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I don't think that anyone has claimed that a JG would eliminate poverty. Rather it would reduce the buffer stock of involuntarily unemployed. In principle it eliminates involuntary UE in that everyone willing and able to work has a job offer, but in practice it probably is limited to people near the bottom of skill-level.
A JG not a panacea for poverty, but it would be a game-changer regarding the approach to employment away from NAIRU and the buffer stock of unemployed.
It's pretty clear from the chart that poverty is a complex issue since the different groups would have to addressed differently. The elderly can be addressed by increasing pensions, and student by subsidizing education to reduce costs. A JG would establish living wage (compensation package) as the bench mark minimum wage, so that firms would have to pay a living wage instead of receiving a subsidy in the form of welfare payments that enables them to pay less than a minimum wage.
The remaining cohort is the group that is most difficult to address since it is a sociological (cultural and institutional) issue rather than an economic one. Throwing money at the problem is not sufficient to address the issues involved.
Ummmm ..... ask Stephanie or Pavlina about poverty and their response is the JG. Period.
The compilation of Minsky ELR articles is titled "Ending Poverty: Jobs, Not Welfare." Minsky advocated putting children and the elderly to work. :~(
So I think it is fair to suggest that MMT (as a whole) needs to take another look at its JG-only policy position.
I like WM's proposal to make SS benefits a flat $2000/month but note that not every elderly person in America qualifies for SS benefits in the first place. I suggest rolling all private and public pensions into SS and making the benefit a flat $2500/month for every citizen of retirement age.
Children could be covered either by a BIG, or by a child-centered BIG similar to Brazil's Bolsa Familia, or by a Scandinavian style child credit. As with other BIGs, there is the usual debate over whether to make the child benefit universal or means-tested.
Our SSDI program has serious issues -- the majority of people who apply are denied, and it's standard procedure to have to hire a lawyer to appeal the claim, which takes about 12 months for the average claim, and a lot of people still fall through the cracks. In the meantime the sick person is supposed to somehow support themselves and also pay the lawyer.
IMHO a weekly means-tested BIG could and should replace SSDI. There would be no hassles about eligibility, and no waiting. The only problem is that SSDI lawyers -- there's an entire industry devoted to SSDI claims -- would have to find another way to make a living. :-)
"Am I the only one who wonders how a JG-only is going to eliminate poverty if only 21.5% of the poor are able bodied unemployed adults? "
The JG provides a living wage job to anybody *who wants one*. That is how it works.
It doesn't get rid of the state pension, or child benefit, or student grants, free education and childcare or social services. Or in sensible countries the national health care system.
It doesn't even get rid of income support schemes if that is what the society is prepared to accept.
What it does gets rid of is all *below poverty line* jobs, which helps the massive number of *working poor* that we have across the globe. Something you've obviously forgotten about.
There is a social limit to the freebies that the society is prepared to hand out without the appropriate level of quid pro quo. That is why freebie based schemes always fail, and continue to fail across the globe. They get whittled away politically as people decide that people are simply not worth the money they are given.
I sat in front of Randy Wary just last week as he gave a Job Guarantee presentation here in the UK. He was quite clear that the ELR system does not preclude social security and never has done since Minsky proposed it. It is in addition to social security where the particular structure of the society will permit that.
"He also recognized that the nation would still need welfare for those who could not, or should not work. He advocated a universal children’s allowance, as well as medical care for all, unconnected to employment. However, he showed that an ELR program by itself would solve most of the poverty problem: at the time, 30% of the poor worked part-time, while 40% didn’t work at all (Minsky 1965). He calculated that perhaps two-thirds of all poverty could be eliminated by providing a minimum wage job to each household."
So you're significantly mistaken on your understanding of what Minsky proposed
So I think it is fair to suggest that MMT (as a whole) needs to take another look at its JG-only policy position.
I don't think that "MMT" has a JG -only policy policy prescription. Different MMT economists have different views. As far as I am aware, Bill Mitchell is the only one favoring a JG-only.
There are a number of other policy differences among them. They just agree on the economic and financial analysis.
Of course Bill does not recommend that the JG replace all social welfare transfers. That's a right wing dream, and a condition for their support of a UBI.
Bill would end other unemployment benefits, and I don't believe that he is open to supplementing a JG with something a means tested basic income. In other words, if one is involuntarily unemployed and able to work, a JG is not optional to receive unemployment assistance.
Other MMT economists would make a JG optional for receiving unemployment assistance. Even if one didn't choose to take it and to rely instead on other government assistance, the job offer would be there.
I find the stats interesting. If 8.4% of the poor are able-bodied, non-student, non-working, adult men and only .56% of that 8.4% i.e. 6.6% of able-bodied, non-student, non-working, adult men are minorities then about 93% of them are white.
I'm wondering what the crossover effects on women and children these white men are having. How many women and children who make up the poor are so because these men are unemployed?
"In other words, if one is involuntarily unemployed and able to work, a JG is not optional to receive unemployment assistance. "
I think you're misrepresenting Bill there.
"I also consider it essential, that consistent with poverty alleviation objectives, that the Job Guarantee wage (which would become the minimum wage) should be paid upon the person signing in for work irrespective of whether the government can offer meaningful work at precisely that time."
"No person who is capable of working in any nation should be left without an adequate income if they are willing and able to work. For those unable to work because of age, disability, illness or child-rearing, the primary source of poverty alleviation should be a upgraded cash grant system."
Bill has always said pay people first and then use the labour afterwards if you can. The main dynamic is that once you have presented yourself to the JG office you get paid and it is up to the office to find you *suitable* work.
What is considered suitable and reasonable is then a social dynamic within that society - based upon its particular view of required quid pro quo.
And that's always the social dynamic if you think about it. Hence why employers are always complaining about lack of staff and demanding foreign visas - because they don't want to be the ones having to bend and take people as they are.
Where there is a disagreement over suitability, the matter should really be decided in a local community court of some kind rather than by bureaucratic inflexible rules.
@Neil I sat in front of Randy Wary just last week as he gave a Job Guarantee presentation here in the UK. He was quite clear that the ELR system does not preclude social security and never has done since Minsky proposed it.
Minsky proposed raising the SS retirement age and forcing the elderly to work until they keeled over. That is on the record and indisputable.
Bill has always said pay people first and then use the labour afterwards if you can. The main dynamic is that once you have presented yourself to the JG office you get paid and it is up to the office to find you *suitable* work.
Bill's 300 page JG proposal would have JG bureaucrats decide what kind of work is "suitable" for an individual. The 300 page proposal does not offer one single example of a skilled JG job. NOT ONE.
Where there is a disagreement over suitability, the matter should really be decided in a local community court of some kind rather than by bureaucratic inflexible rules.
Courts are worthless without individual rights. Is the individual innocent until proven guilty? Does he have a right to be tried by a jury of his peers? If he cannot afford a lawyer, will a lawyer be appointed for him? Is there a written law that spells out that the individual has a LEGAL right to a job that utilizes his education and experience? If so, then why is that right not spelled out in MMT's JG proposal?
If there really were such a court system for the JG, then one can easily imagine that just about every skilled or educated unemployed person would demand his day in court, and the JG system would grind to a halt, mired in legal challenges.
The JG provides a living wage job to anybody *who wants one*.
In practice, the JEFE program did not pay a living wage, and yet MMT enthusiastically endorsed it. As Kalecki explained, the ruling elites will always oppose a living wage full employment program.
There is absolutely nothing wrong with proposing a utopian vision for how things ought to be, but MMT's claim that "my proposal is more politically viable than your proposal" cannot be taken seriously.
"No person who is capable of working in any nation should be left without an adequate income if they are willing and able to work. For those unable to work because of age, disability, illness or child-rearing, the primary source of poverty alleviation should be a upgraded cash grant system."
And I believe that Australia does in fact have a "dole" that does just that -- a BIG by any other name. So when Bill proposes a JG in addition to the Aussie dole, he is in effect proposing a JIG.
Not so American MMT'ers who propose a JG without also proposing a BIG. Mind you that America does not have a meaningful safety net -- there is no universal health care, no national welfare program, there are restrictions on food stamps such that only about half the poor receive them, and restrictions on unemployment insurance such that only about 1/4 of the unemployed receive UI.
As far as I am aware, Bill Mitchell is the only one favoring a JG-only. Pavlina is strongly opposed to a BIG or equivalent welfare programs. Stephanie has told me words to the effect "the JG comes first, maybe we can consider a BIG later." Warren has not proposed any safety net other than the JG. Minsky was militantly hostile to welfare.
he showed that an ELR program by itself would solve most of the poverty problem: at the time, 30% of the poor worked part-time, while 40% didn’t work at all (Minsky 1965). Those numbers are not incompatible with Bruening's numbers, the difference being that Minsky falsely assumes that most of the poor were able bodied working age adults while Bruening shows otherwise.
Minsky made many false assumptions to suit his conservative political agenda.
Minsky proposed eliminating AFDC, which was a sort of means-tested child credit, and replacing it with a universal child credit. Let's think about that for a minute. What are the economic and political differences between the two programs?
-- a means-tested credit acts as an automatic stabilizer, a universal credit does not.
-- a means-tested credit only helps those who need help, while a universal credit helps those who don't need help
-- a means-tested credit reduces economic inequality, a universal credit has less effect on inequality.
-- a means-tested credit program costs less than a universal credit program
-- most Scandinavian countries have a means-tested child credit. It's a proven system.
While I try to be open minded about the means-tested vs. universal benefit debate, and I believe that either system could be made to work *if* designed well, I keep coming back to the fact that a means-tested benefit helps the people who need help the most, acts as an automatic stabilizer, and costs less. To me, the means-tested benefit makes more sense economically.
The theoretical political advantage to a universal benefit system, like Social Security, is that since everyone enjoys the benefits then in theory, everyone should support the program. In practice, that does not always work since the rich do not "need" SS and the rich resent paying FICA taxes to provide SS for the poor -- really no different in that regard than a means-tested benefit.
From a purely rational point of view, it is a puzzlement why Minsky (and some modern MMTer's) opposed the means-tested AFDC child benefit but advocated a universal child benefit. Reading in between the lines of Minsky's papers, he comes across as a believing the right wing myth that AFDC encouraged poor blacks to have lots of children.
That's true, and it would not fly in the US, which is probably why none of the US MMT economists have proposed anything like that. For them the JG would be an optional add to the existing programs as a mop up for the jobless that want to work.
Bill's proposal to pay someone a wage whether or not they choose to show up for work would be pilloried by the US right and wouldn't stand a chance of passing Congress. I doubt that anyone on the left would even propose it seriously.
Now if you are poor you get food stamps, Medicaid, and some financial assistance based on household size. Bill Clinton did add a work requirement in his tack to the right to "triangulate." But he didn't add a job guarantee. The MMT economists would add a JG at a living wage including benefits.
It can be argued that this proposal is not so different from Bill's in substance and the differences lie in the presentation. Well, presentation makes all the difference in selling it in that widely divergent interest groups have to be persuaded.
The JG has three key aspects, economic, social, and political. All of these have to come together to pass muster where it is being proposed.
It has to work economically. It has to address the social issues without unintended consequences. It has to surmount the obstacles of a very tough political process that will try to either sideline it completely as "socialism" or convert it to workfare and privatize it.
Bill's proposal only makes sense politically in areas where the MMT paradigm is already dominant and this is a extension of it. The MMT economists in the US are leading with it as a proposal to address the current employment debacle. Then, they get to explain the rest of MMT wrt to paying for it. Although they also argue it is still the best deal even if one thinks that taxes and government fund government because it is so much more efficient and effective than the present system. The JG could then just be added without revising the system, which Bill's proposal entails.
And I believe that Australia does in fact have a "dole" that does just that -- a BIG by any other name. So when Bill proposes a JG in addition to the Aussie dole, he is in effect proposing a JIG.
As I understand Bill's proposal, the JG is instead of the dole for those on it. In the proposals of other, the JG would be in addition to other welfare assistance.
I should add to that, if the JG were at the level that those on it would be above the poverty line, then they would not qualify for most other assistance if on the JG since the JG would replace it, e.g., it would either include Medicaid or add some comparable health insurance.
In general, universal benefits are inflationary, as is cost of living indexing. Universal benefits have political advantage but not social or economic advantage.
When I say "inflationary" I don't mean necessarily cause inflation but rather add to the spendable money supply. It can be argued that those at the top will just save the money instead of increasing spending, but then it becomes a matter of wealth subsidy that acts as a political sweetener.
The don't at all. They fall entirely into the category of ideas that are 'neat, plausible and wrong'.
Remember I come from a country that has universal benefits, or rather *had* universal benefits - which are then whittled away via the resentment process.
You *have* to address the resentment process. You have to address the withdrawal of labour, because we've had that here in the UK as well. I regularly talk to people who give up jobs because they 'don't see the point any more' due to the high cost and tax rate implicit in withdrawing an income payment - which is how our tax credit system works. And yes the high tax rate will have to persist!
If in teh US you won't stand *at all* people turning up the JG office and not getting any work, then you have to make sure there is enough work, it is of a type that your society demands (in chains and breaking rocks if that's how primitive you are), and that the results of that are shouted loudly via the JG marketing process (look how many people are in chains breaking rocks - how advanced a society we are).
Stop judging everything by the failure of the US to grow up. That may very well prevent the US from ever implementing anything of any value. Well that's to the US's detriment. Similarly the Romans had a slave society until the elite got overrun and the society collapsed.
To me the JG works because it is unemployment benefit with a real contribution, a contribution that happens at the same time as the benefit is received. Rather than a monetary contribution that happens before the benefit is received (an 'insurance' system).
That gives it more chance of getting permanent traction - NHS style. But only if you remember that the point of the job and the programme is to show to others in your peer group that you are making a contribution. That means it has to be visible and endlessly promoted by the JG programme to prevent the 'doing nothing for their money'.
And that's the key point however you hand out benefits. Which I will make again.
You *do* have to show that you are worth your corn to your peers because *they* made the corn and you can't make them share it with you. You have to persuade them.
And very few people are actually capable of doing something useful *and* doing the PR on it to satisfy that requirement. Which is why you need the help of a funded agency.
It's pointless: why not create more public corporations in the form of, for example, cooperatives (instead of big capitalist-like centralized public corporations) or do like do an article Tom posted suggested: http://www.truth-out.org/opinion/item/26323-socialism-and-workers-self-directed-enterprises WSDE) and fill them with jobs actually worth doing, and keep a pool of vacancies to provide "jobs" to people that would need a JG programs cannot provide an adequate infrastructure to analyse and provide the solutions to complex social problems with that sort of labour and means. This already happens in most places with whole sectors depending absolutely on government demand for their services and goods. Is a matter of scale, and mostly, organisation. I'm sure nations like China are using this policies to a bigger extent.
You require a lot more than raw "work" (horsepower) to solve problems and provide actual non-meaningless solutions. JG is, and cannot be anything else, than the old keynesian "dig holes and fill them in", and no that's not fitting any social pourpose that can be perceived as useful (that's why JG worker will also be stigmatized like anyone). Problem solving requires a lot more capital: financial, human, knowledge, and other assets and, above anything else: time, time to coordinate, organise, and develop.
The problem is not JG vs. UBI, is the lack of creative, political will and coordination to solve our real problems, but we have to hit the bottom first I guess, and work besides the political structure to achieve something, including economists and academics (no shit confidence in politicians is at record low!).
@Tom said Now if you are poor you get food stamps, Medicaid, and some financial assistance based on household size
I'm sure Tom already knows this, but only about half the poor receive food stamps, mainly due to the asset test. If you live in a red state, there is no expanded Medicaid, and if you are on expanded Medicaid, the state will put a lien on your assets to recover the Medicaid costs, so Medicaid is merely a loan, not a handout. In many red states there is no financial assistance to speak of. So no, we do not have a meaningful safety net in this country.
@Neil said You have to address the withdrawal of labour, because we've had that here in the UK as well. I regularly talk to people who give up jobs because they 'don't see the point any more' due to the high cost and tax rate implicit in withdrawing an income payment
Neil, despite your claim that the sky is falling due to withdrawal of labor, the UK actually has an above average labor force participation rate. Generally speaking, the participation rate rises and falls with the economy. Austerity policies -- not benefits -- are holding back the participation rate.
If people are not working because it is more profitable to be on the dole, that suggests that jobs do not pay enough and/or your taxes are too high and/or are too regressive. The solution is to raise the minimum wage and get rid of the regressive taxes. Also free day care and free public transportation, so those things do not discourage people from working.
the point of the job and the programme is to show to others in your peer group that you are making a contribution.
Which is why the New Deal infrastructure programs were popular -- they were visible and useful. One of the many problems with the JG is that it is not compatible with infrastructure programs, which are mostly materials and equipment and semi-skilled labor, and which require Congressional authorization. The JG's budgeting formula will limit it to service jobs and grunt jobs like picking up litter. Those types of jobs have a place but it is silly to put all your eggs in that one limited basket.
I'm sure Tom already knows this, but only about half the poor receive food stamps, mainly due to the asset test. If you live in a red state, there is no expanded Medicaid, and if you are on expanded Medicaid, the state will put a lien on your assets to recover the Medicaid costs, so Medicaid is merely a loan, not a handout. In many red states there is no financial assistance to speak of. So no, we do not have a meaningful safety net in this country.
Another reason to having a uniform federal safety net, although it could be structured on the purchasing power parity of various locations, even intra-state, such as city and rural. The big reason for a federal safety net according to MMT is the federal government is a currency sovereign and the US states and municipalities are currency issuers.
I think it is somewhat inefficient to argue for a JG independently of an MMT JG in the context of the MMT macro analysis. Context is everything.
This is why it is important to have a book that updates John Kenneth Galbraith's The Good Society and integrates his Economics and the Public Purpose. He was a big thinker who thought comprehensively. His writing is still surprisingly relevant after decades but it needs to be upgraded with MMT analysis.
There are various ways to do this, but one way would be have different people write different chapters and have someone or a group edit the material to bring it all together. That could be done fairly quickly.
Another quick way is to create a comprehensive ebook and wiki using links to already published material that organizes what's already available into a logical format. That's adding value.
The goal should be to get an accessible account of MMT that hits the NYT bestseller list and stays there for a while.
21 comments:
Just 21.5% of the poor are able-bodied, non-student, non-working adults.
Am I the only one who wonders how a JG-only is going to eliminate poverty if only 21.5% of the poor are able bodied unemployed adults?
Anyway, excellent data. I'm going to bookmark this article for future JG debates. :-)
I don't think that anyone has claimed that a JG would eliminate poverty. Rather it would reduce the buffer stock of involuntarily unemployed. In principle it eliminates involuntary UE in that everyone willing and able to work has a job offer, but in practice it probably is limited to people near the bottom of skill-level.
A JG not a panacea for poverty, but it would be a game-changer regarding the approach to employment away from NAIRU and the buffer stock of unemployed.
It's pretty clear from the chart that poverty is a complex issue since the different groups would have to addressed differently. The elderly can be addressed by increasing pensions, and student by subsidizing education to reduce costs. A JG would establish living wage (compensation package) as the bench mark minimum wage, so that firms would have to pay a living wage instead of receiving a subsidy in the form of welfare payments that enables them to pay less than a minimum wage.
The remaining cohort is the group that is most difficult to address since it is a sociological (cultural and institutional) issue rather than an economic one. Throwing money at the problem is not sufficient to address the issues involved.
Ummmm ..... ask Stephanie or Pavlina about poverty and their response is the JG. Period.
The compilation of Minsky ELR articles is titled "Ending Poverty: Jobs, Not Welfare." Minsky advocated putting children and the elderly to work. :~(
So I think it is fair to suggest that MMT (as a whole) needs to take another look at its JG-only policy position.
I like WM's proposal to make SS benefits a flat $2000/month but note that not every elderly person in America qualifies for SS benefits in the first place. I suggest rolling all private and public pensions into SS and making the benefit a flat $2500/month for every citizen of retirement age.
Children could be covered either by a BIG, or by a child-centered BIG similar to Brazil's Bolsa Familia, or by a Scandinavian style child credit. As with other BIGs, there is the usual debate over whether to make the child benefit universal or means-tested.
Our SSDI program has serious issues -- the majority of people who apply are denied, and it's standard procedure to have to hire a lawyer to appeal the claim, which takes about 12 months for the average claim, and a lot of people still fall through the cracks. In the meantime the sick person is supposed to somehow support themselves and also pay the lawyer.
IMHO a weekly means-tested BIG could and should replace SSDI. There would be no hassles about eligibility, and no waiting. The only problem is that SSDI lawyers -- there's an entire industry devoted to SSDI claims -- would have to find another way to make a living. :-)
"Am I the only one who wonders how a JG-only is going to eliminate poverty if only 21.5% of the poor are able bodied unemployed adults? "
The JG provides a living wage job to anybody *who wants one*. That is how it works.
It doesn't get rid of the state pension, or child benefit, or student grants, free education and childcare or social services. Or in sensible countries the national health care system.
It doesn't even get rid of income support schemes if that is what the society is prepared to accept.
What it does gets rid of is all *below poverty line* jobs, which helps the massive number of *working poor* that we have across the globe. Something you've obviously forgotten about.
There is a social limit to the freebies that the society is prepared to hand out without the appropriate level of quid pro quo. That is why freebie based schemes always fail, and continue to fail across the globe. They get whittled away politically as people decide that people are simply not worth the money they are given.
I sat in front of Randy Wary just last week as he gave a Job Guarantee presentation here in the UK. He was quite clear that the ELR system does not preclude social security and never has done since Minsky proposed it. It is in addition to social security where the particular structure of the society will permit that.
"He also recognized that the nation would still need
welfare for those who could not, or should not work. He advocated a universal children’s
allowance, as well as medical care for all, unconnected to employment. However, he
showed that an ELR program by itself would solve most of the poverty problem: at the
time, 30% of the poor worked part-time, while 40% didn’t work at all (Minsky 1965). He
calculated that perhaps two-thirds of all poverty could be eliminated by providing a
minimum wage job to each household."
So you're significantly mistaken on your understanding of what Minsky proposed
So I think it is fair to suggest that MMT (as a whole) needs to take another look at its JG-only policy position.
I don't think that "MMT" has a JG -only policy policy prescription. Different MMT economists have different views. As far as I am aware, Bill Mitchell is the only one favoring a JG-only.
There are a number of other policy differences among them. They just agree on the economic and financial analysis.
"Bill Mitchell is the only one favoring a JG-only"
Somehow I doubt Bill would be opposed to increasing benefits for elderly, children, disabled etc.
"Bill Mitchell is the only one favoring a JG-only"
No, he has no such illusions.
Of course Bill does not recommend that the JG replace all social welfare transfers. That's a right wing dream, and a condition for their support of a UBI.
Bill would end other unemployment benefits, and I don't believe that he is open to supplementing a JG with something a means tested basic income. In other words, if one is involuntarily unemployed and able to work, a JG is not optional to receive unemployment assistance.
Other MMT economists would make a JG optional for receiving unemployment assistance. Even if one didn't choose to take it and to rely instead on other government assistance, the job offer would be there.
I find the stats interesting. If 8.4% of the poor are able-bodied, non-student, non-working, adult men and only .56% of that 8.4% i.e. 6.6% of able-bodied, non-student, non-working, adult men are minorities then about 93% of them are white.
I'm wondering what the crossover effects on women and children these white men are having. How many women and children who make up the poor are so because these men are unemployed?
"In other words, if one is involuntarily unemployed and able to work, a JG is not optional to receive unemployment assistance. "
I think you're misrepresenting Bill there.
"I also consider it essential, that consistent with poverty alleviation objectives, that the Job Guarantee wage (which would become the minimum wage) should be paid upon the person signing in for work irrespective of whether the government can offer meaningful work at precisely that time."
"No person who is capable of working in any nation should be left without an adequate income if they are willing and able to work. For those unable to work because of age, disability, illness or child-rearing, the primary source of poverty alleviation should be a upgraded cash grant system."
http://bilbo.economicoutlook.net/blog/?p=13025
Bill has always said pay people first and then use the labour afterwards if you can. The main dynamic is that once you have presented yourself to the JG office you get paid and it is up to the office to find you *suitable* work.
What is considered suitable and reasonable is then a social dynamic within that society - based upon its particular view of required quid pro quo.
And that's always the social dynamic if you think about it. Hence why employers are always complaining about lack of staff and demanding foreign visas - because they don't want to be the ones having to bend and take people as they are.
Where there is a disagreement over suitability, the matter should really be decided in a local community court of some kind rather than by bureaucratic inflexible rules.
@Neil I sat in front of Randy Wary just last week as he gave a Job Guarantee presentation here in the UK. He was quite clear that the ELR system does not preclude social security and never has done since Minsky proposed it.
Minsky proposed raising the SS retirement age and forcing the elderly to work until they keeled over. That is on the record and indisputable.
Bill has always said pay people first and then use the labour afterwards if you can. The main dynamic is that once you have presented yourself to the JG office you get paid and it is up to the office to find you *suitable* work.
Bill's 300 page JG proposal would have JG bureaucrats decide what kind of work is "suitable" for an individual. The 300 page proposal does not offer one single example of a skilled JG job. NOT ONE.
Where there is a disagreement over suitability, the matter should really be decided in a local community court of some kind rather than by bureaucratic inflexible rules.
Courts are worthless without individual rights. Is the individual innocent until proven guilty? Does he have a right to be tried by a jury of his peers? If he cannot afford a lawyer, will a lawyer be appointed for him? Is there a written law that spells out that the individual has a LEGAL right to a job that utilizes his education and experience? If so, then why is that right not spelled out in MMT's JG proposal?
If there really were such a court system for the JG, then one can easily imagine that just about every skilled or educated unemployed person would demand his day in court, and the JG system would grind to a halt, mired in legal challenges.
The JG provides a living wage job to anybody *who wants one*.
In practice, the JEFE program did not pay a living wage, and yet MMT enthusiastically endorsed it. As Kalecki explained, the ruling elites will always oppose a living wage full employment program.
There is absolutely nothing wrong with proposing a utopian vision for how things ought to be, but MMT's claim that "my proposal is more politically viable than your proposal" cannot be taken seriously.
"No person who is capable of working in any nation should be left without an adequate income if they are willing and able to work. For those unable to work because of age, disability, illness or child-rearing, the primary source of poverty alleviation should be a upgraded cash grant system."
And I believe that Australia does in fact have a "dole" that does just that -- a BIG by any other name. So when Bill proposes a JG in addition to the Aussie dole, he is in effect proposing a JIG.
Not so American MMT'ers who propose a JG without also proposing a BIG. Mind you that America does not have a meaningful safety net -- there is no universal health care, no national welfare program, there are restrictions on food stamps such that only about half the poor receive them, and restrictions on unemployment insurance such that only about 1/4 of the unemployed receive UI.
As far as I am aware, Bill Mitchell is the only one favoring a JG-only. Pavlina is strongly opposed to a BIG or equivalent welfare programs. Stephanie has told me words to the effect "the JG comes first, maybe we can consider a BIG later." Warren has not proposed any safety net other than the JG. Minsky was militantly hostile to welfare.
he showed that an ELR program by itself would solve most of the poverty problem: at the time, 30% of the poor worked part-time, while 40% didn’t work at all (Minsky 1965). Those numbers are not incompatible with Bruening's numbers, the difference being that Minsky falsely assumes that most of the poor were able bodied working age adults while Bruening shows otherwise.
Minsky made many false assumptions to suit his conservative political agenda.
Re: the universal child credit.
Minsky proposed eliminating AFDC, which was a sort of means-tested child credit, and replacing it with a universal child credit. Let's think about that for a minute. What are the economic and political differences between the two programs?
-- a means-tested credit acts as an automatic stabilizer, a universal credit does not.
-- a means-tested credit only helps those who need help, while a universal credit helps those who don't need help
-- a means-tested credit reduces economic inequality, a universal credit has less effect on inequality.
-- a means-tested credit program costs less than a universal credit program
-- most Scandinavian countries have a means-tested child credit. It's a proven system.
While I try to be open minded about the means-tested vs. universal benefit debate, and I believe that either system could be made to work *if* designed well, I keep coming back to the fact that a means-tested benefit helps the people who need help the most, acts as an automatic stabilizer, and costs less. To me, the means-tested benefit makes more sense economically.
The theoretical political advantage to a universal benefit system, like Social Security, is that since everyone enjoys the benefits then in theory, everyone should support the program. In practice, that does not always work since the rich do not "need" SS and the rich resent paying FICA taxes to provide SS for the poor -- really no different in that regard than a means-tested benefit.
From a purely rational point of view, it is a puzzlement why Minsky (and some modern MMTer's) opposed the means-tested AFDC child benefit but advocated a universal child benefit. Reading in between the lines of Minsky's papers, he comes across as a believing the right wing myth that AFDC encouraged poor blacks to have lots of children.
@ Neil
That's true, and it would not fly in the US, which is probably why none of the US MMT economists have proposed anything like that. For them the JG would be an optional add to the existing programs as a mop up for the jobless that want to work.
Bill's proposal to pay someone a wage whether or not they choose to show up for work would be pilloried by the US right and wouldn't stand a chance of passing Congress. I doubt that anyone on the left would even propose it seriously.
Now if you are poor you get food stamps, Medicaid, and some financial assistance based on household size. Bill Clinton did add a work requirement in his tack to the right to "triangulate." But he didn't add a job guarantee. The MMT economists would add a JG at a living wage including benefits.
It can be argued that this proposal is not so different from Bill's in substance and the differences lie in the presentation. Well, presentation makes all the difference in selling it in that widely divergent interest groups have to be persuaded.
The JG has three key aspects, economic, social, and political. All of these have to come together to pass muster where it is being proposed.
It has to work economically. It has to address the social issues without unintended consequences. It has to surmount the obstacles of a very tough political process that will try to either sideline it completely as "socialism" or convert it to workfare and privatize it.
Bill's proposal only makes sense politically in areas where the MMT paradigm is already dominant and this is a extension of it. The MMT economists in the US are leading with it as a proposal to address the current employment debacle. Then, they get to explain the rest of MMT wrt to paying for it. Although they also argue it is still the best deal even if one thinks that taxes and government fund government because it is so much more efficient and effective than the present system. The JG could then just be added without revising the system, which Bill's proposal entails.
And I believe that Australia does in fact have a "dole" that does just that -- a BIG by any other name. So when Bill proposes a JG in addition to the Aussie dole, he is in effect proposing a JIG.
As I understand Bill's proposal, the JG is instead of the dole for those on it. In the proposals of other, the JG would be in addition to other welfare assistance.
I should add to that, if the JG were at the level that those on it would be above the poverty line, then they would not qualify for most other assistance if on the JG since the JG would replace it, e.g., it would either include Medicaid or add some comparable health insurance.
In general, universal benefits are inflationary, as is cost of living indexing. Universal benefits have political advantage but not social or economic advantage.
When I say "inflationary" I don't mean necessarily cause inflation but rather add to the spendable money supply. It can be argued that those at the top will just save the money instead of increasing spending, but then it becomes a matter of wealth subsidy that acts as a political sweetener.
"Universal benefits have political advantage"
The don't at all. They fall entirely into the category of ideas that are 'neat, plausible and wrong'.
Remember I come from a country that has universal benefits, or rather *had* universal benefits - which are then whittled away via the resentment process.
You *have* to address the resentment process. You have to address the withdrawal of labour, because we've had that here in the UK as well. I regularly talk to people who give up jobs because they 'don't see the point any more' due to the high cost and tax rate implicit in withdrawing an income payment - which is how our tax credit system works. And yes the high tax rate will have to persist!
If in teh US you won't stand *at all* people turning up the JG office and not getting any work, then you have to make sure there is enough work, it is of a type that your society demands (in chains and breaking rocks if that's how primitive you are), and that the results of that are shouted loudly via the JG marketing process (look how many people are in chains breaking rocks - how advanced a society we are).
Stop judging everything by the failure of the US to grow up. That may very well prevent the US from ever implementing anything of any value. Well that's to the US's detriment. Similarly the Romans had a slave society until the elite got overrun and the society collapsed.
To me the JG works because it is unemployment benefit with a real contribution, a contribution that happens at the same time as the benefit is received. Rather than a monetary contribution that happens before the benefit is received (an 'insurance' system).
That gives it more chance of getting permanent traction - NHS style. But only if you remember that the point of the job and the programme is to show to others in your peer group that you are making a contribution. That means it has to be visible and endlessly promoted by the JG programme to prevent the 'doing nothing for their money'.
And that's the key point however you hand out benefits. Which I will make again.
You *do* have to show that you are worth your corn to your peers because *they* made the corn and you can't make them share it with you. You have to persuade them.
And very few people are actually capable of doing something useful *and* doing the PR on it to satisfy that requirement. Which is why you need the help of a funded agency.
It's pointless: why not create more public corporations in the form of, for example, cooperatives (instead of big capitalist-like centralized public corporations) or do like do an article Tom posted suggested: http://www.truth-out.org/opinion/item/26323-socialism-and-workers-self-directed-enterprises WSDE) and fill them with jobs actually worth doing, and keep a pool of vacancies to provide "jobs" to people that would need a JG programs cannot provide an adequate infrastructure to analyse and provide the solutions to complex social problems with that sort of labour and means. This already happens in most places with whole sectors depending absolutely on government demand for their services and goods. Is a matter of scale, and mostly, organisation. I'm sure nations like China are using this policies to a bigger extent.
You require a lot more than raw "work" (horsepower) to solve problems and provide actual non-meaningless solutions. JG is, and cannot be anything else, than the old keynesian "dig holes and fill them in", and no that's not fitting any social pourpose that can be perceived as useful (that's why JG worker will also be stigmatized like anyone). Problem solving requires a lot more capital: financial, human, knowledge, and other assets and, above anything else: time, time to coordinate, organise, and develop.
The problem is not JG vs. UBI, is the lack of creative, political will and coordination to solve our real problems, but we have to hit the bottom first I guess, and work besides the political structure to achieve something, including economists and academics (no shit confidence in politicians is at record low!).
@Tom said Now if you are poor you get food stamps, Medicaid, and some financial assistance based on household size
I'm sure Tom already knows this, but only about half the poor receive food stamps, mainly due to the asset test. If you live in a red state, there is no expanded Medicaid, and if you are on expanded Medicaid, the state will put a lien on your assets to recover the Medicaid costs, so Medicaid is merely a loan, not a handout. In many red states there is no financial assistance to speak of. So no, we do not have a meaningful safety net in this country.
@Neil said You have to address the withdrawal of labour, because we've had that here in the UK as well. I regularly talk to people who give up jobs because they 'don't see the point any more' due to the high cost and tax rate implicit in withdrawing an income payment
Neil, despite your claim that the sky is falling due to withdrawal of labor, the UK actually has an above average labor force participation rate. Generally speaking, the participation rate rises and falls with the economy. Austerity policies -- not benefits -- are holding back the participation rate.
If people are not working because it is more profitable to be on the dole, that suggests that jobs do not pay enough and/or your taxes are too high and/or are too regressive. The solution is to raise the minimum wage and get rid of the regressive taxes. Also free day care and free public transportation, so those things do not discourage people from working.
the point of the job and the programme is to show to others in your peer group that you are making a contribution.
Which is why the New Deal infrastructure programs were popular -- they were visible and useful. One of the many problems with the JG is that it is not compatible with infrastructure programs, which are mostly materials and equipment and semi-skilled labor, and which require Congressional authorization. The JG's budgeting formula will limit it to service jobs and grunt jobs like picking up litter. Those types of jobs have a place but it is silly to put all your eggs in that one limited basket.
I'm sure Tom already knows this, but only about half the poor receive food stamps, mainly due to the asset test. If you live in a red state, there is no expanded Medicaid, and if you are on expanded Medicaid, the state will put a lien on your assets to recover the Medicaid costs, so Medicaid is merely a loan, not a handout. In many red states there is no financial assistance to speak of. So no, we do not have a meaningful safety net in this country.
Another reason to having a uniform federal safety net, although it could be structured on the purchasing power parity of various locations, even intra-state, such as city and rural. The big reason for a federal safety net according to MMT is the federal government is a currency sovereign and the US states and municipalities are currency issuers.
I think it is somewhat inefficient to argue for a JG independently of an MMT JG in the context of the MMT macro analysis. Context is everything.
This is why it is important to have a book that updates John Kenneth Galbraith's The Good Society and integrates his Economics and the Public Purpose. He was a big thinker who thought comprehensively. His writing is still surprisingly relevant after decades but it needs to be upgraded with MMT analysis.
There are various ways to do this, but one way would be have different people write different chapters and have someone or a group edit the material to bring it all together. That could be done fairly quickly.
Another quick way is to create a comprehensive ebook and wiki using links to already published material that organizes what's already available into a logical format. That's adding value.
The goal should be to get an accessible account of MMT that hits the NYT bestseller list and stays there for a while.
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