Dazed and Confused: Matt Yglesias on the Job Guarantee

By Pavlina Tcherneva

Matt Yglesias has written a post that has the words ‘Job Guarantee’ (JG) in the title but has nothing to do with the actual JG proposal.

He begins by asking readers to imagine that:

“…instead of handing out welfare checks and food stamps to these bums, we should make everyone who wants public assistance show up daily at a rally-point to be contracted out to do street-cleaning work. Think parolees sentenced to community service…”

Unfortunately for him, that’s not the Job Guarantee and we have debunked such silly caricatures many times (e.g., here, here and here). Unfortunately for his readers, he is either unfamiliar with the most basic literature on the JG, or is deliberately misleading them. Let’s give him the benefit of the doubt and assume it’s the former.

Yglesias proceeds to tell us that solving the unemployment problem for these “bums” this way is undesirable, because that would empower the Fed too much to focus on avoiding stock market crashes! With unemployment, however, the Fed will just have to keep pushing hard on that string, and sooner or later unemployment would magically disappear. You don’t even need to read Keynes to know that such a thing does not happen.  Just read Bernanke (also here). The Fed cannot do it. We need fiscal policy. Even stranger is his implication that the Fed should not primarily focus its attention on regulations and financial instability!

But back to the Job Guarantee. Lest there is any doubt about our claims, let me reiterate some of them here:

  • The Job Guarantee is not workfare. It is a voluntary program. It is a guarantee of a job opportunity at a base wage, not a requirement to work for one’s current benefits.
  • The JG does not eliminate current programs or take away anyone’s benefits–unemployment insurance, food stamps, etc., all remain. Expenditures on these decline automatically.
  • The JG is not a replacement or substitute for much needed conventional public sector work. Our position has always been that they should be adequately funded. The JG is a buffer stock employment program.
  • It is not run by the federal government (only funder by it). States, localities, non-profits, and nonprofit social entrepreneurial ventures propose, organize, run, and manage the projects.
  • The JG is perfectly compatible with some forms of unconditional basic income—e.g., more generous social security and veteran benefits. I would add universal child allowance.   
  • The JG fluctuates with private sector activity. The JG wage becomes the effective minimum wage. The program maintains and enhances human capital and produces useful output (no ditch digging). It is not a panacea for all labor market problems.
  • No matter how generous the welfare policy, it does little for the person who wants a job and cannot find it.  As I recently explained, the mark of ‘unemployment’ is devastating to the jobless. It’s their scarlet letter.
  • The unemployed are already ‘part of the government sector’.  The public and private sectors, and society at large already bear the enormous real costs of unemployment. 
  • And while the unemployed want to work, the government has chosen to focus on policies that support unemployment. The JG is a policy that supports employment.
  • And as we have long emphasized, there is an important difference between using the unemployed as a buffer stock and having an employment buffer stock policy.  There is a vast body of literature explaining why the JG offers a superior macroeconomic stabilizer to the economy, the currency, and inflationary/deflationary tendencies.

What exactly is novel or progressive about the proposals by Yglesias? He prefers the following: 1) some income support for the needy, 2) some in-kind support; 3) balanced monetary policy; and 4) wage subsidies. All four are policies of the status quo (though I would debate the meaning of #3). All four have been in place for a long time without ever securing true full employment.  They are not enough. The missing piece is the JG.

A new progressive movement is shaping precisely around the idea of the Job Guarantee.  MMT had advocated for a JG even during the Clinton goldilocks economy (e.g., here and here). Sandy Darity has also developed a similar proposal. Bernstein and Baker have recently called for the government to act as an employer of last resort.  Robert Reich has been advocating for WPA renewal for years.

The JG proposal is also not new: Dr. Martin Luther King Jr. called for it in his March on Washington speech;  long-time U.S. Department of Labor economist John H.G. Pierson, who helped draft the Employment Act of 1946, had articulated a Job Guarantee proposal as early as 1941 (Full Employment: Why we need it; How to Guarantee it). Starting in the late 60s, Minsky worked to demonstrate why welfare cannot fully succeed in eradicating poverty (Ending poverty: Jobs not Welfare). And as Matt Bruenig from Demos reported this week, the 1967 report by the Presidential National Advisory Commission on Rural Poverty had proposed a Job Guarantee as a center-stage strategy for the eradication of poverty and unemployment.

In truth, there is nothing of substance in the Yglesias piece that represents an actual critique of the JG. The only thing one could surmise is that he objects to it because it’s “messy”.

He’s essentially echoing the oft-heard objection to the JG that “It’s a good idea; until you start thinking about implementation”.

Let me put it another way:

“Securing the right to food for every person in the world is a good idea, until you start thinking about implementation”
“Securing the right to vote is a good idea until you start thinking about implementation”
“Securing clean water for all is a good idea until…
“Guaranteeing access to public education to all is a good idea until…

You get the idea.  Yes, securing a basic human right is ‘messy’.  Implementing good macroeconomic policies is also ‘messy’:

“Regulating Wall Street is a good idea until…
“Protecting the consumers is a good idea until…
“Building modern infrastructure is a good idea until…

If “problems with implementation” is the pundits’ core objection to a program that provides voluntary employment to those who want to work, secures a basic human right, and provides a better and stronger stabilizer to the economy than anything we have had so far, they cannot be taken seriously. Before speaking from a position of authority, it’s best to become familiar with the literature on the JG. Until then, posts like that by Yglesias would seem like a thinly-veiled strategy to sling mud before the idea gets a fair hearing.

The HuffPo results are loud and clear: the Job Guarantee is by far the most popular program among Americans of all 5 reforms discussed in Myerson’s Rolling Stone piece. Imagine the support the JG would receive, if it got that fair hearing. Until then, cynics uninterested in examining the basic merits of the JG should be ignored.

21 Responses to Dazed and Confused: Matt Yglesias on the Job Guarantee

  1. The Job Guarantee is a guaranteed alternative job offer made available to all at the living wage up to a set number of hours per week.

    If there is always an alternative offer on the table then ‘no deal’ with the private sector becomes an option. And you need to have a ‘no deal’ alternative or a market cannot possibly work.

    • Neil, you came through again. So true. I agree a ‘no deal’ possibility is essential to the functioning of the market.

  2. Ygelesias is the leading court jester of the Village — “the permanent DC ruling class who have managed to convince themselves that they are simple, puritanical, bourgeois burghers and farmers, even though they are actually celebrity millionaires influencing the most powerful government on earth.” (Digby)

    And the Village hates the idea of a JG. That a “new progressive movement is shaping precisely around the idea of the Job Guarantee” scares the living hell out of them.

    • It’s always been the same. Late medieval and early modern aristocrats displayed their liberality and Christian ethics by supporting poor laws, but were loathe to do anything that would challenge the social order.

    • Bill G, well said.

  3. Pavlina, You trashed him pretty good!

  4. Shame on Matt Yglesias for not doing his homework. Sloppy.

  5. This rocks, Pavlina.

  6. Excellent response. It would be mightily honest if Slate posted it.

  7. Here’s hoping we can finally break through. Nice piece Pavlina.

  8. Bravo. Clarity.

  9. I was flabbergasted reading his post. He clearly did not read the actual proposals. I have a hard time believing he based his strawman even on the Rolling Stone synopsis. Thanks for writing this response.

  10. There is an outcome discussed by Henry Carey. He wrote a monograph on a post emancipation economy, and it isn’t pretty. It looks a lot like Haiti. After British emancipation in the Islands, things did not go according to expectations. People without motivation can grow accustom to living with necessities only; and then things fall apart. Money loses it’s value, rentiers starve without production of surplus value, community assets disintegrate, asset transfers are by force, and there is no demand for employment resulting in a diminishing GDP. Without customers, there is no need for production, regardless of the wealth of the job creators. Recessions and post emancipation economics share some similarities. While a JG may be an option, there may be no demand without incentives. A person living north of the Mason Dixon line finds a natural incentive from the weather when seasonal access to necessities waxes and wanes. A person receiving assistance may grow accustom to the situation. We Anglo-Saxons may find that our Protestant values are not universally held or respected.

    • Ransome, in light of the data the 2009 Pulitzer for History, “Slavery by another name….,” http://www.slaverybyanothername.com authored by a former Wall Street Journal Bureau Chief, can you explain what you mean by a “post-emancipation economy.”

      I had no idea that everyone here was Anglo-Saxon and shared “Protestant” values. Please, explain what these values are and where your find them best represented in the current U.S. economy. Is Wall Street a good example of “Protestant” values? What about oligopolies? Are they a good example of “Protestant” values? Do you want to go back to the prohibition of alcohol? Didn’t that used to be a “Protestant” value?

      “People without motivation…” Is this parents who don’t want a better life for their children? Do you have any examples of cultures that do not share want a better life for their children?

      Can you explain how “economic mobility,” works? How do some of the poor and the uneducated get to be middle class? How do the some of the middle class get to become upper class? By what mechanism/meritocracy are the upper class recycled into the two lower classes?

    • He wrote a monograph on a post emancipation economy, and it isn’t pretty. Perhaps. But it is much prettier than the pre-emancipation economy. (Curious which book – there’s a chapter on Emancipation in the British Colonies in his book The Slave Trade: Domestic and Foreign)
      It looks a lot like Haiti.
      What Haiti looked like after emancipation and now doesn’t require any complicated explanation. Endless military and economic assault by great powers creates misery very nicely. Usually if you find a guy bleeding in an alley, the knife in his back is the cause. Perceptive contemporaneous European observers were inspired by, respected the victory of the only successful slave revolt in history. See Susan Buck-Morss’s Hegel and Haiti.

      A relevant example closer to us is modern South Africa. After the end of apartheid, the economic lot of the ordinary person, the black majority, has declined. But there was no reason for this but poor leadership, and above all, listening to international con men with their ludicrous, poisonous nostrums like the “independent central bank” and its intertwined belief in the magical dominance of international finance – con games that the bad but canny old apartheiders had no trouble seeing through and evading. See Naomi Klein’s Shock Doctrine for a precis.

  11. Here (with original footnotes att’d) is a letter recently published in several newspapers in Canada:

    If the Harper Conservatives were serious about job creation, they would not rely entirely on the whims of private sector hiring. In 1944, the Canadian unemployment rate dropped below 1 per cent because one out of every three adult males was engaged in military service and many private sector workers were fulfilling government contracts. As the British politician Tony Benn put it, “If you can have full employment by killing Germans, why can’t we have it by building hospitals, schools, recruiting nurses and teachers? If you can find money to kill people, you can find money to help people.”

    In the 1970s the Liberal government experimented with direct job creation delivered through local organizations and citizen groups. The Local Initiatives Program successfully hired in areas such as arts and culture, recreation, tourism, research and protecting the environment. The federal government needs to reconsider these kinds of initiatives. With double-digit unemployment currently among youth, do we really want a generation of young people living without incomes, without job experience, and without an opportunity to contribute to society?

    Larry Kazdan,
    Vancouver, B.C.

    Footnotes:

    1. The Social Enterprise Sector Model for a Job Guarantee
    http://neweconomicperspectives.org/2014/01/social-enterprise-sector-model-job-guarantee-u-s.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+neweconomicperspectives%2FyMfv+%28New+Economic+Perspectives%29
    By Pavlina R. Tcherneva
    > It’s time to change the conversation from creating jobs for the jobless now, to creating jobs for the jobless always. The Job Guarantee provides the solution. I have explained elsewhere why neither the private sector nor the flawed bastard Keynesian pump-priming policies can get us there (here and here).

    2. Interview with Tony Benn
    http://www.script-o-rama.com/movie_scripts/a1/sicko-script-transcript-michael-moore.html
    ____________________________________________________________________
    See also Modern Monetary Theory in Canada
    http://mmtincanada.jimdo.com/

  12. The problem with not having a Job Guarantee is that you can have situations like the dawn of this millenium, in which we were nearing full employment, a recession occurred, and President Bush didn’t try very hard to get back to full employment.

    James Galbraith wrote about it: http://www.thirdworldtraveler.com/Economics/Bush_Likes_Bad_Economy.html

  13. I think MY’s disagreement stems from the fact that he doesn’t want to add to number of “government workers” (a largely inefficient group of people who spend their time getting in other people’s way). And I am very sympathetic to that point of view. I’d much rather encourage private sector hiring, which is what wage subsidies would do. This will avoid creating more government/authority figures.

    • marris,

      per others above, Yglesias is a well-compensated member of the oligarch’s side of the Democratic party.

      Outside of the military and the national security complex, can you provide some examples of government inefficiency? Are they the folks maintaining the job-killing-government-regulations against marijuana? I would never encourage anyone who did not already have a serious illness to use it, but the prohibition against alcohol didn’t work either.

      Are government workers behind laws that make it illegal for adults to pay for consensual, non-procreative sex? Again, I’m not in support of sex outside of a committed relationship, but it’s not clear to me that it’s any of the government’s business.

      NSA has outsourced so much work to Booz Allen Hamilton, that they get 99% of their revenue from the federal gov’t. http://www.huffingtonpost.com/2013/06/10/booz-allen-hamilton-revenue_n_3415451.html
      They in turn launder a big chunk of that cash up to the Carlyle Group.
      http://www.carlyle.com/our-business/portfolio-of-investments/booz-allen-hamilton-inc

      As far as I can tell, the Carlyle Group is just a billionaires club, Saudi princes,…. They do however, let a few poor folk in, Mitt Romney’s family, the Bush family….. I don’t see “outsourcing” national security to the oligarchs as a particularly smart move.

      I’m glad you’re so confident in government’s ability to keep the work place safe. Is anyone in jail yet for the 2010 murder of 29 coal miners in West Virginia?

      http://en.wikipedia.org/wiki/Upper_Big_Branch_Mine_disaster

      11 workers died on the Deep Water Horizon. Anyone in jail for that?
      http://en.wikipedia.org/wiki/Deepwater_Horizon_explosion

      Ammonium nitrate killed 15 in Texas in April. Anyone in jail yet?
      http://en.wikipedia.org/wiki/West_Fertilizer_Company_explosion

      I haven’t heard of anyone dying in West Virginia from contaminated water
      http://www.cnn.com/2014/01/16/us/west-virginia-contaminated-water/

      “If you can’t do the time, don’t do the crime.”

    • I think you’re right about the rationale behind Yglesias’s disagreement. I think other commenters are also right that he represents the beltway elites’ rationale better than a democratic rationale. Two points I’d like to emphasize (both of which have been mentioned many times by Ms Tcherneva, Mr Wray and any other JG advocating economist): a JG is far more efficient than what we’re doing now or any of Yglesias’s suggestions, and a JG does encourage private sector hiring.

      1) The unemployed are already added to the number of inefficiently government compensated, via unemployment insurance, welfare, etc. Unemployment and extreme poverty (even after welfare) also induce a whole host of social ills (depression, homelessness, drug use, crime, etc) which further increases government expense (police, jails, social workers, shelters). And don’t forget the enormous opportunity cost of not getting the socially valued potential output of many millions of people who want to work but can’t. It’s really very difficult to realistically portray anything more inefficient than persistent unemployment.

      Okay, an easy example of something more inefficient: employment towards the destruction of real resources, e.g. military spending, drug war, FIRE sector fraud, etc. But most of that adds to private sector GDP and might thus be considered “efficient” by those who don’t dig too deeply into the numbers or the real results. But persistent unemployment also qualifies as destruction of our most valuable resources: human capital.

      2) The Jobs Guarantee will (for most people) be a transition job; it will empower the workers to build their skills, resumes, and references (directly addressing the worst of the long-term “structural” unemployment causes) and it will boost aggregate demand which will boost private sector investment. Once the private sector recovers it will start hiring again and most people will leave the JG for the private sector. This is in stark contrast to wage subsidies and basic income guarantees which completely ignore the boom-bust business cycle and will either be too meager to help or too inflationary to help. In other words, the JG does encourage private sector hiring, and it does so more efficiently than other suggested channels.

      The private sector hiring adversely affected by the JG would be businesses that are dependent upon minimum wage workers, since the JG will set the effective minimum wage. But those businesses are also affected by weak aggregate demand, and I suspect most of them would be quite capable of raising wages and benefits a little if they had a correspondingly large sales increase (although they might complain noisily if they don’t understand the correlation).

      • Morgan Warstler

        There’s no reason Guaranteed Income / Choose Your Boss (what you call the JG) can’t and shouldn’t last for a person’s lifetime:

        http://www.morganwarstler.com/post/52547186796/radical-surveillance-of-the-government

        Note, that my plan, a plan that has won the support of both the right and left, REQUIRES the job be in the private sector.

        But since recipients only have to find someone who will pay a VERY SMALL AMOUNT per week (I suggest $40), recipients have plenty of opportunity to drum up work they like. Think of it like Esty for the creative class, that people can live on.