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Great Leap Forward

BOP A MOLE #2: JG WORKERS WILL DO NOTHING USEFUL, THE JG PROGRAM WILL NOT BE MANAGEABLE

Whenever you talk about a Job Guarantee, that promises to hire anyone ready and willing to work, the Moles Pop Up proclaiming that JG workers will never do anything useful. They’ll all be hired to dig holes, and then will be rehired to bury those holes. It isn’t desirable or feasible to run a JG program for the “obvious” reason that we won’t find anything useful for them to do. Much better, it is claimed, to leave them jobless.

The bleeding hearts who take this position are willing to throw the jobless a few scraps. Maybe some welfare or foodstamps, or maybe even a tiny bit of BIG (basic income guarantee, which most proponents want to keep so low that anyone living on the BIG would starve; but that’s an issue for another day). The heartless want to throw the jobless to the wolves, to preserve incentives. Better you than me!

MMTers think all of this is not only far too pessimistic, but also disastrously wrong. We have lots of work to do, and lots of people who want to do the work. The trick is to match the “demand” and “supply”: to create an infinitely elastic demand for workers in order to hire all who want to work. And then to keep them busy doing useful stuff.

As I posted recently, others are pushing for the JG, including Jesse Myerson, in “Five Economic Reforms Millennials Should Be Fighting For”, Rolling Stone – See more at: http://www.economonitor.com/lrwray/2014/01/05/push-for-job-guarantee-gains-momentum/#sthash.7wCXQUEm.dpuf. Jesse is currently being attacked without mercy by all the right-wing nutjobs that have nothing else to do but to write name-calling comments, accusing him of being a dirty pinko commie. (Jessie, Welcome Aboard!) The only coherent and relatively intelligent analysis of his piece that I’ve seen is one at Salon, that points out that everything Jessie called for already exists in some form, somewhere outside the supposedly pinko commie countries like Cuba, North Korea, and Canada: http://www.salon.com/2014/01/06/conservatives_are_losing_their_minds_over_economic_reforms_that_already_exist/

(Sorry, I was kidding about Canada. For the record, Canada is not pinko commie.)

It is almost too obvious to even write about. I’m nearly embarrassed that I have to explain this. There are lots of people who want to work but cannot find paying jobs. And lots of stuff that needs to be done. We’ve got a serendipitous problem here: bring the two together.

I’m going to draw on a piece I wrote back in January 2000. Not because it was particularly brilliant, but to point out that we’ve been Bopping this Mole for a very long time. See here: http://www.cfeps.org/pubs/wp/wp3.html.

The main issues examined here concern the desirability and feasibility of a JG program. The JG program is desired because a) a more-or-less free market system does not, and perhaps cannot, continuously generate true full employment; b) no civilized, and wealthy, society can allow a portion of its population to go without adequate food, clothing and shelter; and c) our society places a high value on work as the means through which most individuals should obtain a livelihood.

The JG is feasible because we can design it to ensure that a) it can be managed; b) corruption will be kept within acceptable bounds (way, way, below what we accept in private firms!) and c) we can ensure workers do things that are socially valuable and that develop skills of the workers.

JG policy cannot resolve all social problems; it cannot even replace all transfer spending. Some individuals will not be able to work–even in a JG program. Some individuals will not be willing to work. However, JG will ensure that all of those willing and able to work at the JG wage will be able to obtain a job by selling their time to the government at the JG wage.

Indeed, “ableness” should be defined as broadly as possible to include virtually all those who are willing to work. There is no reason to impose a narrow “efficiency” standard to ensure “productivity” above the program wage. Any production will normally be better than no production; if one begins with the belief that even the unproductive must be supported, then government will have to provide income whether or not one works. Generally, it will be better to have someone working. But that sets too low a bar for most workers.

In many individual cases, the “net product” may well be negative from a narrow economic standpoint because supervision, capital investments, and personal services required to put some people to work (for example, to employ severely disabled) could exceed the economic value of output. However, a rich society can afford inefficiencies, and the noneconomic benefits of work can offset at least some of the economic costs. And most workers will provide substantial net benefits.

JG intervention is feasible. The modern government does not face the narrow “financial constraints” under which households and firms must operate. As Presidents Reagan and Bush showed, large government deficits do not have the supposed inflationary and crowding-out effects about which orthodox economists have long warned. In any case, however, we have argued that the increase of the deficit associated with operation of a JG program will be relatively small—and JG could even “pay for itself” in society-wide savings. (To be clear, sovereign government faces no affordability constraints, so could always afford both JG and as well all other demands. What really matters is the “real” resources. However, many are concerned about “exploding” deficits, and the fact is that a JG can be implemented with little, or even no, expansion of total government spending.)

While JG may have associated administrative, capital, child care, health care, monitoring, and transportation costs, some of these can be reduced by using JG workers (for example, to provide child care for other JG workers) and “piggy-backing” on existing programs (using local governmental and nongovernmental agencies to administer the program, for example).

Once the primary issues have been resolved, there remain many issues, problems, objections, and extensions that must be analyzed. We shall merely list a few objections that immediately come to mind, and will provide a sentence or two to indicate the direction that might be taken to resolve the problems.

1. It will be impossible to administer the program due to incompetence, corruption, racism, and opposition. Clearly, this is a significant problem; as Minsky used to wonder, are there administrators today as capable as those who administered the New Deal? We can suggest several methods to ease administrative problems. First, the existing unemployment benefits program administration might be used to administer a JG program. Alternatively, administration could “devolve” to the state and local government level and to not-for-profits. The Federal government would simply provide as much funding as necessary to let every state and local government hire as many new employees as they desired, with only two constraints: these jobs could not replace current employment, and they could pay only the BPSW. Finally, a similar offer could be made to qualifying non-governmental non-profit organizations, such as Americorps, VISTA, the Student Community Service Program, the National Senior Service Corps, the Peace Corps, the National Health Service Corps, school districts, and Meals on Wheels.

MMT proponents of the JG have long preferred just such a decentralized program. We prefer to allow existing not-for-profit organizations to “bid” for workers, with government paying wages and these organizations proposing projects and managing the workers. They would be held accountable and would lose access to JG workers (and their wages) if their projects were not successful.

2. JG employment will consist of nothing but “make-work” jobs, like the WPA before it. As we move farther from the 1930s, people seem to have forgotten the contributions made by Works Progress Administration (of the New Deal). WPA workers

not only built or reconstructed 617,000 miles of roads, 124,000 bridges and viaducts, and 120,000 public buildings; they also left the nation with thousands of new parks, playgrounds, and athletic fields. Moreover, they drained malarial swamps, exterminated rats in slums, organized nursery schools, and taught illiterate adults to read and write. Unemployed actors set up theaters throughout the land, often performing in remote towns and backwoods areas. WPA orchestras gave 6,000 live concerts. WPA artists produced murals, sculptures, and paintings that still adorn our public buildings. (Ginsburg 1983, p. 11)

Indeed, it is rather easy to make the case that the WPA played the major role of bringing the USA out of its 19th century position as a mostly lesser developed country and finally into the 20th century as a developed country that could (successfully) rival the developed European countries. (see more below)

We do not believe it requires much imagination to come up with a list of useful tasks for JG workers. Even in the worst case, JG workers must at least “sell” their time in exchange for dollars, which many Americans might find preferable to “money for nothing”. Possible JG jobs include:

  • Companion for the elderly, bed-ridden, orphans, mentally and physically disabled
  • Public school classroom assistant
  • Safety monitor for public school grounds, areas surrounding schools, playgrounds, subway stations, street intersections, and shopping centers
  • Neighborhood cleanup/Hiway cleanup engineers
  • Low income housing restoration engineers
  • Day care assistants for children of JG workers and others
  • Environmental safety monitors
  • JG artist or musician
  • Community or cultural historian

Obviously, this list is not meant to be definitive, but is only to suggest that there are many jobs that could be done by JG workers. We have not listed the more “obvious” jobs, such as restoration of public infrastructure (patching holes in city streets, repairing dangerous bridges), provision of new infrastructure (hiway construction, new sewage treatment plants), and expansion of public services (new recycling programs) that should be carefully considered because they might reduce private costs and increase private profitability. These are types of social spending that should be done even without a JG program, and that might be better accomplished by non-JG (including unionized) workers. However, it should be noted that WPA employees did indeed engage in this sort of work. (see below)

3. What can be done with belligerent/anti-social/lazy JG workers? JG will require that one show-up for work on time; beyond that, requirements would have to be made almost on a case-by-case arrangement. Discipline would be maintained primarily by the promise of promotion to more desirable JG jobs, and, eventually, to private sector employment. In the worst case, some workers might be so irresponsible that their employment would be day-by-day, or even hour-by-hour with a cash payment for a specified amount of time spent on the job. JG workers could be fired from their jobs for just cause; there could be conditions placed on re-hiring (for example, the fired worker might have to wait for 3 days–without pay–before re-hiring; the penalty could be increased for subsequent firings). In extreme cases, some individuals may not be allowed to work in a JG job; JG cannot provide income for all the needy. It cannot replace all other social programs.

4. What effect will JG have on unions? On one hand, JG removes the fear or threat of unemployment, which is often said to be an important disciplinary method used by firms against workers. It also establishes a true, universal minimum wage–below which wages will not fall. It still permits unions to negotiate benefits with employers–such as unemployment compensation (so that although there might not be any federal unemployment compensation, workers could still negotiate privately-supplied benefits). JG  could include a package of benefits, including health care. This would then set the lowest standard (and could, for example, lead to universal health care). On the other hand, the JG pool will also dampen wage (and benefit) demands of non-JG workers as employers will have the alternative of hiring from the JG pool.  JG projects would go through an approval process and it is important that unions (especially public employee unions) sit on the boards that approve the projects. Thus, it is not clear that JG is biased in favor of workers or employers.

5. Won’t participation in JG lead to stigmatization? If JG takes only those workers the private sector “doesn’t want”, won’t participation in JG be seen as a negative indication of character, education, or skill level, much as participation in “welfare” stigmatizes a person? This danger can be reduced through creative action. For example, JG can be promoted as a universal “Americorps” service, open to all who would like to perform community service (unlike the current Americorp program, which limits the number of participants). We could institute a national service requirement, much as many countries require military service or national service. Alternatively, we can rely on persuasion: universities could favor applications from prospective students who have served for a year in an JG position; not only would this provide students with savings for tuition, but it would also enable them to gain skills, training, and maturity before beginning college. Alternatively, colleges could offer “junior year programs” in JG as an alternative to “junior year abroad” programs. Corporations could allow leaves of absence to professionals and executives to work in the JG program. Retired executives, professionals, and politicians could serve in the JG program (much as they now serve with President Carter in Habitat for Humanity). JG might even provide for some part-time positions (perhaps even unpaid) for volunteers who would like to perform community service without giving up other employment. It is possible that JG service could come to be seen as an advantage on the resume, rather than as a stigma.

In any case, those who are jobless are already stigmatized; providing a job to those who want to work will provide a better path to employment.

6. What about Program manageability?

Some critics have argued that the program could become so large that it would be unmanageable. The central government would have difficulty keeping track of all the program participants and ensuring that they are kept busy working on useful projects. Worse, corruption could become a problem, with project managers embezzling funds. We will briefly look at some methods that can be used to enhance manageability.

First, it is not necessary for the national government to formulate and run the program. It can be highly decentralized—to local government, local not-for-profit community service organization, parks and recreation agencies, school districts, and worker cooperatives. Local communities could propose projects, with local agencies or governments running them. National government involvement might be limited to providing funding and—perhaps—project approval. That is the way that Argentina’s program was operated, and it is the way the new program in India to some extent, is run.

In order to reduce the likelihood that funds are embezzled, the national government could pay wages directly to program participants. This can be facilitated by using something like a social security number—and paying directly into a bank account much as social security programs pay retirement pensions. If project managers never get their hands on government funds, it will be difficult to embezzle them. To be sure, there will be some cases of fraud, such as paying to a social security number of someone who is not working, or who is dead. Transparency is one way to fight corruption—public recording of all participants and all payments, through use of the internet, for example, with rewards for whistle-blowers.

(Privacy is a concern. However, note that even in the US the wages of public sector employees are commonly made available. As JG workers would have wages paid by the public sector, there already is a precedent for transparency for public programs.)

To cover management and materials costs, the national government might provide some non-wage funding to projects. In direct job creation programs, an amount equal to 25% of the wage bill has been common. The greater the payment, the greater the adverse incentive for project managers—who might create projects simply to get this funding. For this reason, non-wage funding should be kept small, and the national government should require matching funds from projects to cover non-wage expenses.

While it is tempting to include private for-profit employers in such a program, adverse incentives are even greater where production is for profit. A private employer might replace employees with JG/ELR employees to reduce the wage bill. Worker cooperatives might work better. A group of workers could propose a project designed to produce output for sale in markets. The JG/ELR program could pay a portion of their wages for a specific period of time (say, for one year) after which time the cooperative would have to become self-supporting. If it could not stand on its own, the workers would have to move into regular JG/ELR projects. (Argentina’s Jefes program experimented with worker’s coops.)

Obviously, there are many more management issues that must be explored. There are many real world examples of direct job creation programs funded by government. Programs must be adapted to the specific conditions of each nation. There will be many trial-and-error experiments. Some projects will not be successful—in terms of providing useful jobs that produce socially useful output. But what must always be kept in mind is that the alternative—unemployment—is more socially wasteful.

There have been many job creation programs implemented around the world, some of which were narrowly targeted while others were broad-based. The American New Deal included several moderately inclusive programs such as the Civilian Conservation Corp and the Works Progress Administration. Sweden developed broad based employment programs that virtually guaranteed access to jobs. (Ginsburg 1983) From WWII until the 1970s a number of countries, including Australia, maintained a close approximation to full employment (measured unemployment below 2%) through a combination of high aggregate demand plus loosely coordinated direct job creation. (Often there would be an informal “employer of last resort”, such as the national railroads, that would hire just about anyone.) As Mitchell and Muysken (2008) argued, a national commitment to full employment spurred government to implement policies that created jobs—even if it did not explicitly embrace a national and universal JG/ELR program.

During the Great Depression of the 1930s, like many other nations the US adopted several jobs programs. Again, these were not part of a universal JG/ELR program, but the New Deal programs were huge, and had lasting effects, in the form of public buildings, dams, roads, national parks, and trails that still serve America. For example, workers in the WPA (Works Progress Administration):

shouldered the tasks that began to transform the physical face of America. They built roads and schools and bridges and dams. The Cow Palace in San Francisco, La Guardia Airport in New York City and National (now Reagan) Airport in Washington, D.C., the Timberline Lodge in Oregon, the Outer Drive Bridge on Chicago’s Lake Shore Drive, the River Walk in San Antonio….Its workers sewed clothes and stuffed mattresses and repaired toys; served hot lunches to schoolchildren; ministered to the sick; delivered library books to remote hamlets by horseback; rescued flood victims; painted giant murals on the walls of hospitals, high schools, courthouses, and city halls; performed plays and played music before eager audiences; and wrote guides to the forty-eight states that even today remain models for what such books should be. And when the clouds of an oncoming world loomed over the United States, it was the WPA’s workers who modernized the army and air bases and trained in vast numbers to supply the nation’s military needs. (Taylor 2008)

The New Deal jobs programs employed 13 million people; the WPA was the biggest program, employing 8.5 million, lasting 8 years and spending about $10.5 billion. (Taylor 2008 p. 3) It took a broken country and in many important respects helped to not only revive it, but to bring it into the 20th century. The WPA built 650,000 miles of roads, 78,000 bridges, 125,000 civilian and military buildings, 700 miles of airport runways; it fed 900 million hot lunches to kids, operated 1500 nursery schools, gave concerts before audiences of 150 million, and created 475,000 works of art. It transformed and modernized America. (Taylor 2008 pp. 523-524)

Dimitri Papadimitriou summarizes a number of real world experiences with direct job creation by government—several of them in developing countries:

direct public-service job creation programs by governments have a history of long-term positive results. Throughout the last century, the United States, Sweden, India, South Africa, Argentina, Ethiopia, South Korea, Peru, Bangladesh, Ghana, Cambodia and Chile, among others, have intermittently adopted policies that made them “employers of last resort” — a term coined by economist Hyman Minsky in the 1960s — when private sector demand wasn’t sufficient. South Korea, for example, during the meltdown of 1997-’98, implemented a Master Plan for Tackling Unemployment that accounted for 10% of government expenditure. It employed workers on public projects that included cultivating forests, building small public facilities, repairing public utilities, environmental cleanup work, staffing community and welfare centers, and information/technology-related projects targeted at the young and computer-literate. The overall economy expanded and thrived in the aftermath. http://www.latimes.com/news/opinion/la-oe-papadimitriou-job-creation-20120105,0,607208.story?track=rss&mid=56

It must be remembered that low wage employers across the nation regularly recruit, employ, and train from a pool of potential workers similar to those who will go into the JG workforce. Those workers cook your food, clean your hotel rooms, care for your children, and take care of your elderly grandparents. These firms are under constant pressure to increase the workload, depress wages, and harden the working conditions of those workers as they engage in ruthless competition at the bottom of the wage pool. A JG program will not be run for profit; it will set the minimum wage and working conditions tolerated in the USA. We can choose to enforce humanitarian conditions and livable wages in the JG.

The JG program will focus on those areas of production that are not currently undertaken by private undertakers, either domestic or foreign. It will offer socially productive work for our unemployed. It will raise the bar for our domestic undertakers. It will offer real opportunities for workers that our undertakers neglect—whether because demand for the undertaker’s output is too low or because our undertakers discriminate against groups of workers by race, class, and gender.

25 Responses to “BOP A MOLE #2: JG WORKERS WILL DO NOTHING USEFUL, THE JG PROGRAM WILL NOT BE MANAGEABLE”

cwmayer2004January 7th, 2014 at 4:26 am

Randy,

I'll admit, the first piece I ever read by you was an argument for the JG. I thought you were a bit of a nut. It sounded so bizarre at first. But I kept reading and thinking about the arguments. I think you're winning me over. The JG is certainly better than what we're doing now. Keep writing.

Chris

JimWhitmanJanuary 7th, 2014 at 5:17 am

Hi
Some very interesting discussion to help people think the practicalities through. In the UK there must still be some older people presently available to join forces with younger people in helping to set job guarantee up. Urban Aid and Inner City Partnership dealt with some of the questions you raise by concentrating on providing new services that local councils themselves were not providing and some groundbreaking work was undertaken. Local authorities found it easy to set these schemes up through grant aid to community groups and funding internally to the councils themselves. And after that there was Job Creation – not always well thought of, but valuable in the experience the schemes gained.
Thanks again,
Jim

NeilWJanuary 7th, 2014 at 8:03 am

Good post.

A few points to add.

– Including private sector companies is (IMHO) contrary to the capital development of the economy. The private sector needs labour to be expensive so that it has an incentive to eliminate those jobs and replace them with more productive machines. That is how we drive things forward, and we can do that more aggressively once the Job Guarantee deals with the downside of the 'paradox of productivity' within the private sector.

– The basic administration of the JG is already within reach. Here in the UK it would be a simple matter of central government paying the JG wage to any individual with a National Insurance Number who had a zero wage timesheet filed by an eligible institution within the PAYE system. The payment would come via the Universal Benefit system in the usual fashion (once they iron the kinks out).

The UK probation service already organises community work for those who have been given community service orders by the courts. This is done on a local basis and has added millions of pounds worth of value back to local communities already – in the form of refurbished houses, schools and churches, etc ("Last year alone saw 55,000 completed projects totalling more than 6 million hours of work and estimated at £35m worth of labour at minimum wage"). And that's with *criminals* for *nothing*. How much easier is it going to be with people who are just down on their luck and are getting paid?

So we already have the parts of the Job Guarantee in place. We just need to political will to join them together.

– the private sector has many more 'non-jobs' than the public sector. Most finance jobs are a waste of time. Advertising and marketing is the biggest 'busy work' provider in the entire economy. Do you really need all those lawyers? And that's before we get onto US medical insurance processors – which the rest of the world chuckles at on a daily basis.

We'll all end up doing 'busy work', because our machines will make the stuff we need to live. And the sooner that happens the better off we all will be.

lrwrayJanuary 7th, 2014 at 12:41 pm

neil: agreed. good points and thx for bringing in UK perspective/experience (which I know nothing about).

Note in the USA we had CETA which in some cases "subsidized" regular public employment allowing local govt to do more than it could "afford". Indeed, as a long term unemployed college grad, I got my first white collar job in CETA, where I worked planning the first curbside recycling program in a major county in California. My boss told me to study econ at night, which I did. And there you go.It was a path to a "real" job, if you count academics as such.

Ralph666January 7th, 2014 at 5:37 pm

If, as Neil suggests, it’s necessary to artificially bump up the price of labor to get the private sector to produce more productive jobs, how come the industrial revolution ever took place? That was a period of RECORD improvements in productivity, but there was no minimum wage and no artificial elevation of the price of labor available to private sector employers.

Moreover, the theoretical reason why that is the case isn't desperately difficult, and it’s thus. Private employers have an AUTOMATIC motive to increase productivity!!! I.e. where private sector employers can see a way of making their employees more productive, they’ll fire ahead. Why on Earth would they hold back? Increased productivity means more pay for employees, which means happier employees, plus it means more profit for the employer.

L. Randall Wray L. Randall WrayJanuary 7th, 2014 at 8:07 pm

Boy Ralph that’s about as counterfactual as you can get. You don’t read much about history or current events? Labor was scarce back in the day. Read a bit on the creation of the laboring classes. First you had to take away their right to land and impoverish them with ever-rising feudal rents and enclose their commons. Also read about Adam Smith’s pin factory and you’ll see the phenominal gains in productivity–because machines might be dumb but they are darned fast at simple tasks. That allowed undertakers to replace men with kids in the factories. And I guess you are the lone person in the universe who hasn’t seen the Rick Wolff video and graph showing the complete disconnect between wages and productivity over the past 40 years: workers getting much more productive and Wall St sucking it all away.

John TaylorJanuary 7th, 2014 at 10:16 pm

While I like the concept of JG, I feel the cost in materials and skilled labour would be impractical. Why not go straight to BIG? This could replace all existing programs, saving administration costs. Most work will soon be done by machines freeing us to pursue other callings.

L. Randall Wray L. Randall WrayJanuary 8th, 2014 at 12:48 am

JT: Wow. How’s that Taylor Rule working out? Glad to have you here. Forget the Rule. Use the JG to fight inflation!
The “cost” of materials etc can be limited to 25%, with anything more than that covered by those submitting proposals (community service providers like the Red Cross). Why not just use BIG? Well, BIG is not an anchor, as I’ve explained. It is an inflation vector–paying people not to work. JG pays people to work. BIG difference, no?

ThomasGWJanuary 8th, 2014 at 4:44 am

While the practical result of a JG program depends largely on how it is run (and experience with existing government programs indicates there will be well run JG programs and along with a few real disasters — enough so both sides of the political spectrum can shout "see, I was right, the program is a [success/boondoggle]".

However, I see one other problem with the program as described. Prof. Wray mentions jobs like school classroom assistants, elder care, etc. Since the JG workforce should grow during an economic downturn and shrink with an economic boom, organizations like schools or nursing homes might end up in a position of opposing economic growth (which would shrink JG employment, making them hire higher cost workers).

This contrary result, along with the claim that the JG will not displace existing workers, is what leads me to conclude JG employment could become "make work".

L. Randall Wray L. Randall WrayJanuary 8th, 2014 at 12:23 pm

tgw: We’ve dealt with all of that. So you are jumping in to criticize a proposal you haven’t bothered to spend 10 minutes to research? In fact, the usual swing between peak and trough is about 4 million jobs. You can have “on the shelf” jobs to take care of that. The residual JG labor force will be large enough to keep most programs up and running.

John TaylorJanuary 8th, 2014 at 4:35 pm

Professor Wray, I am probably not the John Taylor you have in mind. It is a common name, after all. Yes, the BIG is an incentive not to work if it is set too high. It could be set at minimum wage level for adults and probably half that for under-18s. Maybe it is time to detach the right to live from the obligation to work. That is almost certainly going to happen this century, like it or not.

windrivenJanuary 8th, 2014 at 8:37 pm

"The private sector needs labour to be expensive so that it has an incentive to eliminate those jobs and replace them with more productive machines. That is how we drive things forward"

Ummm … help me out here. We are talking about a government JG to soak up willing workers but we want to incentivize business to automate and employ fewer workers. So … we privatize greater profits for business while, for all intents and purposes, socializing some of the costs.

windrivenJanuary 8th, 2014 at 8:45 pm

"you are jumping in to criticize a proposal you haven't bothered to spend 10 minutes to research?"

With all due respect Dr. Wray, I have not been able to find a single source, clear and concise exposition of MMT. Lots of blog entries. But that is like looking at a pointilist painting through a microscope. If you can recommend one I'd certainly buy it.

L. Randall Wray L. Randall WrayJanuary 8th, 2014 at 10:58 pm

Windy: You are kidding, right? Ok try 3 books: Money and Credit in Capitalist Economies; Understanding Modern Money; and Modern Money Theory. All by me. Not that those are the only ones you need to read, but simply to disabuse you of the silly notion that there are no serious works on the topic. Any grade school kid with internet access could find them.

L. Randall Wray L. Randall WrayJanuary 8th, 2014 at 11:00 pm

Windy: precisely the opposite. The current system pushes all the costs onto society generated by our undertakers who do not provide enough jobs, and who pay starvation wages. We need a wage/benefit floor. A huge proportion of current private jobs will indeed disappear. That’s a good thing. If the undertakers cannot offer decent jobs and decent wages they ought to be out of business. Paying higher wages of course creates new opportunities, because we wouldn’t have half of our nation’s kids living dirt poor.

L. Randall Wray L. Randall WrayJanuary 8th, 2014 at 11:03 pm

Oh, sorry. I guess it was just wishful thinking that THE John Taylor had discovered the blog and could finally see how money really works. In any event, you seem to want a tiny BIG. (I call it bait and switch since it promises a life free of the drudgery of work but pays so low you live in poverty if you take it) So you still need the anchor. Do you choose unemployment, gold, or employment?

John TaylorJanuary 9th, 2014 at 3:13 pm

Professor Wray, we can, of course, debate the desirable level of BIG payment. I imagine that there should remain some incentive to find paid employment. We can disagree on the details but I want to thank you for your continued advocacy for the jobless. It is much appreciated. This John Taylor is learning much from economic blogs like this. THE John Taylor is still ignorant of how money really works.

L. Randall Wray L. Randall WrayJanuary 9th, 2014 at 4:27 pm

JT: agreed on both points:
The other JT is still clueless on money.
And recipients of a little BIG will need to keep searching for jobs (that don’t exist). That means of course that they are unemployed, doing their duty as a member of the reserve army of the unemployed. Most BIG proponents choose unemp as their preferred buffer stock. To be clear there’s no reason why they could not choose an employed bufferstock (JG), but they either don’t like employment or don’t like govt paying for it.

windrivenJanuary 9th, 2014 at 9:23 pm

Dr. Wray, I absolutely agree that we need a wage and benefit floor, that GINI is moving quickly in the wrong direction, and I am warming to the JG (though I remain skeptical that theory can be translated to practice sans massive boondogglery).

My concern is that we have have offshored a large number of jobs that could be performed by our fellows who lack the education, training or interest in high tech industries and automated others. My further concern is that we continue to incentivize companies to offshore and to automate.

I own a couple of small manufacturing companies and also have an interest in a Chinese company. I have brought jobs back from China (~$3/hr fully loaded) to WA state (~$9.35 NOT loaded) because the need for jobs in my area is extreme. This is a serious burden because I compete with other companies that have no hesitations about using Chinese or Malaysian or Vietnamese labor. Am I simply being a chump for trying? Should I just go out of business and put my peeps on the dole? Or should I just send the jobs to China and spend my days on the sailboat … and still put my peeps on the dole?

Which brings me back to my original question: how is this proposal not encouraging privatizing profits and socializing costs?

windrivenJanuary 9th, 2014 at 9:41 pm

No kidding Dr. Wray, and I thank you for the recommendations. I've just ordered the Kindle edition of Modern Money Theory.

"Not that those are the only ones you need to read"
I'm not an economist, just an interested guy.

"Any grade school kid with internet access could find them"
Yup. NO excuses there. I looked on Amazon a while back and missed it entirely.

L. Randall Wray L. Randall WrayJanuary 10th, 2014 at 12:34 am

Windy: glad you are considering getting on board. I’ve got nothing against creating jobs in China, or in WA. JG raises wages and improves working conditions at home, which PRIVATIZES costs that are now SOCIALIZED. WalMart wages do not come close to covering the costs of reproducting the laboring classes–Walmart is not only explicitly subsidized (mostly by local and state govt give-backs) but also indirectly subsidized because NONE of its workers can actually live on the miserable wages paid. Let’s stop that massive subsidy to crappy jobs by offering a real alternative. If that puts WalMart out of business, so be it.

L. Randall Wray L. Randall WrayJanuary 10th, 2014 at 12:36 am

And my latest post gives you downloadable links to a sufficient number of readings to get you through the next few weeks while you wait for the Kindle. And I get 35cents for the sale of the book! Well, 10cents after taxes.

windrivenJanuary 10th, 2014 at 3:51 pm

"And I get 35cents for the sale of the book! Well, 10cents after taxes."

4 cents after BIG. 2 cents after JG. 😉

mwClevelandOHJanuary 16th, 2014 at 6:24 pm

Randy:

I started thinking about the government as employer of last resort after reading two books:
Stabilizing an Unstable Economy, by Hyman Minsky, and The Keynes Solution, by Paul Davidson.

Your discussion shows the idea is practical. I worry the drop in the civilian participation rate of employment beginning in late 2007 might not reverse itself.

L. Randall Wray L. Randall WrayJanuary 17th, 2014 at 12:38 pm

Cleve: see my newest post. You are not alone! And please read the “new” book by Minsky on the JG. Link is in the post.