There is a consistent undercurrent against Modern Monetary Theory (MMT) that centres on whether we…
Friday lay day – a mini-Job Guarantee proves beneficial in the US
Its my Friday lay day blog and I am working on various projects today so I will cut this blog relatively short. Two things came up this week that I thought were interesting but only require a noting by way of blog entry. The first was a report about a mini-Job Guarantee type program in the New Mexico city of Albuquerque, which is demonstrating that public job creation programs can change peoples’ lives for the better when there is no hope and no other opportunities. The second story I read that was interesting was the Wolf Street Report (October 24, 2015) – Barcelona Threatens to Print Parallel Currency, Madrid Seethes – which discussed the plan by “Barcelona’s left-wing city council plans to roll out a cash-less local currency that has the potential to become the largest of its kind in the world”. The austerity-mavens in Madrid and their puppet masters in Brussels will be having conniptions at the prospect.
Albuquerque’s mini Job Guarantee
I was sent a report his week from the Albuquerque Journal (September 1, 2015) – New outreach set for panhandlers in Albuquerque – which described a program introduced by the local council and a welfare agency – St. Martin’s Hospitality Center.
There is also a more recent report (October 14, 2015) – Albuquerque Spent $50K to Give Panhandlers Jobs and Resources – Here’s How That’s Working Out So Far.
St Martin’s assists homeless and near-homeless people in Albuquerque in a number of ways including accommodation, dental and mental help, behavioural and mental health services, and employment and income support.
The Program provides an innovative solution to the panhandling problem. Panhandling is a cute American term for begging and is usually associated with unemployment and homelessness.
The Albuquerque program involved a $US50,000 grant from the local government to St. Martin’s to help provide homes, food, support and … JOBS to the beggars within the city.
The City’s Pilot Outreach program – There’s a Better Way – sends out a “16-passenger van” twice a week to cruise around the city to “pick up panhandlers who want to work and earn cash for the day”.
Here is the van:
If they agree to work they hop in the van and there is lunch offered immediately.
Anyone who accepts a job are paid $US9 per hour which is just above the minimum wage in New Mexico of $US8.75 (although a lower minimum wage can be paid if the employer is providing healthcare and/or childcare benefits and for tipped employees – see Albuquerque Minimum Wage Increase – 2015)
The workers are “employed to pick up trash, pull weeds or complete other landscaping projects” on five-and-a-half hour shifts.
The Mayor told the press (Source) that:
We want to give the dignity of work for a day … The dignity of a day’s work for a day’s pay is a very good thing. It helps people stabilize, it helps them with their self-confidence, and it helps them get back on their feet.
Around 10 of every 12 asked agree to work.
After the workday is over, the van drops the participants off at St. Martin’s where they are offered food, shelter and support services if they desire them.
The City is seeking funding to expand the program and make it a permanent feature of the city.
The Mayor is a Republican. His colleagues in the US Congress might do well to abandon their ridiculous obsessions with fiscal austerity and the rest of the nonsense they go on about and allocate a large amount of federal funding to any city who wants to emulate the great work of Albuquerque.
In case you are among the group who think this cohort never want to work anyway and take the ‘easier’ way out by begging you might like to read the results of a research program published in 2001 in the Canadian Medical Association Journal – Income and spending patterns among panhandlers.
[Reference: Bose R, Hwang S.W. (2002) ‘Income and spending patterns among panhandlers’, Canadian Medical Association Journal, 167(5), 477-479].
The authors studied a cohort of beggars in Toronto – defined as “as individuals who were soliciting donations of money for personal use from passersby, without providing any goods or services in return”.
The participants were paid for their time and were asked 90 questions about personal characteristics (demography), substance use, income, and a range of other questions.
One interesting question was:
Which would you prefer: a minimum-wage job ($6.85 per hour) or panhandling?
The response:
… 70% … stated that they would prefer a minimum-wage job, typically citing a desire for a “steady income” or “getting off the street.” However, many felt they could not handle conventional jobs because of mental illness, physical disability or lack of skills.
The overall conclusion of the study was that “the majority of panhandlers in Toronto are homeless and living in extreme poverty”.
A mini-Job Guarantee – but it seems to enrich the participants and even one person given a job who wants to work is a step away from the mainstream approach which uses unemployment as a source of social and economic control.
Barcelona’s new currency
In 2009, the state of California proposed to introduce an IOU system to alleviate its crisis.
I wrote about it in this blog – California IOUs are not currency … but they could be!.
I also wrote to the then governor of California (Arnold Schwarznegger) about the plan – My letter to the Governor (arnie)
The point was that if any state or city in a Federal system announced that it would accept IOU vouchers (their face value in the currency of the nation) as legitimate vehicles to liquidate one’s tax obligations to the State or city then the situation changes dramatically.
To circulate the vouchers, all state or city employees could receive some (or all) of their pay in the IOUs (bits of paper or via electronic transfer into special voucher banks), which they could then use to pay their taxes. If all the citizens in the state or city could similarly extinguish their tax obligations using these vouchers then there would be a generalised demand for them, which means that State or city employees would be able to spend the IOUs in shops as they would the the nation’s currency.
The state or city in question would have no financial constraint in the IOU vouchers. It would simply spend them (pay its workers) and collect the taxes later as people handed them back to satisfy their legal obligations. Imposing the tax obligation (in vouchers) creates a demand for them and allows them to circulate as a ‘currency’.
Soon enough, the banking system would develop IOU Voucher Accounts and related products. In this way, the state or city could more easily maintain its level of services without imposing huge costs on the disadvantaged. The state or city could also expand public employment to attenuate the labour market impacts of the recession.
There might be some reluctance to hold the vouchers. If the state or city had have decreed that any resident could extinguish their tax obligations using the warrants then they would become more broadly accepted as an alternative currency in that region.
So the proposed Barcelona experiment is very interesting and will bear watching. Expect trouble from Brussels though (via Madrid).
The article says:
The idea is for local stores and residents to be able to exchange euros for the new currency at a one-to-one parity, and use it to purchase products and services at a discount or with other kinds of incentives. But it doesn’t end there: the new parallel currency may also be used to pay certain subsidies, taxes and local services such as public transport … Municipal workers could also receive part of their salary in the new money.
So the makings of an alternative currency and in the context of Catalonia’s campaigns to break away from Spain a very interesting development.
The report asks whether “Barcelona’s local city currency” could:
… serve as a springboard to a region-wide parallel currency? After all, if Catalonia’s leaders are genuinely serious about breaking away from Madrid and creating a new nation-state (still a sizable “IF”), they will need to dramatically reduce Catalonia’s financial dependence on the central government’s treasury, the Bank of Spain and by extension, the European Central Bank. The only way to do that is to launch its own currency. As Greece’s Syriza party learnt the hard way, it’s no good threatening to go your own way without first having a parallel currency in place.
Syriza never threatened to go its “own way”, which was the problem and why they are now just puppets of the Troika.
We learn that “opposition to the scheme in Madrid is fierce” with a senior Bank of Spain official claiming the scheme was “impossible” and “undesirable.”
The Local Council claims it just wants a way to “increase local government spending” and “there’s no easier way of increasing government spending than printing your own money and then using it to pay salaries, benefits and public services!”.
Exactly.
We will watch it unfold.
Music – from the Inna De Yard Allstars
This is what I have been listening to this morning while I have been working.
The Inna De Yard Allstars are a fluid group of great Jamaican musicians more or less led by the fabulous guitar player – Earl Chinna Smith.
They combine acoustic guitars with hand drums, bass and various percussion kits and play and record in the backyard of Smith’s house in St Andrews, Jamaica.
The French music label – Makasound – have released the recordings. The group in various compositions tour and give live concerts.
This track – Daniel – is off the 2008 album by Earl “Chinna” Smith and Idrens. It was recorded in August 2004 in Chinna’s yard. Idrens is a Jamaican slang term for ‘brethren’ and in this context encompasses a host of other musicians who were in the yard playing on the recording including Jah Youth, Ken Bob, Emmanuel I and Kush McAnuff
If you are in Melbourne this Sunday, my band – Pressure Drop – will be featuring at the Run For Palestine 2015 event – down near the Tan Track (Botanical Gardens) from midday (for one hour).
Then later in the afternoon from 15:00 to 17:00 we will be playing at Kindred Studio in Whitehall Street, Yarraville.
A solid afternoon of reggae that means. Hope to see some of you there.
Saturday Quiz
The Saturday Quiz will be back again tomorrow. It will be of an appropriate order of difficulty (-:
That is enough for today!
(c) Copyright 2015 William Mitchell. All Rights Reserved.
Bill that’s great news to hear about the mini-JG. I hope to live to see the day where Australia tries this. Or at least one country properly tries it. The IOU currency in Spain is also cool. I’d love to see more of this happen and show the Austerian’s their emperor is wearing no clothes.
Would be interested to hear about your thoughts on the raising of the GST by 50% to 15% that’s in all the news. It scares the hell out of me thinking about it. It’ll be a major demand depression surely by the sounds of it. I’d also like to know what you think about the $30 billion in profits the big 4 banks just made collectively. Should we have a super profits tax in them. I think closer to 50% tax instead of 30% would be in order for them.
Anyway have a great weekend.
Curious American Puritanism in action.
They cannot bear to give out free stuff ( the industrial surplus ) for free.
The irony is the energy expended to propel that van could feed thousands.
Better to distribute Jack London’s “The Road ” at a central district in conjunction with free meals and a cold beer.
Oh I forgot – American cities no longer have a center……
PROGRESSIVE:: What is the difference between an idler and a slacker?
KINGWELL: Slackers are not-working – they define themselves in terms of the work they should be doing. The idler is not working at all, instead making his own projects and interests into an independent, work-free scale of value. That’s why idling can be so lively sometimes, though of course it needn’t be. The slacker, having to oppose the norms of work in sullen slouches and work-to-rule slowness, is actually still beholden to those norms. His resistance is futile because it’s actually a form of capitulation.
GLENN: Right! Like the idler, the slacker isn’t cut out for the 9-to-5 life. The slacker hates, fears, and resents his work, his duties, his obligations – think of mid-career Adam Sandler’s characters in Billy Madison and Big Daddy. But unlike the idler, the slacker doesn’t question, or reject, the working world’s value system. (In which, for example, “what you do for a living” equals “who you are.”) He’ll remain trapped, unhappily, in that value system, forever. Or he’ll remain trapped, happily, in that value system – because he’s made peace with it. As Sandler’s characters do, come to think of it, in both of those movies.
PROGRESSIVE: Assuming everyone suddenly became an idler, how would society function?
KINGWELL: Think of it this way: any market economy is a failed attempt to distribute goods and services exactly where they are needed or desired, as and when they are needed and desired. That’s all markets are, despite the pathological excrescences that nowadays attach to them: derivatives funds, advertising, shopping-as-leisure. If we had a perfect market, idling would be the norm, not the exception, because distribution would be frictionless. Most work is the result of inefficiency, not genuine need. In other words, idling is consistent with capitalism’s own internal logic, which of course implies, even if it never realizes, the end of capitalism.
GLENN: Society would regulate the general production, nobody would have one exclusive sphere of activity, and it would be possible for each and every one of us, as Marx once speculated, “to do one thing today and another tomorrow, to hunt in the morning, fish in the afternoon, rear cattle in the evening, criticize after dinner, just as [we feel like it], without ever becoming hunter, fisherman, herdsman or critic.” I mean, as long as we’re talking about an imaginary, what-if scenario.
PROGRESSIVE: Idling is commonly considered a bad thing in western society, something to be avoided. Why should we strive to idle?
Has the American work ethic been manipulated to create a built environment with massive distribution costs ?
The euro experiment in post war Ireland has been a case study in increasing distribution costs (really getting going with the closure of the remaining rural branch lines and its replacement with more and more cars which created the ” first oil crisis ” of Suez which was really a capital goods overproduction crisis.)
Its objective was clearly to transplant America back into the European heartland thus totally destroying what remains of its civilization.
Just to repeat we are dealing with a elite whose objective is total destruction so as to maintain concentration.
Dear Bill
If a province or state issues a parallel currency, then there has to be an exchange rate between the 2. This rate can vary, and then there will be an exchange rate risk for those who hold accounts in the parallel currency.
On country that you may wish to take a look at is Cuba. It has 2 currencies: the CUC and the peso nacional. The CUC is the convertible one and seems to have its exchange rate fixed at 1 USD. Some products and services were priced in CUC and others in moneda nacional. Now all products that used to be obtainable in CUC only can also be purchased with pesos nacionales. The exchange rate between the 2 has been 24 for several years, that is, for each CUC you can get 24 pesos nacionales.
In Cuba there are Cadecas (casas de cambio), where you can exchange pesos nacionales for CUC and viceversa. Since all goods and services now can be paid for with pesos nacionales, Cubans don’t need to go to a Cadeca as often.
It seems to me that the CUC is really the USD in Cuba. Holding USD in Cuba is penalized. One CAD is now worth about 0.77 USD. However, If I went to Cuba with 770 USD instead of 1000 CAD, I would get fewer CUC.
Regards. James
“They cannot bear to give out free stuff ( the industrial surplus ) for free.”
Exposed people get a better offer than they had and the idealist sniffs at it. All or nothing is the idealist’s way where human losses while waiting for “all” to happen is of no concern.
@Simsal
I do not want to give them all.
I am not a Utopian .
Just give them the surplus (water into wine , the loaves and fishes etc)that would otherwise be destroyed by finance capitalism.
The objective seen above is not to solve the problem of hunger.
The objective is to inject the puritan work ethic on these people.
But as Jack London did just nod your head and accept whatever absurd morality these guys have in their little heads.
Perhaps even invent a story to confirm their view of the world.
Whatever makes them happy.
I do this myself when I hitch hike (once a week) , its polite to engage in conversation even if its a fiction.
Great news about a functioning job guarantee, and great music as always Bill! Thank you so much for introducing us to such talent.
Homelessness is a big signal that our social safety nets have suffered way too much erosion. Those living on the street are so damaged they can’t even jump through the hoops as required to receive welfare any longer. In Canada, life on the street is miserable and short (winter nights can reach -40C. Imagine sleeping on concrete in that!) and the numbers of people in this position is becoming shockingly high. If you can drive through the downtown of a major city without seeing lot’s of homeless wanderer’s it’s probably because a clever scheme has been cooked up to lure them out of the city core as part of an urban gentrification plan.
There are largely unseen local economic downsides to this in terms of policing, emergency and medical service costs also born by taxpayers.
The problem is the social services are operated by provincial and municipal levels of government who must pay for the services by taxation which pits the rest of society against the “poor dogs who can’t find a bone”. It’s time federal government stepped up to the plate and funded the JG solution to these problems which it alone must take full responsibility for.
“If a province or state issues a parallel currency, then there has to be an exchange rate between the 2.”
Not really, any more than there is an exchange rate between the deposits in a bank and cash.
Generally these local currencies are pegged at a 1-1 conversion rate with the main state currency with exchange ‘discouraged’ via a variety of social means (local taxation paid in it for one).
You can of course float any liability simple by suspending conversion, but the tax payable in the scrip tends to keep the rate up – since anybody in the area can arbitrage a tax discount by swapping into/out of the scrip if the price drifts away from 1-1.
I have read somewhere that Bristol, England are running a similar voucher system.
Running for Palestine? Better have a chocolate at Max Brenner. Seriously speaking the organisers of the event (which is supposed to raise money for Red Crescent) are also involved in the so-called “BDS” campaign.
If this campaign is going to bring any real benefits to Arabs living in West Bank and Gaza and in refugee camps – I would be very suprised. It only fuels hatred towards Israel and I dare to say to Jews in general (despite all the denials) and feeds the conflict in the Middle East – the Palestinians are the group who is going to suffer the most.
To me the so-called “radical left” and Islamists – Palestinian nationalists are very strange bedfellows. The Palestinians effectively self-manage Gaza. Let’s compare individual liberities in Israel and in Gaza. The same applies to the area ruled by Hezbollah, inspired by Islamic Republic. Where is democracy there?
Try taking off the headscarf in Iran if you are a woman. This is the “liberty” the “radical left” effectively promote by glorifying Palestinian “resistance” I am sorry this all looks very familiar to me – the infamous experiment with communism started with similar lofty slogans.
Dork of Cork,
Yes, utopias as envisioned by Finance Capitalism and Socialism will never work because they do not set the individual economically and monetarily free…to create his/her own utopia. The individual is the key policy target and ingredient of any complete theory, and nearly every one of them either miss, or in the case of austerians, dismiss this fact.
@Steve.
I honestly think they do not believe in their own bullshit – be they socialist or Austrian (two sides of the same coin)
Its merely what’s necessary to achieve their dark project.
The endgame is when they fly milk and stout into Cork airport and claim there is a shortage …..
The object of the capitalistic game is to add costs and nothing else.
It has nothing to do with consumption.
The energy purposely wasted (the friction mentioned by Kingwell) every day is immense.
Study western peripheral energy balance sheets since the 1960s – it will blow your mind.
“Just give them the surplus (water into wine , the loaves and fishes etc)”
Sure, that isn’t far fetched at all for the exposed people mentioned in the text. If by any chance their hunger is satisfied and they get better shelter today, they should understand that there is the evil objective -to inject the puritan work ethic.
And if it turns out they do not dislike that objective, pity them for they have been mislead or brainwashed.
How much better for them if they understood those objectives. That would give them strength while waiting for a social credit system being installed in a near future.
bill
could the state of Victoria do the same? Could it also require Victorians to receive income in Vic IOU’s
Presumably it could also opt out of GST.
In other words, could a State in any federation opt out of the federation at will?
@Dork
You’re really speakin’ my language with “We need to dethrone abstractionism and en power individual sovereignty.” That plus we need to overcome the cognitive dissonance we have between philosophy and policy. Curiously the church in going into agreement with power rejected the greater power of its philosophy of Grace…and the rest is history. From a purely secular and valid economic point of view grace as in the free and direct monetary gift to the individual has no such dissonance, and Gifting as policy empowers both the traditionally productive enterprises of the economy, the government to spend on rationally needed and innovative infrastructure and with a sufficient gift sets the individual free as well. It’s a win-win, proactive integration of philosophy and policy which also incorporates the insights of cutting edge thinking like Disequilibrium Theory and MMT.
We should try it…we’ll like it. 🙂
Sorry, I now regard MMt as perhaps the most extreme manifestation of finance capitalism
Mobilization and all its wastes is a centralising dynamic engaged periodically by the money power to sustain itself.
I am against the church and have good historical. company, Dante and the rest…..
Dear Dork of Cork (at 2015/11/08 at 20:06)
You said “I now regard MMt as perhaps the most extreme manifestation of finance capitalism”. Which confirms my conclusion that you do not have anything interesting to say and should refrain from filling up the comments section from now on. You have had a good run and I will no longer approve your input.
best wishes
bill
Dear Steve, Dork of Cork,
I’m curious to learn more, but as Bill has made clear, this is not the venue for such a discussion. If you have reading recommendations on these topics that would be great, otherwise I’ll just Google the terms and proceed from there.
Dork, less problems more solutions.
Bill is working on the latter thankfully.
Ps I like the maths questions bill