I have noticed a new phenomenon – a sort of new myopia – has emerged as the blogoshphere has expanded. The knowledge set that people think they are empowering themselves with becomes rather constricted – sometimes to a selection of blogs they may have read, sometimes even to the last blog they read on a topic. So we get a range of views and prognostications emerging – held out as expert commentary in many cases – upon the basis of perhaps just a few blogs having been read. As a long-term blogger, I also see this syndrome in the comments section of blogs. Someone new turns up it seems having read the latest offering from someone and launches into an array of criticisms which have been previously addressed but the commentator hasn’t bothered to read. The point is that research is a lengthy process and opinions should only be formed with conviction when one is convinced they have read all the major offerings in the area of interest and considered the evidence base. Which brings me to the real point. Before I wrote blogs I had generated 25 or so years of academic research material – in journal articles, books, book chapters, commissioned reports – hundreds of items of work. That is standard fare for an active researcher chasing competitive grants. That is where one’s contribution to ‘knowledge’ (as far as it is) is to be found. I only started writing blogs as a way of promoting Modern Monetary Theory (MMT) to a broader audience that would never read my academic work. I think that has been a successful strategy. But it has also created this ‘new myopia’. People think that the knowledge set available lies exclusively in blogs. It doesn’t. My blogs cut corners in writing style, referencing, and leave things unsaid that a more formal treatment would cover. The aim of the blog is accessibility and to provide an introduction to ideas which will encourage readers to delve further and arm themselves with deeper knowledge so as to promote informed progressive activism. A case in point is recent deliberations about one of my pet topics – the Job Guarantee.
A week or so ago (May 16, 2017), the Washington-based Centre for American Progress published an Op Ed – Toward a Marshall Plan for America.
The CAP says it is “a progressive public policy research and advocacy organization” does not fully disclose its funding sources (shameful) but is known to have close links to the Clinton camp in the Democratic Party and its staff has had considerable overlap with recent Democratic administrations in the US.
The CAP article (cited above) addressed, in part, the vulnerability of people living in the US “who have not gone to college” and as a result of “prudential and ethical” considerations, it concluded that:
… we must do more to create decent job opportunities and secure family situations for all working people facing difficult economic conditions not within their control.
The Report then provided a graphical analysis of where “lost jobs, low wages, high costs, and dimished mobility played a critical role in setting the stage for a narrow populist victory for Trump” and set out a plan to combat these issues.
Their “Marshall Plan to rebuild hard-hit communities through increased economic growth; more jobs with better wages; and rising opportunities and increased security for families” included a range of policy interventions.
Among them was:
We propose today a new jobs guarantee … There is no shortage of important work that needs to be done in our country. There are not nearly enough home care workers to aid the aged and disabled. Many working families with children under the age of 5 need access to affordable child care. Schools need teachers’ aides, and cities need EMTs. And there is no shortage of people who could do this work. What has been missing is policy that can mobilize people …
An effective employment program would need to provide paid training when needed to allow workers to transition to a designated type of employment … it would not compete with existing private-sector employment … it would provide the dignity of work, the value of which is significant.
All of which I happily read as being a truly progressive contribution (why would I not think that!).
I didn’t read it as being a full operational plan for the implementation of a full-blown Job Guarantee scheme, which lies at the heart of MMT’s macroeconomic stabilisation approach.
I didn’t read the reference to some types of work that would be possible as being a full inventory of Job Guarantee jobs. It was general rather than specific.
The CAP intervention was a blog post not a full blueprint and technical manual on how to design and implement such a scheme.
Having read that I was then disappointed to read this Op Ed the same day (May 16. 2017) – More Job Guarantee Muddle – which accused the CAP proposed of being “muddled”.
After outlining that the Job Guarantee pool would be cyclical varying with the “condition of the private sector”, the author, one Matt Bruenig attacked the CAP advocacy of a Job Guarantee for only mentioning a few job categories of jobs (as noted in the CAP quote above) and concluded that these were not jobs that would be suitable for a Job Guarantee.
Hence the Job Guarantee is stained as being in a “muddle”.
He concluded that:
Time and time again, popular advocates of the Job Guarantee (not referring to the actual academics behind it) make this exact same mistake. They talk about how the Job Guarantee would be a great way to wipe out unemployment and then they turn around and advocate for jobs that are not appropriate for a job guarantee program.
Bruenig is a young white US lawyer who pops up on progressive blog sites.
He achieved some notoriety when he was sacked from his position at Demos around May 2016 after launching a series of personalised twitter attacks on the head of CAP (Neera Tanden) (Source). Bruenig called Tanden, a black women, a “scumbag” among other things.
The Demos press statement on the matter indicated that Demos were the attack on Tanden “were not aware of the extent to which Matt has been at the center of controversies surrounding online harassment of people with whom he disagrees”. The Tanden attack was part of a “pattern of behaviour”.
It acknowledged the incident happened in the heat of the Primary election process at the time (Bruenig supported Sanders and Tanden supported Clinton) – but Demos didn’t believe Bruenig’s “personalized, online fights” were advancing its progressive agenda.
Bruenig seems to have form in this regard – see Is Matt Bruenig a Populist Martyr?.
At any rate, the sides in these disputes are blurred I think, and I agree with Bruenig that Bill Clinton’s welfare reforms were a disastrous neo-liberal assault on the poor in the US, who have never recovered from it. In general, Hillary Clinton’s wing of the Democratic Party is a neo-liberal organisation.
That being said, his attack on the Job Guarantee proposal from the CAP seems more about his personal animosity towards that organisation rather than being a serious attempt to embrace the Job Guarantee proposal.
Bruenig has attacked another earlier call (HERE for the introduction of a Job Guarantee – in a blog (March 22, 2017) – What jobs would be doable under a Job Guarantee program?.
Once again attacking an idea on the basis of a blog post.
In that second attack, he correctly notes that:
The cyclical nature of the Job Guarantee (it picks up in recessions and declines in expansions) is critical to understanding what kinds of jobs it makes sense for Job Guarantee to do. Most importantly, the cyclical nature of Job Guarantee means that you cannot use the program to staff jobs that are necessary to do.
But the implication that necessary and productive (he uses the term “useless”) are one and the same betrays his superficial treatment of the topic.
He also concluded that blog by saying that it is “doubtful” that a Job Guarantee would be able to “absorb millions of jobless people”.
And the really detailed literature on the Job Guarantee does not exist in the blogosphere. That is the problem of confining one’s knowledge set to the Internet.
Tweets, blogs, etc are shorthand communications. In my case, the shorthand might be longer than others, but it is not a substitute for my academic work.
Rather it is a teaser – to encourage people, where possible to engage with that deeper work where possible. If that is not possible, then at least the blogs provide a vehicle for telling readers that such work does exist and the ideas presented in the blog – in streamlined form, are evidence based.
In my case, I try to run a half-way house as well. That is why my blogs are longer than the offerings of other bloggers. The material I cover is so contested that I feel it necessary to provide deeper explanations and more intense evidence so as not to be dismissed as yet another soapboxer. Whether than works is another matter but that is my intention.
But it still holds that perhaps Bruenig should have reflected on the academic literature a little before making these grand statements (disguised, probably, as personal attacks on political foes – CAP!) about whether a Job Guarantee is viable or not.
While his claim that the design and type of jobs that would be suitable for a Job Guarantee have to reflect the cyclical, buffer-stock nature of the scheme, he is not the first person to think of that. Although from reading his work, you would conclude that he was the first to have these insights.
For example, I started out writing about buffer stock employment schemes as a 4th-year honours student in 1978 (yes, we age!) and were fully cogniscant of the issues raised by Bruenig then.
My MMT colleagues have been discussing this issue together since the early to mid-1990s.
So rather than make out that he was coming up with some new critique of the Job Guarantee, upon which to hoist CAP on its own petard, Bruenig might have displayed some humility.
He might have said that while the CAP approach (or the Jeff Spross blog before that) was very general, the academic literature on the Job Guarantee is full of detail about how the generality becomes operational.
Of course, then he would not have had a blog to write or a wedge to drive into CAP, which he obviously dislikes.
As it stands, his entry into these blog debates on this topic is negative and rather ill-informed. It reads as if he thinks he was the first to note all this stuff and CAP are just dullards who “muddle” when it comes to policy design and advocacy.
He seems unaware of the academic literature that is replete with fine-grained analysis of these issues. We have been writing about these things for more than two decades! In my case, since the late 1970s.
As an example, Randy Wray and I considered the issues raised by Bruenig more than a 12 years ago in a paper in the Journal of Economic Issues.
We noted that a common source of criticism of the Job Guarantee relates to whether there would be enough jobs of sufficient merit to fully occupy the extant unemployed.
Most critics claim that Job Guarantee jobs would not lead to the production of useful output (or as Bruenig claims they would be “useless” jobs).
They fail to mention that millions of low-wage, low-skill jobs are created by the private sector in any given month with very little criticism or scrutiny.
These critics get disturbed only when the public sector creates such jobs. The so-called invisible hand of the market is presumed to operate smoothly without creating problems, while the visible hand of government is believed to be incapable of dealing with logistical complications.
But quite apart from this ideological bias, these critics typically fail to fully come to terms of what a buffer stock of jobs actually is.
In the Job Guarantee, the buffer stock of jobs is designed to be a fluctuating workforce that expands when the level of private sector activity falls and contracts when private demand for labour rises.
Instead of forcing workers into unemployment when private (or public) demand slumped, the Job Guarantee would ensure that all those who would under the NAIRU buffer stock system become unemployed would have access to a public sector job at the basic wage.
Bruenig gets that essential characteristic.
It is clear that this overall aim has implications over the business cycle and the cyclical nature of Job Guarantee jobs presents an operational design challenge for the administration of such a scheme and the design of the Job Guarantee jobs.
Job Guarantee jobs would have to be productive yet amenable to being created and destroyed in line with the movements of the private business cycle.
While challenging this is not an impossible requirement for public policy to meet. The private sector does not have a monopoly on being able to mobilise a diverse range of resources and successfully complete thousands of tasks within a tight and complex schedule.
Note also that the private sector scheduling is in some sense much less flexible because it cannot afford to “inventory” workers who are (temporarily) unneeded.
Job Guarantee can employ workers even before precise tasks are assigned, helping to smooth transitions.
The cyclical nature of the jobs suggests that in designing the appropriate Job Guarantee jobs the buffer stock should be split into two components:
- a core component that represents the ‘average’ buffer stock over the typical business cycle given government policy settings, trend private spending growth, and a mismatch of labor force characteristics and employer preference.
- a transitory component that fluctuates around the core as private demand ebbs and flows.
The business cycle fluctuations of employment are not nearly as large as people would like to believe. We have estimated that the total fluctuation between peak and trough in the Job Guarantee pool would perhaps be in the range of 25 per cent of the pool.
So there will be a fairly steady core of workers always in the pool. Nothing like from zero in a boom to millions in a recession.
Modelling can provide a guide to the ‘steady-state’ jobs that would be initially offered under the Job Guarantee scheme.
Administrators would then prioritise work allocations from a broad array of community enhancing activities. In this way, it is unlikely that any important function or service would be terminated abruptly, due to a lack of buffer stock workers, when the private demand for labour rises.
Thus, the design and nature of Job Guarantee jobs would reflect the underlying notion of a buffer stock.
This stock would, in turn, have a ‘steady-state’ or core component determined by government macroeconomic policy settings, and a transitory component determined by the vagaries of private spending.
In the short-term, the buffer stock would fluctuate with private sector activity and workers would move between the two sectors as demand changes.
Longer-term changes in the size of the average buffer stock would reflect discrete changes in government policy.
It is in this context that we argued for the existence of a stable core, which might change slowly and predictably as government policy settings change, and which would allow Job Guarantee administrators to more easily allocate workers to jobs.
Many of these core jobs would be more or less permanent. More ephemeral Job Guarantee activities could then be designed to ‘switch on’ when private demand declined below trend.
These activities would not be used to deliver outputs that might be required on an ongoing basis, but would still advance community welfare.
For example, Job Guarantee jobs in a particular region might be used to provide regular shopping or gardening services for the frail aged, to support the desire of many older persons to remain in their own homes.
It would not be sensible to make the provision of these services transitory or variable, and they would thus be provided from the core buffer.
Clearly, these services could be reassigned to become ‘mainline public sector’ work if a political shift in thinking occurred.
The structure of these jobs and the remuneration paid would however not be altered as a consequence of this political shift. Other ‘off-the-shelf’ projects would be undertaken or completed only when the Job Guarantee pool expanded sufficiently.
Another example of how we considered the buffer stock nature of the Job Guarantee is a Report my research group in Australia issued in 2008 following a detailed study that involved a large national survey of local governments in Australia. We sought to develop an inventory of jobs that satisfy several principles (see below).
These jobs would be accessible to the lowest skilled workers, generate benefits by way of meeting unmet demand for community development, personal care and/or environmental care services and more.
We sought detailed information from local governments on the type of jobs they could supervise that satisfied these criteria, including supervision and capital equipment costs and other relevant factors.
The Final Report (released December 1, 2008) – Creating effective local labour markets: a new framework for regional employment policy – developed a new framework for the design of regional employment policy.
It emphasises increased public sector infrastructure spending, the implementation of a National Skills Development framework and the introduction of a national Job Guarantee.
So similar aims to the Marshall Plan for America proposed by CAP. But our Report was not a blog post – it was, rather, 300 pages long and the result of 3-years of research.
It was funded by the Australian government and an industry partner Jobs Australia through one of the competitive funding schemes that operate in Australia (along the lines of the ESRC in the UK or the NSF in the US).
While some of the institutional detail is designed to talk to Australian readers, the general principles outlined in that Report (and also in many other academic papers by myself and my MMT colleagues) is applicable anywhere.
That Report specifically considered implementation issues that would arise with a Job Guarantee.
We noted that the design and implementation choices of any public policy can significantly determine its impact, the devil being in the detail. As such we sought to enunciate a clear implementation model that was intended to address concerns that people might raise in the context of a Job Guarantee.
Relevant here was the issue of ‘real jobs’.
We noted that some of the theoretically necessary design features of the Job Guarantee system are considered by some to undermine the likelihood that ‘quality work’ will be performed under the scheme.
The justification for creating a Job Guarantee job is to provide work which is accessible to the most disadvantaged unemployed workers.
But it is also intended that the work performed delivers a ‘net social benefit’ or enables ‘greater utilisation of an individual’s capacity’.
If these criteria were used to determine the existence of supposedly ‘real jobs’ in the private and public sector, many would be abandoned.
But the existence of socially harmful and degrading jobs in these sectors does not preclude the possibility of them also occurring under a Job Guarantee, so the question of how the value of these jobs will be determined is legitimate.
Whereas market-driven services are supplied according to how much people are prepared to pay for them, and public services generally respond to usage levels, Job Guarantee work is not intended to increase or decrease in response to changing demand for the Job Guarantee work itself, but to accommodate falling and rising private sector demand for labour.
This appears to disengage the work performed under the Job Guarantee from standard ways of estimating its value.
If it transpired that performing this work made little difference to the overall well-being of the community, not only would it seem a waste of public resources that could have been more beneficially expended elsewhere, but those engaged in performing the work could become demoralised because their skills and energy were not being better utilised.
Equally, while the value of the work to the community does not determine whether Job Guarantee jobs are created or destroyed, this does not preclude the possibility that the work could be of great public benefit, although five additional theoretical parameters for the scheme could potentially reduce the scope of the Job Guarantee to deliver valued services.
The five parameters we considered were:
1. Non-rival nature of the jobs:
To serve its countercyclical function efficiently, the Job Guarantee system must not displace employment in the private or public sectors, which precludes it from delivering services which either the market or the state currently deem worthy of delivery.
This means that Job Guarantee services will address needs that are currently not profitable for the private sector to meet (because they are public goods or because potential recipients of the services cannot afford them) and which the state currently considers of such low priority as to not warrant addressing.
This does not preclude Job Guarantee services from meeting considerable unmet need in relation to the natural and social environment and among the least powerful sections of society, particularly if the system is well-engaged at the local grass-roots level, where the market and the state generally are not.
The Job Guarantee model would recognise sensitivity to local need and local control is crucial to identifying worthwhile and under-performed work
2. The Buffer Stock principle:
The Job Guarantee’s countercyclical function also requires that it does not retain workers when the private sector requires them and can induce them with an appropriate job offer to accept employment.
The operation of the Job Guarantee requires that the Government offers a fixed wage job at the effective minimum wage and never seeks to compete with market wages for workers.
The Job Guarantee is a buffer stock at all times.
If the relative attraction of the Job Guarantee work was its greater security, a sufficiently streamlined entry/exit design (that enabled immediate re-entry to the Job Guarantee) will lower resistance to accepting offers of private sector employment by eliminating risk attached to the job not working out.
The successful transition from the Job Guarantee into private sector employment would be enhanced because the workers would maintain work-related physical and mental stamina, social skills, means of transportation, and the like, capacities which are often lost during long spells of unemployment.
This would further reduce the perceived risk of the scheme.
If the relative attraction of the Job Guarantee work was that it required less effort, this would be mitigated by the degree to which Job Guarantee work achieved the standards of effort and professionalism of the private and public sectors.
These standards are not solely achieved within these sectors by either punishing sub-standard performance (for example, demoting or sacking bad workers), or rewarding above-standard performance (for example, promoting good workers).
Although the Job Guarantee’s fixed-wage and the objective of eliminating unemployment limits recourse to these strategies, it does not totally preclude them, nor does it preclude recourse to other sources of motivation used in other spheres of collective human endeavour such as sport, education, families, and voluntary associations.
If the relative attraction of Job Guarantee work is that it is better managed, safer, more dignified or more satisfying than private sector employment, the solution may be that private sector employers raise their standards in these areas.
3. The expectation of continuance:
The provision of new services that meet significant needs may raise an expectation of continuance. If the withdrawal of a highly valued Job Guarantee service threatened a public backlash, governments would be under pressure to continue the service, perhaps as a mainstream public service, which would permanently reduce private sector access to those workers.
Some Job Guarantee jobs will always need to be undertaken to eliminate unemployment because the private sector cannot do it alone.
Those Job Guarantee services that have the greatest demand for continuity, such as new forms of support for the aged and disabled, would need to be prioritised for retention over services (such as public works) that can be discontinued without significant loss of amenity.
4. The lowest common denominator principle:
Since the scheme is intended to offer all persons of working age a job to eliminate their unemployment or underemployment, there is a presumption that Job Guarantee jobs would need to be kept simple to accommodate the ‘lowest common denominator’ of skill level.
Were this so, many workers would find Job Guarantee work unchallenging and many of their skills would remain underemployed.
This issue has been successfully addressed in the past by labour market program providers by assigning different roles and responsibilities to people within a given work group, according to need and ability.
This simply requires that jobs are designed with a range of options and that supervisors possess the skills to allocate work according to worker needs and capabilities.
Job Guarantee jobs have an advantage in this regard in that they are not dependent on achieving a given level of productivity, thus allowing them to be tailored to accommodate special needs, such as those of people recovering from mental illness.
This would best be undertaken through collaborative job design with the individual, their health professionals and family. New forms of workplace support work are also potential Job Guarantee jobs.
In many respects, the flexible potential for the Job Guarantee to offer diverse employment experiences has fewer limitations than existing sources of employment.
5. No substitutability with other public employment:
Some socially useful services which address important social and economic objectives may already be partially met through permanent public sector employment.
Expansion of these services through the Job Guarantee creates a tension between those employed under public sector conditions and those employed under Job Guarantee conditions.
Downgrading the wages and conditions of the public sector workers would be inequitable.
This issue can be addressed by quarantining this existing public sector employment and associated conditions while the incumbent workers continue their employment in these jobs.
Once these workers retire or take up other positions, these jobs will revert to Job Guarantee pay and conditions.
The general principle is that no person would be individually disadvantaged by the introduction of the Job Guarantee. This is not the same as saying a class of jobs might be restructured into Job Guarantee jobs over time.
We identified hundreds of thousands of suitable jobs across three broad labour intensity and wage to non-wage cost categories.
The scale of the jobs we identified was large relative to the size of Australia’s unemployment problem. A similar exercise in, say, the US, would identify millions of jobs.
Reading blogs as your sole source of information and coming to bold conclusions as if they were one’s own insights and revelations is not a very sound approach to public advocacy.
The Job Guarantee proposal is backed by many, very detailed academic studies over many years.
Without wanting to overstate, I would suspect the early MMT team (Mosler, Wray, Kelton, Tcherneva, Mitchell, Forstater, etc) have thought through every possible problem that might arise from implementing the Job Guarantee.
Whether you agree with our analysis and conclusions is one matter. But to grandstand in the blogosphere and ‘coming up’ with criticisms as if they are something new while ignoring the extant literature is another.
As it stands, the CAP and Spross Op Ed articles on the Job Guarantee were welcome and sound. Their blogs were not the place to flesh out all the detail.
That has already been done by the core MMT team long ago.
That is enough for today!
(c) Copyright 2017 William Mitchell. All Rights Reserved.