Is there a case for a basic income guarantee – Part 3

This is Part 3 in the mini-series discussing the relative merits of the basic income guarantee proposal and the Job Guarantee proposal. While there is a lot of literature out there on the merits of introducing a basic income guarantee very rarely will you read a detailed account of the macroeconomic implications of such a scheme. It is inescapable that the basic income proposal lacks what I call an inflation anchor. That is, to provide an adequate stipend and generate full employment (ensure there are enough jobs for all who want to work), the basic income guarantee is inherently inflationary and sets in place destructive macroeconomic dynamics which make it unsustainable. To suppress the inherent inflationary bias of the proposal, the stipend has to be so low that the recipients are freed from work but not poverty. The Job Guarantee, by way of contrast, is designed to provide an explicit inflation anchor and allows the government to continuously maintain full employment and provide a decent wage to those who from time to time will be in the Job Guarantee pool. It does not rely on poverty wages or unemployment to maintain price stability. That alone is a fundamental advantage of the Job Guarantee over the basic income guarantee – it is sustainable.

The basic income proposal lacks any coherent inflation control

The basic income proposal addresses income insecurity directly by providing a guaranteed stipend to individuals. It is in the class of policy interventions that Modern Monetary Theory (MMT) authors have referred to as ‘generalised expansion’, in the sense that the government stimulus provided by the stipend will indiscriminantly compete for resources at market prices.

The higher the stipend, the greater the stimulus and the greater is the degree of competition for the real resources for sale at market prices.

We should note that the basic income proponents that adopt neo-liberal stances with respect to government fiscal capacity and fail to understand the nature of the unemployment that motivates their advocacy of the basic income, generally prefer a low stipend – to ease the burden on government spending and reduce the taxation burden on those who ‘pay’ for the scheme (in their logic).

But clearly there are basic income proponents who are motivated by notions of individual freedom and advocate higher stipends. These advocates tend not to even get bogged down in discussions about the causes of unemployment or whether the government is financially constrained.

They may also operate within a functional finance paradigm (consistent with MMT) and thus understand that a currency-issuing government faces no financial constraint.

Their overwhelming motivation begins with a philosophical view that individuals should not have to engage in paid work to elicit support from the income generating capacity of the society. This is a statement of liberty. They bristle if they are called neo-liberals and rightly so.

However, whether the basic income proposals emerge from a neo-liberal frame or not is moot in one important sense. Whatever the motivation for a basic income guarantee the fact remains that the concept lacks any coherent inflation control.

The more neo-liberal oriented proposals that advocate modest stipends with a fiscally-neutral environment would have a relatively small impact on aggregate spending and employment, and even with some redistribution of working hours; high levels of labour underutilisation are likely to persist.

At those stipends, the basic income proposal would not enhance the rights of the most disadvantaged nor provides work for those who desire it (see Cowling, Mitchell and Watts, 2003).

Adrian Little (1998: 131) points out that while the basic income might enable individuals to exist without work:

… it does not provide any firm promises of paid work for those who don’t have a job but who want to contribute their labour to the generation of social wealth.

[Reference: Little, A. (1998) Post-Industrial Socialism – Towards a New Politics of Welfare, Routledge, London.]

However, more profound promise arise if we introduce the basic income guarantee within a functional finance paradigm. This is because the introduction of a basic income guarantee would lock the economy in to an inflationary bias, which when combined with the current ‘independent’ central banks would prevent it from achieving sufficient growth to offer real employment options to the workers (see Mitchell and Watts, 2004: 11).

The higher the stipend, the greater the inflation risk. That risk is seen in a modern monetary economy as being related to the relationship between nominal spending growth (demand) and the capacity of the economy to respond to that demand with increased supply of real goods and services.

Within a functional finance paradigm, the government uses its fiscal capacity to increase overall spending in the economy to avoid mass unemployment. The target is output and employment growth rather than any particular fiscal outcome (in monetary terms).

We understand that mass unemployment arises when the fiscal deficit is inadequate to offset the desire of the non-government sector to save overall.

Some readers might argue that the culprit here is not the fiscal deficit being too small, but, rather, the non-spending by the non-government sector being too large.

However, Modern Monetary Theory (MMT) authors assume that non-government sector spending and saving decisions are based on the individual choice in relation to the opportunities available and the constraints that impinge.

In that sense, arguing that overall non-government saving is too large is tantamount to questioning the motivations of the individuals that have combined to create that outcome. That sort of emphasis would appear to be at odds with the exhaltation of individual freedom that seems to underpin basic income proposals.

At any rate, MMT authors prefer to focus on the responsibility of the currency-issuer to use that capacity to fill the gaps left by indidivual (private) decisions.

Following that logic, if there is mass unemployment, then the solution is for the government to expand its net fiscal impact (spending over taxation) and allow the deficit to rise.

So shifting from a state of mass unemployment to the introduction of a basic income guarantee would require a net government stimulus (that is, an increasing fiscal deficit).

In this regard, the basic income guarantee (funded by an increasing fiscal deficit) constitutes an indiscriminate Keynesian expansion and as it lacks any inbuilt price stabilisation mechanisms, inflationary pressures would result.

Workers who draw income from the production cycle have also added output (via their labour) to that cycle. For a given level of productivity (output per unit of input), the more people that have access to income, spend that income at market prices, but do not add to output (that is, are supported in real terms by the production of others), the greater the inflation risk.

Further, the greater the share of income generated in any period that is received by people who offer nothing in return, the higher the inflation risk.

Under these circumstances, the more people pursue the ‘freedom’ on non-work under the basic income guarantee, the worse the situation becomes because for given productivity, this would mean the supply side of the economoy keeps shrinking, while the demand side remains stable (depending on the level of the stipend).

So we come back to the point that to minimise the inflation risk, the basic income stipend has to be small, which then, in turn, means the scheme hardly addresses the dignity of an independent existence. People have income security but are in poverty.

We can explore this vulnerability further.

If the government increases net spending (its deficit) to fund a generous basic income stipend then the demand for labour rises in response to the higher aggregate spending in the economy. Clearly, labour demand would higher than under a fiscally-neutral introduction of a basic income guarantee.

The real issue is what happens to labour supply.

If the stimulus was wrought via the payment of a generous basic income stipend, then it is reasonable to surmise that total labour supply would decrease.

In other words, the level of employment that coincides with ‘full employment’ where everybody who wants a job can find one is artificially reduced in the presence of the basic income guarantee (if sufficiently generous).

The real resource space available for the stimulus is thus reduced. The more people who took the stipend and withdrew from the labour force, the less real capacity there would be in the economy to respond to nominal spending growth.

With less productive workers available, the stimulus would cause what economists call ‘demand-pull’ inflation. The inflation rate is pulled up by an incompatability of nominal spending relative to productive capacity.

Firms would compete for increasingly fewer workers and drive up wages, which would have the consequence of making the basic income stipend less attractive at the margin.

Some ‘Malibu surfers’ might decide to resume work again. The government might respond by raising taxes and/or reducing government expenditure, which would tend to raise unemployment.

The central bank, under the current regime that governs monetary policy, would also respond by raising interest rates.

The combination of these policy responses would reduce the demand pressure would decline, but to the extent that the inflationary process had assumed a cost-push form (distributional struggle over available real income), wage and price inflation may only decline slowly.

It is thus possible that an unsustainable dynamic could be generated in which there are periodic phases of demand-pull inflation and induced cost-push inflation at low rates of unemployment, followed by contractionary policy and high rates of unemployment.

These economic outcomes are consistent with indiscriminate (generalised) Keynesian policy expansions of the past.

Our conclusion is that the introduction of a basic income guarantee which is designed to also sustain full employment (that is, to give all those who want to work the opportunity) is likely to be highly problematic given the likely inflationary consequences.

The Job Guarantee is consistent with both full employment and price stability

An economy reliant on the basic income guarantee to solve the problems of income insecurity brought about by the tendency of capitalist economies to mass unemployment is inherently inflation.

Even though the introduction of a basic income guarantee can engineer a state of full employment if the fiscal stimulus associated with its introduction is sufficient, it does so by promoting an artificial reduction in the supply of labour and the resulting shrinkage in the productive capacity of the economy renders such a nation vulnerable to accelerating inflation.

In other words, an economy built on a basic income guarantee does not have the capacity to deliver both sustained full employment and price stability.

In contradistinction, the Job Guarantee approach is a far superior way to sustain full employment with price stability in the face of private spending fluctuations.

The initial observation is that the Job Guarantee is designed on the basis of an explicit recognition that a sovereign government is never revenue constrained because it is the monopoly issuer of the currency.

Starting from that point conditions the narrative that can be developed to support the introduction of the policy. It frees the proponents from arcane debates about whether the government can ‘afford’ the scheme,

Falling into these neo-liberal debates about fiscal sustainability typically leads proponents of a basic income guarantee to propose a system that only offers poverty-level stipends – to allay attacks that the government will not be able to ‘fund’ the program.

The Job Guarantee is a simple concept with far-reaching consequences. It 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 paid jobs, which expands (declines) when private sector activity declines (expands).

To avoid disturbing private sector wage structure and to ensure the Job Guarantee is consistent with stable inflation, the Job Guarantee 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. Similar considerations would determine the appropriate basic income stipend although the capacity of the government to maintain such a stipend without inflation is limited at best.

Since the Job Guarantee wage is open to everyone, it becomes the national minimum wage. Job Guarantee workers would enjoy stable incomes, and their increased spending would boost confidence throughout the economy and underpin a private-spending recovery.

By maintaining a buffer stock of employment, the Job Guarantee operates under what economists terms ‘a fixed price/floating quantity rule’.

That means that the government’s unconditional job offer is at a fixed wage (fixed price rule) and the buffer stock of jobs fluctuates in accordance with the strength of non-government sector spending (a floating quantity).

Given the Job Guarantee hires at a fixed price in exchange for hours of work and does not compete with private sector wages, employment redistributions between the private sector and the buffer stock can always be achieved to stabilise any wage inflation in the non-Job Guarantee sector.

The government purchases the labour of Job Guarantee workers off the ‘bottom’ of the non-government wage distribution. By definition there is no non-government sector demand for the idle resources (unemployment).

Once the scheme is in operation, the anti-inflation mechanisms are easy to understand. If there are inflationary pressures developing in the non-government sector as it reaches full capacity, the government would manipulate fiscal and monetary policy settings to constrain non-government sector spending to prevent the economy overheating.

This would see labour being transferred from the inflating non-government sector to the ‘fixed wage’ Job Guarantee 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 Job Guarantee buffer stock is a qualitatively superior inflation fighting pool than the unemployed buffer stock. Some disagree by arguing that workers may consider the Job Guarantee 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 Job Guarantee workers will retain higher levels of skill than those who are forced to succumb to lengthy spells of unemployment.

The Job Guaranteeworkers would thus constitute a more credible threat to the current non-government sector employees than those who languish in the unemployment pool. When wage pressures mount, an employer would be more likely to exercise resistance if she could hire from the fixed-price Job Guarantee pool.

Further, if the government was to pay market wages to Job Guarantee workers this would undermine the in-built counter-inflation mechanism and the full employment policy would be equivalent to an indiscriminate (generalised) Keynesian expansion.

So the fundamental difference in relation to inflation between the basic income proposal and the Job Guarantee is that the former spends on a quantity rule (the stimulus competes with other market prices) while the latter spends on a price rule (spending is in the form of a fixed price offer to idle resources with no market bid).

The Job Guarantee thus provides the government with an inflation control mechanism, while avoiding the massive costs of unemployment.

The basic income proposal can only reduce the inflation risk by paying a low stipend and suppressing overall spending in the economy by maintaining mass unemployment.

As soon as the basic income stipend rises sufficiently to become broadly attractive, the labour supply contraction sets off forces that lead to accelerating inflation.

The Job Guarantee represents 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 Job Guarantee 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 and the introduction of the Job Guarantee does not undermine the capacity of the government to pursue these projects.

While it is easy to characterise the Job Guarantee as purely a public sector job creation strategy designed to reduce income insecurity, 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.

The Job Guarantee also provides the economy with a powerful ‘automatic stabiliser’, a characteristic missing from the basic income guarantee concept.

Government employment and spending automatically increases (decreases) as jobs are lost (gained) in the non-government sector.

The Job Guarantee thus fulfils an absorption function to minimise the employment and income losses currently associated with the flux of non-government sector spending.

When non-government sector employment declines, public sector employment will automatically react and increase its payrolls.

The nation always remains fully employed, with only the mix between non-government and public sector employment fluctuating as it responds to the spending decisions of the non-government sector.

The Job Guarantee 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 Job Guarantee 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 non-government market for resources, the Job Guarantee 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. As we have seen, the basic income guarantee proposal is in this class of interventions and is thus inferior to the Job Guarantee.

The only question facing the Job Guarantee 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 Job Guarantee, 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 Job Guarantee 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 Job Guarantee 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.

Conclusion

In Part 4, we move on to discuss the second machine age, coercion and transformational capacities of the Job Guarantee.

That should do it.

The series so far

This is a further part of a series I am writing as background to my next book on globalisation and the capacities of the nation-state. More instalments will come as the research process unfolds.

The series so far:

1. Friday lay day – The Stability Pact didn’t mean much anyway, did it?

2. European Left face a Dystopia of their own making

3. The Eurozone Groupthink and Denial continues …

4. Mitterrand’s turn to austerity was an ideological choice not an inevitability

5. The origins of the ‘leftist’ failure to oppose austerity

6. The European Project is dead

7. The Italian left should hang their heads in shame

8. On the trail of inflation and the fears of the same ….

9. Globalisation and currency arrangements

10. The co-option of government by transnational organisations

11. The Modigliani controversy – the break with Keynesian thinking

12. The capacity of the state and the open economy – Part 1

13. Is exchange rate depreciation inflationary?

14. Balance of payments constraints

15. Ultimately, real resource availability constrains prosperity

16. The impossibility theorem that beguiles the Left.

17. The British Monetarist infestation.

18. The Monetarism Trap snares the second Wilson Labour Government.

19. The Heath government was not Monetarist – that was left to the Labour Party.

20. Britain and the 1970s oil shocks – the failure of Monetarism.

21. The right-wing counter attack – 1971.

22. British trade unions in the early 1970s.

23. Distributional conflict and inflation – Britain in the early 1970s.

24. Rising urban inequality and segregation and the role of the state.

25. The British Labour Party path to Monetarism.

26. Britain approaches the 1976 currency crisis.

27. The 1976 currency crisis.

28. The Left confuses globalisation with neo-liberalism and gets lost.

29. The metamorphosis of the IMF as a neo-liberal attack dog.

30. The Wall Street-US Treasury Complex.

31. The Bacon-Eltis intervention – Britain 1976.

32. British Left reject fiscal strategy – speculation mounts, March 1976.

33. The US government view of the 1976 sterling crisis.

34. Iceland proves the nation state is alive and well.

35. The British Cabinet divides over the IMF negotiations in 1976.

36. The conspiracy to bring British Labour to heel 1976.

37. The 1976 British austerity shift – a triumph of perception over reality.

38. The British Left is usurped and IMF austerity begins 1976.

39. Why capital controls should be part of a progressive policy.

40. Brexit signals that a new policy paradigm is required including re-nationalisation.

41. Towards a progressive concept of efficiency – Part 1.

42. Towards a progressive concept of efficiency – Part 2.

43. The case for re-nationalisation – Part 2.

44. Brainbelts – only a part of a progressive future.

45. Reforming the international institutional framework – Part 1.

46. Reforming the international institutional framework – Part 2.

47. Reducing income inequality.

48. The struggle to establish a coherent progressive position continues.

49. Work is important for human well-being.

50. Is there a case for a basic income guarantee – Part 1.

51. Is there a case for a basic income guarantee – Part 2.

52. Is there a case for a basic income guarantee – Part 3.

The blogs in these series should be considered working notes rather than self-contained topics. Ultimately, they will be edited into the final manuscript of my next book due later in 2016.
That is enough for today!

(c) Copyright 2016 William Mitchell. All Rights Reserved.

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    55 Responses to Is there a case for a basic income guarantee – Part 3

    1. Daniel m says:

      Great piece i hope progressive politicans will understamd that.

    2. Neil Wilson says:

      “Even though the introduction of a basic income guarantee can engineer a state of full employment if the fiscal stimulus associated with its introduction is sufficient”

      Can it though? There is no intervention on the qualitative side in the job supply market. And thus we are back to the Idleness argument in Beveridge.

      “Those who lose jobs, must be able to find new jobs at fair wages within their capacity without delay … This means that the supply and demand for labour are related qualitatively as well as quantitatively”

      Ultimately standard Keynesian Expansion runs out of steam long before actual full employment because there is no market mechanism to sort out the qualitative issues. You end up with a list of vacancies wanting God-on-a-stick for tuppence and a list of individuals needing a living wage and somewhat less than deity like skills and abilities. Never the twain shall meet.

      You need a Job Guarantee to fix that mismatch. Because instead of listing jobs and hoping that people turn up, it is designed to provide Jobs for the People – as they are today at the living wage. You have to have that circuit breaker to clear the labour market unless you’re the sort of person who believes you can turn anybody in a brain surgeon by throwing enough training at them.

      The matchmaker mechanism in the Job Guarantee is a crucial part of its stabilisation system.

    3. Allan says:

      Bill,

      “while the latter spends on a quantity rule”

      Should be price rule.

    4. James Schipper says:

      Dear Bill

      I suppose that the JG will have age limits on both ends. I suppose that it should be open to all who are 18 or older and younger than whatever the legal pension age is.

      One could also argue that a JG makes a program of old-age security unnecessary. A country could have a JG and a disability pension. As long as a person is fit to work, regardless of age, he will not receive a pension because the JG is there for him.

      Is the JG also meant to replace unemployment insurance? Unemployment insurance is usually temporary and sometimes offers benefits in excess of the minimum wage offered by the JG. It is not the same as the JG.

      Regards. James

    5. J Christensen says:

      The province of Ontario, Canada with a liberal majority government appears to be unconcerned with the macroeconomic perspective and is moving ahead with a “minimum income experiment” on the assumption that cost savings will (primarily) be discovered in the administration of what otherwise would be considered welfare and health services:

      http://www.huffingtonpost.ca/2016/03/13/ontario-will-test-idea-of-a-guaranteed-minimum-income-to-ease-poverty_n_9451076.html

      The idea of a basic minimum income was openly promoted (alongside the neoliberal balanced budget mantras) by the federal New Democratic Party during the last election and Ontario’s decision to pursue the idea was promoted by a prominent Conservative well known for his concern for the general public good. There does appear to be a general recognition of the growing poverty problem without a full understanding or at least an admission of the roots of poverty in unemployment. Unemployment has become a taboo word almost, replaced by terms like “income gap” in public discourse.

      To my surprise we did hear from one economist on the CBC radio this morning, who posited that lack of demand is driving down investment and that insufficient government spending causes this; the result being declining provincial revenues.

    6. Bob says:

      On MNE:

      “Without a BIG, the mentality described by Neil will continue to undermine every JG scheme. They’ll conclude that their tax money is being spent to create bullshit jobs. They will arrive at this conclusion regardless if these jobs are shown to be productive or not. They will be offended.

      A similar mentality can be observed with attitudes towards welfare recipients. In spite of systemic mass unemployment, many people are convinced that everyone can find a job if they want to. They “see” individuals as making a choice to be idle. Thus it is “unfair” to provide the unemployed a living at taxpayer expense.

      The psychological need for reciprocity is not compatible with a post-scarcity economy. If we (as social engineers) don’t address the source of our attitudes toward work, these plans will not work out as intended.

      I agree with Bill’s assessment of the flawed economics underlying some of the support for a BIG. In addition, I don’t trust the motivation of those on the right who are advancing various forms of guaranteed income. It could be a ploy to abolish the welfare state.”

    7. larry says:

      “Modern Monetary Theory (MMT) authors assume that non-government sector spending and saving decisions are based on the individual choice in relation to the opportunities available and the constraints that impinge”.

      Bill, it is ok to assume, but this sort of assumption may justly bring about someone asking: What is the evidence for this? I think it is reasonably clear what sort of evidence is relevant, but some readers may not know what to look for. When you revise, might it not be a good idea to mention some of the evidence for this, and other, assumptions that are made?

    8. larry says:

      Bob, this kind of thinking is due to years of brainwashing by a neoliberal establishment and their economic henchmen, which has been taking place for over 35 years. This didn’t used to be the case during the heady years of Bretton Woods, though it was vulnerable to certain shocks because it wasn’t functionally viable. While there were crises during this period, they were relatively small and did not lead to any rethinking. If anything, neoclassical economists led by Milton Friedman kept on attacking the system for its inadequacies, not all of which were such. However, the oil price shock in October of 1973 gave them the opportunity they needed to launch an all out assault on what they termed Keynesianism, a period that was neither truly Keynesian nor consistent with Lerner’s functional finance paradigm. Moreover, the inhabitants of the financial sector were not conceived to be the “masters of the universe”, a misnomer if ever I saw one.

    9. larry says:

      Neil, the Dutch once had the matchmaking issue sorted out, though no more as they fell prey to neoclassical economic ideas. At one time, it now seems a lifetime ago, no one had to take a job for which they were either unqualified or didn’t want, and the Dutch saw nothing wrong with that and supported it. The sky didn’t fall in and the system worked.

      At the same time, higher education was fundamentally free other than for a small admin charge; I think I remember it being around 200 Guilders. Health care was funded similarly to the NHS, though there were differences, as might be expected with a country with different social practices and distinct cultural traditions.

    10. larry says:

      Dutch clarification:

      While the person out of work was waiting for a suitable job opportunity, they were paid a living wage. They were, of course, allowed to take any job they wished or allowed to wait for one that was more suited to their training and expertise or interests, whether in the private or public sector. Naturally, there were those who abused the system. I am unable to say how that was dealt with.

    11. Jake says:

      great post

      “Workers who draw income from the production cycle have also added output (via their labour) to that cycle. For a given level of productivity (output per unit of input), the more people that have access to income, spend that income at market prices, but do not add to output (that is, are supported in real terms by the production of others), the greater the inflation risk.”

      I think thats the rub for the critics and BIG advocates,everyone sees loads high incomes being drawn by people who don’t ostenisibly contribute to producing output one bit,in our current system.

      “Further, the provision of large-scale public infrastructure remains crucial and the introduction of the Job Guarantee does not undermine the capacity of the government to pursue these projects.”

      this has always been my one concern about JG full employment.If the economy is techinically always at full capacity does that limit the capacity of government to work on projects like physical infrastructure.

      “so-called spending multipliers”
      -um that is insightful to purchase idel resoucres (uneploymed) vs hiring “off the top” and competing for resources that the private market is already using …but spending multipliers do exist though?

      @neil wilson

      okay okay but dont throw away opportunites for training/ education as well,a lot of talent gets stuck in low wage work due to life situational issues,lack of financial support to up-skill, enter(or re-enter) education,or retrain.
      But JG is indeed suitable in building up skills,experience and providing training so that people can enter high wage high skill employment.(not withstanding we should be putting pressure on the private sector to train up their staff instead of relying on that to be subsidised by the public sector)

    12. larry says:

      Jake, no one is saying that training or education should be thrown away. Neil may be thinking of the time when university grads, whatever their field of study, were offered “opportunities”, and a stipend, to train to teach physics for a few weeks. It was a complete nonsense. But it took a long time for a neoliberal oriented government to “see” that the program was nonsense, at which point the program was dropped.

    13. Jordan from Croatia says:

      Dear Bill
      ” (MMT) authors assume that non-government sector spending and saving decisions are based on the individual choice in relation to the opportunities available and the constraints that impinge.”

      Very nicely said, except that i would emphasize “opportunities” and “constraints” over “decisions”. Those that have “oportunities” have sizable and exceptionly high incomes so they can decide to save. Those that have “constraints” are those whose income is bellow their needs. So, nice way to avoid saying word inequality as the probem while giving it problem as some decision and “freedom”. Just a matter of choice what to emphasize. So i have to critisize it.

    14. Phil says:

      Another argument that might be worth looking at:

    15. Jordan from Croatia says:

      I have a problem with your way of arguing and reasons behind your post, but not with the premisse that JG is way better then BIG. JG can be safely implemented without BIG, but not other way around. Yet i would like to have both, JG and BIG with relation like BIG the size of present untaxable allotment size while JG with above minimum wage.

      But argument about infltion risks is false. Why did you change acting of government in fiscal and monetary response to the same problem (inflation) that JG or BIG caused? :
      For BIG:”The central bank, under the current regime that governs monetary policy, would also respond by raising interest rates.”

      For JG:”the government would manipulate fiscal and monetary policy settings to constrain non-government sector spending to prevent the economy overheating.”

      Why is that government under JG knows what to do and where inflation comes from, while government under BIG doesn’t? A bit of bias?

      Another problem i have with your claim that JG is equvialent of automatic stabiliser while BIG is not. Both of them ARE automatic stabilisers. Prety equally the same power as automatic stabiliser since BIG would cover everyone while more sizable income from JG would not cover everyone. SO pretty much the same power as stabilizer.

      Inflation anchor is ability for “former” empires like British Commonwealth, Japan and Swiss, Germany can buy anything from sale for dollars, Yen Euro from the whole world. The supply for those countries is the whole world supply, so given nothing radical like atomic explossion or countrywide drought, suply of whole world is anti-inflationary mechanism. Everyone will sell you what you buy for Dollars when your productive capacity falls behind.

    16. Jordan from Croatia says:

      To finnish about world supply of products and services for dollars: I know that since we, Croatians, have to borrow your dollars to buy something from you. You can use your own dollars to buy anything from Croatia.
      This is why you are “former” empire and we are “former” colony.

      This is why you do not have inflationary preassure when productive capacity falls, while we do.

    17. David Swan says:

      BIG is not an automatic stabilizer because it is not counter-cyclical. JG spending increases without intervention in economic contractions, because people lose their jobs and migrate to JG until private employment picks back up. It is the fact that the spending level responds to macroeconomic conditions that makes JG a stabilizer.

    18. Neil Wilson says:

      “training or education should be thrown away”

      Training and education is work. It works best if you see all of them as a form of apprenticeship. Apprentices get paid while training and everybody sees that as perfectly normal. So why not somebody on a physics degree employed by the Job Guarantee?

    19. Gregory Long says:

      Both BIG and the JG fail to deal with what is probably the largest threat of inflation, which gave rise to the stagflation of the 1970s. That is, a situation where even a highly underemployed workforce strains natural resources (oil in the 1970s) and generates high rates of inflation. To counter this threat, you need to massively invest in R&D for new energy sources (space-based solar, lithium-ion batteries), agricultural methods (vertical farming, water desalination), and acquisition of rare metals (asteroid mining).

    20. Jake says:

      @jordan from croatia

      BIG is not an automatic stabiliser because its spent throughout fluctuations in private demand whereas the JG only expands (like uneployment insurance) when private demand falls and unemployment in the private sector rises as labour is shedded.

      BIG therefore has an obvious implicit inflationary bias as it is unconditional to everyone throughout business cycles.

    21. @Neil,

      You’re right about Physics degrees except I’d expand that to include all degrees. The JG could include all education and apprenticeships for young people. We’d offer everyone something and it could be a degree course, or an in-work apprenticeship with HNCs , HNDs etc or even an in work degree course via the open uni. I suspect many young people end up at uni simply because there isn’t much else on offer.

      You and I had a bit of a falling out on the question of the JG a few months ago. Politically, I feel it would just be too hard to establish the kind of universal JG system you are advocating. If it were somehow brought about I doubt it would be totally free of ‘workfare in disguise’ type accusations. There’d be objections from both the left and right. You may be happy to battle on both fronts but I would suggest that stands zero chance of success. I think I might have offended you by saying you were a good economist but a poor politician. I think Bill might take that as a compliment though!

      However, we’re on much stronger ground with younger people, their education and apprenticeships. That is where we should start. We have to come up with a detailed plan though and anticipate all possible objections from both the left and right.

    22. Kevin Harding says:

      Unemployment is not voluntary! It is a result of insufficient aggregate demand. A universal citizens
      income framed within a fiscal context which promotes a level aggregate demand which will promote
      full employment will not provide income without output .
      Inflationary bias is not in demand pull it is cost push.

    23. Kevin Harding says:

      Bill you have often talked about the importance of language in framing progressive economic ideas.
      Please do not use the language of a job guarantee being a buffer stock of employment.
      People are not stocks .Some people must not provide a buffer for other people.

    24. CharlesJ says:

      Jordan,
      In macroeconomics, when we talk about “saving” we also include repayment of debt.

      So not all “saving” decisions are ones that can be dismissed. Our creditor may insist on the repayment of that debt. In the modern world where populations are over-loaded with debt, “saving” is not always a choice but a necessity imposed on us by our creditors.

      Kind Regards

    25. CharlesJ says:

      Kevin Harding,
      “Please do not use the language of a job guarantee being a buffer stock of employment.”

      It is Bill’s job to be technically accurate, even if it sounds bad. It is our job to convey that to other people in a language they can understand and relate to.

      Bill cannot do this by himself. We have to decide how to frame this in the individual conversations we have with people IMO.

      Kind Regards

    26. CharlesJ says:

      David Swan,
      “BIG is not an automatic stabilizer because it is not counter-cyclical.”

      Spot on. BIGs do not respond to the business cycle or wider economic cycles and so risk being inflationary.

      Kind Regards

    27. Kevin Harding says:

      As ever neo liberals have it back to front welfare promotes work not idleness.
      It both increases the poors spending and aggregate demand and social inclusiveness
      and reciprocity.I remember a previous blog of bills where surveys show desire to work is higher
      where the welfare net is strongest.
      If we can move beyond the divisiveness of welfare with a universal citizens dividend we can
      remove the trap of losing welfare when taking work , high marginal rates of tax for the unemployed
      entering minimum and low paid employment.

    28. New Zealand has a type of BIG. EVERY New Zealand resident over the now age of 65 gets, if they live alone, $769.52pf and a couple gets $1152.40pf. It is adjusted every April to account for inflation and is a % of the average wage. Generally speaking it doesn’t matter what you own or what other income you have, all New Zealand residents get it. There is, though, a criteria to get it. You have to have lived x number of years in the country when you were young and x number of years before you get it. You can keep working if you want. This has been going for such a long time I hesitate to say when. Probably before WW1. It is easy and cheap to administer and an absolute godsend to the elderly.

    29. RobM says:

      I’ll start by noting that I’m a long time reader of Bill’s blog and firmly believe that MMT offers the best explanation for how modern economies operate, and why austerity has been so harmful.

      However, I think I see a flaw in the reasoning behind the JG.

      Bill noted that a generous BIG would tend to reduce the productive capacity of the economy by reducing the participation rate due to some workers opting out of employment in favour of the BIG stipend. This then leads to demand-pull inflation as spending remains high while fewer real goods and services are available for purchase (due to reduced production as a result of lower participation).

      I would argue that a similar dynamic might result from the JG. Given that it is intended to pay a socially inclusive full-time minimum wage, there would clearly be a reasonable number of minimum wage private sector workers (especially those working in part-time jobs) who would see a full-time JG job as superior to their current job. If a sufficient quantity of these workers opted out of private sector employment and took JG jobs, then there would be fewer real goods and services available for purchase from the private sector than there were previously.

      If these ex-private and now JG workers were to produce an equivalent value of real goods and services available for purchase in their JG jobs, there would be no decline in total real goods and services available for purchase, and no demand-pull inflation would result. However, is it reasonable to assume that JG jobs will actually produce a similar value of real goods and services available for purchase as the lost private sector jobs? I would expect that there would be a greater emphasis on socially beneficial, and likely free, services being performed by JG workers. If this is indeed the nature of the majority of JG jobs, then the JG jobs would certainly not be producing a similar value of real goods and services available for purchase as the lost private sector jobs, and demand-pull inflation could well result.

      The only way in which the private sector could retain these workers would be to offer a wage sufficiently higher than the JG minimum wage in order to entice the workers to remain in the private sector. An employer who can only offer part-time work due to the very nature of their business (restaurants, bars, etc) would have an even harder time retaining workers who could immediately secure a full-time JG job. Any businesses that could not afford to pay workers the premium over the JG minimum wage, and were unable to pass on the higher labour cost through higher prices, would likely close down. The economy would then lose the real goods and services available for purchase that those businesses had previously produced. Other businesses would likely pass on the higher labour cost through higher prices, and the possibility of cost-push inflation would then exist.

      All of the discussion around BIG and JG seems to me to miss the basic point that Bill and MMT have made clear time and time again. With sufficient deficit spending by the government, it should be possible to produce enough aggregate demand in the economy that the private sector will expand production and employment until there are virtually no unemployed workers. There doesn’t seem to be anything about that solution to the current problem that requires the addition of BIG or JG to ensure income security. There will always be a requirement for government support for those who are physically or mentally incapable of working, but neither JG or BIG should be required if unemployment was virtually zero due to the economy operating at close to capacity. Demand-pull inflation would only become a problem if the government spending was too high and produced aggregate demand that the private sector was unable to match with expanded production.

    30. Jerry Brown says:

      Kevin Harding at 8:09-
      Kevin, it seems to me (in that particular comment) that you are saying the amount of the basic income would vary according to the state of the economy.
      If that is the case, I don’t see it as necessarily more inflationary than a job guarantee. But it then, wouldn’t that be far less dependable than a job guarantee would be for those who really needed it?

    31. Kevin Harding says:

      Just a coupld of quotes .
      ‘ a macroeconomic stability framework’ , ‘an integrated full employment price anchor policy’
      ‘automatic stabilizers’
      The hubris of economics.Well I admit I cannot recomend a universal citizens dividend to
      deliver any of the above.I ‘ ll leave utopian systems to others.Just as a part of a progressive
      tax policy which supports the spending power of the poor whilst taxes on higher income and land
      restrain the wealthy’s claim on real resources. A modest stipend to those not in work additional
      income for those on low pay.
      I do contest the claims about inflationary bias .
      Bill quotes Adrian little on paid workers contributing their labour to the generation of
      social wealth yet how much labour even high paid labour really contributes to social wealth?
      How much unpaid labour(caring etc) previous labour (infrastructure ,education) ,machines digital
      and other contribute to social wealth?
      It comes down to how you view price via the classical price mechanism or costs plus mark up.
      How you view inflation ,excess money in the economy or arising from sectorial conflicts.
      I fully agree that any BIG proposal is no magic bullet.Context Paticularly fiscal context is everything.
      BIG or job guarantees in the hands of reactionaries will be reactionary.

    32. Neil Wilson says:

      “You’re right about Physics degrees except I’d expand that to include all degrees.”

      Not all degrees. Only those degrees considered ‘worthwhile’ by a jury of peers. Otherwise you get into the same situation that shutdown the student maintenance grant system.

      You have to choose what you do with regard to the sensibilities of others. As you always have to do in a free but fair society. That is the collective restriction on individualism you have to accept to keep society together.

      “If it were somehow brought about I doubt it would be totally free of ‘workfare in disguise’ type accusations. ”

      All public sector employment suffers from the same attack and always will do. The public in the UK has been brainwashed to believe that ‘public sector employment = waste’. It’s all over the reports of why Labour lost the last election.

      So you attack back – in a world of automation and robots how is the private sector going to employ everybody? It can’t can it *unless you subsidise them with public funds* and the jobs created would be pointless since they have no guiding moral purpose – just private greed.

      If people have to be paid by the public purse, then isn’t it better that the public gets the output rather than it being stolen for private profit? Then jobs can be created guided by the principles of effectiveness and public service. Only that stops them being pointless.

      The left is very fond of the ‘avoidance’ strategy in politics where they desperately skirt around issues avoiding words and issues that are ‘triggering’, and it has got to the state now where the left says nothing of meaning at all.

      It’s time to change that strategy and rehabilitate concepts and ideas ‘deprogramming’ the corporate framing. Public service for the good of others is one such concept – because it is the only way we can continue as an advanced society into the future.

      So I would argue that the left is very bad at politics. A long study of how Trump has done what he has done would be useful in regaining the initiative.

    33. Kevin made the comment:

      “Please do not use the language of a job guarantee being a buffer stock of employment.”

      CharlesJ replied:

      “It is Bill’s job to be technically accurate, even if it sounds bad. ”

      Speaking as one who is of the left I’d say any ideas which sound bad probably are bad! Buffer stocks are fine for bales of wool, or packs of butter, but not people. We can’t address the issue of unemployment in these terms. We won’t get anywhere with left opinion if we do that. We might get somewhere with those of a more right wing disposition but would we really want any JG system that they’d devised?

    34. J Christensen says:

      RobM:
      If a business could not afford to pay it’s workers a living wage, then that business is of little value to the economy and should not succeed or even be considered a creditworthy investment in a healthy marketplace in the first place. It would not support the virtuous cycle within which workers collectively are able to consume what they should be able to produce. If all businesses operated that way, that would describe an economy heading toward a dead end.

      Today we have a situation were corporations can pay people the minimum just “because they can”; a situation which has been nurtured by the neoliberal project. This has become a major cause of rising inequality and far less than satisfactory economic conditions.

      The economy doesn’t exist for the amusement and advancement of a small handful of people.

    35. BuyerBeware says:

      Thank you for discussing this important topic Bill!! However, I believe that the problem of everyone ‘quitting to couch surf’ are over stated. The problem is not people taking advantage of the program, the problem is there are no jobs (or not enough jobs). If people do leave work there are 100 people who will then apply for that position. If a sovereign government (who issues their own currency) decide to implement the basic income instead of a job guarantee, then, they have to issue the equivalent of a living wage or else they are wasting their time and will not stimulate the economy, they will just are in danger of increasing the people living in poverty. If people cannot pay their bills, they cannot become consumers of goods and services. Whether sovereign governments choose basic income or a job guarantee, in my estimation doesn’t matter, it is how they do it.
      Right now, there are no jobs, so either they need to implement a job guarantee. Failure to do that they need to implement a basic income with a living wage.
      My thoughts are that the sovereign government needs to provide the jobs as corporations will not (cannot) do this, they create profits not jobs.

    36. BuyerBeware says:

      On how to control inflation, I, like Kenneth Galbraith, do not believe that interest rates are a good way to control inflation. High interest rates pull money out of the economy in the wrong places and low interest rates only create asset bubbles. The better way to control inflation is using taxation. Governments can tax and slow the economy in targeted and more appropriate ways.

    37. Jake says:

      @ robm

      So what we should really be focussing on is expanding the productive
      Capacity of the economy to the point where any type of full employment scheme is non-inflationary,as supply will demand.

      That is assuming that JG won’t contribute to productive out out.
      Yes businesses which rely on low cost part time labour will struggle.
      But that’s the point of creating a high productivity high wage economy.

    38. Jerry Brown says:

      petermartin2001 and others, a buffer stock of employment is far more humane than actual current monetary policy based on a buffer stock of unemployment. One term describes a group of people who are willingly working and getting paid. The other is current policy and describes a group looking unsuccessfully for employment and income. I really don’t understand why the problem with the terminology is even worth mentioning considering the actual flaws and tremendous damage done by present policy.

    39. BuyerBeware says:

      Noam Chomsky first coined the term “wage slavery”, we need to be vigilant that we are not aiding the oligarchs advance in obtaining their goal.

    40. CharlesJ says:

      Petermartin2001.
      “We can’t address the issue of unemployment in these terms. We won’t get anywhere with left opinion if we do that.”

      Well I’ve explained the JG to people very successfully, both those on the left and right. I have never once needed to even refer to “buffer stocks” in order to persuade them, even though that is a perfectly good metaphor. So I think your argument might be overly precious.

      Kind Regards

    41. bill says:

      Dear Kevin Harding (at 2016/09/23 at 8:16am)

      You said:

      Please do not use the language of a job guarantee being a buffer stock of employment.
      People are not stocks .Some people must not provide a buffer for other people.

      People are people. Jobs are stocks. The buffer stock is the mechanism to allow full employment and price stability. It is a highly descriptive term.

      best wishes
      bill

    42. bill says:

      Dear Petermartin2001 and CharlesJ (at 2016/09/24 at 6:08 am)

      The use of the term ‘buffer stock’ is not a metaphor. It is the actual mechanism by which prices are controlled as the government provides work for all those who desire it but who cannot find jobs at market prices. It is a mechanism that has a long history in the literature.

      And in explaining the “JG to people very successfully” do you articulate the overall macroeconomic stability features of the JG that go well beyond its job creating capacity? If you do, how do you do that without mention of the buffer stock mechanism?

      best wishes
      bill

    43. CharlesJ says:

      bill,
      “If you do, how do you do that without mention of the buffer stock mechanism?”

      I tell them that unemployment is deliberately created by the government to control inflation. I tell them that a better way to control inflation is to replace this unemployment with jobs paid at a fixed minimum wage paid for by the government. I tell them that replacing jobs paid at the market rate with ones paid at the lower minimum wage provides an anchor against inflation.

      In other words, I explain what “buffer stocks” mean (in my own clumsy way) without actually using the term. I don’t use the term because it is unfamiliar to them, not because I disagree with it.

      Kind Regards

    44. Some Guy says:

      Buyer Beware: The term “wage slavery” goes back a much longer way. Frederick Douglass criticized some uses of the term by noting that his escape from slavery left a vacancy. But that even those subjected to the worst wage slavery in the North were not trying to fill his former position.

    45. Andreas Bimba says:

      The solution is genuine democracy (not corporate dictatorship as now), MMT fiscal stimulus, industrial/commercial development policy, a comprehensive social support/education/health care system and a MMT jobs guarantee scheme all within the constraints of staying within the earth’s global warming limits and reducing our environmental burden and moving towards true sustainability.

      It’s as simple as that and apart from the environmental aspects we had this package close to the ideal settings in the post war period up to the mid 1970’s when the neo-liberal monetarist Chicago School neo-fascists step by step started running off with an ever larger share of the worlds economic wealth.

      I think the MMT economists underestimate the importance of good industrial and commercial development policy and the important role governments can play in this area. The post war Japanese and German governments were particularly good at this approach and these nations both have much lower levels of wealth stratification compared to the main English speaking nations. Both nations have also fallen off the rails a little with neo-liberalism and fiscal austerity in recent times but it is their earlier policies which are so beneficial. I would urge interested MMT economists to learn about the role of Japan’s – Ministry of Economy, Trade and Industry (METI) and how this government organisation builds new industries and capabilities and guides existing industries, from WW2 to the present day. The private sector in a competitive environment is in my mind still the best avenue for providing most goods and services as is done in Japan and Germany, whilst the public sector is best for providing social support, health care, most education, utilities such as electricity, water/waste water, gas, core telecommunications and much of the finance/banking sector.

      The funds available to the government for spending into the economy arising from fiscal deficits is enlarged with economic growth and with the size of the nations GDP before the inflationary constraint is reached. Good industrial and commercial development policy should therefore be prioritised along with the urgent need to transition to clean energy and a sustainable economy. Expansion of the manufacturing, value adding, food/fibre/minerals processing sector with additional import replacement under moderate tariff walls of mostly about 15%, to enable highly automated manufacturers to compete with low labour cost and high technology capable East Asian competitors, is a very worthy policy option as well as the fostering of new higher education and creativity intensive industries using a METI approach and those suggested by Professor Goran Roos for South Australia.

      The size and health of the internationally tradeable goods and services sector of a nation’s economy largely determines where a nation sits in the world, via the relative value of its currency and this sector must be strong if we are to be able to deliver the level of social support, education and healthcare services most of us expect from a developed country. A third world economy cannot support a developed world social welfare, education and healthcare sector even with MMT fiscal stimulus policy as the base economy is too small.

      I see the JGS as then providing employment to the residual of the unemployed that cannot find suitable employment in a fiscally stimulated, well managed (i.e. METI), socially inclusive, less wealth stratified economy. The JGS I therefore envisage may start off smaller than most MMT economists are planning for. A stimulated and well managed economy will also benefit the legions of underemployed to a much greater extent and harness the limitless creativity and enterprise of the human mind.

    46. Neil Wilson says:

      “However, is it reasonable to assume that JG jobs will actually produce a similar value of real goods and services available for purchase as the lost private sector jobs?”

      Of course it is – unless you’ve swallowed the ‘private sector is always more efficient’ kool aid.

      Plus of course there is the other dynamic effect. If labour is expensive, then automation gets a better look in.

      An example shows this clearly. Currently there are 12 people offering hand car wash facilities and subsidised by tax credits.

      We eliminate the tax credits and introduce a Job Guarantee. Those people are taken out of freezing in cold weather, boiling in hot weather and ending up with trenchfoot due to the constant damp and redeployed maintaining the public parks, talking to seniors in their community and repainting the community centres. A much better use of people.

      In their place private operators install a single cash wash machine which can easily handle the throughput of 12 people at the same price, but also keeps the car wash machine manufacturer and their maintenance staff in secure jobs.

      The other effect is to get rid of ‘parasite’ businesses. Once all the marginal operators go to the wall, the space is left for efficient operators that pay their staff properly to expand. The greater volume to staff ratio helps maintain the staff pay levels via greater productivity.

      The current private sector nonsense is that the ‘private sector creates jobs’. We should turn around and say we don’t want that. The actual task of an effective private sector is to replace human endeavour via capital investment. If you fall for the ‘private sector creates jobs’ line then all you end up doing is providing the private sector with free labour subsidised by the state. At which point your productivity improvement falls of a cliff.

      The task of the private sector is actually to destroy jobs.

      Cheetahs will obviously accept fresh meat thrown to them every day, but it isn’t good for them. They get fat and lazy. You need to remove the meat and force them to get back to chasing gazelles.

    47. Neil Wilson says:

      “cash wash machine”

      *car wash machine

      (as freudian slips go, that’s a belter).

    48. Jerry Brown says:

      Goodness gracious Neil, why do you hate the gazelles so much? They seem so harmless to me…

    49. Kevin Harding says:

      Andreas Bimba you are so right. While I support a universal citizens dividend as a part of
      a progressive tax and welfare system and state guarentees for training and work I do not
      consider either as the most important priority for governance.
      They are tools in the box to promote good governance .Social cohesion and justice .
      Economically speaking good governance means directing real resources where they are
      most needed .Pragmitsm and prudence always with an eye to the future.
      The world is facing a climate crisis ,we should move to only generating electricity that does
      not generate greenhouse gases A.S.A.P. The private sector is clearly not up to the task
      with good governance we could have already reached that milestone .
      Here in the Uk we are facing a health and social care crisis the government should create
      direct real resources predominantly human ones (professional and well paid ) to solving.
      We are facing a housing crisis the government should facilitate house building but must
      address price and rent inflation with rent controls.
      WIth an eye to the future education and scientific research should have recourses including
      well paid human ones directed to it.
      GOvernance has to be based on priorities .We have been so poorly governed that the US
      electorate are likely to vote in Mr. Trump.

    50. @Neil,

      “Not all degrees. Only those degrees considered ‘worthwhile’ by a jury of peers.”

      Speaking as someone who actually has a first degree in Physics and a Masters in Electronics, it is tempting to agree with you. But we have to be careful that we don’t fall into the trap of equating educataion with training. If people want training that’s fine but if they want education that should be OK too.

      From the perspective of society we either make a decision to support courses like ‘media studies’ or we don’t.

      I would argue that the type of courses that you and I might have in mind are largely subscribed to by those who can’t find a decent job and haven’t got the A level grades needed for more prestigious courses.

      The problem will largely be self correcting once we do have a better range of options available for our young people.

    51. Brendanm says:

      @neil

      “Not all degrees. Only those degrees considered ‘worthwhile’ by a jury of peers”

      It is perhaps best to concentrate on the value of the teachers, rather than the value of the curricula or the students. If the teacher is an active part of a research community and they want people to know something and other people want to know it; what value can third parties bring to the question?

    52. Neil Wilson says:

      ” If people want training that’s fine but if they want education that should be OK too.”

      It clearly isn’t though as the failure of the student maintenance grant over the 60s to 80s has shown. That’s the point. The student maintenance system was a basic income scheme that failed – just as all the others have failed. And for the same reason. Other people got fed up seeing students getting paid for doing nothing and being a societal nuisance.

      People will stand that for a short time, call for it to cease, and then elect people who will eliminate the freebie. Which is why all the ‘basic income’ trials in the world end up as failures. People elect the other lot to get rid of them or run them down to a pittance.

      Again you are limited by what others need to see. If higher education was seen more like an apprentice scheme – where the student is employed by the Job Guarantee, released to University to attend courses and paid on a timesheet of attendance at lectures, tutorials and study sessions, then you can sell that work to the electorate – particularly if it is accompanied by lots of shots of students and quotes about being grateful for their university place.

      Education for education’s sake is a laudable aim, but that’s what lecturer and researcher positions in universities are for. You get them after you have proved your worth.

    53. Jim Green says:

      A niche in the overall picture–from this side of the pond…….

      President Obama/Presidential Innovation Fellows:

      Since WW II our single method of Job Creation in America has been based on the belief/propaganda that “The market can provide anybody wanting a job, with a job”……

      And when it didn’t work–we pretended it did, and drifted into Santa Clause-like wishful thinking—asserting “it is the American way”, or “God’s will”—or some such lie we told ourselves–as rational Job Creation, in a changing world, drifted further and further away…..

      For instance, this method of Job Creation has not resulted in a UE rate below 3% since 1953, but we limped along—terrorized by McCarthyism, and leaving millions jobless—and by the mid-1970’s the colliding forces of globalization, automation, technology reached critical mass, resulting in a cosmic shift in the world economy—with subsequent “High and persistent unemployment pervasive throughout the OECD since the mid-1970’s”, according to Dr. William F. Mitchell, and every credible economist.

      And, going forward the data got even more grim—i.e., since 1980 we have had excessive UE 70% of the time [twice that of preceding years], and by the Crash of 2008—8 million were rendered jobless—[and in spite of an extremely anemic recovery we inched down from 10% to 5% UE, inexplicably still relying on the above method]—–

      And with the result that by the September 2016 DOL Jobs Report, we still have 8 million Americans looking for work, that can’t find any…..and in an economy limping along on a flat tire—as a direct result of high UE, and a Republican Congress determined to sabotage America—for political reasons–

      The lesson is: Our choices are adapt and change in a world that is changing—whether we like it or not—or be forced to create a Police State to hold in place antiquated and unworkable laws and policies [in this case re our Job Creation]—and sadly, America has opted for the latter—and we need look no further than the police marching in lock-step in Charlotte, this past week, as proof!

      The flaw in all of this is based on simple common sense: “The mechanic can’t fix the engine without the proper tools”—and when Jobs, Jobs, Jobs is the major mantra in this election—fixing unemployment is hopeless so long as we insist on a method of Job Creation—THAT DOESN’T WORK!

      Proposed Solutions: HR 1000, and FULL EMPLOYMENT IS A PRO-MARKET CONCEPT, Amazon

      Jim Green, Democrat opponent to Lamar Smith, 2000

      Thank you for contacting the White House!

    54. Mike Ellwood says:

      I would agree with Neil that students on degree courses should be considered to be JG employees, with all the benefits (and responsibilities), but would be more generous, like Peter Martin, in opening it up to all degrees.
      .
      On the other hand, I’d want the government to be more proactive in its relationship with the universities (I speak in a UK context) about what they offer, and at what fee level (I think some of the universities have taken advantage of the present student loan system in order to charge rather exorbitant fees; they should be discouraged from this, and only the government has sufficient muscle. I am here taking it for granted that in an MMT-conscious world, student fees would be paid directly out of the national deficit spend.
      .
      Degree level education is a public good, and we can be served by the arts and humanities, as well as pure science. Having said that, I *would* put a lot of emphasis on the sciences, pure and applied, research, and engineering (perhaps with a renewed focus on nuclear engineering, so we can build our own small-scale reactors, in contrast to the behemoth that we are allowing foreign governments to build for us at great expense at Hinkley Point). Foreign languages too (although university isn’t necessarily the best place to learn languages at a practical level).
      .
      However, I would make students “earn” their place at university by having them work for a year (or more) after leaving secondary (high) school, in a JG job in their own community (living at home to save travel and accommodation costs). This would take the place of the “gap year” which has become fashionable in the UK in recent decades. In the latter, some young people do bone fide VSO schemes or similar, but for many others, it’s a rather expensive extended holiday, available only really to those from comfortably off families.
      .
      And when they start their university course, they would just carry on under JG terms, with permitted and paid holiday at the usual times, although perhaps rejoining a JG job for a while in their community in the long summer university vacation.
      .
      All of this would be a hard political “sell”, but the “JG gap year” could be “sold” as a form of “Civilian National Service” which might go down well in right-wing circles, especially for those of a certain age. :-)

    55. BuyerBeware says:

      [ Some Guy says:
      Saturday, September 24, 2016 at 14:12

      Buyer Beware: The term “wage slavery” goes back a much longer way. Frederick Douglass criticized some uses of the term by noting that his escape from slavery left a vacancy. But that even those subjected to the worst wage slavery in the North were not trying to fill his former position.]

      Thank you! We need to stop discussing & considering that minimum wage is acceptable. It keeps people working as slaves. The ‘economy’ needs to be about people not money. . . . . .

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