Responses to MMP Blog #46: The Job Guarantee – Program Manageability

By L. Randall Wray

Responses to MMP Blog #46: The Job Guarantee – Program Manageability

Sorry, late yet again. One more week of teaching and then things should be less hectic. Note I had planned for 52 MMP blogs and we are nearing the end…… But it looks like we’ll need a few more. I’m going to be a bit lazy this week, cutting and pasting the comments and providing brief responses.

  1. Neil Wilson Since unemployment is a systemic failure, aren’t the only questions that need to be asked (i) how much monetarily are we to compensate these people for the loss imposed upon them by the economic system? (ii) whether it is better to pay them do something useful and add to society or just pay them for sitting around doing nothing much? Otherwise the economic system surely relies on starving some people out of the way (either to an early grave or another jurisdiction).

LRW: Agreed with the sentiments. Just add this: JG is a bufferstock so it actually helps the private sector employers, too.

  1. Neil Wilson Isn’t the management of a JG programme from the federal point of view pretty much the same as the management of a benefits programme? You work out whether somebody is entitled and pay them. Same issues with both really. One is means testing – which requires a lot of checking and rules, the other is whether they are doing some work that is of use. Seems to me that the overhead of both is pretty much the same. Here in the UK we’re implementing the ‘Universal Credit’ system which requires ‘real-time’ (ie every payroll period) work hours data to be collected from every employer in the country so that top up ‘tax credit’ benefits can be adjusted in real time as well.  Add ‘file a nil paid timesheet from non-private sector organisation and we’ll pay it instead’ to the rule-set and you have a Job Guarantee.

LRW: You can design the JG to minimize federal government overhead, etc. But that pushes it onto some other organization such as state and local government, not-for-profits, co-ops, or private firms. It is simpler to pay people to stay home than to organize projects. Of course, as I’ve argued, having them work has many, many social and private benefits over “welfare”.

  1. Justin Holt I’ve been an advocate of full employment programs since I read Harvey’s book several years ago. But I have a few questions and a comment. Would the counter-cyclical effect of a JG be limited due to a cap on non-wage spending? Do you recommend that a JG also be supported by increased permanent public employment and public skills development programs as recommended in CofEE’s 2008 report “Creating effective local labour markets: a new framework for regional employment policy” ? Also, a comment, by requiring matching funds by local entities this may prevent job creation in areas where the local government is unwilling to match funds. Of course funding to non-profits and worker cooperative would get around this problem. It seems that a JG allows choices for people whose local government is unwilling or unable to employ them. People can by pass their local government and request funds. As opposed to seeing this as circumventing local control it could rather be understood as allowing people the opportunity to liberate themselves from local elites, brute luck, and a local electorate which does not share their opinions. A JG would offer opportunities to people who are not in agreement with the local opinion. Thus, a minority group of people who are not budget hawks could be fully employed while their local government cuts spending to meet the desires of the majority. A JG thus adds options and does not limit them. Of course local business may dislike the competition, but who ever said business liked competition?

LRW: First, yes there are other countercylical programs in addition to the JG. And yes it might be necessary to raise taxes or cut non-JG spending if inflationary pressures arise due to excessive AggD. However as a general observation, virtually all developed capitalist economies operate with excess capacity and so this would rarely be needed.

Second, the matching funds element is only a proposal for the NonWage costs–to prevent, say, a nonprofit from getting lots of new federal govt paid for equipment, buildings, autos, etc. If they really need these things, they ought to put up some of the funds. If they cannot do so, they should create jobs with very low nonwage costs. Our first priority is jobs, second is providing community service. We want to keep the incentives aligned.

Third, I do not agree that we should expect local govt to undertake every possible project of positive social value using its own local tax revenue. That will not work for fairly obvious reasons. So yes I would let them propose JG projects. If they prove useful then there could be local citizen pressure to convert these to regular public employment. However, I do prefer not for profit projects by local community service organizations. It might not prove sufficient.

  1. Golfer1john The idea that a local government might opt not to participate is interesting. If such a thing is common, maybe the Federal or State government would have to make it an offer they can’t refuse. Tie it to other revenue-sharing programs, for instance. If the overhead allocation is sufficient, I don’t think this would be a big problem. I think most local officials would welcome a cost-free opportunity to expand their empires. The program should not compete with private business, either for workers (except by setting a floor under wages) or for output. It is for people that private business is not willing or able to employ.

LRW: I don’t think any particular government or not-for-profit should be required to participate. Requirements would reduce “buy-in” and lead to poorly run programs. I do agree—as I’ve argued before—that projects should not compete with the private sector.

  1. Golfer1john  “there is no justification for believing that the market can “do everything” and that the market test is the only test of value.” STRAW MAN ALERT !!! Even the most ardent free market advocates acknowledge a role for government, and the existence of social costs and benefits not reflected in market prices. Only anarchists want no government. If you want to start a campaign against anarchy, you have my support.

LRW:  We will see how many ideologically motivated commentators will object that the mkt test is the only one that matters. In my experience, it is always a major claim made. Am waiting for Ralph’s response (-). I find it necessary to continually point out that narrow “mkt efficiency” is not the only test. And I never hear our free marketeer friends acknowleding that most new firms fail–that is to say that most “market experiments” are failures. thus, that a few govt failures should be accepted. Rather, they seize on every single govt failure as “proof” govt can do nothing right

  1. Joe Firestone (LetsGetitDone) “there is no justification for believing that the market can “do everything” and that the market test is the only test of value.” I don’t think it’s straw man. I’ve seen conservative politicians and pundits claim this or something similar many times. Economists are more careful about this, but there’s no way the Federal Government would have done all the outsourcing it’s done over the past 30 plus years at a cost much in excess of what civil servants would have cost if people didn’t believe something like the above proposition.

LRW: I agree with Joe. It may not be so in every country in the world, but this is the reality in the US.

  1. Golfer1john Something similar? Yes, I would say that most things the free market can do acceptably should be done by the free market. The price mechanism is the most efficient and effective way to allocate resources to their highest use. I hear politicians say that often, too. This is not the same as advocating EVERYTHING to be done by the free market. I have never heard a politician advocate doing away with the police and the courts, and allowing free market vigilantes to enforce the law and mete out penalties. (Maybe the SEC would be a good beta test candidate, though National defense is another, and there are others. The Constitution lays out several powers delegated to the Federal government. I know of no proposed amendments to remove any of them. In fact, the trend has been a transfer of power from the people and the States to the federal government, ignoring the 9th and 10th amendments. If I may be allowed a criticism of Prof Wray’s style, I think he sometimes weakens his arguments by over-generalizing, using absolutes when clearly the absolute is false, and the truth is writ in shades of gray. My comment is more about his style than about whether central planning is better or worse than a free market.

LRW: I disagree with much of that. There is no such thing as a “free market” to leave things to be done by. All economies are planned. The only questions are: by whom, for whom. Truth is not writ in shades of grade. I admit truth is hard to divine, however. And of course we all need to be suspicious of anyone who claims to have found it.

  1. Golfer1john It’s not clear to me who are the “project managers” to whom you refer, or that matching funds (from where?) should be required for non-wage costs. If you’re thinking of current local government managers, I would not want them “creating projects” because of this program. If the local government wants to do a project, they should do it regardless of the existence of a JG, and it should be justified and funded like all their other projects. I have in mind existing organizations already doing the projects, but struggling to do more for lack of volunteer labor. If they are properly vetted, I’m not worried about giving them funding for the overhead of the additional JG workers and activities. As for matching funds, remember we are talking about a program to be funded by a monetarily sovereign government but carried out by monetarily non-sovereign entities. They have not the option to simply spend more money, they must have an income from somewhere else, either taxes in the case of a local government, or donations in the case of a non-profit. Requiring them to (net) spend money to implement this program surely will reduce their willingness and ability to participate, and more so when funding is harder to come by, which is when the program is most needed. Matching funds is a pro-cyclical idea, tending to defeat the effect of a counter-cyclical program. Independent audits would be a better way to monitor for fraud, and as a side effect would eliminate any requirement for public disclosure of the names of JG participants. The auditors should be paid by the Federal government, not by the auditees, as is the common practice in commercial audits, so as not to duplicate the conflicts of interest in that system.

LRW:  I thought I made this clear: I’d let local, state government plus not-for-profits and possibly worker co-ops propose projects. Once approved, federal government provides wages to JG workers. There will be supervisory staff plus materials costs. The question is how much of that the fedgovt ought to cover. I’d put a limit—say, 25% (the number used in Argentina and in the US New Deal), with the rest “matching funds” from the project manager. I see no easy way to separate what a local government would do “anyway” versus what it will do with JG workers funded—since the main barrier to local projects is money.

  1. Golfer1john  “I do not agree that we should expect local govt to undertake every possible project of positive social value using its own local tax revenue.” Nor do I. Local governments operate, like our Declaration of Independence says, “with the consent of the governed”. Just as I cannot afford every possible product of benefit to my family, local governments will not have consent to raise taxes enough to afford every possible project of positive social value. People will prioritize, and do what they feel are the most beneficial and, yes, cost-effective projects. I have a feeling that even with JG and full employment, there will still be a list of project proposals of positive social value that aren’t getting done, because they lose out to other projects of greater social value that can be done with the same resources. My econ 101 teacher said that economics is the science of unlimited wants and limited resources.  My econ 101 teacher was a huge free marketeer, and he often pointed out that 4 out of 5 new businesses fail in the first 5 years. The only thing he said more often was “there is no free lunch”. This is creative destruction, and is the essence of capitalist free market advancement. It is not a failure of the system, any more than the hundreds of light bulb designs that failed before Edison invented a light bulb that worked. I”m having trouble picturing a “failure” of a JG project. OK, if you build a bridge and it falls down, maybe, but I don’t think bridge building is an appropriate JG project anyway. Since the main objective is to employ people, the only way to “fail” is if you gave a project and no workers showed up. I guess it comes down to the idea of what projects should be part of JG. It’s difficult to fail if your objective is sending JG “volunteers” out to work with Habitat for Humanity, or the food bank. Corruption, I suppose, could be considered a failure.  I was thinking we would still need lower taxes, even with JG. If we lost 5 million $50,000 jobs in the recession, replacing them with 5 million $8 an hour jobs is not enough to get back to where we started.

LRW:  Golfer: please sue your econ 101 teacher. Looks like sheer unadulterated nonsense was taught to you. That explains a lot! (-) Free lunches and low hanging fruit are everywhere. Grab them. That is what econ 101 ought to teach. Economics is NOT the study of scarce resources and unlimited wants—indeed both of those get it backasswards. The most important resource, labor, is always nonscarce and unemployed in all capitalist economies. And in any case resources are socially created, not given by nature. Wants are also socially created, not innate in “homogenous globules of desire” as Veblen put it.

Failure: yes, corruption, unfinished projects, projects that are not seen by the community as useful, projects that do not allow for improvement of worker skills and advancement, etc. Our ultimate objective is to make JG workers more employable, and to provide the community with useful projects. So failures are possible and indeed will occur.

  1. Greg Bickley What do you know about the corruption surrounding Indias JG program.? That was a topic on one of the blogs I read the other day. I cant remember exactly where right now. Every other JG program and their troubles will be used against the idea here at home. I like the idea of direct pay via SSN. No middle men touch the money.

LRW: Read papers about India’s program at www.levy.org. One of my students is completing her dissertation on the program—she did field visits so will be reporting detailed studies. Just to quickly summarize: it depends greatly on the village; those that are better run, with the interests of villagers in mind, do a good job in organizing useful projects and providing the labor hours promised. Watch on NEP for announcement when the dissertation is done.

  1. Trixie Like Greg B. above, I’d like to get any insights you may have India’s JG. The article I think he is referring to is: http://ipsnews.net/news.asp?idnews=107379 Obviously, reports of corruption come as no surprise. And I understand India’s economic and political environments are not comparable to the US, but any info/links you may have would be helpful.

LRW: see my answer above. Yes, there will be cases. However you must also understand that the mainstream media is ALWAYS going to hype failures. After all, it is a for-profit sector and always hates the competition.

  1. Joe Firestone (LetsGetitDone) Randy’s look at the JG is in this post is very realistic, I think. But when considering the problems that will certainly arise, it’s very important to always have in mind the costs of using an unemployment buffer stock. Bill Mitchell’s very good on this here: http://bilbo.economicoutlook.net/blog/?p=17740 and in other links in the above post. The cost is just staggering and there’s no way the possible costs of the JG that come to mind even begin to approach in severity the costs Bill describes.

LRW: Thanks Joe. Agree completely, and thanks for links to Bill.

  1. Ralph Musgrave | I have a few comments. First re dealing with embezzlement, I agree that plenty of use can be made of the internet. Use can possibly also be made of cell phones / mobile phones. In Nigeria every other person has a mobile phone now, and much of the embezzlement of social security money has been cut by crediting peoples’ phones with social security money. However, another undesirable practice (or form of “embezzlement”) is using productive JG employees for long periods as substitutes for regular employees whose wage would normally be funded by the non-profit etc. That was a problem under CETA as I mentioned a few days ago. I don’t think your post said much about that. A way round that problem is to prevent any given JG employee staying with a given employer for more than a few months (though there are plenty of refinements to that “few months” rule that could be added). Next: your point near the end of your post about public goods, social benefits and costs, market prices, social efficiency, etc. Obviously the market does not value public goods correctly, as you say. But we already have a system for dealing with that: it’s called democracy. That is, anyone can campaign for, and/or vote for having a bigger proportion of GDP allocated to public spending. So I have doubts as to whether those setting up JG systems have a right to overrule those democratic decisions: i.e. assume that the electorate has voted incorrectly and that public goods are STILL UNDERVALUED. That’s why I’ve always assumed when discussing JG that the marginal product of labour in public and private sectors are the same. And that in turn is just one of the arguments for having JG operate as much in the private as public sector. Though obviously you oppose JG operating in the private sector.  Re the millions of jobs which non-profits etc can allegedly produce, COFFEE once did some research into this (I can’t quote chapter and verse). The response they got from non-profits, local government, etc was that there were strict limits to the amount of relatively unskilled and temporary labour they could use. The response of the COFFEE researchers was bizarre: instead of accepting the empirical evidence that they themselves had collected, they accused the non-profits etc of not being imaginative enough. Personally I live in the twenty first century, not the thirteenth: that is I accept what empirical research shows, unless it is contradicted by other empirical research. You could argue that the above evidence is contradicted by the experience of Jefes under which very large numbers were put onto JG type work without too much difficulty. But my answer to that is that given catastrophically high levels of unemployment, there is an ample supply of entrepreneurial and skilled labour amongst the unemployed. So getting people to run JG projects is no problem. However, given catastrophically high levels of unemployment, much the best solution is a straight rise in aggregate demand, not JG. That is because regular jobs (public and private sector) are more efficient than ELR/JG jobs.

LRW: Agree on use of internet. CETA could “hang on” to employees only because they had no other options. Unemployment was high and there was severe competition to get a CETA job (as I can attest) precisely because it was not a JG. Further, pay varied by job so if you were lucky enough to get one of the high paying jobs, it was hard for the private sector to attract you. I would not add any time rule to JG—no need for it. JG does not overrule democracy. It supports a human right. I see no good argument here for JG jobs in the private sector, but if anyone ever comes up with some I will listen. I am not inalterably opposed. I am somewhat familiar with the Coffee research you mention as I knew the student who undertook it—and I do not think you have accurately reported the results. In any case, that is a matter for Bill, not me. If the unemployed have “entrepreneurial skills”, I’d let them form worker co-ops, probably with a time limit to demonstrate profitability. Your last statement is just plain false unless you mean for it to apply in the narrow “market” sense of profitability—but then it cannot apply to regular public sector jobs. As usual, the reference to “efficiency” is nothing but a handwave.

  1. Golfer1john |“using productive JG employees for long periods as substitutes for regular employees whose wage would normally be funded by the non-profit” I’m not familiar with the nuts and bolts of CETA funding and operation, although I vaguely remember the acronym. Perhaps it allowed more opportunities for embezzlement than JG would do. People who would be in JG for a long time mostly need training, not just any old thing to do. They are not likely to be coveted as regular employees by non-profits. I can’t imagine a JG employee staying for a long time in a JG job if he is a suitable substitute for a regular employee. He would be one of the first to be hired out of JG by a regular employer, at a higher wage. I guess he could be paid extra “under the table”, but that behavior seems more likely for a private sector employer than for a non-profit.

LRW: Golfer’s last point is the obvious one. JG does not want to retain workers—it “sells” to a higher bidder.

  1. Ralph Musgrave Golfer, There would certainly be a TENDENCY for relatively productive JG employees to quit fairly quickly for regular work. On the other hand, in many countries, unemployment benefit and various “in work” benefits for the lower paid are so high, that that those in the bottom third or so of the pay scales have little incentive to seek more productive work than they are currently engaged in. So my guess is that rules need building into the system that dissuade employers from holding on to JG employees for too long.

LRW: NO. JG takes “workers as they are” and enhances their skills and employability. But it does not kick them out so long as they follow the work rules.

  1. Golfer1john | “given catastrophically high levels of unemployment, much the best solution is a straight rise in aggregate demand, not JG. That is because regular jobs (public and private sector) are more efficient than ELR/JG jobs.” No, it’s because you want a vibrant economy with a small pool of JG workers, where more people can get jobs they aspire to, and not be relegated to work that employers are not willing to pay for.

LRW: And you don’t want to stoke inflation, which you will do long before you ever get to full employment through pump priming.

  1. Ralph Musgrave | Golfer, Valid point. But it doesn’t contradict my point, namely that efficient jobs are better than inefficient ones, all else equal. I.e. if unemployment can be reduced by simply raising demand, that’s the best way to do it rather than create JG jobs because, 1, the jobs created are more efficient, and 2 (your point) you get a bigger variety of jobs which as you say, enables more people to get the jobs they aspire to.

LRW: Looks like “efficient hand waves” to me. Efficiency is ill-defined and over-rated. How “efficient” is it to leave 25 million unemployed? Or, almost as bad, to employ them on Wall Street?

22 Responses to Responses to MMP Blog #46: The Job Guarantee – Program Manageability

  1. Krugman defines full employment as an unemployment rate of “five percent at the most”.
    Robert Reich says we should not start destroying the economy (reducing the deficit) until unemployment reaches five percent.
    Bill Mitchell, and possibly MMT as a whole, defines it as two percent unemployment.
    I’m with MMT.

  2. “Krugman defines full employment as an unemployment rate of “five percent at the most”.”

    Anybody stating that should be required to donate their job to those systemically abandoned.

    It wouldn’t then take long for them to change their mind.

    If we’re not prepared to fix the problem, then these people need to be fully compensated for their loss. It’s not as if they can do anything about it themselves.

  3. Well, it is nice to see it is 5%. So we can still hope for some more improvement. But does that number include all the people who gave up and does it include the nine million or so working part time? I mean inquiring minds want to know these things. Someone should ask Dr Paul what he thinks, or does he need his ISLM curve to help solve it? Is that where the liquidity trap disappears?

  4. I agree with Tyler and Neil. To get back to Ralph’s comment:

    “However, given catastrophically high levels of unemployment, much the best solution is a straight rise in aggregate demand, not JG. That is because regular jobs (public and private sector) are more efficient than ELR/JG jobs.”

    Forgive me, but as I read the MMT policy recommendations, they are 1) full payroll tax cuts; 2) State Revenue Sharing to save or restore state-level jobs; and 3) the JG. The first two should easily get us to 5% quickly, then the JG mops up in a highly targeted way that moderates demand-pull inflation as we approach 2% UE and less. That doesn’t sound to me like a straight JG solution, and, more importantly it seems very different from a program based only on addition of traditional AD stimulus to the economy.

    Also, on this:

    “Personally I live in the twenty first century, not the thirteenth: that is I accept what empirical research shows, unless it is contradicted by other empirical research.”

    What empirical research shows is rarely unambiguous because it always relates to some theoretical interpretation or other, and usually involves measurement modeling relating indicators to underlying theoretical constructs. So, what empirical research show is most often not obvious and always open to critique.

    The CofFEE researchers interpreted their empirical results, and drew certain conclusions about what they meant. You may disagree with their interpretation, but if you do, then I think you need to give us your critical review and not simply suggest that they just rejected their empirical evidence for no good reason.

  5. Graham Paterson

    If we look at the history of employment over the last 200 years, the whole thrust of progress has been to put people out of work by producing more with less labour. The introduction of the computer chip supercharged the momentum, and the world has now achieved the position of producing everything needed by society with a fraction of the workforce needed by manual effort. Full employment is no longer necessary, or in reality, attainable, in which case, maybe we need to re-look at the whole economic structure upon which society is based. C H Douglas did this back in 1920 and he has been studiously ignored ever since. The concept of “full employment” used to be endorsed by the banking system in cohorts with the government. They did this because it was, and is, the way of getting society into perpetual debt. Based on the A+B theorem where A = wages and B=all the ancillary costs in producing any product.
    B consists of the cost of raw materials, an amortised proportion of the capital costs, overhead costs, taxes and a profit margin.
    A = the wages received by the employee less income tax deductions and any superannuation deductions, if applicable.
    A realistic proportion of wages to the above group of production costs is in the order of 25 to 30%
    Thus, the purchasing power of the employee will always be about a quarter, or a third, of the total price of any product. The difference must be made up from perpetual debt to the Banking industry.
    This has worked out fine for the banking industry until they began to realise that technology was beginning to carve serious inroads to the “full employment” mantra. That’s when the bankers started to become really creative and developed all their exotic, and toxic, financial instruments which they unleashed onto the world’s gambling casinos, otherwise know as “markets”. Thus, they were able to continue reaping their profits and not have to worry about jobs and industries being exported offshore.
    “Full employment” ensures that wages, which represent the principle purchasing power of the majority of the population, and can never be sufficient to purchase the goods produced. As a consequence, the population is forced to borrow from the Banks in order to achieve the standard of living that is constantly thrust upon everyone through media bombardment. Consequently, there is a very powerful incentive for the Government to act in concert with the Banking industry and maintain the status quo.
    Poverty and economic insecurity are two factors that exert the greatest strain on human nature. Economic warfare is a contributing cause of these factors and the only difference between economic warfare and military warfare is in method and not in principle.
    In this age of plenty, it is clearly unnecessary to maintain the dogma of “full employment” when a nation’s needs can be met by a smaller workforce operating efficiently on a reduced timeframe.
    This gives rise to the question of how the real wealth of a nation can be distributed to keep the whole population without the need for “full employment?”
    The corollary to this is, “What prevents the wealth from being distributed?”
    The cure for poverty and the cure for war can be found in the rectification of the money system.
    If the true purpose of money is recognised for what it is – namely – a ticket system, then the real wealth of society could be distributed in the form of a National Dividend to allow the products of the industrial system to be purchased by the society’s population
    This is nothing to do with socialism – it is the application of the “free enterprise/capitalist” principles applied to the nation. When a company improves its productivity and efficiency, it pays a higher dividend to its shareholders. Based on exactly the same principle, when a country becomes more productive and efficient, its shareholders, that is, its citizens, should be paid a dividend to reflect the achievement.

    That way, people are provided with the purchasing power to buy and consume the goods available without having to go into debt to the Banking industry and the industrial system can achieve it proper purpose of producing for consumption. At the same time, this will lead to a more efficient use of resources and a corresponding reduction in the production of wasteful products.
    A radical modification of the existing financial system will make it possible to build a strong and united nation and free the citizenship from economic instability. The concept of a National Dividend through the creation of a National Credit system does not involve any confiscation of assets already in private hands.

    • CH Douglas was a full blown crackpot. But don’t worry, you won’t embarrass yourself here. Coincidentally, it’s not too far from Friedman’s negative income tax, or George’s land tax dividend.

  6. Well I disagree with several statements about what “full employment” means. Here is my definition: there is a job offer for anyone willing to work. Full employment does NOT mean 7%, 5%, or 2% unemployed. It means NO ONE–literally Not One Single Individual–who wants to work is left unemployed without an offer of a job. Period. The JG–by definition–provides that job offer AT THE GOING PROGRAM WAGE.
    Anything less than that cannot be full employment.
    Now that is not the end of desirable labor market policies. Ideally, we aspire for more than that, with every individual working in their dream job at an appropriate wage (with suitable constraints at the top to avoid excessive inequality). But let’s first get a job offer for everyone and then strive for something better.

    • I agree with this Randy. In mentioning the 2% figure I had in mind people who were voluntarily transitioning from one job to another, but did not intend to convey that this would represent a buffer stock of any sort. I recognize that this is the conceptual idea we’re implementing:

      “NO ONE–literally Not One Single Individual–who wants to work is left unemployed without an offer of a job.”

      And that if this idea was fulfilled, then the 2% of the work force I cited would be comprised of people who were in transition from an old job to a new job, and who might well have offers, but who hadn’t begun work on their new jobs yet.

  7. When I was 16 I spent a summer working for the Conservation Corp outside of Washington DC. I believe that was a state funded program, hiring anybody 14 – 25 years of age to do “landscaping” in parks and other public properties (separate from the normal county park employees). The program also prepared the hirees for their high school equivalency, which I already had, so I just sat around during those sessions and tutored others. As for the landscaping, we mostly just drove around in vans all day listening to the radio and hanging out at 7-11′s. I remember one day one of the guys drove us all back to his house in a neighboring county so he could take a shit at home, because he didn’t want to use a public restroom. Sometimes, if we were given materials of some kind, we would have to go and dump them somewhere; dump bags of mulch behind the bushes at a parking garage, throw potted plants into a roadside ditch, and so on. On the mowing and blowing days we would just drive around. Sometimes people would show up on time for the morning stretch routine, sometimes not at all. Nobody ever got fired. Last I heard, they had to shut the program down because the employees were using the vehicles to run drugs and the supervisors kept getting assaulted.

    Personally, I found it to be a highly amusing summer job and a nice change of pace from the cut-throat food service jobs I had been accustomed to. My friends and I felt that we were all in on a big joke where somebody had snookered all the people doing real work into paying us to drive around and eat chips and drink slurpees. I still have the t-shirt, 15 years later.

    So my question is: does the JG come with a company car?

  8. Well, Jerry, I think you should have been taken out and punished. Shot, or something else suitable. OK, shot is perhaps extreme but certainly put in prison for misuse of public funds.

    • Ha! It was hardly my idea, the state put me up to it! Pretty sure that’s entrapment. Under normal circumstances I would simply have been fired along with everyone else in the program. But of course that would defeat whole the purpose of the program.

      But we really don’t need to be concerned with the lowliest occupations out there; Goodwill and The Salvation Army and St. Vinny and even programs like the Conservation Corps have that covered. There’s no shortage of things for people busted on the street to occupy themselves with. I know, I’ve been there. There’s lots to do.

      The problem is that we’ve been consistently losing skilled jobs, they’re not coming back, and they’re jobs the government can’t possibly fake. On top of that, the return to labor we do manage to employ has been consistently shrinking. Hate to sound like a broken record, but this is direct result of our tax policy allowing banks to sink all our capital into chasing the unearned increment, leverage it to the hilt and raise the price structure of the economy until it’s untenable. It’s really a wonder we get anything done at all. On the one hand, all legitimate activity is taxed to death; on the other, we’re beset by chronic rent extraction given free license. That’s why we can’t employ ourselves.

      The JG won’t change any of that. At best, it’s welfare from the 99ers to the 99ers, dividing up the existing return to labor into smaller pieces; at worst, it continually destroys real jobs until we’re all working in a soviet labor camp for “project managers” who pay us an “informal” wage.

      The thing with MMT in general, it seems to me, is that we already have a fascist system in place that’s a lot more efficient than what you guys are proposing. MMT lacks subtlety, flexibility and plausible deniability, and because of that it will never be seriously entertained.

      But I will enjoy making fun of it and look forward to a career spent proving it wrong.

      • Jerry, thanks for letting us know you are on a mission and are not to be taken seriously. I won’t.

        • I’m not the one asking to be taken seriously — relatively speaking, my views are extremely orthodox. You’re the one out in left field.

  9. FDR got unemployment down to 1.2 percent in 1944 – awesome. John Kenneth Galbraith was in charge of keeping inflation low during this time period.

    By late 1982, unemployment had risen to nearly 11 percent.

  10. “Free lunches … are everywhere.”

    This sounds like the kind of statement that you often refer to as “handwaving”, which leaves me in doubt about your state of mind in making it. If you’re serious, can you provide some examples?

    “please sue your econ 101 teacher”

    Not likely. He’s been dead for many years. Even if he were still alive, he’d be what the lawyers call “judgment-proof”. Vow of poverty, and all that. But, if it matters, he said all those things before 1971. I guess the part about unlimited wants and limited resources is more relevant to micro economics today, not macro, so even if it no longer applies to monetarily sovereign governments with floating exchange rates, of which there were none at the time, it does still apply to non-monetarily-sovereign entities such as households and states. It’s sure true in my house, and my town, and my state.

    Back to the free lunch. Every decision to do something, or not do something, involves a choice, and every choice has a cost. The cost is the foregone opportunity, the choice not made. You can accept the “free” lunch, but a foregone choice might be to work through lunch and earn more money, if you’re an hourly employee, or finish earlier and spend more time with your family, if you’re salaried. Or it might be to go to the gym instead, and perhaps live a longer and healthier life. Or maybe buy your own lunch, and have something tastier or more nutritious.

    Maybe he was teaching more than just economics. But I’d still like to hear what you think is available with no cost to anyone.

    • Forgive me for interjecting, but it’s a good question. The answer you’re not likely to get from Randy is: land. Economic land is the only truly free lunch. And fiat money, FRB…… other monopolies, natural or as a result of collusion, sometimes fix free lunches too. Copyrights and patents would be another example.

      Randy says “in any case resources are socially created, not given by nature.”

      I would love to hear what mysticism lay behind that statement.

      • FRB???

        Land hasn’t been free to acquire (never mind to manage and profit from) for a long time. Nor are patents and copyrights. You have to invent something, or buy it from someone who invented it. Nobody is going to give it to you, except perhaps in her will.

        I sort of expected something related to fiat money, but that is not free of costs either. Even though it is created quite effortlessly, it imposes a cost on all current holders of the currency. MMT states that too much fiat money creation could cause inflation, and floating exchange rates will change with the creation of fiat money long before noticeable domestic inflation occurs. Like any other social cost not borne by a participant in the transaction, the cost is simply shifted to others.

        • Fractional reserve banking, comes right after fiat. Sorry that was a bit sloppy.

          There’s another economist at UMKC named Michael Hudson that occasionally cross posts here. His blog is here: http://michael-hudson.com/ He can tell you all about how land rent is the biggest free lunch of all. Another one, a bit more conservative, is http://www.masongaffney.org/

          Copyrights and patents do not always require an actual invention, and the legal protection is given freely by the government, can be inherited, etc. I don’t have time to go into it. Land is by far the most important free lunch.

          • It appears that you consider that since you can rent out your land and receive income from it without further personal labor or expense (except filing the tax returns, and collecting the rent from deadbeats), that is the “free lunch”? That makes no sense to me, since you had to buy the land in the first place in order to be able to rent it out. If you are a car rental company, is the rent on the cars also a “free lunch”? If you prepay for a year’s worth of lunches, are the last 364 of them “free”?

            Likewise for patents and copyrights, is not the intellectual property that they protect your own possession just as much as your car or anything else you own or built? It seems to me that the government has a duty to protect you against its theft just as it protects you against the theft of anything else that you own. Are burglary laws a “free lunch” for all of us?

          • Anyway, if economic rent is what you’re thinking of as “free lunch”, that is not at all what my economics professor meant by the term. He was talking about everything of value having a cost, even if that cost is not apparent at a superficial level.

  11. Yes, I have to agree with Randy, too many people throw around artificial numbers as what is defined as full employment. If requested I’ll put a number to it but I think I am in agreement with Randy, that full employment is frictional unemployment only.

  12. Golfer1john : Rational behavior, not being insane is a free lunch. The most obvious answer is the Job Guarantee, full employment. It’s a free lunch. Unemployment is insane.

    Why? – because full employment consists of not throwing away, not destroying the lunch you already have. Don’t put people in cages & keep them from working. Doing stuff can result in more stuff getting done than not doing stuff. Don’t employ people at being unemployed. Employ them at productive work. Don’t have government impose debts on its people which are unpayable because of the government’s (in)action.

    Pre-monetary economics have no unemployment because they understand their pre-money better than the money it developed into. Translate unemployment, translate not having a Job Guarantee into a pre-monetary society, see what is really happening underneath when you understand money, and you get something so insane that the chief & shaman would take the proposer to the witch-doctor for immediate trepanning.