Bill Mitchell, an economist at the University of Newcastle (Australia) argues (among other things) in this interview that sovereign currency issuers, like the US and Australia, ought to offer jobs to anyone who wants them.
Among other things, it would mean 0 unemployment (or at least 0 involuntary unemployment), greater productivity, and create a “buffer stock” of employees for private industry so that they could always hire workers away from the job guarantee program, if or when they needed them. It would also stabilize the economy, protecting it from econonomic recessions.
Full disclosure: I’ve favored the basic income guarantee, or what Thomas Paine called the “Citizen’s Dividend”, mainly because of what seems like the nightmarish bureaucracy necessary to set up a job guarantee. But Mitchell makes a persuasive case.
I’m curious what you all think.
PS: there’s a summary on the same page if you don’t want to watch the video. But the interview is better than the summary.
Could you summarize it for us? Why is a job guarantee to be preferred to a “Citizen’s Dividend”? Why not supply non-market income through the basic income guarantee, and then have labor purchased to the extent desired in the ordinary fashion, through market mechanisms, on top of that?
During the New Deal the government hired all sorts of people, many of whom did great work. I read the summary, but I assume that contracting with companies to hire (or retain) employees would count also.
There is a bias against hiring the long term unemployed today. Turning these people into government workers with a track record of responsibility and some good current references could help a lot. And there is a ton to do.
Mitchell specifically addresses this argument, which he says is usually the first one that comes up. He says that that “printing money” (which the U.S. has been doing systematically since the Great Rececession of 09) results in higher employment, not inflation, in countries which are not resource contrained. Zimbabwe and Weimar Germany are poor comparisons to modern first world economies. In Germany the occupation of the Ruhr, the devastation of WWI, and reparations represented real resource constraints. In Zimbabwe, it was the systematic destruction of the farming industry.
Mitchell is not arguing that hyper-inflation is impossible, merely that it happens only in the presence real resource constraints, the most important of which is labor.
How does a job guarantee work exactly? The big question that comes to my mind is, where do the jobs come from? How can a program like this be meaningfully distinguished from just giving people money (which I am not opposed to, to be clear). I’d expect a job guarantee program to devolve into a dishonest-feeling, demoralizing system of pretense at make-work.
I’m not sure what you want me to summarize. There’s a summary of the interview just under the interview, which does a better job than I can do.
As far as the basic income guarantee (and by the way, I think Citizen’s Dividend is a much better label. It brings to mind ownership and patriotism, which everyone is in favor of. B.I.G. sounds like welfare, which everyone is against) I can’t answer which one is better, because that’s the question I’m asking.
Mitchell doesn’t compare the two directly. He merely says that a guaranteed job program is better than what we have now. He says that unemployment is a bigger drag on economic development than any other economic problem, and that economists who focus on other issues are missing the big picture. He specifically talks about Greece, where 60% of young people are unemployed. That’s a generation which won’t be entering the workforce, if ever, until they’re in their thirties. The direct and knock-on effects of that kind of waste of resources is obscene. The other inefficiencies that MMF-types talk about are piss in the ocean, in comparison. (I’m paraphrasing.)
I would guess, or infer, that Mitchell prefers the Job Guarantee over BIG because 1. It’s politically more palatable, and 2. Because it’s the most direct way to eliminate unemployment.
Huh. For some reason I thought you’d be against the job guarantee. And you’re right. During the Great Depression government jobs programs did some great work. The Hoover Damn is one that comes to mind. There was also a program that recorded the memories of the last living former slaves before they died. Rural electrification started then as well, if I remember right.
And you’re right, the U.S. has been printing money since 09. A lot of people don’t seem to be know that. The result has been falling unemployment, and no inflation.
Emphasis added. Can you flesh that out? Intuitively, I would think it would lead to lower productivity. Productivity = “value of goods and services produced in a period of time, divided by the hours of labor used to produce them”. Unless these new workers are more productive than the existing workers, productivity is going down (at best, staying the same), not up, and it’s hard to imagine how they could be more productive.
The Citizen’s Dividend would be enough to get by, but more or less by definition not as much as a job would pay.
I, personally, would pay everyone the dividend, whether they worked or not. (It’s a Citizen’s Dividend - not unemployment.) That would make administration easier, and eliminate the incentive not to work.
That’s sort of my fear about it too. But as Voyager pointed out, the government has provided meaningful important jobs before.
And I think there’s still plenty to be done. Just off the top of my head, transportation infrastructure in the US needs improvement. Mass transit is poor or non-existent in many cities in the US. Universal broadband would make an excellent project. Expanding and improving AmTrak so that it could be a realistic alternative to flying would be awesome. Much could be done to improve public education. Expanding the number of schools, decreasing class sizes, and letting parents decide which school their kids went to are some examples. Doing something to reduce or eliminate student loan debt is another. Expanding Peace Corps could yield a number of benefits. I’m sure there are many others.
There’s certainly an ordinary language sense of the word “productivity” as meaning “total value of goods and services produced”, simpliciter. LinusK was likely speaking of this.
Well, when debating economics we should use the terms a economists use them. But if that’s what he means, then so what? Are we lacking in goods produced? Are we now Supply Siders?
OK, so what problem is that solving? Is our economy plagued with too few goods being produced? What happens when you produce more goods than the market needs?
It seems pretty obvious to me that the classical definition of productivity would be violated and it would be a bad thing – people wasting time doing things unproductive. Possibly better to just have a guaranteed basic income: a couple (but certainly not all) of these people will have ground-breaking artistic or scientific or technical revelations that they would not have had otherwise if they had been forced to work on unproductive tasks for 20+ hours a week. Not to mention the quality time the mass of people could have otherwise spent with shopping, with family, etc.