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Thursday, December 15, 2011

Jobs Guarantee

Heteconomist has a nice discussion about the so-called jobs guarantee idea being put forth by MMT  adherents.

I would like to suggest that Kalecki's list of possible reasons why some might have reservations about a jobs guarantee program is sorely incomplete.

His three reasons, as Heteconomist lists them:
The reasons for the opposition of the ‘industrial leaders’ to full employment achieved by government spending may be subdivided into three categories: (i) dislike of government interference in the problem of employment as such; (ii) dislike of the direction of government spending (public investment and subsidizing consumption); (iii) dislike of the social and political changes resulting from the maintenance of full employment. (emphasis in original)

All three of the above, one could argue, point purely to a conservative political-ideological point of view. According to Kalecki, it seems the uneasiness some might feel stems from three uneasy free-market invasions:

1. government sector vs. private sector
2. spending type a vs. spending type b
3. labor vs. capitalist

But I'm uneasy with the idea of jobs guarantee; and while I might have some discomfort along the lines of the above (to varying degrees), my true discomfort stems from some additional reasons given our existing government structure (including but not limited to):

1. Final decisions (running the business/employment programs, deciding what programs are best to do and what aren't etc) would be made by politicians. One must merely observe today's political environment to see that, absent a Utopian government, the logistics of such an operation, even if attempted with public-private resources, would likely fail in the long-term. How would these decisions be made? Who gets hired where, and based on what?

2. Unemployment, while unsavory, does serve a purpose. It weeds out the bad-acting laborers in good times. It's the bad times that is of concern - it's during deep recessions that even the average-actors are weeded out of the labor market. JG assumes that the recessionary environment is the norm or majority, when one can argue it is not. Why should the government guarantee jobs to bad actors (drug abusers, truant former employees, abusive former employees, lazy former employees)? Why should the good actors have to work to find a good job comparably? If I'm the good actor, who potentially values stability over wage, why wouldn't I reduce efforts to improve myself or advance my skills, and just take the government freebie? Related, if unemployment is pushed more toward 0% (2% or whatever) as an employer or last resort, the adult now has lesser incentive to re-skill or re-educate themselves - something a dynamic economy must do to survive.

I haven't closed my mind to the JG idea, but until someone attempts to formulate an extremely detailed plan, as opposed to just talking esoterically and abstractly as I've seen on blogs and in some MMT papers, then I have serious doubt that this jobs guarantee idea will ever be taken too seriously by anyone outside of academia or halls of philosophy.

9 comments:

Nathan Tankus said...

http://e1.newcastle.edu.au/coffee/pubs/wp/2006/06-15.pdf

http://e1.newcastle.edu.au/coffee/job_guarantee/JobGuarantee.cfm

such things exist, if you look. also, you could always look at the actual real world examples....

Anonymous said...

I read your second objection as an objection to the incentives created by a jobs guarantee. While it's true that having such a guarantee affects incentives, welfare leads to the very same effects.

There are many reasons (both economic and moral) that we have welfare and we try not to allow anyone to starve in the streets, even drug abusers. I won't go into that here--I'm sure you can think of them yourself. I think the jobs guarantee idea should be thought of as a proposal for a better version of welfare.

Diptherio said...

On objection 2: unemployment also serves to keep wages down. The psychological effect of unemployment (at whatever level) serves to keep even the "good actors" from pushing too hard for higher wages, better benefits, etc. This effect is, of course, increased in direct proportion to the level of unemployment. Real wages have remained flat or declined over the last 40 or so years, while productivity has continued to climb. Having an employer of last resort may serve to address this issue by giving workers the confidence to negotiate for wage packages that better reflect their productivity.

Another JG type idea would be to have a national cooperative investment bank that would provide start-up funding for groups of workers wishing to start a cooperative, worker-owned enterprise. This would allow workers to "employ themselves," so to speak.

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