - perhaps even me.

No doubt there will be debt counsellors, pro-bono lawyers, and many builders fixing churches, etc.

But for the most part it has to deal with the main client base - which will be unskilled workers in the secondary labour market. It will be mostly providing work for them, but certainly not exclusively.

PeterM said...

Neil,

" But it won't pay any more - deliberately - so that it doesn't disrupt the wage structure."

I think this is where the politics comes in. Many of us, on the left, want to do just that! ie disrupt the wage structure of socially irresponsible modern day capitalists. We don't like the business models which rely on the 'employment' of large numbers low paid workers on zero hour contracts.

So the arguments put forward by Kalecki, (thanks for the refernece on that BTW) are just as valid now as they were when he wrote in 1942. The business models of many well known multinational companies would be completely undermined if those workers were no longer available.

So the demand for full employment can't be just condidered to be an economic issue in isolation. The biq question is how that full employment is achieved.

You're probably right in thinking it could be achieved without offending any of the capitalist class if the terms and conditions of the proposed employment were set so low that even a job flipping burgers in the non-JG sector might seem attractive by comparison! But is that what even those who may be slightly less of a leftish persuasion than myself would wish?

Surely some disruption must be a good thing.


Neil Wilson said...

The living wage *is* disruption, and you slowly push it up over time. Capitalists must then compete for labour from the JG pool - investing and training to receive any profits. It's the latter that is the valuable process in capitalism - just as the heat out of a nuclear reactor is the valuable bit. To get that you simply have to contain the nasty stuff using effective engineering.

That is what MMT is all about - effective engineering to make the system work properly.

If the JG is £10 per hour then capitalists must compensate people properly for doing anything else that is less pleasant than the JG job. That may be money, or it may be promises - but compete they must. It's the lack of competition in the labour market that is causing the current malaise.

If capitalists can't make a profit out of a process, then the process either dies, or if it is considered to have public value it becomes part of the JG job list.

Overtime you get towards equality as you move the bottom to the top.

What many on the left struggle with is that things still need to be made - which capitalism is very good at - and you have no other rational mechanism by which relative value is ascertained even remotely accurately.

Once you strip rents and oligopoly out of the system competitive valuation is pretty effective - particularly when you no longer have to worry about whether a business lives or dies.

It's a bad idea to throw the baby out with the bathwater. We tried that with the Russian based systems, and they don't work. That's why China changed course.

The thing about the 'captains of industry' is that ultimately they only have one vote each.

PeterM said...

I'd agree with all that. I've given it quite a bit of thought and have come around to the idea that the JG will be genuinely socially progressive and it's all "do-able".

They'll be some resistance from the Unions on the left. They'll be more resistance from established capitalism, on the right, but nevertheless it could attract substantial public support, from both left and right, IF its handled in the right way.

It does need to start small and build up from there. A pilot scheme is the first step.

Some Marxists would argue that the demand for a JG is also a revolutionary demand. They would say that capitalism needs to have a reserve army of unemployed labour and that a reserve army of labour, even on minimum wages, would not be a sufficient deterrent in the eyes of many capitalists. For example many workers are scared of losing even minimum wage jobs. They are scared of becoming involved in Union activity at work. Having a job guarantee would remove that fear.

This differentiates it from all other MMT presciptive policies, like running increased deficits etc. That's just a way of getting Capitalism to function better and both gives the workers jobs and increased profits to the capitalist class.

So, yes, lets push for a JG but lets be under no illusions as to the the strength of the forces we are up against.

Tom Hickey said...

Agree, PeterM. The JG breaks the lock that Kalecki describes and as he says, capital is not going to roll over. They know full well that an effective JG is the end of capitalism.

Capitalism is antithetical to a labor force that free to bargain rather than being forced by economic necessity to accept what capital offers. The buffer stock of employed rather than reserve army of the destitute is key to changing the game.

PeterM said...

Tom,

"They know full well that an effective JG is the end of capitalism."

I'm surprised you should say that. It's been a long time (my student days!) since I've been totally anti-capitalist. My more adult view has become more reformist in a Keynesian sense.

So I wouldn't want to completely see the end of capitalism, or the free market, and would like to explore the possibility that a JG wouldn't necessarily mean what you suggest.

For example, the JG could be tied in with a state run apprentice scheme. The problem for individual firms who do run such schemes is that they can lose their employees, when they become qualified, to other less scrupulous companies who are happy to exploit the efforts of others. So their is an obvious role their for State / Private sector co-operation to ensure an equitable system.



Neil Wilson said...

It's more the end of corporatism.

I see JG as putting the control rods in the nuclear reactor of capitalism. And I see MMT influenced bank and exchange reform as putting in a modern 'fail cool' containment shell.

Then we can get more power out of the system.

Tom Hickey said...

PeterM,

Don't confuse a market based economy with capitalism from the neoliberal standpoint (socialism for the rich only) and the laissez-faire Libertarian view (ideally zero government intrusion in the economy other than to provide security and protect property). The essence of the capitalism I am talking about is prioritizing money and machines ahead of people and the environment.

Things may be different in the UK, but in the US, capitalists consider "Keynesianism" socialism by unless it is subsidies for firms, or increased domestic security and military expansion.

This is what is considered capitalism in America today, and Europe is considered socialist — post Thatcher UK excepted. Capital moans that the US is becoming too much like Europe. They reject the concept of a mixed economy or third way, which they view as the road to increasing socialism. "Give an inch and they'll take a mile."

While Minsky said that there are many forms of capitalism, capitalism has become associated with neoliberalism. Moreover, the American right is to the right of Hayekian neoliberalism in the direction of Koch Bros. laissez-faire, and they are politically ascendant.

It's really pretty fierce over here. The idea of making workers free to choose without economic pressure by providing a basic compensation package at the level of a living wage would upend business as usual in the US. As it is, government subsidizes workers at the bottom that are not paid a living wage and and although working, fall below the poverty line. That's millions of workers.

The wage bill is the highest cost to business and profit margin (read capital share) requires suppression of labor.

The enemy is trade unions, as well as any legislation that increases labor bargaining power, protections, or benefits, which are considered anti-free market. Their goal is zero bargaining power for labor other than poaching high skilled workers from other firms. It was discovered that Steven Jobs even masterminded an illegal cabal to avoid this practice that drove up wages of knowledge workers.

Capital loves the fungibility of global labor and the ability to import imbedded labor on the cheap. The push is even on to relax immigration regulations to allow hiring of knowledge workers abroad, who have been willing to accept about a third less than American workers.

A JG would be a spanner in the works that would break the machine here in the US.

PeterM said...

Tom,

There's a lot of politics to digest there. I'd just make the point that the EU isn't socialist. The EU is run by German neoliberals who make Margaret Thatcher seem like a spendthrift! No-one can possibly believe that the high levels of neo-liberalism and unemployment in the Eurozone has anything to do with a planned socialist economy.

There's a lack of democracy in the EU which makes it very difficult for the people of EZ to control what happens in their economies. That's very much at the root of the problem. Something will have to give soon.

I would say that MMT advocates could have a variety of political opinions. There's no reason why not. I don't think we'll get anywhere if we are all seen as 21st Century Marxists proclaiming that (managed) capitalism is beyond redemption. I'd avoid phrases like 'spanner in the works'. We should be aiming to improve things rather than wreck things and sweep away the old order. The Marxists tried long enough to achieve that and never really got anywhere in the west. The Communists had thousands of workers behind them in their heyday. MMT advocates are nowhere near achieving that level of support.

So I would suggest we stick to advocating for democracy, expanding it by the use of internet voting etc, for full employment, and at the same time continue to educate ourselves and everyone else on how the system functions and how it could improve.

If we make some progress on that maybe we will move on to something better. We'll see.

Neil Wilson said...

Yup. I'm still trying to work out what the UK Labour Job Guarantee idea is all about.

Is it actually a foot in the door approach?

Tom Hickey said...

expense ronnudiI am very skeptical of a job guarantee in the US without a change in the political and public mindset away from neoliberalism. Even the US public is largely convinced that Europe's problems have arisen from socialism, and that the current policy of austerity is designed to correct that. So European austerity is supported politically and popularly in the US.

In this environment, any proposal for a JG would be converted to workfare. It's the only way that it could pass muster politically in the US, and I don't see a lot of popular support either, since the public remains convinced that the people are poor due to their own failings. Few people are going to be excited about a low wage job provided by government, which they will interpret as tax-payer funded. Moreover, a permanent JG program is way over the top.

Unless a critical mass of people understand what's at stake an MMT version of the JG is not viable. The only thing that viable in the US now is UBI and the right supports that only on the premise that it eliminates other social welfare and social insurance programs.

This is a very tough situation the US is facing politically, and it is buttressed by intense propaganda by the mainstream media. There are probably not more than a couple thousand people that have have heard of MMT and far fewer than actually understand it.

That's why we need slogans that have popular appeal like Put people and the environment before money and machines. The right spends a huge amount of $ developing, testing and propagandizing slogans like small government, low taxes, strong military and traditional values. The left has no counter so far. So the debate is about how small government should be, how low taxes should be, how much more $ the military needs, and wedge issues. In fact, most of the political ads are about wedge issues.

People are concerned with jobs and the slogans on the right are about the need to reduce government jobs that are "paid for by taxes" and increasing private sector job creation through investment by free up investment funds by cutting taxes on the "job creators," that is, business and the wealthy. I don't see many people going for a job guarantee as a way to address the unemployment issue. Americans want "real jobs" that result in careers, not "make work."

What I am saying is that addressing issues piecemeal is going to either fail or be co-opted in the US. The challenge is to move the Overton window to the left to accommodate solutions that put people and the environment first, instead of money and machines. Otherwise the left is just howling at the moon.

PeterM said...

" The left has no counter so far."

Well, I'd say the best counter was democracy. When politicians, of whatever party, have to win elections they have to face up to the reality that people want jobs, they want somewhere to live, they want decent schools, healthcare, a good environment etc etc

So, whatever country we live in, let's campaign to get everyone registered, and make it easy to vote. Let's look at internet voting, postal voting etc. There's really no reason to have to stand in a long queue to mark a cross on a piece of paper in the 21st century.

Neil Wilson said...

Unfortunately there is a very easy way to neutralise voting. Offer Hobson's choice on the ballot paper by manipulating the funding and propaganda mechanisms that determine the list.

Rather too much fondness for the magic of democracy and the wisdom of crowds on the left. In reality we're tribal and easily manipulated by messages - something the right have long understood.

Tom Hickey said...

Exactly, Neil. Aristotle wrote about this in Politics.

China is condemned for being a one-part state with all candidates coming from the Communist Party.

Well, in the US we have a one-party state too, de facto, and it is the Capitalist Party. It's capital that provides the funding and owns the major media, controlling the messaging.

The Capitalist Party has as much a lock on elections as the Communist Party.

The difference is that the Chinese people know that they are being controlled by one party and the American people don't. That actually believe that they are "free to choose."