Thomas Palley argues that the UK Conservative Party’s plan to abuse the unemployed “confirms” the accuracy of his opposition to MMT theorists’ employer of last resort/job guarantee (ELR/JG) proposals. His logical chain is as follows.
- UK Prime Minister Cameron, leader of the Conservative Party, wants to establish a program forcing the unemployed to work at sub-minimum wages to receive unemployment compensation to which they are now entitled by law.
- Palley has criticized MMT proponents’ ELR/JG proposals, which bear no resemblance to the UK proposal.
- Cameron’s proposal, therefore, “confirms” that Palley’s criticism of MMT proponents’ ELR/JG proposals is correct.
Palley’s logical chain is illogical.
Here is Palley’s statement of his logic.
Cameron’s move confirms other reservations I have long had about the ELR proposal and the possibility it could also be used to undermine public sector unions and public sector wages by substituting ELR workers as replacements.
Palley’s basic logical flaw shows up in his use of the words “the” and “it.” He uses both words to conflate the MMT proponents’ ELR/JG model with the Conservative plan’s non-ELR/JG model. His words claim that there is a single proposal – the Cameron/UMKC proposal to attack the UK working class. An historical example makes the illogic even clearer. After the emancipation of the slaves, many states of the defeated Confederacy instituted “black codes” designed to recreate de facto slavery. (The black codes went far beyond the later Jim Crow laws.) Someone mirroring Palley’s illogic could have written this sentence.
Virginia’s (Cameron’s) adoption of the black codes (forced work at below minimum wages to receive unemployment compensation) confirms other reservations I have long had about emancipation (ELR/JG) and the possibility it could also be used to undermine … wages.
(As a historical note, some critics of the emancipation of the slaves did oppose it on the grounds that it would reduce white wages.)
MMT proponents’ ELR/JG programs emancipate the unemployed and give them additional choices. Our programs are structured in a way that meets Palley’s concerns and are the opposite of Cameron’s assault on the unemployed.
The other key point of illogic in Palley’s argument is the implicit assumption that if MMT proponents did not develop emancipatory ELR/JG programs, people like Cameron would never think of forcing the poor to work as a condition of getting benefits. This is as logically nonsensical as blaming MMT theorists for the “possibility” that the government might fund evil wars were they to understand their full fiscal capacity to spend. Of course that is a possibility. No economist can rule out that possibility. Should we deliberately give bad economic advice that will leave millions unemployed and poor in the hope that their plight will dissuade bad leaders from launching unjust wars? If so, how bad do you want us to make our advice – how many tens of millions should we leave unemployed? How many “Greenspans” (a cardinal measure of extraordinarily bad economic advice equivalent to 10 million lost jobs) should we aspire to?
Does Palley really think Cameron and the Conservatives were dedicated to helping the poor until they read our blog or Bill’s blog and suddenly decided that favoring the wealthy at the expense of the poor was a grand policy because we have fought for the opposite policy all our adult lives? I am of Irish descent. My memory of history is that Cameron’s unspiritual ideological forefathers came up with the idea of mandatory work in order to obtain access to the soup kitchens during the Great Hunger a century before any of the current MMT theorists were born. A million left to die of starvation and exposure and a million forced to emigrate in the coffin ships. Does Palley think we have forgotten our history?
Palley is concerned that his hostility to the emancipatory ELR/JG programs crafted by MMT proponents is being construed by my colleague as demonstrating Palley’s indifference to the plight of the tens of millions left unemployed and poor by the refusal to offer such programs. Palley can demonstrate his concern and desire to work together to dramatically reduce unemployment and poverty by explaining how he believes the MMT proponents proposals would harm public sector unions and specifically how he would craft an ELR/JG program that would prevent that harm.
Blaming our blog or Bill’s blog for Cameron’s latest nasty assault on the UK working class could not pass even the weakest logical or factual test. It simply diverts both Palley and us from working to dramatically reduce unemployment and poverty. If Palley has useful tweaks to suggest on our ELR/JG proposals that he thinks are vital to protect public unions we will be happy to consider them.
Before Palley worries about ELR, it might be beneficial for him, or for anyone in the UK government (or for anyone in the U.S. government, for that matter) to understand Monetary Sovereignty. He frets about an MMT hypothesis while the UK is embarked on austerity, which violates the very basis of MMT.
It’s like arguing about the relationship between modern humans and Neanderthals, when you don’t understand the basics of Evolution.
Better he first should understand economics.
TP left a comment over at Mike’s that included (my emphasis): “Even if the theory behind ELR and its financing were one hundred percent correct, there would be some very difficult political judgments to be made….”
This caution about the “financing” may mean he is not buying your Monetary Sovereignty or the MMT take on our FFNC currency system either… Resp,
He’s right. ELR involves “some very difficult political judgments.” So does everything the government does. I have no argument with a statement that essentially says nothing.
Your note on “its financing” very well may indicate he doesn’t know where the money would come from (i.e. ignorant of Monetary Sovereignty). Or he simply may wonder whether the government should pay employees directly or pay businesses to hire employees. Hard to know.
Rodger Malcolm Mitchell
“Blaming our blog or Bill’s blog for Cameron’s latest nasty assault on the UK working class could not pass even the weakest logical or factual test. ”
Or laugh test, let’s be honest.