Regular readers will know that I have spent quite a lot of time reading the…
We can have full employment again in a green world
Last Saturday, the Weekend Australian, Rupert Murdoch’s daily national newspaper, had a relative Modern Monetary Theory (MMT) avalanche, with two core MMT-style articles published and two that were supportive rather than hostile. That tells you something about the way the world is shifting. I have received a bit of flack for publishing an Op-Ed piece in that newspaper from those who style themselves as Leftists. It is the same old argument – dealing with the devil. And the same old reply – if you want to influence policy then you have to talk to those who make policy. It is easy plotting revolutions over lunch. There has been a lot of groundwork laid over the last several months to bring people into the conversation. It is quiet stuff. Discreet. And as things unfold I will make some of the developments public. At present, all I can say is that I have a document before the Prime Minister today and there is a lot of behind-the-scenes workshops/briefings going on at state-level. And, while activists spend a lot of time ‘pressuring’ this person and that person on social media, the big shifts that are going on at present, including the publication of Noel Pearson’s piece and my article, are not being helped by aggressive social media confrontations. Sometimes it is better to work in a subtle way and exploit networks where they are available. That is not to say that activism to promote MMT is not appreciated and helpful. But we do need to pick our path. Anyway, a number of people asked me to publish my article here because they cannot get behind The Australian’s paywall. So here is the penultimate version which is a few hundred words longer than the actual article, which I cannot provide due to copyright restrictions. I also cannot provide Noel Pearson’s accompanying and complementary article but it was magnificent.
Here is the link to Noel Pearson’s article – The case for a government jobs guarantee.
Here is the unedited text. The final version was cut a bit but didn’t lose anything in substance or flavour.
Text begins ….
Japan embraced the neoliberal excesses in the 1980s. In 1991, the excessive private debt caused a massive commercial property collapse. The government’s response pushed economic policies to the extreme of conventional limits – continuously high deficits, high public debt, with the Bank of Japan buying much of it. Modern Monetary Theory (MMT) tell us this was the correct response.
Most economists recycled predictions of high interest rates, accelerating inflation and bond market revolts. None came to pass. Japan has maintained low unemployment, low inflation, zero interest rates and strong demand for government debt.
Undeterred, these economists continue to promote their ‘fictional’ world, keeping citizens in the dark about the true capacity of government and the consequences of using that capacity to sustain full employment.
They manufacture fear about public debt and deficits, predict government insolvency, use the words – Weimar or Zimbabwe – to invoke fears of hyperinflation. They rehearse false moral arguments about today’s government spending burdening our grandchildren.
None of their predictions ever materialise for they were lies to begin with.
Which is why we are hearing more about MMT. It has an impeccable record of prediction and offers answers that the economic orthodoxy fails to provide.
Renowned British journalist Martin Wolf, commenting on MMT, recently wrote: “In my view, it is right and wrong. It is right, because there is no simple budget constraint. It is wrong, because it will prove impossible to manage an economy sensibly once politicians believe there is no budget constraint.”
MMT exposes these fictions but some still think it is better for the public to be kept in a state of ignorance.
In the real world, currency issuing governments have no intrinsic financial spending constraint. They can purchase whatever is for sale in their own currency including all unemployed labour desiring work.
Mass unemployment is a political choice. Imagine if all Australians understood that, rather than labouring under the current deception.
It was not too long ago when full employment was official government policy.
The 1945 Government White Paper on Full Employment begins with a commitment to the Australian people “Full employment is a fundamental aim of the Commonwealth Government. The Government believes that the people of Australia will demand and are entitled to expect full employment” This commitment was abandoned when the Whitlam Government changed course in 1975.
Australians knew it was government’s responsibility to maintain spending sufficient to sustain full employment. The purpose of fiscal policy was not to achieve a surplus or deficit. Rather, they judged government on how low unemployment was.
Unemployment was a policy target, not a policy tool.
Menzies nearly lost the 1961 election because unemployment rose above 2 per cent.
Australian used to maintain a buffer of public sector jobs that always provided easy employment access to our least skilled workers.
So when and why did Australians become so tolerant of systemic unemployment and its attendant ills – the accumulated human wreckage to use my friend, Noel Pearson’s term – that goes along with it?
The answer lies in the political and economic developments we now call neoliberalism. They were supported by a series of powerful but interconnected myths – promoted by economists to distort our thinking about money, the capacity of government, and our economy.
Politicians on both sides now claim that employability (preparing people for jobs) rather than full employment is the proper role for government. They claim the ‘market’ will take care of the jobs.
As a result. we have endured elevated levels of unemployment and underemployment, suppressed wages growth, massive household debt, and rising inequality.
The unemployed are ‘managed’ within Australia’s newest ‘industry’ – the unemployment industry – and churned through pointless training programs divorced from paid-work. They receive below poverty line income support and are coerced by pernicious work tests when it is obvious there are not enough jobs to go around. The Robodebt scandal obliges.
The victims of this policy failure are scarred with accusative nomenclature – cruisers, bludgers, job snobs – as a divide and conquer strategy aimed at creating social divisions – them (bludgers) and us (hard working Australians). Lifters and leaners.
Even in the last few we days there have been absurd claims that the JobSeeker scheme discourages the unemployed from seeking work. In May 2020, unfilled job vacancies declined by 43.4 per cent. On a national scale, there were 3 persons for each unfilled vacancy in February. Now it is 7.2. Adding in the 600 odd thousand that have ‘left’ the labour force after giving up looking as employment opportunities collapsed, gives 12 job seekers per job vacancy.
Any reasonable person knows this is a systemic lack of jobs.
MMT exposes these fictions and provides answers to support a new vision of collective prosperity and an environmentally sustainable future.
The current government crisis response has been massively inadequate. I estimate that Australia has over 25 per cent of available labour underutilised in some way.
The waste of human potential is staggering.
There was no reason for unemployment to rise.
The government should introduce what I have termed a Job Guarantee by making an unconditional job offer at a socially-inclusive minimum wage to anyone willing and able to work.
The buffer of jobs would normally be small and would shrink as private sector activity recovers.
No inflationary pressures arise because government would not be competing for labour at market prices. There is no market bid for the unemployed.
I know all the criticisms – painting rocks – and the like. They simply reveal a lack of imagination.
Research at the Centre of Full Employment and Equity (University of Newcastle) over 25 years has addressed these issues. We can articulate hundreds of thousands of productive jobs that would add meaning to peoples’ lives and add value to society.
The Job Guarantee would replace the ‘unemployment industry’. Productive replacing the unproductive. A guarantee of employment replacing a guarantee of unemployment.
Treasury said JobKeeper would require an investment of $70 billion over 6 months to reduce unemployment rate by 5 points (585 thousand jobs). Our modelling shows that a Job Guarantee that reduced the unemployment rate by 6 points would require net investment of just $53 billion over a year.
A no brainer!
It is, as they say, a no brainer.
The JG does not solve all societal ills, but it would be a significant improvement on the current suite of policies.
The scale of this disaster is so large that Australians will have to get used to very large fiscal deficits for a decade or more to support income and employment growth, so that households can reduce their astronomical and unsustainable debt levels.
Any attempt at ‘paying down the public debt’ or ‘getting into surplus’ will be catastrophic and undermine the opportunities of our current generation and those that follow.
And when we wake from the health crisis, the on-going climate crisis will occupy our fears and challenges.
We need a grand vision to replace the impoverished world that neoliberalism has created for us.
We can have full employment again. We can choose a Just Urgent Sustainable Transformation (JUST2030) that will future proof our economy and give all Australians the opportunity to develop and put to use the knowledge and skills we need today and in the years to come.
Noel Pearson has written a powerful accompanying piece today calling on government to take responsibility for the unemployment crisis and the social damage it causes.
We are working together now, economist and lawyer, academic and indigenous leader. And we will be writing regularly to expand on the JUST2030 vision that we believe is not only grounded in economic reality but also in basic human decency and care for the natural world.
Watch out for more action under our JUST2030 project.
That is enough for today!
(c) Copyright 2020 William Mitchell. All Rights Reserved.
This Post Has 69 Comments
An excellent and timely piece that pushes forward the central plank of MMT – a fully automatic stabiliser that guarantees a job and an income for all.
Today represents 10 years since I first commented on this blog (here if you are interested: https://billmitchell.org/blog/?p=10554&cpage=1#comment-8035)
I’d like to thank Bill for disabusing me of the notions I held then via a decade of magnificent blog posts. I am very grateful. It’s been an interesting journey. Hopefully we are now nearer the end than the beginning.
Thank you very much.
Gotta hand it to Noel Pearson, he always knows which way the wind is blowing.
At the time of Mabo he was a land rights militant, then in the Howard years he switched to Friedmanite solutions and now he’s an MMT convert.
A good sign for MMT and indicator the neolib bandwagon is rapidly losing riders. This is good.
Terrific to make one more step towards traction for MMT at government policy level. I wrote to my House of Reps member a few weeks ago referring to Bill’s outing of the stimulus numbers, and also to alert her to the publication of Stephanie Kelton’s ‘Deficit Myth’. Hope she reads it. The JUST 2030 vision sounds good – the new normal will unfortunately feature fires, floods and other climate anomalies – the first tipping point may have already arrived given the warming of Arctic regions is several decades ahead of forecasts.
There will be plenty of community resilience jobs coming up in the future, I fear. Hopefully policy makers realise that crisis creates opportunity, after ten wasted years.
Speaking of opportunity, I am co-author of a Year 12 economics text here in WA (after many years teaching the subject at secondary and tertiary levels). I have to admit that this blog has left me embarrassed. What type of macroeconomics have I been teaching all these years? Fortunately I have an opportunity to correct that in the near future, and perhaps a couple of thousand Year 12 kids will at least get to apply some critical thinking to the ‘balance the budget’ argument usually put to them.
Many Thanks Bill.
Large scale greenhouses can be used to replace power stations for electrical power generation. The plants grown inside the greenhouse are pulverised and desiccated before use as the fuel source for the electrical generation. The heat and the CO2 released in the combustion process are captured (and recaptured) within the gas impervious greenhouse, providing a huge acceleration in plant growth. A jungle in a bottle. To achieve reliable 24h/365d power delivery to the national grid the greenhouse must therefore use the ground as very large thermal store and have an appropriate lighting system.
Reliable power delivery 24h/365d unlike PV and wind. Good as they are.
No CO2 released (handy for carbon neutrality by 2030) No fossil fuel, Carbon capture
No H20 released (handy for a deserts)
50 square kilometres produce to a gigawatt.
Cost irrelevant, carbon neutral by 2030. Shovel ready in two months if taken seriously.
Apologies for being slightly left of topic.
Thank you for all your comments along the way.
May I offer my thanks to Bill and to Neil for his below the line concise thought. Regarding this, ‘The scale of this disaster is so large that Australians will have to get used to very large fiscal deficits for a decade or more’. My thought is, why should Australians care about or focus on the deficit. Rather they should get used to more public sector jobs needed to rebalance the economy towards proper infrastructure spending and environmental security and (if it were introduced) get used to more public sector JG jobs as well, while the private sector recovers its employment potential. And there being so much slack in the economy, they needn’t have to face increased taxes, except maybe on the wealthy to limit their power to influence and corrupt.
As a follower of MMT for the past five years or so, I’ve become acquainted well enough to understand the government policy implications MMT reveals. I am a graduate member of the ‘vulgar economics’ MMT battalion here in the United States. Thanks to Bill, Warren Mosler, L. Randall Wray, Martin Watts, Stephanie Kelton, the brilliant Michael Hudson, Mr. Fazi, Mr. Wilson., AOC and her crew in the US House of Representatives, and many many more people around the world, we are making a difference. Faster than ‘one funeral at a time,’ in my opinion. It helps when you possess a superior ‘framework’ to explain the power of national monetary sovereigns.
A search for Pearson’s capeyorkpartnership will produce a very timely article by Pearson on the J.G.
Here is the link to Noel Pearson’s article – The case for a government jobs guarantee
Fantastic work Bill, congratulations! Both yours and the Noel Pearson piece are outstanding, and he is a very valuable ally at this time in particular. Sadly as we go back into lockdown here in Melbourne I can’t go out to celebrate your achievement, but I shall raise my glass from home…But another bout of lockdown is also a good reminder that we can’t manage this crisis with temporary solutions, and that a JG gives a structural solution both now and for the future. I’m looking forward to see the proposal, and will you be publishing more on your modelling soon?
Professors Chris Edmond, Richard Holden , and Bruce Preston wrote an article in ‘Crikey’ today entitled:
“Should governments obsess about debt? Yes, say traditionalists. No, says the theory (MMT)”.
They variously claim they knew it all along , and yet follow with contradictory statements eg
“The argument behind this theory is that, actually, we shouldn’t worry about budget deficits at all. In doing so, MMT makes two claims: one weak and one strong”.
“The weak claim is that a country that can issue debt denominated in its own currency, say dollars, can always finance a shortfall between its spending and its revenues. The central bank can, at the press of a button, create unlimited new dollars”.
[My note: I would have thought the central MMT thesis is governments are constrained by the nation’s resources and productive capacity, not money, regardless of “weak” or “strong” claims].
“This is neither a new nor a controversial idea. It is well accepted by central bankers, treasury officials, academic economists, and other experts – even if it’s not well understood by various politicians and commentators who are all too quick to talk as if the government budget is just like a household budget. It is not.
But if this view is so well accepted, why don’t countries usually finance budget deficits this way?
The answer is because the strong claims of MMT do not follow from this weak claim. The important constraint facing a government is not how to cover liabilities denominated in its own currency. The important constraint is how to pay for real goods and services. After all, no one cares about currency for its own sake. They care about what they can buy with that currency.”
[My note: the important constraint is availability of resources and the economy’s productive capacity, not how to pay for them].
In a reply to Edmond, I mentioned inflation being caused by excess demand on resources, and in his reply he linked to this turgid explanation of his own invention:
“When Does an Increase in Government Debt Cause Inflation?
Milton Friedman famously argued that inflation is always and everywhere a monetary phenomenon.
But the primacy of monetary policy in Friedman’s worldview implicitly assumes a certain type of
fiscal policy operating in the background. The more general case is that inflation is determined by
monetary and fiscal policy and depends crucially on “fiscal backing”. In this sense, as Thomas
Sargent puts it, it is more accurate to say that inflation is always and everywhere a fiscal
To understand fiscal backing, consider a stylised government balance sheet where the Government
represents the activities of both the Treasury and Reserve Bank.
The Government issues two types of nominal liabilities: (i) government debt, and (ii) money — the
sum of bank reserves and currency. The real value of these nominal liabilities is the real quantity of
goods and service that they can purchase, i.e., the dollar value of liabilities divided by the overall
level of prices in the economy. Think of this price level as the CPI.
What assets does the Government hold? Assets are the present discounted value of current and
future taxation in excess of current and future spending. Taxation includes both explicit statutory
taxes levied on various economic activities and seigniorage, the implicit “inflation tax” which
comes from the fact that future inflation erodes the real value of money held by the private sector.
This discussion ignores real physical assets held by the government. Their inclusion doesn’t alter
the arguments that follow. If anything, they raise complementary issues, such as the role of
privatisation in budget policy.
By accounting identity, the real value of assets must equal the real value of liabilities. The assets
provide the “fiscal backing” to the Government’s liabilities.
This identity is in some sense just accounting. But it is far more. It tells us that monetary policy and
fiscal policy are inextricably linked.
To see the link differently, consider the Reserve Bank’s inflation targeting framework. This
framework has two important implications for the Government balance sheet. First, since inflation
is the growth rate of the price level, the Reserve Bank’s inflation target is effectively a choice of the
path of the price level. So the inflation target determines the real value of the Government’s
outstanding nominal liabilities. Second, the Reserve Bank pursues its inflation target by adjusting
interest rates. So the instruments of monetary policy determine the real present discounted value of net taxes.
For the Reserve Bank’s target to actually be feasible, fiscal policy must ensure that the real value of
assets equals the real value of liabilities. That is, as the RBA changes interest rates to achieve its
inflation target, the fiscal backing must also change. Standard economic models such as the RBA’s
macroeconomic model, MARTIN, assume these changes in fiscal backing occur. When these
adjustments fail to happen, the RBA can’t deliver its desired inflation rate.
To give a concrete example, suppose the Treasury decides to raise taxes to implement a permanent
surplus target of one percent of GDP, having run deficits in the past. Because this policy action
raises the present discounted value of taxes, fiscal backing increases. The real value of outstanding
liabilities must rise by a corresponding amount — the price level must fall. Government liabilities
are more valuable, so the public consumes less and saves more.
This balance sheet perspective provides a useful framework to understand whether recent RBA
balance sheet policies will be inflationary, whether new public debt issuance will be inflationary,
and whether the Government can issue as many nominal liabilities as desired: that is, “print money”
without consequence. To see why, we need to distinguish between policies that simply change the
composition of the consolidated Government balance sheet and policies that change the overall size of the consolidated Government balance sheet.
To take an example of policies that change the composition of the consolidated Government balance sheet, consider the RBA’s recent approach to yield curve control, a form of so-called “Quantitative Easing”. The RBA purchases government debt from the private sector by crediting the seller with newly created bank reserves. But the total liabilities issued by the consolidated Government (the Treasury and RBA combined) do not change. The interest payments on the public debt to the RBA are remitted back to the Treasury so cancel and so too the issued debt from the perspective of the joint balance sheet of both entities. So long as the real assets backing this same quantity of liabilities also remains unchanged, such central bank policies should not be inflationary in the long run.
But government debt issued by the Treasury is fundamentally different. New debt represents an
increase in the overall size of the consolidated Government’s balance sheet. Whether spending is
financed by selling the debt directly to the public or to the central bank which makes payment with
reserves is largely irrelevant, with one important qualification. Selling debt directly to the public
provides important market price signals about market perceptions of fiscal sustainability that would be lacking if the RBA bought directly from the Treasury.
Either way, whether such actions are inflationary ultimately depends on fiscal backing. If newly
issued debt is backed by future increases in net taxation, it will not be inflationary. Only when fiscal
backing is not present will inflation be a problem.
For this reason, statements that we are not Zimbabwe or that we are not yet seeing the RBA directly
purchase Government debt are beside the point. The relevant determinant of inflation is fiscal
backing. Not the composition of liabilities, not the quantities of outstanding liabilities.
Similarly, claims by proponents of Modern Monetary Theory are misplaced. While it is true the
Government can always issue nominal liabilities to pay for existing nominal liabilities (for example,
issue new nominal debt to pay for interest on existing nominal debt), these commitments must be
paid for in real terms. At the end of the day, government spending involves purchases of real goods
and services or transfers to help firms and business make purchases of real goods and services. Not pieces of paper.
The public will hold Government liabilities if they have value. That value is the real quantity of
goods and services that they can secure, which depends on the price level. If there is no fiscal
backing, inflation will erode the real value of liabilities until they equal the real value of assets.
Holders perceive government liabilities as less valuable. Attempts to convert these assets into real
goods and services drives up the price level. Inflation is “the tax” that ensures appropriate fiscal
This discussion abstracts from uncertainty and the public’s expectations about future economic
developments, including the conduct of policy. Should holders of the public debt become
pessimistic that future taxation will back liabilities, sharp changes in inflation are likely. Similarly,
deficit alarmism calling for immediate fiscal retrenchment during a recession are counterproductive.
Whether we will see inflation emerge as a source of fiscal financing depends on many things. But
given Australia’s strong fiscal position with low gross debt and much lower net debt, a surge in
inflation is unlikely. Should Australia grow in nominal terms between 3.5 – 5 percent per annum
over the next 30 years, a large part of new debt issuance will be paid for by typical inflation inflation of 2.5 per cent and an expansion in the tax base from population growth and rising real economic activity”.
Chris Edmond and Bruce Preston
The University of Melbourne, 6 May 2020
Bill, or someone with similar expertise might be interested in critiquing this. I’m not!
I’ll critique it in one word:
Wow! So hope still lives, and sanity and humanity may yet prevail down under. May this be but the beginning of “a new vision of collective prosperity and an environmentally sustainable future, ….a grand vision to replace the impoverished world that neoliberalism has created for us.” Thank you, Bill, and the others working with you in your efforts to persuade Australian government officials, at this time of unprecedented crisis, to act prudently pursuant to the clarity provided by the MMT lens. The following link may not be helpful to the delicate dialogue underway (and if it’s not, I’m sure Bill will not allow it to appear here and possibly gum up the works), but today’s post from another exemplary, cutting-edge Australian blogger provides an incisive explanation of what MMT and related efforts to facilitate socioeconomic progress have been and continue to be up against.
Prof Mitchell. Do we need to worry about a wall of new money, suddenly falling onto the private sector, as the virus lock-down subsides, spiking up inflation?
As far as I can gather, the UK Treasury has fiscally injected circa an extra 150 billion “units of account” since last February, where is it currently hiding out? Hence, what is its velocity of circulation? Is it paying down credit / loans; is it being voluntarily saved (frightened for the future); is it being involuntarily saved (can’t get out the house to spend it)?
If inflation does spike up in the near term as production capacity and inventories are exhausted, how then can MMT foot soldiers like me, rebut the neo-liberal mainstream claim that “MMT printing money causes hyperinflation”? We few in the UK are trying to do our bit as believers in MMT, We need more street level weaponry.
I think what is remarkable, even stunning, is that Bill Mitchell’s and Noel Pearson’s essays have been published in the Murdoch press, the arch purveyors of mainstream economic’s deficit mythology.
One thing about the scheme that Noel Pearson’s essay describes is a little surprising. He says:
” Whether an employee works fulltime or part-time would be their choice, but they would be paid for the time they work. No work, no pay. ”
Then Pearson writes:
“Thirdly, unemployment benefits would become history in Australia.”
So, no work, no pay and unemployment benefits gone.
I though the idea of the JGS was that participation was optional and the alternative unemployment benefits would always be available.
In the U.S. the issue right now is the expiration at the end of July of the additional $600/week above regular unemployment benefits. Some of those furloughed actually made more on unemployment and so were disincentivized to return to work even with jobs on offer, so in the case of the U.S. that argument isn’t completely absurd. Obviously there needs to be a more nuanced and comprehensive approach a la the Job guarantee, but I think in this case at least they did something. Hopefully at least a modified extension of the benefits will happen soon.
“So, no work, no pay and unemployment benefits gone.
I though the idea of the JGS was that participation was optional and the alternative unemployment benefits would always be available.”
No. Why should it?
If an individual chooses not to participate in the state’s scheme that is their choice isn’t it? At that point the state is perfectly entitled to wash its hands. There is always private charity if that is preferable to making a positive contribution to society via hours of labour for others.
The same would apply if you get sacked from a Job Guarantee position. The individual chose to behave like that, and should stand the consequences of their actions.
The Job Guarantee pays a living wage in exchange for labour hours – unless exempted by age or infirmity.
“where is it currently hiding out? ”
It has been swapped out for UK Gilts. The whole idea behind the ‘sterilisation’ nonsense is the fear that people will spend their money. Hence the desire to get it into 24 Carat Pounds on the inane belief that the decline in price will slow down the spending in Sterling Pounds come the ‘big rush’.
There will be no big rush. The fear that is driving the hoarding won’t subside that quickly.
“No. Why should it? ”
I am not making judgements about what should or shouldn’t be.
I am seeking clarification about the standard MMT concept of the JGS.
I seem to recall reading here in Bill’s blog that the scheme would be voluntary and that unemployment benefits would continue to be available to those that don’t want to participate.
If my recollection is incorrect – fine.
Are you saying categorically that the JGS has always been such that if an unemployed person doesn’t want to participate in the scheme then he has no recourse to other government benefits?
“No. Why should it? ”
Are you sure about that?
So the JG is effectively no different from Workfare then? At least as far as the participant is concerned, albeit paid at a higher rate than JSA?
I also thought that it was voluntary? (If you’re in poverty then there’s no choice but to take it, if you’re out of work).
Pavlina’s new book arrived today, so I’ll dig deeper…
Dear Mr Shigemitsu and others (2020/07/08 at 6:25 am)
The issue you raise is one of preference not an inherent feature of the Job Guarantee.
Some people think the JG can be totally voluntarily and combined with a UBI or continued unemployment benefits.
Others, like me, think that the government responsibility to provide jobs for all should be accompanied by a commitment of people to contribute to society if they can.
And requiring a person to work if they can in return for income security is not workfare.
Workfare is a program limited in hours (usually with no choice by workers) and conditions and usually paid below minimum wages (on an hourly basis).
The JG as I conceive it, allows workers to choose their hours, engage in training and further education (full-time where appropriate), receive non-wage (social wage) benefits like annual leave, sick leave, transport and child care subsidies, educational expenses, superannuation etc.
It is also not conditional on anything other than turning up and working and never runs out. A person could have a JG job forever if they liked and enjoy stable income growing with national productivity (real income growth in other words).
That is nothing like workfare or work-for-the-dole in the Australian context.
Anyone who has difficulty working – age, sickness, disability – is provided generous income support by the state.
That is how I conceive it. Others have different preferences as to volition.
“As far as I can gather, the UK Treasury has fiscally injected circa an extra 150 billion “units of account” since last February, where is it currently hiding out?”
I presume most of the government support for unemployed workers has been spent on food, utilities, rent and mortgages. The government (stupidly) borrowed the money from private investors, so there has been little new net money created in the private sector, given the loss of wages.
Where will inflation come from? And if the government issued the rescue package money itself, to pay for food etc of unemployed workers, how would inflation arise, given the loss of wages in the lock-down?
The Job Guarantee will be a massive failure if anyone involved in running programs like WFD, the Job Network, and various other incarnations of them is allowed to hold any position of authority within it.
Unfortunately, that’s exactly the type of people you will have running it. So it’s another case of meet the new boss same as the old boss.
“So the JG is effectively no different from Workfare then? ”
Not really. Can you choose to go on “Workfare”. You can choose to quit your current job and take a JG job. That’s an important feature of it that handles the resentment issue you get with unemployment benefit (“why do they get state money when I don’t”) and UBI (“why do I get taxed and have to work when they do neither”).
The question is why should everybody else support an individual if they won’t add to the pot? Even when every doctor and every third party knows they are perfectly capable of doing so – and a system has been created to allow them to do so.
The JG is indeed voluntary. You just don’t get any money from the state if you choose not to. That then falls to charities – funded by people who believe that people should be paid if they do nothing. That way those who don’t believe in reciprocation are the ones that get to pay for it. If you are in the majority there will be no issue. The charity will do its work – and you’ll get tax relief on it.
Every right comes with a responsibility. As soon as you add a free-for-all you sow the seeds of the scheme’s destruction,
“The government (stupidly) borrowed the money from private investors, so there has been little new net money created in the private sector, given the loss of wages.”
Why do you think swapping Silver Pounds for Gold Pounds deprives the private sector of money? Do they not have Gold Pounds that are fully liquid? Are they not the best collateral, so much so the central bank accepts them as posting against the Real Time Gross Settlement system?
As MMT shows us, the government didn’t borrow from the private sector. What happened is the same thing that happened every day. The National Loans Fund expanded and the Consolidated Fund expanded at the same time in the Bank of England – creating new Silver Pounds. The consolidated fund was used to transfer those Silver Pounds to banks who credited individuals in turn. The individuals spent between the banks and at the end of the day the banks and the pension funds took the new Silver Pounds that were left and swapped them for new Gold Pounds issued by the Treasury. The Silver pounds so swapped were then used to reduce the number on the National Loans Fund to zero.
Reserve add. Reserve drain. Breathe in, breathe out.
“Are you saying categorically that the JGS has always been such that if an unemployed person doesn’t want to participate in the scheme then he has no recourse to other government benefits?”
Let’s put it the other way around – since it is you that has to justify the transfer not me.. Are you categorically saying that you want to force somebody to work extra hours producing a surplus to give to other people for nothing of real value in return?
Why should they put 8 hours in producing for people who refuse to put 8 hours in in return – even though they clearly could if they wanted to? What justification do you have for stealing time from the workers that they could better spend with their family and friends?
Everybody has to contribute to society if they can if they want anything out. The 8 hours input is the contribution payable. The JG is essentially a contribution based system – using time not money. And the ability to sort the “workers from the shirkers” goes down very well with the general public who will have to vote for this if we want it in place.
There’s an obsession on some parts of the hard left with the idea that you can get away with doing nothing and still be part of society. I’ve never understood it. No voting majority is going to back that – ever.
My personal view is that the number of ‘shirkers’ will be zero. So the whole thing is a moot point anyway. People want to work. People want to have the ability to contribute and feel useful to others.
“Let’s put it the other way around”
I don’t know why you are being deliberately provocative. It seems you want to grandstand on the point.
I’m not playing your game.
I have no interest in making value judgements about the JGS.
I was merely seeking clarification which Bill has provided.
“I don’t know why you are being deliberately provocative. ”
That would be your faulty interpretation. And comes across as incredibly arrogant and self centred. I was talking to the room, not you. Hence why I didn’t mention you by name in the response.
The UK sectoral balances came out last week
•The households’ saving ratio increased to 8.6% in Quarter 1 (Jan to Mar) 2020, compared with 6.6% in Quarter 4 (Oct to Dec) 2019.
•Households’ consumption spending decreased by £9.5 billion (negative 2.7%) in Quarter 1 2020, the largest quarterly fall in nominal household spending of this type ever recorded; there were large falls in expenditure on motor vehicles, restaurants and hotels, and clothing and footwear.
•The households’ net lending position increased to 2.6% of gross domestic product (GDP) in Quarter 1 2020 from 0.8% in Quarter 4 2019.
•General government saw an increase in its net borrowing position to negative 4.4% of GDP; the increase in borrowing was the largest since Quarter 3 (July to Sept) 2013 and was particularly driven by the introduction of the Coronavirus Job Retention Scheme (CJRS) late in the quarter.
•A fall in private non-financial corporations’ gross operating surplus of £5 billion was seen in Quarter 1 2020 as a fall in profits was seen across almost all industries.
•Financial corporations saw a decrease in their net lending position to 0.5% of GDP in Quarter 1 2020 as they increased their acquisition of non-monetary gold.
•In Quarter 1 2020, domestic sectors and the rest of the world saw large changes in their financial account balance sheets as the UK and world financial markets anticipated the global coronavirus (COVID-19) pandemic.
•In the financial account, there has been evidence of a “Dash for Cash” as UK monetary financial institutions (MFIs) saw record increases in deposits placed with them on the quarter of £819.6 billion as investors switched to safer investments.
•In part, these deposits have been funded by the issuance of new loans by MFIs; they recorded their highest rise ever in short-term loans of £304.8 billion.
Fiscal stimuli and Job Guarantees are subsets of thermodynamic limits.
For example, the 50 square kilometre “Power Greenhouses” (as Lee above proposes) produce 1 gigawatt, enough electricity for about 100 people (at 10,000KWh / person / year).
For the c25million Australian population, that means building about 250,000 Power Greenhouses, covering 12.5 million square kilometres.
For Power Greenhouse’s to replace not just Australian electricity, but all its energy consumption (c 63,000 KWh/person/year) would mean building about 78 million square kilometres of “Power Greenhouse” about 7,800 times the urban area of Greater Melbourne.
Why even think about building even one, let alone a quarter of a million “Power Greenhouse” (with fossil fuels, or how else to power CO2 gas-tight Power Greenhouse build-out?) when much of the energy exported from Australia is used for generating electricity overseas; three times as much thermal black coal is exported as is used in Australia, and all of the uranium production is exported?
@Bill & NeilW,
Thank you for clarifying.
I threw down the “Workfare” gauntlet because that’s the objection to the JG that I have seen expressed on more than one occasion by the UBI mob, and your replies helpfully provide the necessary ammunition for countering that argument.
It’s clear to me (as someone who has endured a period of “officialised” unemployment) that no one, other than a complete masochist, would prefer to be paid, as now, £70 to spend a fruitless 37.5 hours pw scouring the Jobcentre portal for crap zero hours jobs, on pain of welfare withdrawal and sanctions for failure to comply – rather than be earning £340pw in a full-time job, with training, holiday and sick pay, security and career progression opportunities.
Best, Mr S.
When thinking about the significance of the JG, I think it’s important to move beyond purely economic considerations. E.F. Schumacher famously wrote about the benefits of employment in a much larger context, grounding his discussions in both Buddhist and Christian traditions. Seen from those perspectives, employment has at least a four-fold purpose: (1) to develop and sharpen a person’s innate skills and talents; (2) to draw people out of their natural ego-centricity by learning to work with others on common tasks; (3) to instill a sense of self-worth, self-reliance, and agency; and then, lastly, comes (4): to produce the goods and services necessary for a healthy economy. Only when economic analysis is broadened and deepened by meta-economic considerations–what Bill calls values–does it fit the tagline of Schumacher’s most popular book, “Small Is Beautiful,” which tagline is “economics as if people mattered.”
Thank you, Newton, for that reminder about Schumacher’s take on employment. I shall be using that. ‘Small Is Beautiful’ was the first economics book I read before I did my degree and my entrance essay was based on it. No one was impressed:o)
Political proposals on where to aim fiscal stimuli and Job Guarantee Schemes will always be limited by real world thermodynamic / energy available constraints.
“Power Greenhouses” produce 1 gigawatt / 50 square kilometres (according to the proposal above) enough electricity for about 100 people (at 10,000KWh / person / year).
To replace not just Australian electricity, but all its c25million population’s energy consumption (c 63,000 KWh/person/year) would mean building about 78 million square kilometres of “Power Greenhouse” or about 7,800 times the urban area of Melbourne.
“Power Greenhouses” are thus obviously not a particularly sensible proposal.
Instead first, Australians should scale up carbon capture (which “Power Greenhouses” also need) and use all the thermal black coal it exports, three times as much as is used in Australia.
Better and far more efficient, Australians could start to use all of its uranium production that’s exported for generating electricity overseas.
Prof Mitchell, it is difficult to follow the conversational thread in your comments area. It would be nice to have a “reply” link at the bottom of each comment.
Also, comments from Neil W; like, “Why do you think swapping Silver Pounds for Gold Pounds deprives the private sector of money.”; just confuses the MMT message at street level.
UK government spending, created and issued by the UK National Loans Fund to its central bank for distribution, is called “reserves”. Reserves come in two mirrored parts. One part turns up in a high street bank’s customer current account (state pension payment say). the identical mirrored part turns up in that high street banks “reserve” account at the central bank. The high street bank’s balance sheet continues to balance.
Strange that a lengthy post on these power greenhouse thingys would appear the same day as a presumably well-researched critique.
And given that it takes decades to get a nuclear facility up and running I would fear that Australia may well be too environmentally, politically and economically unstable to properly run one.
“That would be your faulty interpretation. And comes across as incredibly arrogant and self centred. I was talking to the room, not you. Hence why I didn’t mention you by name in the response.”
Bulldust. You were clearly addressing me. 🙂
I have not read Schumacher. Sounds apt.
I was surprised by Noel Pearson taking the line that the JGS should not allow those that are capable of work recourse to unemployment benefits if they don’t want to participate in the JGS.
I was wondering what you think Schumacher would make of such an approach.
Henry, Neil might have seen me somewhere in the room also – I was lurking about one of the corners, as usual trying to figure out how to get society to provide me a generous income no strings attached. His ideas seem designed to foil my ambitions (or lack of ambition more accurately). No doubt he was addressing the lefty corner of the room where I was arrogantly plotting, even though you were the one quoted. Don’t feel bad that you were not singled out for attention.
Seriously though, Neil’s idea of the JG would be a huge improvement over what exists right now in my country. But it is hardly the only way to run an MMT style Job Guarantee in my opinion. There is no reason a JG can not coexist with some form of unemployment compensation. Or other types of government assistance such as might be needed if a worker who had been providing for a number of children lost their job.
“Also, comments from Neil W; like, “Why do you think swapping Silver Pounds for Gold Pounds deprives the private sector of money.”; just confuses the MMT message at street level.”
I’m not sure that asking the man or woman in the street whether or not they that think swapping Govt liabilities at the BoE for Govt liabilities at the Treasury deprives the private sector of money would elicit any greater understanding either – although it’s the direct reality that Neil is alluding to, with such metallurgical panache.
To stand a good chance getting the same message across in the demotic, you’d most probably need to ask them whether, as private individuals, they thought that buying £100 worth of Premium Bonds would make them £100 poorer. I doubt you’d find anyone who’d say it did.
“Don’t feel bad that you were not singled out for attention.”
I asked a straight question, seeking clarification, instead I received an unwanted invitation to act as a straw man – not interested.
Neil Wilson asks me:
“Why do you think swapping Silver Pounds for Gold Pounds deprives the private sector of money?”
My point was merely to allay acorn’s apparent concerns about inflation arising from government covid-19 rescue package injection of money into the economy, during the withdrawal of the rescue packages.
As you know I would nationalize the entire banking system so the government never has to borrow from the private sector at all, but that’s another story (following your point earlier that government does have to borrow money, regardless of whether it can issue ‘debt free money’ or not).
in any case I agree with acorn’s view that your question above “just confuses the MMT message at street level.”
Obviously. I’m at the street level.
“there is a lot of behind-the-scenes workshops/briefings going on at state-level. ”
Obviously I’m not in the loop but what I’m seeing here in QLD is the state government talking about hiring freezes and cuts.
The best news I have read in some considerable time. Goodonyou Bill.
1 Gigawatt for 3600 seconds/24 hours/365 days a year supplies 700,000 homes.
Ask google: how many homes does 1 gigawatt supply
A gigawatt of power will provide enough energy for about 700,000 homes. Assumptions: A typical home uses about 11,000 kWh per year. A baseline 1 gigawatt power plant with an uptime of 88% (typical for coal plants) will provide 1 GW x 365 x 24 x 0.88 = 7,700 gWh of energy over the year.
20 square miles of greenhousing can provide enough plant material to handle to the energy
needs of 700,000 homes. Call It 350,000 homes. Happy now.
Australia is a party to seven core international human rights treaties. The right to social security is contained in article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR).
See also article 5(e)(iv) of the Convention on the Elimination of All Forms of Racial Discrimination (CERD) , articles 11(1)(e) and 14(2)(c) of the Convention on the Elimination of All Forms of Discrimination Against Women , article 26 of the Convention on the Rights of the Child (CRC) and article 28 of the Convention on the Rights of people with disability (CRPD).
CEDAW requires measures to be taken to ensure women, on a basis of equality with men, the right to social security, particularly in cases of retirement, unemployment, sickness, invalidity and old age and other incapacity to work, as well as the right to paid leave.
The CRC requires countries to recognise the right of the child to benefit from social security. Benefits should take into account the resources and the circumstances of the child and persons having responsibility for the maintenance of the child.
The CRPD requires countries to recognise the right of people with disability to social protection and to take appropriate steps to ensure access by people with disability to social protection and poverty reduction programs and to retirement benefits and programs.
What is the difference between saying to someone “take a JG job or you get no money” and “take a JG job or starve”. Seeing that in a modern society access to money – in some minimal amount – is a precondition for personal survival? (And airily leaving it to “charity” to fill the gap is just a cop-out IMO).
“It’s clear to me (as someone who has endured a period of “officialised” unemployment) that no one, other than a complete masochist, would prefer to be paid, as now, £70 to spend a fruitless 37.5 hours pw scouring the Jobcentre portal for crap zero hours jobs, on pain of welfare withdrawal and sanctions for failure to comply – rather than be earning £340pw in a full-time job, with training, holiday and sick pay, security and career progression opportunities”. (MrShigemitsu)
That seems a pretty conclusive argument, the gap between JG and non-JG hourly rate being fully £7.20 per hour (leaving aside the undoubted added value of the fringe-benefits). So what purpose, exactly, is served by witholding the measly £1.87 per hour from the wretched JG-refusenik? For the satisfaction of seeing him punished? Getting his just desserts? For having the temerity to refuse to conform?
Seems to me to be totally out of place in association with something that was conceived-of as an employment buffer-stock cum price-anchor devoid of any normative ballast.
“So what purpose, exactly, is served by witholding the measly £1.87 per hour from the wretched JG-refusenik? For the satisfaction of seeing him punished? Getting his just desserts? For having the temerity to refuse to conform?”
Robert, what if the purpose of such a proposal was to forestall objections that those opposed to a Job Guarantee make? So as to allow the JG to be enacted. Neil Wilson’s idea of what the Job Guarantee would be does just that- it eliminates most ‘conservative’ type objections (the kind that could actually be made in public) right off the bat. So I think it is possible that his proposal could be more likely to get enacted into law than something I would come up with. Just for example. Some of Bill Mitchell’s ideas about it (the surfers idea) would also be D.O.A. in the US Congress for sure.
That being said, the Job Guarantee is not intended to solve all of society’s problems and it would not solve all of them. A just society will still need additional social assistance programs. Even Neil sees the need for some of them.
“what if the purpose of such a proposal was to forestall objections that those opposed to a Job Guarantee make? ”
Yes, this might explain why Bill and Noel were able to publish their JG manifestos in the Murdoch press. There was a sufficiently hard arsed condition attached to the scheme such that conservatives might find it palatable.
You may well both be correct in your (shared) appraisal.
What is this, if not pandering to right-wing brutality?
I simply refuse to accept Neil’s bald approach to this – moral – question, which seems to me to smack of unmitigated social engineering (and to hell with the collateral damage). It’s reminiscent of the 19th-century Poor Law, only dressed-up in 21st-century techno-babble – and just about as inhuman in its potential effects. Talk about throwing the baby out with the bathwater!
I’m sorry but I think it stinks (as, reading between the lines, I suspect both of you do too).
I meant *Henry* Rech of course
I’m not sure I like it either.
However, I do think there should be monetary incentive for those wanting to join the JGS. They are prepared to work so they should be paid the minimum wage plus the other benefits mentioned.
Unemployment benefits should be set lower than the minimum wage otherwise the JGS probably won’t be effective.
Is there a risk that “frugal” governments will pressure lower tier public jobs wages with minimum wage JG worker?
How and who should the minimum wage level be negotiated and maintained on a decent level?
There would be a market for short or medium termed unemployment insurance, people with wages well above minimum wage maybe want to be able to keep on living as before, not moving out of the neighborhood, keep their children in the same schools and so on.
An insurance could be constructed so its ad on top of what they get from a JG job.
I suppose a Job Guarantee would only if it is combined with a break from the overall neoliberal economic ideas that is the norm in most countries today. Economic policies that aim to create full employment, otherwise there will probably be a permanent JG precariat. Where the minimum wage will be under constant political attack.
How many would get a better living standard with a JG (suitably constructed)? Will there be a need to curb consumption somewhere else to head of possible increased inflation?
Or will it just be that it gets supply and demand in better balance relative available real resources?
As now gone progressive Swedish economist wrote 1985:
“All human value is ultimately derived from demand, from the lack of labour. Women and young people also gain human value and economic value in a thriving economy with high utilisation of all resources. For the capital-owning minority, however, low capacity utilisation, absence of labour shortages and stagnation are the very preconditions for increased economic, political, and human power.
It is just a matter of choosing: should the whole or the part flourish?”
Sven Grassman (google translation)
Where are the political interests, with some power to talk about, that are willing to take on the “the capital-owning minority”?
“Unemployment benefits should be set lower than the minimum wage otherwise the JGS probably won’t be effective”.
And (like you and some others here) I always took it as read that that would be an inherent part of how the JG would operate in the real world.
It seems we may have been mistaken. If so, perhaps we’re going to need to reappraise our (hitherto unquestioning) attitudes towards the JG?
However, in mitigation, I note that Bill wrote in his comment (above):-
“The issue you raise is one of preference not an inherent feature of the Job Guarantee”.
So perhaps I’m getting unnecessarily agitated 🙂
(Although Neil’s expressed opinion does appear to me to directly contradict Bill’s)
“Unemployment benefits should be set lower than the minimum wage otherwise the JGS probably won’t be effective.” I too agree. Should there be conditions set for claiming, like proof of job search?
The problem with setting a minimum wage is that although most essential living expenses are pretty equal, housing is not. It’s one of the biggest problems we have here in UK.
“Unemployment benefits should be set lower than the minimum wage otherwise the JGS probably won’t be effective.”
Why should there be unemployment benefits if unemployment is impossible for anyone able to work? If people are not fit to work there is and should be other social systems that help those.
No public unemployment benefits system is required. If people want to buy private unemployment insurance (not public sponsored) they should of course be free to do so. Maybe there could be a market for those who are way above minimum wages. That ad on top of JG minimum wage during a transition period. Full private insurance coverage so you don’t need to use JG would probably be very expensive.
Bill has mentioned that someone in the JGS would be eligible for a range of other living expenses support – things like education, health, training and maybe housing/rent.
If a person is willing to work and contribute this seems fair enough to me.
I am not sure I have entirely understood what you have said.
Someone not fit to work should have the support of an alternate system. I think Bill has said that.
In Australia, there is no tradition of unemployment insurance, unlike the USA. I guess that is an entirely different approach.
Then there are people who just don’t want to work. What do you do with them?
If people do not want to work, they must manage that them self. Someone maybe wants to work as little as possible, let them do that. If they manage to support them self, inside the boundaries of the law.
Why should we do something about them?
Yes, they do not contribute, but they are on the margin and a decent well fare system can afford that.
I think that there is broad support even in my country for the idea that someone willing to work should be able to work and that in doing so, they should also be able to afford at least a modest life with some dignity. Actually, I think it would be difficult to find people who would publicly oppose that basic idea, even if they privately do. Call this the lowest common denominator. So to allow such an idea to become public policy, maybe it makes sense to start there at that basic level of agreement on at least the minimum goal of public employment policy.
Now even though there is broad acceptance of the goal, we immediately start to find honest (and dishonest) objections whenever an actual policy is discussed. Things like- it would be nice but we can’t afford it, it will cause inflation, it will hurt small businesses, the program is too big, the government can’t manage such a program, there isn’t enough useful work to do, and many variations of these and many more. Many of the honest objections arise from ignorance of how a monetary economy works and Bill Mitchell has answers for all of them. But some objections are based on ideology or self-interest (greed and power). And that type of objector won’t be swayed through education and rational explanations- many of them already well understand how the system works and benefit from it right now. These types of objectors need to be isolated and their self-interest needs to be exposed in order to implement a Job Guarantee politically.
That is why I would support Neil Wilson’s hard-ass, barebones Job Guarantee. It removes many ‘reasonable sounding’ objections from debate and therefore exposes the remaining objections for what they truly are- ideology and self-interest. It isn’t perfect but it is far better than what currently exists. It also would serve as a counter cyclical automatic economic stabilizer and also provide the buffer stock of employed that MMT shows would be beneficial for controlling inflation and for keeping people in an employable condition- things our current policy is poorly suited to do.
And most importantly- we have a slight chance of getting something like it enacted. And even that will be very difficult to do.
This is an excellent discussion.
The problem I’ve always had with the JG is that I see an endless demand for labour for jobs in the public sector to provide, especially, services, which would be very nice. That is an argument against providing a basic income for those who don’t want to work.
On the other hand there are many ‘psychological’ reasons why someone would find it oppressive to be forced to work to subsist.
Lots to think about.
This boils-down to a “means v. ends” – aka “political expediency” – debate.
ie – How many of the claims of common humanity can morally-justifiably be disregarded in pursuit of what is held to be a *paramount* political goal – for any number of *in themselves persuasive*, but practical not moral, arguments?
That’s something that each person can only work-out for themselves.
“That is why I would support Neil Wilson’s hard-ass, barebones Job Guarantee”.
So how would you answer my question:- “What is the difference between saying to someone “take a JG job or you get no money” and “take a JG job or starve”. Seeing that in a modern society access to money – in some minimal amount – is a precondition for personal survival?”
The guaranteed offer of an honest decent way to obtain money- sometimes called employment- when such offer does not currently exist would be a vast improvement over what is on offer in the US today. If someone chooses to rely on charity rather than work, well at that point at least they have a choice in the matter. I am not saying it is perfect- I am saying it is a lot better than what we have now here.
In response to your question- I would want to know what that person’s reasons were that made them unwilling to work in some way. And why they believed I should nonetheless support them.
People has always been forced to work and make an effort to not starve to death. It has never been so that healthy adults could refuse to do something for the personal survival and demand that they should be feed by others.
When we where hunters and gathers I imagine everybody had to contribute by best of there ability, so also in agrarian societies.
If we could enroll all possible human capacity and go down to a more sustainable consumption pattern it maybe be enough to work in average 2-4 hours per day.
So, do we want or need full employment, i.e. 8 hours a day or rather 10-12 including commuting?
People have properly worked as much as they do in the industrial age, an age with gigantic productivity gains.
“If the goal of societal development were that we all worked to the maximum, we would be insane. The goal is to free man to create the maximum. Dance. Paint. Sing. Yes, whatever you want. Freedom.”
Ernst Wigforss, Swedish Social-democratic finance minister in the 1930s.
In the late 19th century approximately 75% of the workforce was engaged in agriculture like farming and forestry, in the 1950s labor force in industry peaked at 45-50%. Now the service sector is the dominant employer.
A large part of that is as Wigforss said; “Dance. Paint. Sing” and acting and sport entertainment and so on. But on a commercial basis for us to watch and consume, not to do our self. The somewhat exception in this entertainment industry are computerized games and social network interaction on phones and computers.
@/lasse: “If we could enroll all possible human capacity and go down to a more sustainable consumption pattern it maybe be enough to work in average 2-4 hours per day.” That’s true only in the case of goods. Most people work in the service sector now and I cannot see the demand for those services diminishing. Indeed, there is a huge unfulfilled demand for the sort of services which are better provided by local authorities.
I’ve been pondering why the Murdoch press was prepared to publish Bill’s and Noel Pearson’s JGS manifestos in the Australian. I found this very surprising. Were they just jumping on the latest bandwagon? For decades they front-ran the promotion of the government spending, deficit and debt mythologies of the mainstream, vociferously.
So why shift?
I don’t think it was just a case of the proposed JGS that Bill and Noel put forward having a hard edge to it – no benefits for the unemployed not willing to participate in the scheme.
Could it be that the Murdochs and their fellow travelers perceive the current Covid crisis as an existential threat to capitalism? Toss in the decline of globalism and various social movements now disrupting societies around the globe – Black Lives Matter, climate change etc..
Could it be they see MMT as away that governments can and will bail out the capitalist system? Perhaps they see the flourishing of MMT as a saviour for their commercial interests and the maintenance of their power.
All they have to do is make certain that MMT is implemented such that it maximizes their position. So best get on board now while it’s still possible to manage the process of its adoption.
Great article Bill. Keep up the great work you’ve been doing in this space for decades.