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Options for Europe – Part 82

The title is my current working title for a book I am finalising over the next few months on the Eurozone. If all goes well (and it should) it will be published in both Italian and English by very well-known publishers. The publication date for the Italian edition is tentatively late April to early May 2014.

You can access the entire sequence of blogs in this series through the – Euro book Category.

I cannot guarantee the sequence of daily additions will make sense overall because at times I will go back and fill in bits (that I needed library access or whatever for). But you should be able to pick up the thread over time although the full edited version will only be available in the final book (obviously).

Part III – Options for Europe

Chapter 19 Employment guarantees

[PREVIOUS MATERIAL HERE]

Employment buffer stocks and price stability

Once the neo-liberal myths about macroeconomics are exposed and the implications completely understood (see Chapter 18), it becomes obvious that a better alternative would be to utilise an employment buffer stock approach. The Job Guarantee (JG) is an example of this approach and considered the best way to maintain price stability while avoiding the massive costs of unemployment. Between 1945 and the mid-1970s, western governments realised that, with deficit spending supplementing private demand, they could ensure that all workers who wanted to work could find jobs. Although private employment growth was relatively strong during this period, governments were important employers in their own right, and also maintained a buffer of jobs for the least skilled workers; for example, in the major utilities, the railways, local public services and major infrastructure functions of government. By absorbing workers who lost jobs when private investment declined, governments acted as an economic safety valve. British economist Paul Ormerod (1994: 203) noted that the economies that avoided high unemployment in the 1970s maintained a “… sector of the economy which effectively functions as an employer of last resort, which absorbs the shocks which occur from time to time, and more generally makes employment available to the less skilled, the less qualified”. He concluded that societies with a high degree of social cohesion (such as Austria, Japan and Norway) were willing to broaden their concept of costs and benefits of resource usage to ensure that everyone had access to paid employment opportunities.

It is in that context that the JG can be understood. The JG is a simple concept with far-reaching consequences. The JG involves the government making an unconditional job offer to anyone who is willing to work at a socially-acceptable minimum wage and who cannot find work elsewhere. This creates a buffer stock of jobs, which expands (declines) when private sector activity declines (expands). To avoid disturbing private sector wage structure and to ensure the JG is consistent with stable inflation, the JG wage rate is set at the minimum wage level, defined to ensure the worker is not socially excluded. The minimum wage should be an expression of the aspiration of the society of the lowest acceptable material standard of living. Since the JG wage is open to everyone, it will functionally become the national minimum wage. JG workers would enjoy stable incomes, and their increased spending would boost confidence throughout the economy and underpin a private-spending recovery.

The JG is a powerful ‘automatic stabiliser’. Government employment and spending automatically increases (decreases) as jobs are lost (gained) in the private sector. The JG thus fulfils an absorption function to minimise the employment and income losses currently associated with the flux of private sector spending. When private sector employment declines, public sector employment will automatically react and increase its payrolls. The nation always remains fully employed, with only the mix between private and public sector employment fluctuating as it responds to the spending decisions of the private sector. The JG maintains what is referred to as ‘loose’ full employment because the government offers to purchase labour for which there is no current market demand. The increased government spending does not compete with other resource users. The JG thus recruits labour ‘off the bottom of the market’ in contradistinction to general government spending, which involves the government competing with other purchasers for resources including labour. By not competing with the private market for resources, the JG avoids the inflationary tendencies of traditional Keynesian pump-priming, which attempts to maintain full capacity utilisation by ‘hiring off the top’, that is, competing for resources at market prices and relying on so-called spending multipliers to generate extra jobs necessary to achieve full employment. The latter approach fails to provide an integrated full employment-price anchor policy framework. The only question facing the JG is whether there is enough real capacity in the economy (available resources and output space) for the extra government spending. The existence of idle workers is strong evidence that there is non-inflationary scope to spend. Further, the government knows when it has spent enough. Under the JG, the last person who seeks a job on any particular day defines how much government spending is required to ensure there are enough jobs available. It is also true that because it would be impossible to run a JG matching all the skills to jobs the employment buffer stock comprises ‘loose’ full employment in the sense that there would some skills-based underemployment existing when the pool was large. In better times, as the JG pool shrank, and was predominantly occupied by workers who would typically be the last employed by any private firm (if ever), the gap between ‘loose’ and ‘true’ would be around zero.

Once the scheme is in operation, the anti-inflation mechanisms are easy to understand. If there are inflationary pressures developing in the private sector as it reaches full capacity, the government would manipulate fiscal and monetary policy settings to constrain private sector spending to prevent the economy overheating. This would see labour being transferred from the inflating private sector to the ‘fixed wage’ JG sector and eventually this would resolve the inflation pressures. Clearly, when unemployment is high this situation will not arise. In general, there cannot be inflationary pressures arising from a policy that sees the Government offering a fixed wage to any labour that is unwanted by other employers (see Mitchell and Muysken, 2008).

The JG buffer stock is a qualitatively superior inflation fighting pool than the unemployed buffer stock. Some disagree by arguing that workers may consider the JG to be a better option than unemployment. Without the threat of unemployment, wage bargaining workers then may have less incentive to moderate their wage demands notwithstanding the likely disciplining role of wait unemployment in skilled labour markets. But JG workers will retain higher levels of skill than those who are forced to succumb to lengthy spells of unemployment. The JG workers would constitute a credible threat to the current private sector employees. When wage pressures mount, an employer would be more likely to exercise resistance if she could hire from the fixed-price JG pool.

The JG is a minimum spending approach to full employment. But, importantly, it does not replace conventional use of fiscal policy to achieve social and economic outcomes. The government would supplement the JG wage with a wide range of social wage expenditures, including adequate levels of public education, health, child care, and access to legal aid. Further, the provision of large-scale public infrastructure remains crucial. Some JG proponents have referred to its an ’employer of the last resort’ scheme for workers in the same way that central bank’s function as lender of the last resort to the banks. However, why the central bank’s capacity should be seen as a true last resort, the Job Guarantee should be one of the first policy structures that a currency-issuing government puts into place. While it is easy to characterise the JG as purely a public sector job creation strategy, it is important to appreciate that it is actually a macroeconomic policy framework designed to deliver full employment and price stability based on the principle of buffer stocks where job creation and destruction is but one component. It is thus a macroeconomic stability framework rather than an ad hoc crisis response.

A popular misconception is that the JG is just a version of Workfare or so-called ‘work-for-the-dole’ schemes. Unlike workfare schemes, the JG is a policy approach that does not require us to jettison economic security, social justice and the traditional objectives of wage setting in order to build an efficient and productive economy. Workfare does not provide secure employment with conditions consistent with norms established in the community with respect to non-wage benefits and the like. Workfare does not ensure stable living incomes are provided to the workers. Workfare is a program, where the State extracts a contribution from the unemployed for their welfare payments. The State, however, takes no responsibility for the failure of the economy to generate enough jobs. In the JG, the state assumes this responsibility and provides acceptable rewards to the workers for their work. While most would exit the JG pool as soon as they could, for others, especially low-skilled workers with a history of job instability and lengthy spells of unemployment, a guaranteed, secure job would be sufficient and they might prefer to remain in the JG forever. That would not be permitted under Workfare.

Existing unemployment benefits schemes could be maintained alongside the JG program, depending on the government’s preference and conception of mutual responsibility. Without the continued provision of unemployment benefits, the concept of mutual obligation from the workers’ side would become straightforward because the receipt of income by the unemployed worker would be conditional on taking a JG job. The JG wage could be paid to anyone who turned up at some designated government JG office even if the office had not yet organised work for that person. The person might be permitted a short-period in between losing their job and starting a JG job – to sort out their affairs. This period would be covered by full JG pay. It might be argued that in the European context, where unemployment benefits are paid from an insurance fund as some proportion of the workers last earned wage, that unemployed workers would be disadvantaged if the JG replaced the unemployment insurance schemes. It would depend on the worker’s past history and the generosity of the scheme but both schemes could coexist with no loss of effectiveness of either.

In the next section, we see that even orthodox economists agree that there are masses of “low-tech maintenance” and “social care” jobs that can be done by anyone with only a few week training available at any point in time. Extensive research has been done in a number of countries to identify suitable JG jobs (see CofFEE, 2008). The jobs have to be accessible to the least-skilled because they are the ones who typically bear the greatest burden of unemployment. They should ideally not be functions the private sector is currently fulfilling. JG workers could contribute in many socially useful activities including urban renewal projects and other environmental and construction schemes (reforestation, sand dune stabilisation, river valley erosion control, and the like), personal assistance to pensioners, and other community schemes. For example, creative artists could contribute to public education as peripatetic performers. The buffer stock of labour would however be a fluctuating work force (as private sector activity ebbed and flowed). The design of the jobs and functions would have to reflect this. Projects or functions requiring critical mass might face difficulties as the private sector expanded, and it would not be sensible to use only JG employees in functions considered essential. Thus in the creation of JG employment, it can be expected that the stock of standard public sector jobs, which is identified with conventional Keynesian fiscal policy, would expand, reflecting the political decision that these were essential activities. The JG would be integrated into a coherent training framework to allow workers (by their own volition) to choose a variety of training paths while still working in the JG. However, if they chose not to undertake further training no pressure would be placed upon them.

The JG would be ‘green’ because it is consistent with changing the composition of final output towards environmentally sustainable activities. These activities are unlikely to be produced by traditional private sector firms because they have heavy public good components. They are ideal targets for public sector initiative. Future labour market policy must consider the environmental risk-factors associated with economic growth. Possible threshold effects and imprecise data covering the life-cycle characteristics of natural capital suggest a risk-averse attitude is wise. Indiscriminate (Keynesian) expansion fails in this regard because it does not address the requirements for risk aversion. It is not increased demand per se that is necessary but increased demand in certain areas of activity.

If the business community or anyone else thinks the fiscal deficit associated with the JG at any time is ‘too high’ or that there are ‘too many’ workers in the JG pool – then there is a simple remedy that is available to them – they can just lift their private spending (for example, invest more in productive capacity). Then the fiscal deficit and the JG pool will shrink. The important point is that the JG is an investment which creates a safety net that is always there to cope with private sector spending fluctuations (driven in part by varying saving desires). In that sense, it is infinitely superior to using unemployment as the buffer stock to cope with the flux and uncertainty of private spending. It is almost unbelievable that citizens tolerate governments which deliberately force millions of people around the world into unemployment for want of some funding that the government can always provide.

The JG is not a universal panacea. It is a safety net employment capacity that provides an inflation anchor for the macroeconomy via the fact that the government would never be competing for resources with the private sector. The private sector can bid the workers away any time they want to pay above the minimum wage (and provide reasonable working conditions). If there are inflation pressures, tighter policy settings would redistribute workers from the inflating private sector into the fixed price Job Guarantee pool and stabilise prices. That is how buffer stocks work. The value of this approach is that the government knows exactly how much stimulus is required to achieve this “loose” full employment on a daily basis. The tap turns off when the last worker walks in the door on any day looking for a job. This provides daily feedback to the fiscal system and overcomes the uncertainty of timing and guessing the size of the stimulus.

Once the economy is at full employment – in this sense – the government can then design other stimulus measures that it deems to be politically sustainable (and which hopefully add social value) to create employment and activity elsewhere. But it always knows that if the spending levels come up against the real capacity of the economy then employment will just be redistributed if policy tightening is required rather than unemployment being created.

Employment guarantees enter the mainstream debate

On April 14, 2009, the German newspaper Die Welt (“The World”) carried the headline ‘Tarifparteien fordern Staatsgeld gegen Jobkrise’ (Evert and Neumann, 2009) , which reported on a proposal whereby the Federal Employment Agency (Bundesagentur für Arbeit) in Germany would create so-called ‘transfer companies’ (Transfergesellschaften) where firms could ‘park’ workers they could no longer afford and guarantee to reemploy them once their economic outlook improved (see also Der Spiegel, 2009). The scheme would be government-funded and pay worker 67 per of their current wage for a period of two years. It would also pay social insurance contributions and offer training opportunities for up-skilling. The proposal was framed in the context of deteriorating economic conditions in Germany and a fear by trade unions and firms that the Government-funded shorter hours scheme would not be sufficient to avoid an unemployment crisis. In the context of our discussion, these transfer companies, would have been ‘buffer stock’ employers to absorb workers when firms could no longer justify employing them on the basis of their sales. The scheme was rejected by the politicians on the grounds of cost.

The idea of an employment guarantee was also floated in the United Kingdom, by academic professors Paul Gregg and Richard Layard. They proposed that a job guarantee should be introduced to reduce the likelihood that the current crisis will create an entrenched pool of disadvantaged long-term unemployed, which then allegedly “makes it difficult to have a quick recovery that is not also inflationary” (Gregg and Layard, 1998). The idea that the long-term unemployed present a bottleneck to non-inflationary growth is one of Layard’s persistent messages but is highly contested and outside the scope of this discussion. The empirical evidence suggests that whenever spending in the economy is strong enough, the resulting growth draws from both the short- and long-term pools of unemployment.

It suited Layard to make this claim because he was one of the principle architects of the OECD Jobs Study (1994), which formalised the abandonment of full employment as an objective of governments in place of a diminished ‘supply-side’ concept of ‘full employability’ (see Layard et al,, 1991). The OECD agenda was used by governments to launch policy attacks on the unemployed and welfare recipients on the presumption that so-called ‘supply-side’ rigidities undermined the capacity of economies to adjust, innovate and be creative. The proposed reform agenda was variously adopted by many governments. It was introduced as monetary authorities increasingly adopted inflation targeting (formal and informal) which their policy on price level targets and used unemployment as the instrument to achieve these targets. It also was accompanied by growing fiscal conservatism, which in Europe was expressed in the Maastricht Criteria and the SGP (Mitchell and Muysken, 2008).

The Layard-OECD narrative justified the view that unemployment was an individual problem rather than the result of a systemic failure to create enough jobs, the latter, which had been the dominating policy view since the Great Depression ended. The whole thrust of the so-called active labour market policy is predicated on the belief that the long-term unemployed represent a structural bottleneck that can only be addressed by supply initiatives like training and cuts to welfare entitlements (OECD, 1994). Layard (1998: 27) argued that “in the very bad old days, people thought that unemployment could be permanently reduced by stimulating aggregate demand … This belief has died everywhere … these ideas did not address the fundamental problem … The only way to address this problem is to make all the unemployed attractive to employers … Nothing else will do the trick.” He believed in what economists know as ‘Say’s Law’ – supply creates its own demand – which is a relic from the C19th that Keynes categorically destroyed during the Great Depression. Layard claimed that new jobs follow an increase in a more trained pool of unemployed and “the mechanism is simple enough. If the labour supply increases and the number of jobs does not, inflation starts to fall; this makes possible an increase in aggregate demand in the economy, which in turn increases employment in line with the increase in the labour supply” (p. 26). Keynes knew this argument was false in the 1930s, just as Marx had years earlier referred to Say’s Law as “’preposterous’, ‘a paltry evasion’, ‘childish babble’, and ‘pitiful claptrap’ and thought Say, himself was ‘inane’, ‘miserable’, ‘thoughtless’, ‘dull’, and a ‘humbug’ (Sowell, 2006: 173). The evidence didn’t support the supply-side view. In the period after the OECD Jobs Study was released and before the crisis ensued, the advanced economies continued to generate high unemployment rates and broader forms of labour underutilisation (for example, underemployment) have increased. The trend to part-time and casualised employment which fails to provide enough hours of work to match the preferences of the workforce is now widespread throughout advanced countries. The crisis has since exacerbated these elevated levels of unemployment and it is difficult to see what has been achieved by the supply-side labour market policies other than to punish the most disadvantaged workers in our communities.

As that reality was unfolding in Europe as the Maastricht ‘convergence process’ was sustaining persistently high levels of unemployment, there were mixed messages coming out from Layard and co, seemingly struggling to reconcile their ‘theoretical’ position with the contrary evidence. As an example of this tension, in 1997, Layard expressed doubts about the supply-side labour market policies that he initially promoted and which had been so zealously taken up by governments around the world.

Layard (1997: 202) said that:

If we seriously want a big cut in unemployment, we should focus sharply on those policies which stand a good chance of having a really big effect. It is not true that all polices which are good in general are good for unemployment. There are in fact very few policies where the evidence points to any large unambiguous effect on unemployment and some widely advocated policies for which there is little clear evidence.

In this vein, Layard (1997: 192) argued that further cuts in the duration of benefits, a key neo-liberal policy strategy, would only increase employment at the costs of the creation of an underclass with an “ever-widening inequality of wages.” He then admitted to seeing a role for government job creation, which would allow people to reacquire “work habits – to prove their working capacity … [and to restore] … them to the universe of employable people. This is an investment in Europe’s human capital.”

Further, in 2001, another member of the LNJ team, Stephen Nickell wrote (Nickell and Quintini, 2001: 5) in relation to cutting income support benefits:

… simply because a change in the benefit system reduces equilibrium unemployment … [by making unemployment less attractive] … it does not necessarily imply that it is a good thing. It is arguable, for example, that the current benefit system is simply too mean. In fact, to have a system which operates well, it is not necessary to plunge households into poverty should the sole breadwinner lose his or her job.

The point is that this group of researchers have been at the centre of the neo-liberal policy attack on workers and supported policies, which culminated in the GFC. Layard’s call for a job guarantee should be seen as part of this history of failed ideas and policies and a history of trying to remain at the centre of the debate despite that failure. The proposal by Paul Gregg and Richard Layard for the British government to “offer an ultimate guarantee that a job will be there” reflects the view that “(c)ommon humanity requires us to offer meaningful activity when the regular economy does not” (Gregg and Layard, 2009: 1). No doubt you will see the tension between this position and some of Layard’s earlier claims about jobs being generated if there is an effective labour supply.

Mainstream economists are notorious for selective citations and rarely refer to other social science research in their own work (Zuckerman, 2003). Despite the concept of a Job Guarantee having a specific and long tradition in the institutionalist literature and then the MMT literature, Gregg and Layard (p.1) said that we “should use a new term ‘The Job Guarantee’ which will resonate with people, rather than have headline talk about modifications to the New Deal, which is pretty arcane to most people.” At the time they released the paper, I wrote to Layard questioning his claim to be authoring a ‘new term’ and further noting that their concept of an employment guarantee was a very limited conceptualisation of the Job Guarantee, outlined earlier in this chapter, which is a central element of MMT.

Gregg and Layard’s proposal can be summarised as a very short-term job for people after they had been in an active labour market program for 12 months. Unemployed 18-25 year olds would be churned through various labour market programs first, and, then if they had not succeeded in gaining employment, they would be offered a 6-month paid job. For the over-25s, access to 6 months of guaranteed employment would not be provided until they had been churned through 18 months of these humiliating and useless labour market programs.

Significantly, Gregg and Layard recognise that there are a “mass of low-tech maintenance which needs to be done on public housing, schools, hospitals and roads, by LTU given 1-2 weeks’ training. Similar there is a mass of social care (e.g. homehelp) which can be usefully provided by LTU. The work needs to be managed professionally with a visible leader at the centre” (p.2). One wonders how this squares with the view that the long-term unemployed (LTU) represent a bottleneck, which contrains the capacity of the economy to grow. It is clear that these types of jobs are available in all economies if the government is willing to fund them. They private sector will not provide them because the private costs outweigh the private benefits – meaning they cannot make a profit on these activities. But it is also clear that the social benefits outweigh the social costs, which prima facie makes a case for government action. Further, these jobs can be productively performed with limited extra training. The question then is why submit unemployed workers to months or years of so-called ‘training’ on pitiful income support levels if they can be immediately productive, provide a beneficial service to society, and exit the welfare system by taking a wage in one of these jobs? The answer is that clear. Governments have become obsessed with fiscal austerity and think the ‘cost’ of these jobs are too high’. The reality is the British government like other currency-issuing governments can always afford to hire everyone who wants a job at the minimum wage. Gregg and Layard fall into the fiscal austerity trap by proposing a highly limited program that would only lock in after a person had been unemployed for a long period because they want to limit the government outlays. To extract the full benefits of a Job Guarantee the policy has to be unconditional and unlimited. It is only then that the buffer stock dynamics ensure all those who want to work can and that price stability will be maintained.

The European Commission Youth Guarantee Initiative

On October 22, 2012, the European Foundation for the Improvement of Living and Working Conditions (Eurofound) published a report, which sought to estimate the monetary cost of the growing incidence of youth classified as NEETs (youth that are not in employment, education or training) in Europe. The aim was to “to broaden “understanding of the benefits accruing from re-engaging young people in employment and education” and stimulate “governments and social partners to prevent the disengagement of young people from the labour market and education” (Eurofound, 2012: 65). Eurofound’s ‘conservative approach’ to estimating these costs still found that “In 2008, the 26 Member States lost almost €120 billion, corresponding to almost 1% of European GDP. When the recent economic crisis and the increase in the NEET population between 2008 and 2011 is taken into account, it is likely that this loss has been even greater … It was estimated to be €153 billion, corresponding to more than 1.2% of GDP in Europe” (p.81). For several nations including Greece, Italy, and Ireland, the losses were estimated to be “equal to 2% or more of each country’s GDP” (p.81). For example, for Greece the estimated losses in 2011 were over EUR 7 billion or 3.28 per cent of GDP.

When Eurostat released the unemployment estimates for October 2012, the data showed that youth unemployment had deteriorated sharply over the previous 12 months across the EU and in some nations (for example, Greece 57 per cent; Spain 55.9 per cent) it was beyond what might be termed alarming levels. The data was evidence that the policy framework in place in Europe was moving the European economy in the wrong direction. The EC Commissioner for Employment, Social Affairs and Inclusion, László Andor responded to these disastrous unemployment statistics by announcing the Commission’s intention to introduce a Youth Guarantee scheme. He told the press that the high “youth unemployment has dramatic consequences for our economies, our societies and above all for young people. This is why we have to invest in Europe’s young people now … This Package would help Member States to ensure young people’s successful transition into work. The costs of not doing so would be catastrophic” (European Commission, 2012a). In other words, the situation had reached emergency proportions requiring a response of commensurate proportions.

In December 2012, the European Commission presented a proposal to the European Council for a European-wide Youth Guarantee (European Commission, 2012b). The European Council adopted the recommendation from the Commission on April 22, 2013 (European Council, 2013). The Youth Guarantee was taken to mean “a situation in which young people receive a good-quality offer of employment, continued education, an apprenticeship or a traineeship within a period of four months of becoming unemployed or leaving formal education. An offer of continued education could also encompass quality training programmes leading to a recognised vocational qualification” (European Council, 2013: 1). The Council had determined at its February 8, 2013 meeting to allocate “EUR 6 billion for the period 2014-20 to support the measures set out in the Youth Employment Package” (p.3), which included the Youth Guarantee.

The fact that the Commission was considering this policy initiative marked somewhat of a change in thinking amidst the doom and gloom that austerity had created to that date. The task, however, was to break out of the austerity straitjacket and introduce a policy that would represent a real change for European youth caught in despair of joblessness. The Youth Guarantee Initiative (YG) is a good idea but unfortunately failed to make that break.

[I WILL FINISH THIS SECTION LATER TODAY AS WELL AS A SECTION ON WHY EMPLOYMENT GUARANTEES ARE SUPERIOR TO INCOME GUARANTEES]

THEN I HAVE ONE CHAPTER TO COMPLETE AND AN INTRODUCTION – I STILL HOPE TO FINISH WITHIN 10 DAYS]

Additional references

This list will be progressively compiled.

CofFEE (2008) ‘Creating effective local labour markets: a new framework for regional employment policy’, Centre of Full Employment and Equity, University of Newcastle, November. http://e1.newcastle.edu.au/coffee/pubs/reports/2008/CofFEE_JA/CofFEE_JA_final_report_November_2008.pdf”>””’

Der Spiegel (2009) ‘New Idea to Keep Unemployment Down: Germany Mulls ‘Parking’ Unwanted Labor in New State-Funded Firms’, April 14, 2009. http://www.spiegel.de/international/germany/new-idea-to-keep-unemployment-down-germany-mulls-parking-unwanted-labor-in-new-state-funded-firms-a-618887.html

Eurofound (2012) ‘Young people not in employment, education or training: Characteristics, costs and policy responses in Europe’, October 22, 2012. http://www.eurofound.europa.eu/pubdocs/2012/54/en/1/EF1254EN.pdf

European Commission (2012a) ‘Youth employment: Commission proposes package of measures’, Press Release, December 5, 2012. http://europa.eu/rapid/press-release_IP-12-1311_en.htm?locale=en

European Commission (2012b) ‘Proposal for a Council Recommendation on Establishing a Youth Guarantee’, Commission Staff Working Document, COM(2012) 729, December 5, 2012. http://ec.europa.eu/social/BlobServlet?docId=9222&langId=en

European Commission (2014) ‘Leaflet – The Youth Guarantee: Making It Happen’, April 2014. http://ec.europa.eu/social/BlobServlet?docId=11601&langId=en

European Council (2013) ‘Council Recommendation of 22 April 2013 on establishing a Youth Guarantee’, Official Journal of the European Union, C120/1, 26.4.2013. http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32013H0426(01)&rid=1

Evert, H. and Neumann, P. (2009) ‘Tarifparteien fordern Staatsgeld gegen Jobkrise’, Die Welt, April 14, 2009. http://www.welt.de/wirtschaft/article3556507/Tarifparteien-fordern-Staatsgeld-gegen-Jobkrise.html

Graham, B. (1937) Storage and Stability: A Modern Ever-normal Granary, New York, McGraw Hill.

Gregg, P. and Layard, R. (2009) ‘A job guarantee’, mimeo, London School of Economics, March 16, 2009. http://cep.lse.ac.uk/textonly/_new/staff/layard/pdf/001JGProposal-16-03-09.pdf

Layard, R. (1997) ‘Preventing Long-Term Unemployment’, in Phillpott, John (ed.), Working for Full Employment, Routledge, London, 190-203.

Layard, R. (1998) ‘Getting People Back to Work’, Centrepiece Magazine, 3(3), Autumn, 24-27.

Layard, R., Nickell, S. and Jackman, R. (1991) Unemployment, Macroeconomic Performance and the Labour Market, Oxford University Press, Oxford.

Nickell, S. and Quintini, G. (2001) ‘The recent performance of the UK labour market’, Glasgow: talk given to Economics Section of the British Association for the Advancement of Science, September.

OECD (1994) Jobs Study, Organisation for Economic Co-operation and Development, Paris.

OECD (2001) Innovations in labour market policies, the Australian way, Organisation for Economic Co-operation and Development, Paris.

Ormerod, P. (1994) The death of economics, London, Faber and Faber.

Piore, M.J. (1979) Unemployment and inflation, institutionalist and structuralist views, White Plains: M.E. Sharpe, Inc.

Sowell, T. (2006) On Classical Economics, New Haven CT, Yale University Press.

Zuckerman, E.W. (2003) ‘Some Notes on the Relationship between Sociology and Economics (and Political Science):
Cross-Disciplinary Citation Patterns over the 20th Century’, mimeo, MIT Sloan School of Management, October 14, 2003.

(c) Copyright 2014 Bill Mitchell. All Rights Reserved.

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    This Post Has 3 Comments
    1. Having read every segment to date, the book in it’s final form has to be powerful.

      Professor, it has been an exceptional educational experience.

      Thanks

    2. I thought you might be interested that Lord Layard is also well known to the ‘talking therapies’ workforce. His total lack of experience or comprehension of the profession was no bar to his pushing Cognitive Behaviour Therapy on to NHS mental health service. The advantage of CBT is that it provides statistics and is relatively cheap/quick to train therapists. That it is suitable in only a minority of cases was irrelevant. Of course, the prevalence of CBT is also promoted by the private health insurers anxious to restrict costs.

      The aspect that causes some black humour is that evidence-based medicine actually has no evidence-base as to its improved efficacy. Clearly, statistics and measurement depends on the availability of suitable tools with which to measure. The therapeutic process is more akin to creating climate models i.e. an iterative process which is time-dependent but given that Lord Layard can doubtless justify his elegant computer models which bear no relation to the real economy, I suppose we shouldn’t be surprised by his hubris in foisting another mythology onto the talking therapies. Just as unemployment has hit the fan so too is the UK’s mental health service.

    3. One bad lesson we should have learned from 2008-14 is that there is a distinction between workable economic theory (this one I like) and politically feasible economic policy. The big problem with JG, as we should have learned from US experience, is that those who are paying taxes to support the JG will resent those taking the guaranteed jobs, and a political backlash will occur. You can argue (and I would agree) that those having non-subsidized jobs will truly benefit from the JG because it sustains aggregate demand, but that argument is too difficult for most people.

      It is possible that this problem will be less severe in societies (most of the EU) where people are more accustomed to shared social responsibility, but there is no guarantee that this will be so.

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