Now why is this so amazing? Because 20 years ago, anyone who advocated a universal jobs program was dismissed as a complete wacko, or worse. We were regularly called fascist Nazis, Slavers, and dirty pinko commies. No insult was beyond the pale. From the left—heterodox, Post Keynesian economists; and from the right—your usual nut-job anti-government free-market libertarian Austrians.
They all agreed: it is absolutely insane to offer a job to an unemployed worker who’d like to work.
Best to leave them unemployed. The only difference of opinion between left and right amounted to how much suffering you should force on the unemployed. The left wanted to ensure they live in poverty, to be sure, but give them enough that they won’t revolt or beg (it’s just so embarrassing to walk by those panhandlers, you know). The right wanted more severe conditions, to serve as a lesson for anyone else who might dare to go without a job. Any job. No matter how low the pay, how dangerous the working conditions, how demeaning the work. We need a lot of suffering to ensure that no job will ever be refused.
Besides, the left and right argued, we cannot afford to hire them. Better to pay them welfare or put them in prison. Yes, even if it costs upwards of $50,000 apiece annually, or even $100,000, best to imprison them. Provide the right incentives. In the long run, that is cheaper than giving them a job at a living wage.
We need the suffering of the unemployed to keep wages in check. That promotes economic stability. High unemployment is great for the economy. How many unemployed will it take? Well, certainly 10 million; maybe 20 or 25 million. They’re doing their job—a reserve army of the unemployed to help break the back of evil labor unions that cause inflation.
Yes, the left and right agreed—following Marx and Friedman—a buffer stock of the unemployed is just what the doctor ordered. It is the medicine for a healthy capitalism. An antidote to full employment.
By contrast, we argued, following Keynes, such beliefs are “crazily improbable”, the sort of stuff no one could believe unless her mind had been “befuddled” with nonsense “for years and years”. Surely it makes more sense to get them working, to pay them for contributing to society, to keep them out of a life of crime and destitution and desperation? Even if they don’t produce much, that is better than nothing? Even if their wages are above some measure of the value of their output, that is better than putting them in prison where they learn to be much more dangerous criminals, and where they must be watched and guarded and fed and provided with both care and punishment? And when they get out, we ensure they do not get employment, so that they go right back into prison where they belong. That’s efficient!
We responded: wouldn’t the economy be stronger, and actually less cyclical and less prone to inflation if we put them to work. If employment in the program moved countercyclically. If government spending on the program moved against the cycle. If the wage of the program attenuated cyclical movements. If employers could recruit out of the pool of employed workers, rather than looking among the ranks of the recently imprisoned, the homeless, the drunk, the destitute.
Well, we finally won those debates. Judging from the recent discussions across the blogs—from left to right, from Post Keynesian to Austrian. All seem to accept that IN THEORY the JG/ELR does everything we have always claimed it would do.
The only debate remaining concerns political feasibility and whether the program can be implemented and run. Don’t take my word for it. Look at the blogs:
http://pragcap.com/the-evolution-of-mmt/comment-page-1#comment-94369
http://www.creditwritedowns.com/2012/01/my-comments-on-mmts-job-guarantee-idea.html
MMT, NGDP, AndAustrian Economics: Alphabet Noodling!.
THE FUNDAMENTAL DIFFERENCE BETWEENAUSTRIANS AND MMT’ERS .
Also most of the comments on my own previous two GLF blogs ask for details on how to implement the program. How can you run it? What will they do? How do you prevent the crony capitalists from taking over?
Much of this has to do with the size of the program. Many commentators are presuming the number of jobs we need is 20-25 million. It seems overwhelming. Is government up to the task?
I consider that a victory of unimaginable proportions. I have been arguing since the 1990s that through the thick and thin of the business cycle, the number left behind is upward of 20 million. The “cost” of using unemployment as a buffer stock, the cost of the reserve army of the unemployed, is 20 million lost lives at the business cycle peak! The waste is beyond imagination. We could put the most incompetent and corrupt and bungling Bush appointees in charge of the JG program and still not manage to waste what our “free market” approach to maintaining a reserve army of the unemployed manages every year.
The extra output that would be provided is sufficient to resolve virtually every shortfall of infrastructure or public service that anyone could possibly come up with. Heck, if we really wanted to, we could rebuild Australia’s lost “Alps” with that workforce. Or rebuild the land bridge to Asia. Or, why not, build that stairway to heaven that we used to sing about.
(As you probably know, Australia lost its mountains; Warren Mosler used to always joke that they should be ashamed for not maintaining them. If their Alps could be restored, the land of Oz would no longer be dry. And, hence, the JG could be put to use to rebuild them. OK, before I get the hate mail, it is a joke. But you get the picture. 40 million American hands put to useful work.)
Those who push for the JG/ELR should just declare victory and go home.
But we won’t. I promise. Let the discussion of problems of implementation, management, corruption, efficiency, training, and matching skills to work begin. We’ve finally got beyond the theory and the name calling.
The other Keynes quote I love (but cannot locate right now), says that if we just get busy and start thinking of useful things for the unemployed to do we’ll have no problem coming up with a sufficient list.
Let me close with a quote from Minsky (1965: 299-300), who long proposed an ELR program:
“Work should be made available for all able and willing to work at the national minimum wage. This is a wage support law, analogous to the price supports for agricultural products…. To qualify for employment at these terms, all that would be required would be to register at the local U.S.E.S. [US Employment Service]. Part time and seasonal work should be available at these terms… National government agencies, as well as local and state agencies would be eligible to obtain this labor. They would bid for labor by submitting their projects, and a local ‘evaluation’ board would determine priorities among projects…. The basic approach is straight forward – accept the poor as they are and tailor make jobs to fit their capabilities. After this is done, programs to improve the capabilities of low income workers are in order.”
We’ve been working on this project a long time. Here is a very short list of just a very small proportion of the articles I’ve worked on. In coming blogs, I’ll provide more details on how to implement and run the program—and on what the workers will do.
http://www.cfeps.org/pubs/wp/wp3.html
http://www.cfeps.org/pubs/wp/wp9.html
http://www.cfeps.org/pubs/wp/wp39.html
http://www.cfeps.org/pubs/wp/wp41.html
http://www.cfeps.org/pubs/wp/wp43.html
http://www.cfeps.org/pubs/wp/wp50.htm
http://www.levyinstitute.org/pubs/ppb54.pdf
http://www.levyinstitute.org/publications/?docid=500
http://www.levyinstitute.org/publications/?docid=253
Also Read: My Comments on MMT’s Job Guarantee Idea