By William K. Black
Kansas City, MO September 25, 2017
The University of Missouri – Kansas City recently hosted the first conference on Modern Monetary Theory (MMT) and a closely associated idea, a federally-backed job guarantee for everyone willing and able to work. On September 25, 2017, the New York Times published an article exemplifying one of the applications of the job guarantee that would provide a win-win that should unite anyone interested in strengthening the family. The title is “How Did Marriage Become a Mark of Privilege?” Claire Cain Miller authored the column, and her key takeaway are in these two passages.
Fewer Americans are marrying over all, and whether they do so is more tied to socioeconomic status than ever before. In recent years, marriage has sharply declined among people without college degrees, while staying steady among college graduates with higher incomes.
Americans across the income spectrum still highly value marriage, sociologists have found. But while it used to be a marker of adulthood, now it is something more wait to do until the other pieces of adulthood are in place — especially financial stability. For people with less education and lower earnings, that might never happen.
These facts establish an obvious policy that could unite the public. The combination of MMT full employment policies and the job guarantee is the best way to strengthen family financial stability. The United States, which has a sovereign currency, can do that. The European Union nations that lack a sovereign currency will frequently be unable to do so. Jobs, not simply income, are essential to many humans’ happiness and sense of self-worth. Unemployed American men, for example, do less housework than do employed American men. Businesses are deeply reluctant to hire the unemployed, particularly if they have been unemployed for any significant time. The cliché of males responding to unemployment through depression has considerable truth.
By Felipe Rezende
This last part of the series (see Part I, II, and III here, here and here) will focus on the Brazilian response to the crisis.
What Should Brazil do?
The Brazilian current crisis fit with Minsky’s theory of instability (see here, here and here). The traditional response to a Minsky crisis involves government deficits to allow the non-government sector to net save. That is, if the private sector desire to net save increases, then fiscal deficits increase to allow it to accumulate net financial assets. The sharp increase in budget deficits in 2015 comes as no surprise. Rezende (2015a) simulated Continue reading
By L. Randall Wray
Dean Baker, everyone’s favorite progressive economist (mine, too), has an interesting take on our unemployment problem.
Give more paid vacations.
The idea is that if all the employed work less, employers will need to hire the unemployed to produce what the already employed won’t be producing while sunning themselves on Florida’s beaches.
Look, I’m all for shorter work weeks. It is ridiculous that labor’s push somehow got stuck a century ago at the 40 hour work week in the USA. Employed Americans work more hours per year than just about any other workforce on the planet.
By L. Randall Wray
It is amazing no one has thought of this before. Seven years after the GFC began, we’ve still got up to 25 million people who want jobs but cannot find them. Of course that’s far more than the official unemployment numbers—which don’t count anyone who worked just an hour or so, or who gave up looking altogether.
Gee, I wonder how on earth we can find a solution to joblessness, or to low pay? It is all so complicated. How can we stroke the business class in just the right way to get them to create a job or two? How can we prevent our corporations from taking jobs abroad?
Pavlina R. Tcherneva presents her proposal for a Youth Employment Safety-net (YES!) at the Interdisciplinary Conference on Youth Unemployment in Times of Crisis “¡No Mas! Strategies and Alternatives”. Middlebury College, VT (starts at 38min 45secs)
By Fadhel Kaboub
(cross posted from freepress.org)
This year marks the 50th anniversary of the so-called “War on Poverty” that President Lyndon B. Johnson declared when the official poverty rate was at 19%. Five decades later, the poverty rate stands at 15% with 46.5 million people living below the official poverty line, which is about $23,000 for a family of four (2012 Census Data). More than 20 million people earn less than half the poverty line, in other words, they live in extreme poverty in the richest country in the history of the world. The statistics are even more depressing when we consider that the child poverty rate (under age 18) is an alarming 21.8%. Even worse, for children under the age of 5, some states register poverty rates of up to 36%.
By L. Randall Wray
Memo to Obama: Don’t tie progressive spending policy to progressive tax policy. Each can stand on its own.
Reported today in the Washington Post:
Obama proposes $600 billion in new spending to boost economy
President Obama on Tuesday unveiled an ambitious budget that promised more than $600 billion in fresh spending to boost economic growth over the next decade while also pledging to solve the nation’s borrowing problem by raising taxes on the wealthy, passing an overhaul of immigration laws and cutting health costs without compromising the quality of care. Obama seeks to raise more than $1 trillion – largely by limiting tax breaks that benefit the wealthy — to spend on building roads and bridges, early childhood education and tax credits for the poor.
Here’s the conceit: Uncle Sam is broke. He’s got a borrowing problem. He’s gone hat-in-hand to those who’s got, trying to borrow a few dimes off them. But they are ready to foreclose on his Whitehouse.
By L. Randall Wray
In recent weeks the Job Guarantee proposal has gained supporters, and the arguments for an increased government role in ensuring full employment have become stronger. (See here, here, and here.)
In this piece, I examine why. Bear with me because I will tie together four threads. First, we have the return of the stagnation thesis; Second there’s growing evidence that the US labor market is not recovering, and many are arguing that this is the “new normal”; Third, the Fed has (re)discovered what many of us have known all along: low interest rate policy does not stimulate investment; and Fourth, our “thought leaders” are finally discovering that Americans want government to do something about involuntary unemployment. All of these threads strengthen the case for the Job Guarantee.
By Pavlina Tchnerva
Pavlina R. Tcherneva discusses her proposal for eliminating unemployment now and forever by running a job guarantee program through the social entrepreneurial sector. She examines the problems with conventional stimulus policies and the price-stabilization features of her proposal.
It is the 12/10/2103 interview and starts at 17:30 min mark.
Policy Aspects of MMT
By Eric Tymoigne and L. Randall Wray
[Part I] [Part II] [Part III] [Part IV] [Part V] [Part VI]
From the theoretical framework discussed in the 5 previous installments, MMT draws specific policy conclusions about fiscal, monetary and financial policy. In this final post we address the policy implications.
In line with Keynes and Minsky, MMT recognizes that unemployment, arbitrary distribution of income, price instability and financial instability are central problems of market economies that require some government involvement for resolution.