This is the third part in a on-going series that I am writing about Deep Adaptation, Degrowth and related concepts, all of which are designed to provide some sort of pathway beyond the current mess that the world is in with respect to climate, inequality, poverty, excessive consumption, and excessive population growth. Today, I consider…
There is more to the Job Guarantee literature than a few blog posts
I have noticed a new phenomenon – a sort of new myopia – has emerged as the blogoshphere has expanded. The knowledge set that people think they are empowering themselves with becomes rather constricted – sometimes to a selection of blogs they may have read, sometimes even to the last blog they read on a topic. So we get a range of views and prognostications emerging – held out as expert commentary in many cases – upon the basis of perhaps just a few blogs having been read. As a long-term blogger, I also see this syndrome in the comments section of blogs. Someone new turns up it seems having read the latest offering from someone and launches into an array of criticisms which have been previously addressed but the commentator hasn’t bothered to read. The point is that research is a lengthy process and opinions should only be formed with conviction when one is convinced they have read all the major offerings in the area of interest and considered the evidence base. Which brings me to the real point. Before I wrote blogs I had generated 25 or so years of academic research material – in journal articles, books, book chapters, commissioned reports – hundreds of items of work. That is standard fare for an active researcher chasing competitive grants. That is where one’s contribution to ‘knowledge’ (as far as it is) is to be found. I only started writing blogs as a way of promoting Modern Monetary Theory (MMT) to a broader audience that would never read my academic work. I think that has been a successful strategy. But it has also created this ‘new myopia’. People think that the knowledge set available lies exclusively in blogs. It doesn’t. My blogs cut corners in writing style, referencing, and leave things unsaid that a more formal treatment would cover. The aim of the blog is accessibility and to provide an introduction to ideas which will encourage readers to delve further and arm themselves with deeper knowledge so as to promote informed progressive activism. A case in point is recent deliberations about one of my pet topics – the Job Guarantee.
A week or so ago (May 16, 2017), the Washington-based Centre for American Progress published an Op Ed – Toward a Marshall Plan for America.
The CAP says it is “a progressive public policy research and advocacy organization” does not fully disclose its funding sources (shameful) but is known to have close links to the Clinton camp in the Democratic Party and its staff has had considerable overlap with recent Democratic administrations in the US.
The CAP article (cited above) addressed, in part, the vulnerability of people living in the US “who have not gone to college” and as a result of “prudential and ethical” considerations, it concluded that:
… we must do more to create decent job opportunities and secure family situations for all working people facing difficult economic conditions not within their control.
The Report then provided a graphical analysis of where “lost jobs, low wages, high costs, and dimished mobility played a critical role in setting the stage for a narrow populist victory for Trump” and set out a plan to combat these issues.
Their “Marshall Plan to rebuild hard-hit communities through increased economic growth; more jobs with better wages; and rising opportunities and increased security for families” included a range of policy interventions.
Among them was:
We propose today a new jobs guarantee … There is no shortage of important work that needs to be done in our country. There are not nearly enough homecare workers to aid the aged and disabled. Many working families with children under the age of 5 need access to affordable child care. Schools need teachers’ aides, and cities need EMTs. And there is no shortage of people who could do this work. What has been missing is policy that can mobilize people …
An effective employment program would need to provide paid training when needed to allow workers to transition to a designated type of employment … it would not compete with existing private-sector employment … it would provide the dignity of work, the value of which is significant.
All of which I happily read as being a truly progressive contribution (why would I not think that!).
I didn’t read it as being a full operational plan for the implementation of a full-blown Job Guarantee scheme, which lies at the heart of MMT’s macroeconomic stabilisation approach.
I didn’t read the reference to some types of work that would be possible as being a full inventory of Job Guarantee jobs. It was general rather than specific.
The CAP intervention was a blog post not a full blueprint and technical manual on how to design and implement such a scheme.
Having read that I was then disappointed to read this Op Ed the same day (May 16. 2017) – More Job Guarantee Muddle – which accused the CAP proposed of being “muddled”.
After outlining that the Job Guarantee pool would be cyclical varying with the “condition of the private sector”, the author, one Matt Bruenig attacked the CAP advocacy of a Job Guarantee for only mentioning a few job categories of jobs (as noted in the CAP quote above) and concluded that these were not jobs that would be suitable for a Job Guarantee.
Hence the Job Guarantee is stained as being in a “muddle”.
He concluded that:
Time and time again, popular advocates of the Job Guarantee (not referring to the actual academics behind it) make this exact same mistake. They talk about how the Job Guarantee would be a great way to wipe out unemployment and then they turn around and advocate for jobs that are not appropriate for a job guarantee program.
Bruenig is a young white US lawyer who pops up on progressive blog sites.
He achieved some notoriety when he was sacked from his position at Demos around May 2016 after launching a series of personalised twitter attacks on the head of CAP (Neera Tanden) (Source). Bruenig called Tanden, a black women, a “scumbag” among other things.
The Demos press statement on the matter indicated that Demos were the attack on Tanden “were not aware of the extent to which Matt has been at the center of controversies surrounding online harassment of people with whom he disagrees”. The Tanden attack was part of a “pattern of behaviour”.
It acknowledged the incident happened in the heat of the Primary election process at the time (Bruenig supported Sanders and Tanden supported Clinton) – but Demos didn’t believe Bruenig’s “personalized, online fights” were advancing its progressive agenda.
Bruenig seems to have form in this regard – see Is Matt Bruenig a Populist Martyr?.
At any rate, the sides in these disputes are blurred I think, and I agree with Bruenig that Bill Clinton’s welfare reforms were a disastrous neo-liberal assault on the poor in the US, who have never recovered from it. In general, Hillary Clinton’s wing of the Democratic Party is a neo-liberal organisation.
That being said, his attack on the Job Guarantee proposal from the CAP seems more about his personal animosity towards that organisation rather than being a serious attempt to embrace the Job Guarantee proposal.
Bruenig has attacked another earlier call (HERE for the introduction of a Job Guarantee – in a blog (March 22, 2017) – What jobs would be doable under a Job Guarantee program?.
Once again attacking an idea on the basis of a blog post.
In that second attack, he correctly notes that:
The cyclical nature of the Job Guarantee (it picks up in recessions and declines in expansions) is critical to understanding what kinds of jobs it makes sense for Job Guarantee to do. Most importantly, the cyclical nature of Job Guarantee means that you cannot use the program to staff jobs that are necessary to do.
But the implication that necessary and productive (he uses the term “useless”) are one and the same betrays his superficial treatment of the topic.
He also concluded that blog by saying that it is “doubtful” that a Job Guarantee would be able to “absorb millions of jobless people”.
And the really detailed literature on the Job Guarantee does not exist in the blogosphere. That is the problem of confining one’s knowledge set to the Internet.
Tweets, blogs, etc are shorthand communications. In my case, the shorthand might be longer than others, but it is not a substitute for my academic work.
Rather it is a teaser – to encourage people, where possible to engage with that deeper work where possible. If that is not possible, then at least the blogs provide a vehicle for telling readers that such work does exist and the ideas presented in the blog – in streamlined form, are evidence based.
In my case, I try to run a half-way house as well. That is why my blogs are longer than the offerings of other bloggers. The material I cover is so contested that I feel it necessary to provide deeper explanations and more intense evidence so as not to be dismissed as yet another soapboxer. Whether than works is another matter but that is my intention.
But it still holds that perhaps Bruenig should have reflected on the academic literature a little before making these grand statements (disguised, probably, as personal attacks on political foes – CAP!) about whether a Job Guarantee is viable or not.
While his claim that the design and type of jobs that would be suitable for a Job Guarantee have to reflect the cyclical, buffer-stock nature of the scheme, he is not the first person to think of that. Although from reading his work, you would conclude that he was the first to have these insights.
For example, I started out writing about buffer stock employment schemes as a 4th-year honours student in 1978 (yes, we age!) and were fully cogniscant of the issues raised by Bruenig then.
My MMT colleagues have been discussing this issue together since the early to mid-1990s.
So rather than make out that he was coming up with some new critique of the Job Guarantee, upon which to hoist CAP on its own petard, Bruenig might have displayed some humility.
He might have said that while the CAP approach (or the Jeff Spross blog before that) was very general, the academic literature on the Job Guarantee is full of detail about how the generality becomes operational.
Of course, then he would not have had a blog to write or a wedge to drive into CAP, which he obviously dislikes.
As it stands, his entry into these blog debates on this topic is negative and rather ill-informed. It reads as if he thinks he was the first to note all this stuff and CAP are just dullards who “muddle” when it comes to policy design and advocacy.
He seems unaware of the academic literature that is replete with fine-grained analysis of these issues. We have been writing about these things for more than two decades! In my case, since the late 1970s.
As an example, Randy Wray and I considered the issues raised by Bruenig more than a 12 years ago in a paper in the Journal of Economic Issues.
We noted that a common source of criticism of the Job Guarantee relates to whether there would be enough jobs of sufficient merit to fully occupy the extant unemployed.
Most critics claim that Job Guarantee jobs would not lead to the production of useful output (or as Bruenig claims they would be “useless” jobs).
They fail to mention that millions of low-wage, low-skill jobs are created by the private sector in any given month with very little criticism or scrutiny.
These critics get disturbed only when the public sector creates such jobs. The so-called invisible hand of the market is presumed to operate smoothly without creating problems, while the visible hand of government is believed to be incapable of dealing with logistical complications.
But quite apart from this ideological bias, these critics typically fail to fully come to terms of what a buffer stock of jobs actually is.
In the Job Guarantee, the buffer stock of jobs is designed to be a fluctuating workforce that expands when the level of private sector activity falls and contracts when private demand for labour rises.
Instead of forcing workers into unemployment when private (or public) demand slumped, the Job Guarantee would ensure that all those who would under the NAIRU buffer stock system become unemployed would have access to a public sector job at the basic wage.
Bruenig gets that essential characteristic.
It is clear that this overall aim has implications over the business cycle and the cyclical nature of Job Guarantee jobs presents an operational design challenge for the administration of such a scheme and the design of the Job Guarantee jobs.
Job Guarantee jobs would have to be productive yet amenable to being created and destroyed in line with the movements of the private business cycle.
While challenging this is not an impossible requirement for public policy to meet. The private sector does not have a monopoly on being able to mobilise a diverse range of resources and successfully complete thousands of tasks within a tight and complex schedule.
Note also that the private sector scheduling is in some sense much less flexible because it cannot afford to “inventory” workers who are (temporarily) unneeded.
Job Guarantee can employ workers even before precise tasks are assigned, helping to smooth transitions.
The cyclical nature of the jobs suggests that in designing the appropriate Job Guarantee jobs the buffer stock should be split into two components:
- a core component that represents the ‘average’ buffer stock over the typical business cycle given government policy settings, trend private spending growth, and a mismatch of labor force characteristics and employer preference.
- a transitory component that fluctuates around the core as private demand ebbs and flows.
The business cycle fluctuations of employment are not nearly as large as people would like to believe. We have estimated that the total fluctuation between peak and trough in the Job Guarantee pool would perhaps be in the range of 25 per cent of the pool.
So there will be a fairly steady core of workers always in the pool. Nothing like from zero in a boom to millions in a recession.
Modelling can provide a guide to the ‘steady-state’ jobs that would be initially offered under the Job Guarantee scheme.
Administrators would then prioritise work allocations from a broad array of community enhancing activities. In this way, it is unlikely that any important function or service would be terminated abruptly, due to a lack of buffer stock workers, when the private demand for labour rises.
Thus, the design and nature of Job Guarantee jobs would reflect the underlying notion of a buffer stock.
This stock would, in turn, have a ‘steady-state’ or core component determined by government macroeconomic policy settings, and a transitory component determined by the vagaries of private spending.
In the short-term, the buffer stock would fluctuate with private sector activity and workers would move between the two sectors as demand changes.
Longer-term changes in the size of the average buffer stock would reflect discrete changes in government policy.
It is in this context that we argued for the existence of a stable core, which might change slowly and predictably as government policy settings change, and which would allow Job Guarantee administrators to more easily allocate workers to jobs.
Many of these core jobs would be more or less permanent. More ephemeral Job Guarantee activities could then be designed to ‘switch on’ when private demand declined below trend.
These activities would not be used to deliver outputs that might be required on an ongoing basis, but would still advance community welfare.
For example, Job Guarantee jobs in a particular region might be used to provide regular shopping or gardening services for the frail aged, to support the desire of many older persons to remain in their own homes.
It would not be sensible to make the provision of these services transitory or variable, and they would thus be provided from the core buffer.
Clearly, these services could be reassigned to become ‘mainline public sector’ work if a political shift in thinking occurred.
The structure of these jobs and the remuneration paid would however not be altered as a consequence of this political shift. Other ‘off-the-shelf’ projects would be undertaken or completed only when the Job Guarantee pool expanded sufficiently.
Another example of how we considered the buffer stock nature of the Job Guarantee is a Report my research group in Australia issued in 2008 following a detailed study that involved a large national survey of local governments in Australia. We sought to develop an inventory of jobs that satisfy several principles (see below).
These jobs would be accessible to the lowest skilled workers, generate benefits by way of meeting unmet demand for community development, personal care and/or environmental care services and more.
We sought detailed information from local governments on the type of jobs they could supervise that satisfied these criteria, including supervision and capital equipment costs and other relevant factors.
The Final Report (released December 1, 2008) – Creating effective local labour markets: a new framework for regional employment policy – developed a new framework for the design of regional employment policy.
It emphasises increased public sector infrastructure spending, the implementation of a National Skills Development framework and the introduction of a national Job Guarantee.
So similar aims to the Marshall Plan for America proposed by CAP. But our Report was not a blog post – it was, rather, 300 pages long and the result of 3-years of research.
It was funded by the Australian government and an industry partner Jobs Australia through one of the competitive funding schemes that operate in Australia (along the lines of the ESRC in the UK or the NSF in the US).
While some of the institutional detail is designed to talk to Australian readers, the general principles outlined in that Report (and also in many other academic papers by myself and my MMT colleagues) is applicable anywhere.
That Report specifically considered implementation issues that would arise with a Job Guarantee.
We noted that the design and implementation choices of any public policy can significantly determine its impact, the devil being in the detail. As such we sought to enunciate a clear implementation model that was intended to address concerns that people might raise in the context of a Job Guarantee.
Relevant here was the issue of ‘real jobs’.
We noted that some of the theoretically necessary design features of the Job Guarantee system are considered by some to undermine the likelihood that ‘quality work’ will be performed under the scheme.
The justification for creating a Job Guarantee job is to provide work which is accessible to the most disadvantaged unemployed workers.
But it is also intended that the work performed delivers a ‘net social benefit’ or enables ‘greater utilisation of an individual’s capacity’.
If these criteria were used to determine the existence of supposedly ‘real jobs’ in the private and public sector, many would be abandoned.
But the existence of socially harmful and degrading jobs in these sectors does not preclude the possibility of them also occurring under a Job Guarantee, so the question of how the value of these jobs will be determined is legitimate.
Whereas market-driven services are supplied according to how much people are prepared to pay for them, and public services generally respond to usage levels, Job Guarantee work is not intended to increase or decrease in response to changing demand for the Job Guarantee work itself, but to accommodate falling and rising private sector demand for labour.
This appears to disengage the work performed under the Job Guarantee from standard ways of estimating its value.
If it transpired that performing this work made little difference to the overall well-being of the community, not only would it seem a waste of public resources that could have been more beneficially expended elsewhere, but those engaged in performing the work could become demoralised because their skills and energy were not being better utilised.
Equally, while the value of the work to the community does not determine whether Job Guarantee jobs are created or destroyed, this does not preclude the possibility that the work could be of great public benefit, although five additional theoretical parameters for the scheme could potentially reduce the scope of the Job Guarantee to deliver valued services.
The five parameters we considered were:
1. Non-rival nature of the jobs:
To serve its countercyclical function efficiently, the Job Guarantee system must not displace employment in the private or public sectors, which precludes it from delivering services which either the market or the state currently deem worthy of delivery.
This means that Job Guarantee services will address needs that are currently not profitable for the private sector to meet (because they are public goods or because potential recipients of the services cannot afford them) and which the state currently considers of such low priority as to not warrant addressing.
This does not preclude Job Guarantee services from meeting considerable unmet need in relation to the natural and social environment and among the least powerful sections of society, particularly if the system is well-engaged at the local grass-roots level, where the market and the state generally are not.
The Job Guarantee model would recognise sensitivity to local need and local control is crucial to identifying worthwhile and under-performed work
2. The Buffer Stock principle:
The Job Guarantee’s countercyclical function also requires that it does not retain workers when the private sector requires them and can induce them with an appropriate job offer to accept employment.
The operation of the Job Guarantee requires that the Government offers a fixed wage job at the effective minimum wage and never seeks to compete with market wages for workers.
The Job Guarantee is a buffer stock at all times.
If the relative attraction of the Job Guarantee work was its greater security, a sufficiently streamlined entry/exit design (that enabled immediate re-entry to the Job Guarantee) will lower resistance to accepting offers of private sector employment by eliminating risk attached to the job not working out.
The successful transition from the Job Guarantee into private sector employment would be enhanced because the workers would maintain work-related physical and mental stamina, social skills, means of transportation, and the like, capacities which are often lost during long spells of unemployment.
This would further reduce the perceived risk of the scheme.
If the relative attraction of the Job Guarantee work was that it required less effort, this would be mitigated by the degree to which Job Guarantee work achieved the standards of effort and professionalism of the private and public sectors.
These standards are not solely achieved within these sectors by either punishing sub-standard performance (for example, demoting or sacking bad workers), or rewarding above-standard performance (for example, promoting good workers).
Although the Job Guarantee’s fixed-wage and the objective of eliminating unemployment limits recourse to these strategies, it does not totally preclude them, nor does it preclude recourse to other sources of motivation used in other spheres of collective human endeavour such as sport, education, families, and voluntary associations.
If the relative attraction of Job Guarantee work is that it is better managed, safer, more dignified or more satisfying than private sector employment, the solution may be that private sector employers raise their standards in these areas.
3. The expectation of continuance:
The provision of new services that meet significant needs may raise an expectation of continuance. If the withdrawal of a highly valued Job Guarantee service threatened a public backlash, governments would be under pressure to continue the service, perhaps as a mainstream public service, which would permanently reduce private sector access to those workers.
Some Job Guarantee jobs will always need to be undertaken to eliminate unemployment because the private sector cannot do it alone.
Those Job Guarantee services that have the greatest demand for continuity, such as new forms of support for the aged and disabled, would need to be prioritised for retention over services (such as public works) that can be discontinued without significant loss of amenity.
4. The lowest common denominator principle:
Since the scheme is intended to offer all persons of working age a job to eliminate their unemployment or underemployment, there is a presumption that Job Guarantee jobs would need to be kept simple to accommodate the ‘lowest common denominator’ of skill level.
Were this so, many workers would find Job Guarantee work unchallenging and many of their skills would remain underemployed.
This issue has been successfully addressed in the past by labour market program providers by assigning different roles and responsibilities to people within a given work group, according to need and ability.
This simply requires that jobs are designed with a range of options and that supervisors possess the skills to allocate work according to worker needs and capabilities.
Job Guarantee jobs have an advantage in this regard in that they are not dependent on achieving a given level of productivity, thus allowing them to be tailored to accommodate special needs, such as those of people recovering from mental illness.
This would best be undertaken through collaborative job design with the individual, their health professionals and family. New forms of workplace support work are also potential Job Guarantee jobs.
In many respects, the flexible potential for the Job Guarantee to offer diverse employment experiences has fewer limitations than existing sources of employment.
5. No substitutability with other public employment:
Some socially useful services which address important social and economic objectives may already be partially met through permanent public sector employment.
Expansion of these services through the Job Guarantee creates a tension between those employed under public sector conditions and those employed under Job Guarantee conditions.
Downgrading the wages and conditions of the public sector workers would be inequitable.
This issue can be addressed by quarantining this existing public sector employment and associated conditions while the incumbent workers continue their employment in these jobs.
Once these workers retire or take up other positions, these jobs will revert to Job Guarantee pay and conditions.
The general principle is that no person would be individually disadvantaged by the introduction of the Job Guarantee. This is not the same as saying a class of jobs might be restructured into Job Guarantee jobs over time.
We identified hundreds of thousands of suitable jobs across three broad labour intensity and wage to non-wage cost categories.
The scale of the jobs we identified was large relative to the size of Australia’s unemployment problem. A similar exercise in, say, the US, would identify millions of jobs.
Reading blogs as your sole source of information and coming to bold conclusions as if they were one’s own insights and revelations is not a very sound approach to public advocacy.
The Job Guarantee proposal is backed by many, very detailed academic studies over many years.
Without wanting to overstate, I would suspect the early MMT team (Mosler, Wray, Kelton, Tcherneva, Mitchell, Forstater, etc) have thought through every possible problem that might arise from implementing the Job Guarantee.
Whether you agree with our analysis and conclusions is one matter. But to grandstand in the blogosphere and ‘coming up’ with criticisms as if they are something new while ignoring the extant literature is another.
As it stands, the CAP and Spross Op Ed articles on the Job Guarantee were welcome and sound. Their blogs were not the place to flesh out all the detail.
That has already been done by the core MMT team long ago.
That is enough for today!
(c) Copyright 2017 William Mitchell. All Rights Reserved.
This Post Has 29 Comments
This is an important post because growing awareness of the truth of how the economy really works through understanding Modern Monetary Theory also includes acknowledgement of the Job Guarantee.
I applaud any reasonable paid employment opportunity but I am pleased to see that the Job Guarantee was already assumed to mean that it would exist with the credentials of each JG participant considered.
That way each person’s human wealth would be engaged and employed for societal benefit.
There is rather too much veneration of the competitive market value model and little respect for other modes of operations.
In the service sector, which by definition doesn’t require much in the way of monetary capital but an awful lot of human capital, there is no guarantee that the competitive approach is superior.
To take your average outsourcer for example. They have a sales, marketing and account management operation that chews up a huge amount of staff simply to obtain access to tenders. Then there is the tendering process which requires a huge bid team to produce documents that are never read. The cost of all the failed tenders has to be borne by those tenders that are won.
During the operation the client and the supplier has to run contract and account management teams to ensure that the contract is adhered to and neither under or over performed.
That is the cost of doing things by price. A vast overhead of non-jobs.
You can get a similar economy of scale on a service by working together in a collaborative fashion. The software at the heart of most mobile phones and computer servers is developed collegiately in that manner, which lots of people chipping in and sharing.
The Job Guarantee is there to discipline the private sector. If required social value is not occurring then that is because the private sector is running too hot and using up resources on other matters. So alter policy to cool it down and release the resources for the required social value.
It may be the case that the Job Guarantee shows private provision to be ineffective and problematic once it is starved of cheap labour and the props of government bailouts. That then helps show what services need to be public provision, or at least where the problems lie.
The Job Guarantee is, from the view of the individual on it, just another job at the living wage – providing the ‘nice to have’ public service.
interesting observations Neil. When you say ‘The cost of all the failed tenders has to be borne by those tenders that are won’ not sure I follow how the costs borne by the failed tenders transmit to the costs born by the successful ones.
The ongoing problem with the ‘living wage’ in the UK (and Australia as well I suspect) is the inflated cost of housing. Don’t we need to find policy for that so that real lining wages are possible with around 25% of disposable income on rents/mortgage maintenance. Not sure how MMT would deal with the housing asset bubble that has gone on in the UK for 40 years.
Bill is right to refer to the uselessness of most blog posts on this subject caused by the fact that those opining on the subject have not bothered to read up the subject. On that point, I stumbled across this article recently (link just below) which noted the total absence of references in blog posts on JG to CETA, which was a JG type scheme operating in the US in the 1970s.
Next, Bill refers to “regular shopping or gardening services for the frail aged” would be suitable JG work. Re shopping, if an aged person cannot do their shopping, they should have PERMANENT help with that. Thus that sort of work would not be suitable for the variable element in JG (i.e. the change in total number of JG people as between booms and recessions).
As to gardening, the idea that JG people are likely to want to help aged people with gardens is rather called into question by the fact that the unemployed (at least in my neighbourhood) are not falling over themselves to help local pensioners with their gardens. That is evidence that JG would require an element of compulsion. Plus I would not personally want any old bod from the dole queue messing around with my garden, thank you very much. I suspect there are many others like me.
[Bill edited out a link]
Since a sovereign government is in control of its own currency and money making power, a proportion of that capacity can be set aside to providing government housing for people of all socio-economic levels.
Government-backed rental properties can easily become a reality.
Government-backed home-owner mortgages for low income home ownership can likewise become a reality.
With the Job Guarantee system, there is a bureaucratic network that can oversee both channels of affordable, secure housing for everyone.
If you bid for 6 jobs, then there is a cost associated with maintaining that level of bid capacity – 5 failed tenders in every six attempts.
If you get 1 in 6 jobs, the cost of running the bid capacity has to be recovered from the job you win.
Getting one in six jobs, and staying in business, essentially means that there are five other competitors who get 1 in 6 jobs as well – all of whom have a 1 in 6 success ratio.
That’s six jobs distributed to six competitors and 36 tenders produced *and analysed* to get those jobs.
That overhead can be generalised to the entire sales, marketing and advertising industry. The usual joke is that only 50% of advertising spend is effective. But you can never know which 50%.
Private sector consist of operators that will do anything as long as it generates profit. But what is good for individual operators is not often good for the whole economy, that is why private sector is profoundly inefficient. In short, they employ large numbers of people to redistribute economic pie, rather than to make larger pie. That inefficiency in biggest drag on our living standards by far.
I had been hoping Professor Mitchell had seen the CAP proposal that includes a sort of jobs program somewhat based on a jobs guarantee and comment on it because I know he has done many years of research in that area specifically and is perhaps the foremost promoter of (and authority on) the MMT Jobs Guarantee in the entire world. So his opinion is very valuable to me and very much impacts my own opinion of what I have read of the CAP proposal. In this case it has already made me think more favorably of it, or at least that it is going in the right direction.
But the point is that I had already had an opinion on the CAP job guarantee thing, and though I had not expressed it publically at all, I don’t understand what would have been wrong about doing so. And while I have not done 25 plus years of research into that specific area and would not present myself as an expert on the subject, I would estimate that I have read far more than even one person in ten thousand about it. And Professor Mitchell is a very busy man and can’t be expected to express his opinion on every similar proposal by every group that isn’t even in power in every foreign country in the world in a timely manner.
I wonder if the “young white US lawyer who pops up on progressive blog sites” had not expressed his opinion would the older white Australian economist who writes authoritatively on the subject of the Job Guarantee corrected him. Nor am I sure what age, race, and nationality have to do with this subject. But that is a different matter 🙂
Jerry Brown -I was wondering whether bIll was recommending a Wittgenstinian Disposition in the manner of ‘ whereof one cannot speak thereof one must be silent.’ It takes years to become knowledgeable about an area. Most people will manage one or two areas of knowledge they can speak of with some authority.
I’m at the point with MMT that I sort of know what questions to ask and could probably explain the basics of some areas if asked to but not more than that after a few years of reading with no backgound in the subject. I think one is entitled to express a view to the extent of one’s knowledge as long one is aware when the ground is getting a bit shaky under one’s feet.
Many people are self-educating now in economics particularly after 2008 which is a good thing as long as one remembers that a few years reading can’t replace a lifetime of study. If we had a more enlightened society there would be more educational opportunities available but neo-liberalism started to do away with that in the UK in the 80’s and adult education crumbled. Luckily we have Bill’s blog and each other. It’s great that Bill treats us to more in depth blogs and asks us to stretch ourselves a bit, I’ve learnt an immense amount though I don’t retain it well, sadly.
Well said, Simon.
We learn the subject better by discussing our views and not being scared to ask for clarification.
“the fact that the unemployed (at least in my neighbourhood) are not falling over themselves to help local pensioners with their gardens”
Around here, some people are, in charitable organizations like food banks, meals-on-wheels, trips downtown for shopping. As of now these are charities, mostly staffed by pensioners with income to live on and time to spend. So a suggestion to make these functions paid work for people that need paid work is not so bad.
As for permanence, if unemployment continues to look, as Prof. Mitchell says, like a steady base along , with a cyclical variation of ~25%, then we could probably find a steady pool of drivers, box-fillers, and gardeners — maybe not the same individuals from month to month, but people to keep the service going. If times got too good, they might have to call on the retired volunteers again.
“if an aged person cannot do their shopping, they should have PERMANENT help with that. ”
And how are you going to ensure that the help is PERMANENT. Indenture or slavery?
People in the public sector are allowed to give up those jobs and go work in the private sector as well. Which they will do if the private sector is making a better offer.
So the problem is that the private sector is making a better offer.
There is no material difference between a ‘normal’ public sector job at the living wage and a Job Guarantee job at the living wage. They are both just jobs at the living wage. Whether they get filled depends entirely upon whether the private sector is making a better offer at the time.
If you want a public sector job paying more than that, then you have to get the democratic authorisation to redistribute *and you may not get it*, which means that PERMANENT public sector jobs might end up unfilled and the service not happening at all.
We’re seeing that in the UK now – libraries closing, roads unrepaired, social care diminished. Yet we still have 3.6 million people across the country without work that want it, and another million short of work.
To get a service accepted into the public sector you first have to establish that it is useful enough to use tax powers to protect. Yet another benefit of the Job Guarantee is to show to people what public services are useful – to the point where they miss them when they disappear in a boom.
There are (at least) two real world transitory ‘jobs’ that can offer an alternative template:
* postgraduate researcher
* tech startup entrepreneur/coder
Both of these templates can be run on a shoestring. Neither competes with the commercial world. Both offer opportunities for Australia going into a rapidly changing future.
Australia should be fostering more research and more venture capital opportunities. A Job Guarantee can do that, as well as offering socially useful lowest common denominator jobs.
Hear, hear MarkH.
Accessible and substantial Micro-finance funding in the forms of Micro Finance Grants (MFGs) and Micro Credit Loans (MCLs) should be available to low and no income people so they can form their own self-employment via their own micro businesses based on their skills, experience, willingness to endeavour and/or qualifications.
The MFGs would be non-repayable and $10k-$15k over and above Newstart for a reasonable period while the business is able to become up and running.
The MCLs would be repayable and $20k-$30k and repayable at affordable interest and repayment rates.
The concept is to encourage the endeavours of poorer people with good ideas and the willingness to become self-determinant as opposed to floundering in poverty on Newstart. These people are not the usual demographic who can access ready funding from banks, venture capitalists and so on.
There is no reason why a sovereign currency can’t address these fundamental imperatives.
Thanks Jennifer, although I’m reticent to put numbers to a prototype of an idea. The schemes you’ve outlined are more concrete than the ones I think are possible. Yours can be done right now with a minimum of political tinkering: they’re basically the New Enterprise Incentive Scheme with a bit more oomph.
I’m coming at it from a different direction: the nature of work itself is changing rapidly. We don’t know what the jobs of the future will be, but we know we are at the beginnings of a time of great upheaval. Learning from venture capitalism, we can see that a)it is an expensive folly to try to pick winners; b)the money you waste in funding losers is a cost worth paying; c)almost every idea and project is a loser; and d)there is gold in taking risks, and the winners pay for your losers by orders of magnitude;
I believe a sovereign nation can use its spending power to take those risks **with no real risk**. Fund researchers to come up with the ideas, frameworks and technologies of the future; fund entrepreneurs to explore the space of ideas for commercial opportunities. So many people who are forced into mundane jobs and/or onto the dole queue have it in them to be idea generators. This is the cost of funding the Australia of the future, one that can take on the world with new native industries.
Australia should be profligate with risk spending. Payback, via taxes or some sort of equity sharing scheme will be more than profitable.
There is a lot of common ground between what you’re saying and what I am saying.
However, please don’t confuse my concept with the very limited and limiting NEIS which only serves as a ‘replacement’ to Newstart and not a significant source of accessible and equitable funding over and above the Newstart benefit.
Newstart is the fundamental necessary bread and butter of every poor person floundering in poverty. MFGs and MCLs are necessary funding sources for the realistic and reasonable birthing of new micro-businesses to get people working again according to their strengths and greatest contributions for society.
Jennifer: It’s likely we’re talking about exactly the same thing, framed in slightly different ways.
Many years ago (1996 to be exact) I did a NEIS course. I needed the money and I thought I had an OK idea. I learned from that experience (after the dust cleared) that many, many startup businesses are very undercapitalised and are destined to fail from the start. The most eye-opening learning experience was seeing how risk and failure are viewed by bureaucracy and greater society: you only *deserve* one shot with public money, taxpayers worked hard for it and you wasted it, and failing is shameful.
For want of better words, the bottom of the labour market has a marketing problem. At the risk of being a boorish guest on this blog, I think the way the MMT and the job guarantee is being marketed here exacerbates the two-tiered nature of the market. You either have a real job, that being an industry job, or you’re a parasite sucking from the public teat. I’ve made a couple of previous comments on this blog complaining about the metaphors used to sell MMT to the general public: they’re not weaponised enough, and stand no chance against the mind worms neoliberalism has introduced into our culture. MMT as it stands requires people to be ‘kind’. To see the goodness in others and the nobility at the bottom of the labour market. To just give others a fair go.
I know this sentiment is anathema on this blog, but if the people at the bottom of the market are going to ever be recognised as true participants, and not parasites to be pitied or scorned, the framing of messages from MMT headquarters needs to change to acknowledge the self-interest of everyone else. Neoliberalism isn’t just the enemy, it is in an unassailable dominant position, and to fight it you’ve got to use its weapons. Making pleasant noises about the unemployed being ‘idle real resources’ is useless if those resources can’t be used to (ahem) make money. So to make the bottom of the labour market true participant, use the methods of neoliberalism: startup monkeys and research students earn a pittance and will almost certainly fail to deliver us anything profitable *but at least they’re trying*. This reframing may be all that’s needed to sell MMT.
So, yes, we’re probably talking about the same thing. As long as participants in your scheme can repeatedly fail, forever, with no penalty, and have that failure be seen by everyone else as a positive contribution to the welfare of the whole society.
If this blog is for purely didactic purpose why not lose the comment section.
Being aware of potential pitfalls of a job guarentee for many years has unfortunately not
honed a coherent believable defense against those concerns.
The five parameters certainly raise problems which seem very hard to address paticualrly
with the spectacular growth of insecure minimum wage work it is hard to see how a living
wage JG would not be incredibly attractive to much of the workforce
“The Job Guarantee is, from the view of the individual on it, just another job at the living wage – providing the ‘nice to have’ public service.”
That’s a nice theory but it wouldn’t work that way in practice. A person’s perceptions of their job and society’s perceptions of their job would be heavily influenced by cultural norms. All jobs already are. Insert a ‘Job Guarantee’ job into that, and you’ll get a response based on the culture you insert it into.
“”if an aged person cannot do their shopping, they should have PERMANENT help with that. ”
And how are you going to ensure that the help is PERMANENT. Indenture or slavery?”
You didn’t answer his question. You ducked it and replied with a straw man.
Job Guarantee may work fine economically, but culturally it will have problems just like anything else does.
Getting people to come round to MMT has so far proven impossible because of ingrained cultural norms. Proponents of MMT mostly have so far not really taken this on board. Starting to push Job Guarantee is adding another load to an already well-loaded cart….
Neil Wilson doesn’t understand how it’s possible for government to guarantee the provision of a particular service without “slavery” (May 24, 2017 comment at 14:40). I imagine the average fifteen year old who has never studied economics can answer that question: have government create sufficiently well paid jobs that those concerned are tempted to stay in those jobs more or less permanently.
I don’t know if Neil has noticed, but people in the UK with jobs in the police, National Health Service, and other sections of the government machine tend to stay in those jobs for years and often decades on end. Net result (gasps of amazement) the UK manages to provide basic policing and health services in every area of the UK 365 days a year.
James, I think you are right that a Jobs Guarantee and MMT in general have difficulty because of “cultural norms”. But that doesn’t mean it is wrong. And difficult is not the same thing as impossible. At all. Cultural norms do change and sometimes fairly quickly.
Ralph, I think you realize that no government can ever absolutely guarantee the provision of any good or service in perpetuity if the people and the resources needed aren’t there or are unwilling. If they are not available, it is impossible. If they are unwilling but forced, it could be called a type of slavery. Neil Wilson is not wrong.
Agreed with Jerry and Neil.
I think one issue in thinking about this is the fact we’ve been living through nearly a decade of the ‘austerity’ mindset, where, by and large, public service jobs have been lost because governments are suggesting they can’t afford them. As a result we see most things through that prism – whereby resources typically are available (and often were already in place) but the government are choosing not to employ them – or at least choosing not to push against the upper limit of what the public might consider acceptable in terms of pay/conditions etc. Instead it seems they have been deliberately downplaying expectations of what vital public services should earn relative to the private sector in keeping with their own ideology. This has often led to a negative spiral (eg cuts result in less staff -> more pressure and stress on existing staff -> more staff leave -> even more stress on remaing staff -> job gets reputation for bad compromise between pay/high stress -> hard to recruit even if people available), so we end up with unfilled roles even in a scenario where the private sector isn’t aggressively outbidding the government.
However, cast your mind back to the UK pre-GFC, and there were plenty of examples of the government struggling to fill specific vital services, because the qualified people were enticed elsewhere (either in to the booming private sector or elsewhere in the public sector). A classic example was the 2004 GP contract – which contained loads of sweeteners for GPs (both in terms of pay and working conditions) because up to that point they were really struggling to recruit GP trainees, particularly in unfashionable/rural areas. They couldn’t force medical trainees in to those roles so their only recourse was essentially a massive bung, which made GP contracts much more financially attractive than equivalent hospital specialist roles (link to an old BBc news article if Bill permits http://news.bbc.co.uk/1/hi/health/6314301.stm). I knew a lot of trainee medics around this era, and many of them went through exactly that thought process – “I want to be a heart surgeon/paeditracian/oncologist etc and don’t fancy hearing about old ladies foot problems as a GP in Doncaster* but I can earn far more for less hours if I do…” (note, I’m not necessarily claiming the ‘more for less’ is how things worked in reality – GPs would certainly disagree! – or denigrating GP work, but that was very much the perception at the time). However this contract pushed at the boundaries of both what the general public and other workers in healthcare thought was fair. Ultimately though, if they couldn’t achieve that there’s a chance necessary rural GP services would have gone unprovided or filled with less suitable staff.
For another example, type ‘army recruitment struggle’ into google and see just how many stories come up on missed targets (both UK, US and elsewhere). Of course, this is the classic field in which governments have (and still do in parts of the world) employed forced conscription – which surely hammers home the point?
*Apologies to anyone from Doncaster
“but people in the UK with jobs in the police, National Health Service, and other sections of the government machine tend to stay in those jobs for years and often decades on end.”
If that is the case, why are they always recruiting? That’s empirical evidence of staff turnover – significant staff turnover. I’m seeing no hire responses to council recruitment campaigns already. They can’t get the staff at the rate on offer. Same in schools – who are running short of teaching staff and increasingly have open positions.
You cannot create higher paid government jobs without democratic legitimacy – because it involves a transfer. Taking resources from one person to give to another. People haven’t been too keen on that recently.
The Job Guarantee causes Jobs to be created automatically when there are resources available, and tasks to be completed. The delivery can be via the council, as it used to be when we had an implicit Job Guarantee during the Post-War consensus – getting a job with the council always used to be the default – or it can be via ‘social enterprises’ which will pop up during a slump and then vanish away during a boom.
If people don’t like the vanishing services, they can then elect people to initiate a transfer sufficient to keep the service going.
I think that the work of planning, launching, and developing a small business should be included as a living wage job that people can do under a Job Guarantee.
Same with the work of doing formal study (as long as you demonstrate that you are attending the sessions and completing the assignments and exams to a satisfactory standard).
Caring for one’s own children is arguably something that we should simply pay people a living wage to do if they would like to focus on that socially useful work during their children’s most developmentally crucially years.
Many socially useful activities that our culture currently defines as hobbies, leisure, or unpaid service can and should be converted into living wage jobs on demand. Artistic and cultural services, environmental management services, and social and community services are the big three sectors that a JG should target.
I agree Nicholas 200 percent
Recent conversations with Pavlina Tcherneva (on FB) appear to show she backs something which I have never seen you, Randy or Warren consider (or any other key MMT academic)..
Pavlina thinks that a JG should be an option for parents, simply to look after their own children at home. And equally astonishingly, she affirms that such a JG – or let’s call it what it is, a parents’ UBI, masquerading as JG – has no automatic stabiliser function and couldn’t less.
Well, I’d guess around half the working age work force are parents. In Ireland, I would g’tee vast numbers of parents (at least one per working age household) would avail themselves of this freebie. Likely the same in most countries. (Fine.. but we know such UBI type measure won’t last, and likely cause economic damage in the fall out.)
Ok, if Pavlina wants to propose some parenting supports, but frankly, such a stupid idea would make a mockery of JG as any buffer stock or automatic stabiliser.
Pavlina further justifies this by claiming that MMT is indeed, a political platform, so its fine to throw in whatever social supports she fancies and bastardise the JG to do it.
Having heard you, Bill, and others, regularly claim – with good justification, where JG really is a buffer stock, at least by design intent, as you’ve written about over the years – that MMT is not political, but a macro economic framework for optimising output and stability, I’m very disappointed to hear that from Pavlina.
Not to say now quite confused as to whether MMT is or isn’t an apolitical offering, ‘officially’?
Where do we stand?
I’ve long considered MMT’s very strong apolitical case to be a major plus in trying to educate people about it, and the paradigm changing macro policy options that flow from it.
To load that up now, with god knows what political baggage, seems particularly stupid and ill considered.
Pavlina is correct to support JG for parents to nurture their own children if they choose. That’s the only acceptable form of privatisation