Pavlina R. Tcherneva: Why the Job Guarantee is Superior (Wonkish)

By Pavlina R. Tcherneva, PhD., Assistant Professor of Economics at Franklin and Marshall College, Research Scholar at The Levy Economics Institute, and Senior Research Associate at the Center for Full Employment and Price Stability. Originally published at New Economic Perspectives

Lambert here. Randall Wray defines a Job Guarantee this way: “A job guarantee program is one in which government promises to make a job available to any qualifying individual who is ready and willing to work. Qualifications required of participants could include age range (i.e. teens), gender, family status (i.e. heads of households), family income (i.e. below poverty line), educational attainment (i.e. high school dropouts), residency (i.e. rural), and so on. The most general program would provide a universal job guarantee, sometimes also called an employer of last resort (ELR) program in which government promises to provide a job to anyone legally entitled to work.” I feel that with 8% (nominal) unemployment stretching as far as the eye can see, a humane society needs to be looking for alternatives to the current regimen.

* * *

A few weeks ago I called for a technocratic debate on the merits of the Jobs Guarantee (JG), relative to other fiscal policies. A number of bloggers took the charge but the debate was not immune to ideological biases, which proved the starting point of my piece that one cannot separate fact from theory or ideology (and by ideology I do not mean the derogatory use of the word, but that which signifies ‘ontology’ or a ‘world view’). What I didn’t expect is for friends and sympathizers to resurrect one particularly invidious charge we have long heard from MMT deniers, namely that MMT is pushing authoritarian policies.

Oh, boy. How did we even get here? I thought this was going to be a technocratic debate.

Let me deal with just a few issues here: 1) the seeming resurrection of status quo fiscal policies, 2) the merits of JG compared to other fiscal policies, 3) some additional real-world evidence on the benefits of direct job creation, and 4) offer a vision for a JG in a free and democratic society.

1) Why defend the status quo? 

The criticism of JG boils down to unproven claims that it will impose hidden costs on firms and competition, have a negative impact on incentives to work, wealth creation and productivity, and will lead down the path to socialism. After all, great prosperity had been achieved under the old system, so why change it? 100 years ago the same arguments were made in opposition to 8-hour workdays, 5-day workweeks, child labor, mandated vacation and today they are made against paid family leave, living wages, etc. So there is nothing new in the critics’ claim that JG would reduce incentives, productivity or growth.

Indeed these are not arguments against the JG. They are arguments for the status quo. Those who support MMT, but not the JG, say that they favor more deficit spending in the form of pro-investment, pro-growth, pro-productivity policies, coupled with strong public infrastructure and education investment and income support to the poor and unemployed. But all of these policies are the status quo, even if proponents are demanding more funding for them. They are the status quo because they have been tried with generous funding at one point or another in the postwar era and have still failed to solve the most important problems of modern society like poverty, income inequality, short and long-term unemployment, instability, deteriorating incomes and on and on and on.

I am baffled why JG critics who nevertheless sympathize with MMT have embraced the neoclassical definition of full employment in the presence of volumes of literature on the problems with this definition and the fundamentally flawed theory behind it. They are suggesting that policy should target a ‘full employment’ rate consistent with 4% unemployment. Note that for MMT scholars, full employment is a condition where everyone who wants to work has a job, not a condition where 4% of the workforce wants to work but cannot find employment. With respect to policy, JG critics have been arguing that government spending should be based on ‘new’ fiscal rules that deliver the desired unemployment rate.

Why are we reinventing the wheel? There is 80 years of literature deriving from an approach known as Hydraulic Keynesianism that already thinks that full employment is equal to some level of bufferstock unemployment (known as the NAIRU), thereby assuming away much of the problem of unemployment. Priming the pump up to that bufferstock unemployment level based on some version of Okun’s law is the hallmark of the ISLM approach and all of its modern neoclassical descendants who favor fiscal policy intervention (btw, Okun himself cautioned that the link between output and employment growth is very tenuous). We have volumes and volumes of analysis critiquing the macro-theory underpinning the Hydraulic Keynesian approach but suddenly we are resurrecting it?

What is the new contribution in the proposed policies by critics of the JG? The idea that governments can spend without facing budget constraints? That’s not new. The ISLM economists of the postwar era who took Lerner seriously knew this all too well. Even modern New Consensus economists seem to understand this (see Woodford and Bernanke’s work). Or is it the idea that we can spend on a ‘new’ fiscal rule that fine tunes the economy? That’s just old wine in new bottles. Automatic hydraulic fiscal policies that adjust spending and taxation throughout the business cycle are the trademark of postwar fiscal intervention that has not delivered long term stability or full employment.

Priming the pump, whichever way you dress it, works extremely poorly. It is trickle-down Keynesianism, which erodes the income distribution and fails to address unemployment and poverty, no matter how well intentioned it is. If you want to get a job done, you do it directly. If private sector sales are too low, you provide demand. If the private sector still fails to create enough jobs for all, the public sector fills the gap through direct hiring. If firms pay poverty wages, the public sector establishes an above-poverty wage floor (minimum/living wage). If companies fail to provide health insurance for all, the public sector does. Fine-tuning is an inferior policy that is akin to shooting darts blindfolded—some of them will hit the target, some won’t, but a whole lot of time, effort, and resources will be wasted in the meantime. This was well understood by Minsky and Kalecki and anyone who reads them seriously understands the difficulties with fine-tuning policies, especially those that are pro-investment, pro-growth.

2) How direct job creation and the JG/ELR compare to other fiscal policies

In a recent Levy paper I use the insights of Minsky and Kalecki to demonstrate why alternative policies are inferior to direct job creation in general, and the ELR in particular. The paper augments the conventional Post Keynesian markup model to study the effects of different fiscal policies on prices and income distribution. Minsky often argued that in the modern era, government is both ‘a blessing and a curse’ – it stabilizes profits and output by imparting an inflationary bias on the economy, without stabilizing it at or near full employment.  In this paper, I consider several distinct functions of government: 1) government as an income provider, 2) as an employer, and 3) as a buyer of goods and services.  The inflationary and distributional effects of each of these fiscal policies differ considerably. First, I examine the effects of income transfers to individuals and firms (in the form of unemployment insurance and investment subsidies, respectively). Next, I consider government as an employer of workers (direct job creation) and as a buyer of goods and services (indirect job creation). Finally, I modify the basic theoretical model to incorporate fiscal policy a la Keynes and Minsky (JG, ELR, “on-the-spot-employment”), where the government ensures full employment through direct job creation of all of the unemployed unable to find private sector work, irrespective of the phase of the business cycle. The paper derives a fundamental price equation for a full-employment-economy with government. The model presents a ‘price rule’ for government spending that ensures that the ELR is not a source of inflation. Indeed, the fundamental equation illustrates how in the presence of such a price rule, at full employment, inflationary effects are observed from sources other than the public sector employment program.

Critics of the JG have to make a really good case why the status quo should be defended, how conventional fiscal policy should be packaged under the guise of a new fiscal rule to deliver stability and better socioeconomic outcomes than the JG. They need to explain why higher markups and worsening income distribution from pro-investment, pro-growth policies are preferable to giving jobs to the unemployed in a productive project. But please make your case like engineers would—on the technical and not on the political merits of these rules (there is no such thing as one policy being ‘less political’ than another), and not by making unsubstantiated claims that the ‘the JG is politically disastrous’. You also cannot falsely claim that we know nothing about how direct job creation policies work in the real world and what impact they have on the economy or the beneficiaries.

3) Benefits from direct job creation: new evidence from Argentina 

The literature on the New Deal, the Swedish model, industrial policy and direct employment around the world is voluminous, even if it’s not ‘mainstream’. We know a lot about direct job creation. MMT has focused on Argentina’s Jefes program because it was modeled after our ELR proposal. We have shown which features of the program worked the way we said they would and which didn’t and why. We have also illustrated some of the benefits of Jefes on the macro-economy and the beneficiaries themselves. But recently JG critics (and skeptics) have questioned the effect of the program on the poorest members of society and have argued that income support programs may be preferable. This is not a new claim either. In fact it is precisely the argument that drove the reform of Jefes in Argentina.

If you’d like to learn about this reform and the impact Jefes had on the very poor, you can read another Levy paper of mine, which examines several surveys (in addition to the ones conducted by Randy Wray and me) of poor women from different municipalities in Argentina. The surveys tell a very important story about the benefits of job creation on the poorest members of society. The paper also addresses the debate on job guarantees versus income guarantees.

Though the literature on the JG and the ELR often emphasizes their macroeconomic stabilization effects, these policies can also have profound social transformative effects. For example, MMT has advocated a Green New Deal. In this paper I show how the JG can help address enduring economic problems such as poverty and gender disparity.  The survey evidence and fieldwork I consider reveals that poor women overwhelmingly want paid work opportunities and that policies such as the JG or the ELR not only guarantee full employment and macroeconomic stabilization, but can also serve as an institutional vehicle that begins to transform some of the structures and norms that produce and reproduce poverty and gender disparities. I look at the transformative features of public employment policies by turning to the capabilities approach developed by Amartya Sen and elaborated by Martha Nussbaum—an approach commonly invoked in the Post Keynesian, Institutionalist and Feminist literature. The paper examines how the access to paid employment can enhance what Sen defined as an individual’s “substantive freedom”. Any policy that fosters genuine freedom begins first with an understanding of what the targeted population (in this case, poor women) wants. It then devises a strategy that guarantees that such opportunities exist, and finally it removes the obstacles to access to these opportunities.

In sum, if you’d like to learn about the impact of these programs on the poor, it is best to go on the ground, study the programs, and ask the poor themselves. I encourage you to read and think about the narrative of these poor women about their experience in Jefes. It’s all good and well to sit around puffing one’s pipe debating the problems with the JG, but unless one takes the time to study specific direct job creation programs and talk to program participants, all criticisms will remain in the realm of armchair philosophy.  The paper above shows that the poor want jobs, not handouts, and demonstrates how the JG fosters participatory democracy.

4) The Job Guarantee fosters democracy: A proposal for the US

I especially object to the claim that the JG leads us down the path of socialism or some authoritarian system. Any good idea in the wrong hands can turn deadly. It doesn’t mean that it’s not a good idea. Splitting the atom can produce cheap energy for all, but someone decided to build an A-bomb instead. So do we reject the science behind the splitting of the atom, because it can be put to terrible uses?

And why even go there? I find JG to be entirely consistent with the wishes and desires of a free a democratic society. Indeed, I think that it is a crucial but absent component for any participatory democracy. If a citizen wants to work, contribute, show initiative, innovate, participate, do something/anything for the public purpose, why not provide the opportunity?

In my research funded by the Institute for New Economic Thinking, I have argued that part of the JG needs to be done on the basis of a grants-based approach (especially in normal times, during normal business fluctuations), where the communities, nonprofits, and the unemployed themselves can participate in designing, proposing and executing the projects that would be performed in these communities. This is a model fully consistent with the entrepreneurial American spirit.

The grants will be allocated to non-profits that are on the ground and are already doing many of the jobs that the public sector (yes, the government) has failed to do. These are the same nonprofits which fulfill crucial social needs but lack adequate resources. Plus new nonprofits pop up in an entrepreneurial fashion all the time to fill new needs–e.g., environmental cleanup, sustainable agriculture, urban farming. They are better organized, more familiar with local needs and resources and can surely use more helping hands to do what they need to do. I’ve been suggesting this grants-based approach after observing how some projects in Argentina were done this way. You may think that those uneducated, poor, and ‘unemployable’ men and women have no good business ideas, no entrepreneurial spirit, or ability to figure out what needs to be done and you’d be dead wrong. We don’t need big government planning and authoritarian decision-making about placing certain people into specific jobs—the nonprofit market can figure this all out, so long as it has the resources. Government only needs to make the calls for proposals, assess the projects the way it would with any current private sector contract, perform the due diligence in reporting and quality control, and allocate the funding for worker wages and materials (and in many cases the funding need not be 100%). All the JG does is add the explicit objective to employ the unemployed at a base wage into these projects. Nonprofit work is highly countercyclical, which is why it is well suited to providing the automatic stabilizer we’ve been discussing. As the economy slumps, we can use the existing unemployment agencies to provide placement of the jobless into these nonprofit projects. As the economy recovers the same agencies will provide job placement into higher paying private sector work. We have the infrastructure to execute a JG.

Where mass infrastructure improvements are needed they should be done. It’s a no brainer. Some projects will be executed by private companies which pay prevailing wages, some projects will be low skill already and will hire at a base wage. The non-profit model I describe above does not preclude doing much needed large-scale infrastructure investments or improvements.

No MMT scholar has ever argued that designing JG is easy, that there are no kinks to work out or that it is a panacea to all social ills that plague modern economies. To those who have only been able to envision an ‘unproductive’, ‘authoritarian’ version of the JG, and not a ‘democratic’ one that advances the public purpose, I say “Leave the job to us. We will design a policy that supports the aspirations of a free and democratic market economy.” To the rest who have your own bold visions and practical ideas about how to make it happen–we want to hear from you and let’s get to work.

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.


  1. Javagold

    the thing i never get about this whole mess, is if the elite really want a nation of debt slaves/serfs, do they not need JOBS to slave at and income so they consume and pay off the debt ????

    why did they move most of the jobs offshore….they already had the workers, taxpayers hoodwinked and asleep, why would they ever wake that sleeping giant up ???

    1. digi_owl

      The “elite” is not a singular unit. Those that have rules the roost until now is the financial elite. These make their profits by acting as middle men (see day traders and high frequency trading) and derivatives “gamblers”. The kind of elite you think about is the industrial equivalent of the landed aristocracy. Like Ford that provided his workers with a means of taking home a car now and paying it down over future paychecks. These are more likely to feel a kind of obligation to their work force, and that is why i compared them to the landed aristocracy. But thanks to the rise of the financial elite in the 70s-80s onwards, and their move into board rooms via IPOs and MBAs (seriously, disconnecting the running of a business from understanding the nature of the products being produced?!), their views on short term profits have supplanted those of the industrial elite. The financial elite can’t care less about the worker/consumer dichotomy, as they already have more than enough to live on bespoke goods for the rest of their lives (with potentially a whole hospital on retainer once their health fails).

      1. Darren Kenworthy

        A game of musical chairs as the Titanic sinks. 99.9% are fighting over the seats being rearranged on the deck while .1% fight over who will get the best seat in the lifeboat.

    2. davrus

      I sometimes wonder whether people are being naive even when they look at exclusively at material gain when considering the actions of others. Maybe a significant part of it is the power rush of being able to destroy others lifes, of being so obviously powerful in comparison to them.

      I sometimes think the same thing about the wars, maybe it isn’t just about oil. Maybe a good part of it is about getting a power rush from being able to bomb people into the stone age for defying you.

  2. Advocatus Diaboli

    In my opinion, the problem lies in the idea of distributing money for a “job”.

    Why should people have to work a useless, or worse than useless, job to make a decent livelihood? Why not simply give people a decent amount of money to consume?

    Why should people have to pretend to work- especially in this age of machines and automation?

    1. Gaelle

      Advocatus Diaboli, You have a point.. the transaction of ‘payment for time used’ would not resolve the power relationship on its own .. ‘payment for participation’ makes more sense .. it may be that achieving this would involve a bit of both .. that is the minimum distributed to all as one’s share of our collective income and a salary for participation in the economy in some form of employment ..the issue of employment guarantee alone may simply encourage a return to a 50s type prosperity where a family unit may be prosperous, but the mother would still be abjectly poor if she left the father and as a woman alone (even more so as a mother) she would have very limited option to make it on her own .. I am pretty sure that MMT proponents are very aware of that though as the conclusion to Pavlina R. Tcherneva’s post alludes to .. With the little I know, I still feel that MMT proponents contribute one of the most creative and valuable proposal around .. so thanks once more to Yves and NC for providing this precious forum .

      1. LeonovaBalletRusse

        Gaelle, how about payment for productive political participation, moving the open democracy forward beyond the *status quo* freaks who pull reigns to retard advancement in the real economy and in the real democracy?

        1. Gaelle

          LeonovaBalletRusse You are preaching the converted here. I entirely agree with your point. Reading that post I was reminded of the odd case of Marinaleda (a city in southern Spain) which functions as a full employment utopia-turned-pilot since 1978…. Where, I believe, they include political participation as a recognised contribution … Judging by what just happened to the Judge Garzon .. I wonder how much longer they will be allowed to go on…

    2. Carla

      “Why should people have to pretend to work- especially in this age of machines and automation?”

      Maybe because everyone needs to have a purpose. Of course, you’re right, it needn’t be linked to money (an artificial construct, anyway).

      But it seems to me that the unhappiest people in the world may be those who lack a purpose. Unfortunately, some people are quite happy fulfilling a nefarious purpose, and many of them seem to be either 1-percenters, or their lackeys. And then, of course, there are the lackluster criminals way down here among us rabble.

      Nevertheless, I’m not sure anything quite spells misery like a lack of purpose.

  3. Robert Wreck

    Bust up big pharm, big finance and regulate and relegate these rather dry, boring service jobs away from rentier cancer. Work less hours too, the 80 hour a week BMW/ amphetamine class needs to share the bounty, they aren’t really doing anything incredible, innovative or amazing anyway other than padding their stash. The military ain’t no jobs program either. Shovel the neo-liberal idea of “the poor just need trainin'” into the dumpster. Incidentally, they push the same propaganda to victims of the grift, whether it’s payday loans or predatory lenders “the poor folk just need ’em some financial education”. F#$k Bill Gates too, outsourcing rapist.

      1. LeonovaBalletRusse

        Search: Artemus Gates, Frederick Gates, Gates of CIA/Defense … 01% interests.
        Follow the DNA. Should we fall for the *no relation* claims?

  4. craazyman

    these are good ideas well worth contemplating.

    there are acres and acres of empty waterfront land on the East River in Long Island City that would make a beautiful East River riverside park. I don’t even know who owns it. Maybe Port Authority.

    It’s a totally wasted resource for New York’s citizens.

    I have wandered there a few times to take photographs but it’s fenced in with a few not-to-intimidating rusted signs that warn against trespassing so it just sits there. acres and acres of weeds and hills and short trees and brush and gravel with incredible views of Manhattan. You feel like you’re in another world.

    I would easily support paying people to design and create such a park — landscape artists, laborers, artisans, gardeners, carpenters, etc.

    It would be an asset with ongoing value, far in excess of development cost. I just would hope they don’t make it too “parkie” devolving it into a manicured moneyed coma, its kind of rough right now and I like it that way, but whatever.

    However, I bet people would come to blows about what to make it — ballfields or nature trails, barbeque pits or horseshoe pits, boardwalks or nature paths, but with a little compromise the “public purpose” would evolve and I’m sure it would be beautiful. It really is a cool place, Just take the 7 train from Grand Central to Vernon Blvd. walk east then south and you’ll see it. Nobody is ever there. Slip through the fence and roam around. LOL. Before they ruin it by making it a park. ahhahahahahah.

    1. LeonovaBalletRusse

      craazyman, there’s a demand for these *conversion* projects all over the country. But the eternal *Lebensraum* putsch of .01%-1% DNA would have to be conquered.

  5. Middle Seaman

    Tcherneva makes excellent points with JG. FDR suggested the right for employment as part of his second bill of rights in 1944.

    Obviously, arguments against JG boil down to either: staus quo (i.e. leave me alone) or the money be better used for other solutions (i.e. the rich need the money). Tcherneva’s attempts to argue that the objectors have no base for their argument is weak; almost no one uses solid arguments to back their thinking.

  6. LeonovaBalletRusse

    History shows that providing women with valid, remunerative work, as an alternative to breeding and dependence on men, has brought excellent rewards to society in every quarter. Of course, this is fought tooth and nail by *primitive* men, especially those wedded to a patriarchal *religious*, closed-system authoritarian view of the world.

    1. Gaelle

      Frighteningly, it appears that history is going in reverse as far as women are concerned…which suggests that a movement for economic reform (and adoption of an MMT paradigm in particular) would require a parallel widespread political pedagogy… May be starting with (re)introducing the teaching of Political Economy as a required topic at university or even earlier .. with rotating staff exposing students to many views

  7. run75441


    Why not change the paradigm where it is more profitable to invest in investments creating Labor rather than gambling on Wall Street with CDS, naked CDS, etc. Tax thosse critters and give breaks to investments which create Labor.

    1. LeonovaBalletRusse

      run, it’s about where *government* money comes from. Taxation of the *rich* should return to what it was during Eisenhower, that time of *American Prosperity*.

      1. Lambert Strether Post author

        LBR, thanks. now I understand better. So I’d go with Pavlina says: “If you want to get a job done, you do it directly.” There are no jobs? Create them. No reason to incentivize a couple of layers of rentiers for that.

        1. Mel

          Well, if the taxes received were enough to pay the wages, then you wouldn’t just be incentivizing, you’d be funding.

          Guaranteed jobs without guaranteed wages is also called slavery, right? The funding question has to be answered somehow.

  8. Damian

    The solution is not JG but reversing the participation in the WTO and GATT in USA – all you got “net” are commodities exported with low hourly wage content and gave up high value wages / high labor hours – when jobs shipped offshore

    they all knew the effect and now there is eventually – 160,000,000 out of 310 million that are of no use over the next 30-50 years

    either they become compost from neglect…….. or you change the entire dynamic and cancel the WTO and demand comparable wages to trade with a country coupled with a tariff

    what the white collar doesnt appreciate – as this game goes on and on – they will be affected increasingly since there will less businesses to manage for all but medical research, software design and programming, etc –

    the services industry and government in large part depends on disposable income of the masses for revenue which is going away – redundancy for the white collar will be much worse than the blue collar eventually

    1. psychohistorian

      The real problem is that we allowed multi-national corporations, based in the US, to engage in international wage war race to the bottom tactics that beggared our work force and built house-of-card economies all around the world as labor need is/was moved to the cheapest bidder.

      JG would at least give those that are true victims of this sick social organization some feeling of humanity. There are not enough jobs for those that want to work and it is not going to get better so we need to deal with what it means to contribute to society in exchange for basic safety net support.

      Thanks for the posting.

  9. davrus

    I sometimes wonder whether people are being naive even when they look at exclusively at material gain when considering the actions of others. Maybe a significant part of it is the power rush of being able to destroy others lifes, of being so obviously powerful in comparison to them.

    I sometimes think the same thing about the wars, maybe it isn’t just about oil. Maybe a good part of it is about getting a power rush from being able to bomb people into the stone age for defying you.

  10. Max424

    The infrastructure of the United States is rated a D+ by the Army Corps of Engineers. Do you know what that means? Yeah, you guessed it; a vast majority of this country’s backbone is either in the process of failing, or has already failed (right Browny!).

    So, there is plenty of VITAL work available, to all Americans, if we choose, as a nation, to make it available.

    Or we can choose, as a nation, to rot.

    Note: Just kidding! We don’t have ANY choices as a nation, obviously, because we no longer have a nation. It’s been stolen away by you-know-who, and you-know-who believes that ROT is GRAND!*

    *Especially when they’re flying over it in their Gulfstream 650s (or on Air Force One, for that matter). Looking at the rot below makes the flyover experience for our Overlords that much more … hmmm … satisfying, I think is the word.

  11. don

    Ms Tcherneva,

    A few thoughts and an ending question, the answer to which might help bring some clarification.

    The real difficulty with technocratic, policy wonkish proposals such as a JG (one that I need no convincing as to its validity, and would add to it the right to housing, health care, education), is that while it may be fine and good conceptually, accomplishing it in practical terms will require something for which technocrats have little, if any, handle on: how to get from here to there.

    I assume that accomplishing JG will require massive popular support and mobilization to obtain the governmental power to implement and enforce. So while a “demand” like JG is fine and good in terms of informing a mass movement for radical social change as to whats needed, on its own it is little more than a conceptualization. The real task is in radically reforming government so as to support JG to make it a material fact of life, and that, I assume, will not come about unless we witness real democratization of our political system.

    Perhaps MMT assumes differently, that it does not see the need for radical social change to bring about JG, that implementation is more or less a technical matter, as in technocratic. Here the assumption is that making JG a reality can simply be done without radical reform of government, relying instead on MMT’s rational powers of persuasion – so convincing that the power elite (or if you prefer, elected officials and other decision makers), buy into the idea and implement JG, perhaps after a little prodding from the public..

    So do MMT advocates assume that JG can be accomplished within the existing power structure?

    1. Max424

      “So do MMT advocates assume that JG can be accomplished within the existing power structure?”

      I can’t speak for all MMT advocates, but this one believes that nothing can be accomplished within the existing power structure.

      Literally, nothing.

      The people, through their elected representatives, must control money creation, in order to do anything remotely like what Ms. Tcherneva is talking about it.

      But We the People don’t control money creation, and probably never will. It will likely remain the sole and undemocratic privy of the private banking syndicates … for as long as we all shall live.

      1. Max424

        There is only one “power broker” in Washington that I can think of that might be considered an MMT advocate, Dennis Kucinich.

        There are possibly dozens of others (perhaps even hundreds), but aligned against these advocates of the people are tens of thousands of “power brokers” that benefit from the status quo; the status quo being the allowance of the theft of what should be the public’s fiat currency by private institutions (most of them banks, all of them criminal).

        Basically, everybody in Washington is getting rich, either by tapping directly into our fiat currency, or by taking “legal” bribes and/or revolving door kickbacks from the people who are doing the tapping.

        Is there any hope for change? Does it look like it?

        Note: The most optimistic thing I can think of to say: At least a very tiny minority of the population knows where money comes from, and also knows what great things the public could achieve with it if the public had control of it; and that would be MMT advocates.

  12. Hugh

    The country has huge needs for labor to re-industrialize in a sustainable, non-hydrocarbon based way. Much of the countries infrastructure: roads, dams, bridges, levees, sewers, water treatment, electrical grid, and internet capabilities need to be replaced, rebuilt, or expanded. Communities need to be replanned. Housing needs to be renovated for energy efficiency. We need a domestic industrial base for most of our production needs. The nation needs people to fill out our decaying education system and take care of our sick and old. Useful, productive jobs can be found because our needs are many and great.

    I agree with don though, and this is a criticism I have made of many such proposals, that they presuppose the current system is basically sound. But it isn’t. It is a kleptocracy. Kleptocracy and a jobs guarantee are like oil and water. They don’t mix.

    There are several things that bother me about this post and most of them have to do with the tacit acceptance of the terminology of our kleptocratic elites. An ELR, employer of last resort, is an insult to American workers. Why not call it a loser’s brigade or something equally demeaning? Government should be the employer of first resort.

    Tcherneva lumps the minimum wage and living wage together as if they are the same. But again they are very different. A minimum wage is about what employers are comfortable with paying, as in the minimum possible. A living wage is about what the worker needs and deserves.

    This gets into another issue. Labor is labor whether it is in the public or private sector. But Tcherneva seems to accept the more traditional neoliberal view that the object of public employment such as under a jobs guarantee is to create a stock of workers, only this time not an unemployed one, for the private sector. To do this, jobs guarantee employment needs to make itself noncompetitive with the private sector. This lack of competition, however, is to the benefit of private employers, not workers.

    Tcherneva also wishes to have a technocratic, not a political debate. By technocratic, I take her to mean purely economic. But the root of so much of what is wrong in economics is that it has forsaken political economy, the union of these two. Invoking a jobs guarantee without reference to political government turns it into a kind of deus ex machina, that is we keep the same basic structure but then somehow this new element is just magically introduced into it. This is what I think don was criticizing.

    And there is this baffling bit:

    I especially object to the claim that the JG leads us down the path of socialism or some authoritarian system. Any good idea in the wrong hands can turn deadly.

    I find this politically naïve and again accepting the current elitist framework and definitions. Socialism has become a contentless word akin to the bogeyman for anything anyone dislikes. It has become code to cover attacks on the social safety net. And a stronger social net is exactly what Tcherneva is calling for with the jobs guarantee. Back when socialism did have a content, it produced things like Social Security and Medicare, public education, rural electrification, and the highway system. Scary stuff I know.

    This passage is so inverted. We have an authoritarian system and it is called kleptocracy. We don’t need to be led to it. And one of the prime ways we got to what we have now is precisely because our elites have been making war on socialism for decades, because socialism is not the monster the elites have conjured it to be. Socialism is rule by the 99%. This is the antithesis of elite, kleptocratic rule, hence its demonization by the elites.

    A jobs guarantee could be a good idea but MMTers really need to go back to the drawingboard and establish a solid social, political, and economic framework (as in all three of these) for it.

    1. Aqufer

      Agreed, but i will make the argument that we stand a better chance of getting somewhere if we avoid the word “socialism”. As soon as it is introduced, too many recoil and the conversation becomes one of having to defend “socialism” as a concept with all the baggage, deserved or not, it has accumulated, instead of a mutual discussion about where we need to go and how to get there.

      i understand that there are many out there who have a fond attachment to the term and wish to restore its good name – but I am a pragmatist and think that if we talk with folks who do recoil at the term about things and thinks we could agree on, we might wind up getting to the same place …. As they say, a rose by any other name … If the door is barred, get in through the window …

  13. Aqufer

    Green New Deal, Green New Deal, hmmmm, now where have I heard that before? Oh yeah, it is the baseline concept of Jill Stein’s proposals ….

    Well, son of a gun, fancy that, small world, ain’t it?

    As far as a new political paradigm, seem to me that’s in there, too ….

    If you want this stuff, there’s a good way to make a concerted, discrete, difficult to misinterpret, way to support it, and, if enough of us do, even get it – Vote for it!

    How to transfer from the think tank to the real world – Vote for it …

    Does that mean that’s all you have to do? Shucks, no – but until folks do – that “political paradigm” won’t change. Until we use that lever in the poll booth as a lever for change we won’t have much leverage at all. Until we use that lever as a way to express what we want and need as opposed to placing a bet on a horse race or accepting what the MSM has told us is the best we can get ….

    The funny part is that is the easy part – the hard part is after that – but we can’t even get folks to do the easy part …

  14. JTFaraday

    Perhaps, as a Naked Capitalism reader, I am just spoiled, but this post is not “wonkish.” This post is 2620 words of moralizing petulance that the great unwashed have not immediately capitulated, like Pavlina’s pet poodles, to the argument that is nowhere in evidence.

    So why is this grad student interrupting my regularly scheduled revolution again? Did the Hamilton Group call?

  15. reason

    I’ve argued against this several times, and I’m not satisfied that my concerns have really been addressed. If we were an agricultural society, where everybody had pretty similar skills I can see how this can work. But in a modern society where even relatively simple products depend on a very complex supply web, how can you possibly manage this. Think of the problems of these jobs being seen as a last resort – to be left at the first alternative opportunity – and what this means for managers. Think of how to get necessary investment for projects for new workers (when these projects may have to be abandoned in the future for lack of workers).

    How this is superior to better income support (I like to call it a national dividend) is beyond me. Better income support supplies a powerful automatic stabiliser (and a powerful regional development subsidy) that will ensure that private sector jobs become available. The way that welfare schemes were designed in the past, was very inefficient, in both administration costs, and in the introduction of a poverty trap (locally high marginal tax rates). A universal national dividend would avoid this.

    Micro-economics matters.

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