There have been many job creation programs implemented around the world, some of which were narrowly targeted while others were broad-based. The American New Deal included several moderately inclusive programs such as the Civilian Conservation Corp and the Works Progress Administration. Sweden developed broad based employment programs that virtually guaranteed access to jobs.
From WWII until the 1970s a number of countries, including Australia, maintained a close approximation of full employment (measured unemployment below 2%) through a combination of high aggregate demand plus loosely coordinated direct job creation. (Often there would be an informal “employer of last resort”, such as the national railroads, that would hire just about anyone.) As Bill Mitchell argues, a national commitment to full employment spurred government to implement policies that created jobs—even if it did not explicitly embrace a national and universal JG/ELR program.
In the aftermath of its economic crisis that came with the collapse of its currency board, Argentina created Plan Jefes y Jefas that guaranteed a job for poor heads of households. (See Tcherneva and Wray 2005 here) The program successfully created 2 million new jobs that not only provided employment and income for poor families, but also provided needed services and free goods to poor neighborhoods.
For many years Argentina was proclaimed to be the success story of IMF austerity and market liberalization policies, until it experienced an economic meltdown in the winter of 2001-2002. (I won’t deal with causes of the crisis here—but it was the inevitable result of adopting a currency board arrangement. By giving up its own currency, it faced a financial crisis even though its budget deficits always would have met Maastricht criteria.)
To deal with the looming crisis and skyrocketing unemployment and poverty rates, the Argentinean government implemented a limited job guarantee program called Plan Jefes y Jefas de Hogar Desocupados (Program for the Unemployed Male and Female Heads of Households, or simply Jefes). Participation in the program grew quickly, to about 5% of the population, and about 13% of the labor force.
The Jefes program provided a payment of 150 pesos per month to a head of household for a minimum of 4 hours of work daily. Participants worked in community services and small construction or maintenance activities, or were directed to training programs (including finishing basic education). The household had to contain children under age 18, persons with handicaps, or a pregnant woman. Households were generally limited to one participant in the Jefes program. The program was intended to be one of the government’s primary programs to deal with the economic crisis that gripped Argentina with the collapse of the currency board. Most other safety net programs were eliminated or reduced in order to shift funding to Jefes.
Government’s total spending reached about 1% of GDP, with nearly 2 million participants (about 1.6 million in Jefes and 300,000 in a similar program that we did not study, PEL). However, it should be noted that the U.S. spends 1% of GDP on anti-poverty social assistance, while France and the UK spend 3-4% of GDP on such programs.
The program deviated substantially from our proposal for a JG: it limited entry to those who had qualified and signed-up by May 17, 2002, although some who did not meet that deadline were added. This is said to have resulted in some cases of discrimination because other potential participants were denied access even though they appeared to meet program requirements—but had missed the deadline. More importantly, households were forced to make a choice concerning who would participate in the program. Limited entry prevented the program from reducing unemployment and poverty rates further. If entry into the program were not restricted to one participant per family, it is probable that many poor families would send both husband and wife into the program. This would have provided a minimum family income of 300 pesos monthly, lifting some families out of poverty. If the program were broadened further, extended beyond heads of households with children, persons with disabilities, or pregnant women, participation would almost certainly have grown well beyond 2 million. The unemployment rate would have fallen much further, as would the poverty rate.
Further, by limiting the program to the equivalent of half-time work, workers were prevented from working the number of hours desired, and their incomes were reduced to the extent that they were unable to find another part-time job to make up the difference. Given that many participants—especially females—had no previous formal labor market experience, the likelihood that they would find work outside Jefes at anything approaching the minimum wage is quite low. Limiting entry appears to have been made a central feature of the program in an attempt to constrain federal government spending; however, it led to much dissatisfaction and possibly to some instances of favoritism and corruption.
Much to the surprise of Labor Ministry officials, female heads of households initially accounted for some 60% of program participants and that eventually grew to three-quarters. Formal surveys indicate that the program was well-targeted to intended households (poor families with children) and was highly popular among participants. Studies by international researchers (including the World Bank) found that projects were generally well-run, completed on time, and provided needed services to poor communities.
The increasing “feminization” of the program (caused in part by economic recovery that pulled most men out of the program and into the private sector) proved to be a political problem. Government officials adopted the attitude that the program was providing jobs to “economically inactive” women who should be at home instead of working. I won’t go into the details (in part because I am not sufficiently familiar with them) but officials created an alternative scheme by which the remaining men would be moved into an unemployment program and the women would be moved into welfare. These moves were voluntary, but higher pay in either unemployment or welfare was the attraction that helped to gut the Jefes program. One of my PhD students continued to study participants as the program was reduced—and found that women would rationally take the higher pay in welfare but continue to work in their jobs (without pay) because they found substantial benefits in the social networks they had created through work. They also wanted to contribute to their communities.
Pavlina Tcherneva and I visited a number of Jefes projects and conducted interviews with about 100 participants (mostly women) and their supervisors. Just to quickly summarize our main findings, we found that when we asked “would you prefer to receive the benefit of the Jefes program but stay at home,” every single one, without exception, said that they would not want to sit at home and that they preferred to go to work. When asked “why”, the most common responses were that 1) they felt (or would feel) useless sitting at home, 2) they felt like they were helping the community when they were working, 3) there is dignity in working, 4) they were meeting their neighbors and 5) they were learning new skills. Note that our findings are consistent with survey data from other studies, which indicate that participants are highly satisfied with the program because they feel they “can do something”, they “help the community”, they “work in a good environment” and they “learn”.
It was particularly interesting to note that when we asked “do you think that there are essential goods and services that your community needs, which can be performed by Jefes workers,” everyone, without exception, answered in the affirmative. People distinguished between factory work and community work, with many claiming that there are social services that are not considered ‘productive’ in the sense of profit-generating activities that, nonetheless, needed to be done—things like caring for the young, old and the frail, cleaning and fixing up the neighborhoods, running soup kitchens, and so on.
Jefes was helping to redefine the meaning of work, providing paid employment for activities that are generally thought to be “unproductive labor”. However, we found significant barriers, especially at the highest levels of government, to thinking about such types of work as deserving of remuneration. All of the government officials agreed that the kinds of services provided by Jefes projects were useful, but they were reluctant to view Jefes projects as “efficient”. There was a strong bias toward market evaluation of efficiency. For example, officials agreed that the bread provided by Jefes workers to poor neighbors was meeting a real need; however, they believed that modern private sector bakeries could meet this need much more “efficiently” with skilled labor. They told us it would be better to pay the women to stay home so that they could simply buy bread from modern bakeries.
The Jefes projects that they viewed as “sustainable” were micro-enterprises (worker co-ops) that could compete in markets. Projects that did not produce output sold in markets were seen as “inefficient” because they did not meet a market test. Hence, woman baking bread in a Jefes project that was then provided freely to their poor neighbors was seen as necessarily “inefficient”—although the project created useful jobs and useful “output” that reduced hunger.
This is obviously a common attitude shared by mainstream economists. “Market efficiency” is the metric of value. So, ironically, they preferred that the women do nothing “productive”—just stay at home and live off hand-outs—rather than make positive contributions to their societies. The only “productive” use of such “inefficient” women and their kids was as “consumers” of the output of big “efficient” corporations. Nor could these officials really comprehend all the other benefits the women got out of working and feeling useful to their communities.
All officials we interviewed agreed that the women in Jefes were doing important, even necessary, things, however, they were less convinced that these activities should qualify for pay. If the women organized into micro-enterprises to sell products in markets, then the market would determine the proper remuneration. However, if products were distributed freely to neighbors, then the work was somehow undeserving of remuneration. Of course, these are widely held views all over the world—especially by those who are trained in mainstream economics.
More recently, India passed the National Rural Employment Guarantee Act (2005) that commits the government to providing employment in a public works project to any adult living in a rural area. The job must be provided within 15 days of registration, and must provide employment for a minimum of 100 days per year. These programs represent a relatively explicit recognition that government can and should act as employer of last resort.
Job guarantee supporters see employment not only as an economic condition but also as an inalienable right. Many of us see the right to work as a fundamental prerequisite for social justice. The American social scientist John Dewey maintained that:
The first great demand of a better social order…is the guarantee of the right, to every individual who is capable of it, to work—not the mere legal right, but a right which is enforceable so that the individual will always have the opportunity to engage in some form of useful activity and if the ordinary economic machinery breaks down through a crisis of some sort, then it is the duty of the state to come to the rescue and see that individuals have something to do that is worthwhile—not breaking stone in a stoneyard, or something else to get a soup ticket with, but some kind of productive work which a self-respecting person may engage in with interest and with more than mere pecuniary profit.
Some job guarantee supporters such as Phil Harvey and Bill Mitchell argue for the right to work on the basis that it is a fundamental human (or natural) right. Such treatments find supports in modern legal proclamations such as the United Nations Universal Declaration of Human Rights or the Employment Act of 1946 and the Full Employment Act of 1978. As these authors recognize, social justice arguments rest on more than the official recognition of the right to work as a fundamental human right.
Amartya Sen, for example, supports the right to work on the basis that the economic and social costs of unemployment are staggering with far-reaching consequences beyond the single dimension of a loss of income. Another Nobel Prize Winner William S. Vickrey identified unemployment with “cruel vandalism” and spent the latter years of his life outlining the social and economic inequities of unemployment and devising strategies for its solution. In sum we believe that the justifications for the right to income and the right to work on the grounds that they are inalienable human rights, consistent with the goals of social justice and freedom, are not incompatible.
In this vein, the Indian program might be more successful than the Argentinean experience. Note this is not for any technical reason, such as program formation or expertise. In my view, the Jefes program was organized in a very innovative way (albeit, as only a partial JG program, with various limits placed on participation and with a wage that was far too low). Its decentralization but with various levels of checks and balances was quite successful at generating projects that contributed to communities. And the program provided a wide range of benefits to participants. But the problem is that the officials in Argentina saw it as a temporary program to deal with a crisis. When the crisis was over, they phased out the program. India has formulated the program as a human right.
I had never been convinced that this is necessary because I thought that logic, alone, would carry the day. Employing people is better than giving them handouts. Enabling people to contribute to society is better than forcing them to remain at home living under the stigma of welfare. But, unfortunately, economists have successfully convinced policy makers that the only measure that really matters is narrow market efficiency.
Yet we have successfully battled against such arguments in the area of human rights—all races, all ethnic groups, all genders have fundamental human rights. As I said in an earlier blog, human rights are aspirational (Phil Harvey has written great articles on this)—and we need to recognize and fight for the right to a job. This is more than the right to have income. It is a right to do something useful, to contribute to society, and to have all the benefits one gains by fully participating in society in a socially useful way.
The Jefes experience allows us to move from the realm of theory to the reality of practice. Many of the fears of the critics of direct job creation programs have been shown to be fallacious. Job creation, even on a massive scale and under difficult circumstances, can be successful. Participants welcomed the chance to work, viewing participation as empowering. The program can be democratically implemented, increasing participation in the political process, and with relatively few instances of corruption and bureaucratic waste. Useful projects can be undertaken. Even with a huge program that employed 5% of the population, communities were able to find useful work for participants. Jefes reduced social unrest, and provided demand for private sector production.
Could a program like Jefes work elsewhere? At the very least, we can learn from the program’s successes and failures. As one of the Argentinean organizers put it to Pavlina and me, “The people that actually have the answers are the ones with the needs, those that suffer from starvation. If you target your policies to these people you cannot go wrong. This government did a good job; they addressed the root of the problem…. They didn’t look to the top; they went straight to the bottom.”
In a sense, the JG/ELR program really is targeted “to the bottom” since it “hires off the bottom”, offering a job to those left behind. Its wage and benefit package is the lowest, setting the minimum standard that private employers can offer. It does not try to outbid the private sector for workers, but rather takes those who cannot find a job. Further, by decentralizing the program, it allows the local communities to create the projects and organize the program. The local community probably has a better idea of the community’s needs, both in terms of jobs and in terms of projects. However, actual project formulation must be done on a case-by-case basis.
Next week: can MMT be separated from the JG?
“For example, officials agreed that the bread provided by Jefes workers to poor neighbors was meeting a real need; however, they believed that modern private sector bakeries could meet this need much more “efficiently” with skilled labor. They told us it would be better to pay the women to stay home so that they could simply buy bread from modern bakeries.”
They were right. I’m truly amazed that a serious economist would suggest otherwise. If you subsidize inefficient bakeries, you will get more expensive, lower quality bread and less of it. And I’m guessing “inefficient” in this case was probably the polite way of putting it. It’s an experiment you can do at home yourself, see if it’s worth your time starting a cottage bakery in your kitchen.
You might also try growing potatoes in your backyard with a fork. Keep track of your materials costs and log your time at minimum wage, see how much the potatoes cost you. Was it worth your time? Does it make you feel particularly useful? What would happen if the government began subsidizing these industries in earnest?
And how lofty is a human right to that job if it means forcing someone else to hire at gunpoint?
Sorry, Jerry, I don’t think this is just a question of efficiency. There are also questions of values and effectiveness here as well. It may be more efficient to just give people money and trust that private sector bakeries will supply the bread people need, if one is only interested in supplying bread. But that’s not the only outcome of the jobs program. There are also social outcomes of employment that both very important and very positive. If you want to be objective you have to look at all the outcomes of a program. If a program, creates bread, provides people with social ties and social networks, teaches them new skills, provides a job, and also provides a sense of worth, while an alternative program provides bread more efficiently, but results in greater isolation from others, provides no new skills, and no jobs except the relatively few in the more efficient bakery, then I think the first program is certainly providing more social value than the second and is to be preferred.
I think your point on this isn’t broad enough because its assessment of alternatives is only from the viewpoint of economic efficiency and doesn’t take into account other consequences.
Also, I don’t know what you mean by:
Who’s being hired at “gunpoint?” Participation in the JG is voluntary, and the JG programs don’t force employers to hire anyone. So, where’s the “gunpoint?”
Joe: this “Jerry” has already indicated we should not take him seriously; he says this is his “career”–first to abuse a public sector jobs program, then to frack away at MMT and the JG. Don’t take him seriously. He’s just another in a long line of pseudo Austrians trying to divert the discussion away from the issues.
Randy, you misunderstood me. I’m going into cooperative development and finance to demonstrate an approach that is antithetical to yours. I have not dedicated my life to refuting MMT directly — certainly not by joining the CC when I was 16. Funny you would think that.
I may be pseudo Austrian, but I’m not trying to divert the discussion from the issues. Not at all. Just pointing out that your program does not treat the real issues and will in fact make the situation worse. I’ll offer again that the real issue here is the financialization of land rent squeezing out marginal income and employment.
I don’t have a problem with social safety nets or even soft money — it’s just the coercive part I disagree with, which is the root cause of their inefficiency.
“Who’s being hired at “gunpoint?” Participation in the JG is voluntary, and the JG programs don’t force employers to hire anyone. So, where’s the “gunpoint?”
Participation may be voluntary but the funding is not. The expropriation of taxes (I know, taxes don’t matter) and the enforcement of legal tender laws for debts both public and private is only possible with the threat of violence. Randy knows what I’m talking about.
If you get the JG approved, and there’s a fair chance of that as things continue to unwind, there will be a very large and very poisonous minority. Especially when we all end up in bread lines.
That threat of violence is also a necessary and ineliminable part of civilized society as well. This is perhaps the fundamental moral distinction between Austrians and, for want of a better category, Keynesians and neo-Keynesians. Austrians believe that the government’s monopoly on violence should only be used to prevent and punish private fraud and violence, and then only when market solutions to violence and fraud are not available. Others believe that there is a responsibility to use that monopoly to promote progress and the public welfare whenever necessary, which is to say, when the cumulative individual efforts to see to their own private welfare are met with otherwise insurmountable environmental or social obstacles.
If your idea of progress and welfare requires a monopoly on the use of force, then it can not possibly be considered progress or welfare.
I didn’t say it required the use of violence, just the threat. Of course, the threat has to be credible, so violence will sometimes have to be committed. But what kind of bleeding-heart hippy are you that you think the use of violence is never justified? And I suppose you think that instead of the government holding a monopoly on violence to be used in support of the democratically legislated public purpose, that private individuals should be capable of producing violence for their own private profit?
The truth is, as I have always suspected was the case, that Austrian-style economics is nothing more or less than a sophisticated and nuanced defense of economic and social anarchism. Insofar as it succeeds in that defense, it does so by idealizing individuals and market activities and reasoning from “First Principles,” as opposed to paying attention to how real people behave and how their real activities aggregate.
Have you figured out HOW the big shots keep running off with the money yet? Or that the big shots ARE the government and a political solution is not possible?
Nathan,
We’re way off topic here and I bristle at being called a hippy. But don’t peg me as an Austrian either, please. I do think the key to any possible solution is to observe how consumer preferences are aggregated, politically and economically. We’re competing against modern global financial markets that allocate capital towards production, and our consumer demands are mostly stuck in an antiquated town hall type of democracy that doesn’t stand a chance. We have to bring democracy to market ourselves. The government will not do it for us.
So, there’s no “gunpoint” apart from what already exists, a Government that enforces its laws and also its requirement that its currency be accepted as legal tender, and also used for payment of its taxes.
Sure there’s ultimately a threat of violence behind that. So what?
Every society has a political system, there are always elites in the political system. There are always laws or customs in the political system, and some of these are always enforced by violence or the threat of it. So, what does this have to do with the JG as distinct from everything else the Government does? You’ve just raised a red herring! Who needs that?
Finally, this:
is just BS. Take lies this to Faux News that’s where this kind of fairy tale belongs!
If we take efficiency as our sole determination of good outcomes, there are many training and education situations which are inefficient. Training any person would be inefficient since more and better output would be achieved with an experienced laborer. Spending time educating children in the needs and standards of a community is inefficient since we can just employ those who are already educated. But, if people have any time preference for their children and other children and their children’s children then training and education are choices which satisfy one’s preferences.
One last point in clarification of Wray’s outlook and in: Professor Wray is operating from a standpoint that is similar to Sen’s which is a criticism of the ordinal utility maximization. If one is interested in Sen’s critique and his own capabilities approach see his book “Development as Freedom.” Jerry, of course, may be right that all activities should be subordinate to efficiency and Wray and Sen are wrong. Wray has tried to show that the JG social goods approach satisfies people’s preferences better than an efficient market test approach with the survey information above.
This means, and in response to Jerry, that people gain more “utility” that is pleased not necessarily when they simply have more income. Rather people may be more pleased with less income while at the same time when then can engage in certain activities. We could set up a utility proxy for these activities which may demonstrate a more efficient outcome, if our metric for efficiency is satisfaction of preferences and not simply just more income or more output.
Come on, be sensible. Children are a commitment parents take on voluntarily; their education is a part of that and also a very real investment in the parents’ future (at least it used to be). Same with market based training and education, it’s an investment that must be made — and IS made voluntarily.
The market is nothing but people expressing their every preference — there’s nothing outside of that. If the government is funding something outside the market, you can be sure they are going against the majority preference, otherwise it would exist already.
As you say, people voluntarily chose all the time to take lower paying jobs that are more satisfying, or to volunteer at soup kitchens and food pantries when they are unemployed. They don’t need government subsidies to spur those decisions. Government speculation in the emotional utility of various occupations is really an atrocious justification for a very misguided idea.
Preferences are not expressed in a uniform manner or through a uniform mechanism. Not everything is capable of being bought, nor is everything capable of being sold, and therefore, market pricing cannot be used as an efficient or moral allocation of those things. Moreover, some things which can be bought or sold bear rather strongly on those things which are not capable of being bought and sold, and vice versa, which means even market pricing allocation of those things is inefficient or unreflective of desires in other ways. Nor should we desire that everything be capable of being priced and so be made amenable to market allocation, unless you’d prefer to have a price put on your very life.
Government action is one way people have of expressing preferences that the market is often incapable of encompassing and therefore in conflict with. This is perhaps one of the strongest reasons that excessive influence by powerful market participants is so detrimental to both proper government function and proper market function.
Absolutely everything is for sale, Nathan. And the market will never be perfect, it’s made up of people. But it is, on the whole, objectively more efficient and really the only way to run a complex society.
I used to hold similar beliefs to yours, and even identified as a socialist into my early twenties. That was before I started a business, applied for business loans and mortgages and discovered how the market worked, discovered the absurdity of government regulation. I also got to know my landlords pretty well.
Anyway, the fact is that the government rises out of the market. It is all a free market for human action, and there is nothing extra-economic about it. The question here is whether it is cost effective, or even possible, to force people — people you have no relations with — to do what you have arbitrarily decided is best.
It would be more fruitful to concentrate on WHY people have become poor and unemployed in the first place, instead of simplistically treating the symptoms with fake jobs and fake money.
On the contrary, some things are incapable of being bought or sold, and some things are capable of being bought and sold in a practical sense but should not be bought or sold. For example, you cannot buy nor sell the carbon or nitrogen cycles. And you should not be able to buy or sell another human being. I suppose you think that people are really “for sale” in the sense that enough money will motivate them to compromise their principles. But everything being for sale entails being able to go down to the old slave-block, and purchase that pretty little red-head to do your dishes and make your bed. It means being able to buy legislation if you can afford it.
Government arises out of economics (it doesn’t really, government regulation makes markets possible in the first place) because markets are insufficient to meet the totality of human preferences and desires. Markets are great, in fact, the best allocators for some kinds of things, namely, things that can and ought to be tradable between individuals. But they absolutely suck for allocating other kinds of things. And worse, if appropriate allocation of those other things does not take place, market allocation of even things they ought to be good at allocating fails.
Jerry, this is just pure nonsense, not because the statement’s been falsified, but because it can’t even be tested. There’s no society where a “free market” exists or has ever existed. And there’s no society which has emerged from a market. So, you’re assertions aren’t testable. They’re religion in the Hayekian church, impervious to facts and the way world really is!
And as for ‘objectivity’ I doubt that you have a coherent view of what that word even means, because if you did you wouldn’t make that kind of broad state without a track record of empirical evidence showing that alternative views are false.
All of those things you mention are happening right now and always have been, and they are not profitable on the whole. I don’t think anybody could afford to buy the anthropogenic portion of the carbon cycle, not that they couldn’t per se.
As any Hayek fan can tell you, FA Hayek is one of the most misunderstood geniuses of the modern age. What Hayek’s fans WON’T tell you is that they are the ones doing the misunderstanding.
One thing that does not exist today are jobs for all those who want them. I guess the market overlooked that little thing. But there are around twenty five million who want to work. The idea here is to give those people jobs bc we think that is desirable and is in the public purpose.
The government funds things like defense outside the usual markets. And we know we are not funding enough of our infrastructure and education is a gaping hole. It seems to me there are all manner of things dysfunctional about the market, unemployment being a really big one. Seems this system of economy keeps breaking down in recessions and financial crisis where the big shots run off with the money. The JG is one small thing that ought to be undertaken to make the “market” livable.
“The market is nothing but people expressing their every preference — there’s nothing outside of that.”
Two huge lies right here. C’mon Jerry, it’s too embarrassing.
Sorry, Justin,
I wouldn’t want to use “utility” here because it requires interval scaling which screws up certain types of modeling, and also because utility is only about extrinsic value and not intrinsic value. I prefer priority ratio scaling, a perfectly practical alternative these days when it comes to measurement. Priority scaling techniques can create ratio scales with absolute zero anchors, and can be used for measuring intrinsic value.
Also this:
Nothing is certain so there’s no saying that Jerry is absolutely wrong placing efficiency first. But doing this is a conjecture, and the wealth of survey evidence that exists about the values people hold cross-culturally, provide plenty of basis for falsifying Jerry’s conjecture. This suggests to me that there’s a very low likelihood of his judgment about value priority surviving any test of its legitimacy, while there’s a very good chance that the Sen/Wray judgment subordinating efficiency to other values will survive and our experience.
I think I’ve resolved my difficulty with the idea that a job of one’s choice is a human right. In your discussion you talk of the right to have an “opportunity to engage in some form of useful activity”, and other such noble terms. Of course, everyone should have that right, and has it now. Many organizations are accepting volunteers for such activities, and even in this time of high unemployment there is, as there is always, a shortage of volunteers. Since the government has sponsored an economic system that requires a buffer stock of labor, then surely it is the government’s responsibility to ensure that the harm its system causes is mitigated, and JG does that, by paying people who want to exploit their opportunity and right to do something useful.
It is simply not the same as the right to a job (with the associated pay) of one’s choice. In fact, the idea is that the JG workers will, someday, find a job of their choice. JG is not intended to be that job, and nobody has the right to any particular job just because it is their job of choice.
The problem with using volunteer work to meet the human psychological need for productive and fulfilling work is that participation as a volunteer requires some income from some source for the volunteer in order to fund that participation. Lots of poor folks would probably love to volunteer at homeless shelters or animal rescues, and many of them are staffed by folks on the lower end of the economic scale, but lack the money to buy the gas to get there, or lack sufficient income to pay for childcare while volunteering, or simply can’t afford to take the time required for the volunteer commitment off of what paying work they do have, if they have any.
The fundamental human right here appears to be a right to an income, in order to enable one to meet fundamental human needs.
Re: “I had never been convinced that this is necessary because I thought that logic, alone, would carry the day. ”
You are vastly overestimating the intelligence of the American public there 🙂
In addition, I would argue that high unemployment is very “market inefficient”. I have long argued that societies have essentially three choices:
1) Pay the unemployed to sit at home and do nothing i.e. welfare (incredibly inefficient).
2) Don’t pay them anything and let society pay a higher price through crime, drug abuse, over-populated prisons, etc (not just incredibly inefficient but destructive as well)
3) Pay them to do productive work. The poor typically spend all their money, thus raising aggregate demand which makes the “market” more efficient.
The choice should be obvious but I really have little faith in a dumbed-down populace recognizing how badly they are shooting themselves in the foot by believing the lies sold to them by those who choose greed over morality. If we can ever get past the lunacy of allowing high unemployment, maybe…just maybe we can get around to talking about how income inequality is “market inefficient” and how concentrated wealth destroys democracies.
“The choice should be obvious but I really have little faith in a dumbed-down populace recognizing how badly they are shooting themselves in the foot by believing the lies sold to them by those who choose greed over morality.”
I see this sort of sentiment a lot, but I think it’s getting things quite wrong. The public is very enthusiastic about full employment and cares very little about deficits and the like. If a JG program were on the political radar, the “dumbed-down populace” would almost certainly embrace it. What prevents that from happening is the ignorance of elites, not that of common people.
One of the issues with employment is that the unemployed lack a medium through which to express their demand for meaningful and fulfilling work, except for through the political mechanism, which is nearly hopelessly corrupted and where an understanding of complex issues is rarely to be found on either side of the aisle, at least in the US.
This is similar to the lack of aggregate demand in the economy at present. It’s not that people don’t desire all the goods and services the economy is capable of producing and more, it’s that they lack the medium of expression through which that desire can be economically measured and ascertained. Likewise, the unemployed desire meaningful and fulfilling work, but they lack a mechanism through which that desire can be fruitfully expressed.
On a different note, one of the things that struck me about this article was how some of the women who were moved off the Jefes program and onto welfare continued their community work on their own initiative. This strikes me as telling, in that the provision of work itself may not be required for a JG program at all, the workers themselves will provide the work. To facilitate this, JG checks could be dispensed at a center and must be physically collected, no electronic deposits, where various charities and community groups could post volunteer projects which JG check recipients are free to join or not as they choose. You could make first-time enrollees take a class on personal finances and offer credit counseling, then file a monthly report on the work they’ve been doing to stay enrolled. I would even go so far as to suggest that the program not be means tested in any way, such that even current employment or any income from other sources not be a bar to enrollment. The actual guarantee would be to an income, not a job.
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It’s tempting to argue with Austrians and their kin because they seem, on the surface, to understand the mechanisms of the current system fairly well (at least in comparison to “orthodox” economists.)
The trouble is with goals – where the MMT economist wants to understand the existing system in order to improve humankind’s administration of that system, the Austrian is interested in describing the mechanisms of the system only towards the end of converting more people to his belief that the current system should be abandoned in favor of some other system.
The Job Guarantee is a program whose effects are fairly well understood, as big policy initiatives go. It’s been implemented at various times and places, in various guises, and has had certain effects which can be described with a decent amount of precision. The primary risks of the program seem to be political – not an insignificant consideration given that we seem to have entered an era of fiscal and regulatory brinksmanship that could doom even the most well-intentioned economic reform.
However, the world seems to be extremely short on specific, operational objections to the Job Guarantee program. According to beard-stroking conventional wisdom, some usually unspecified economic calamity will befall us if we recklessly hire unemployed people and put them to work creating real value in their home communities and pumping net financial assets from the US Treasury directly into depressed areas of the country.
Hearing objectors out is all well and good, but it’s important to remind everyone what they’re objecting to – sending money and jobs to people who need them to survive, whose communities are in crisis because the social infrastructure is crumbling faster than it can be repaired. This is not a theory. It is a description of the program, and of the conditions that make it necessary.
Well said. We will hear next week whether we can seperate the JG from MMT. So for now it is only my opinion, but to take it out is to ignore both the good it can do and the ability to stabilize prices (if only modestly)and reduce unemployment. I think Austrians are disengenuous at best. You either use the tools at your disposal to help people or you sell propaganda for the plutocrats. That way leads to asuterity and more unemployment. It is one thing if there is no other alternative (famously said) and quite another once you understand the options.
As Warren puts it: JG is necessary as an effective price anchor to limit inflation. The full employment of labor is a consequence we will have to learn to live with.
Very well stated.
Randy Wray is right. There is too much emphasis on measuring efficiency in a way that deters other means for human beings to acquire well-being. Minimising money inputs to maximise money outputs is all fine and dandy but how would you justify, for example, a city council employing someone to make judgements on whether any new or existing building developments provide an adequate network of paths that make walking and cycling exercise an attractive option.
By maximizing the utility preferences of the various stakeholders in the property, similar to how neighborhood associations, or large companies like Disney, or indeed municipalities, which are state chartered corporations that have been granted certain legal jurisdictions, do now. Private non-profits often express these sorts of preferences through the purchase of conservation easements, as another example.
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“For example, officials agreed that the bread provided by Jefes workers to poor neighbors was meeting a real need; however, they believed that modern private sector bakeries could meet this need much more “efficiently” with skilled labor. They told us it would be better to pay the women to stay home so that they could simply buy bread from modern bakeries.”
So, in fact the prodaction of bread has to be a goverment service, even if the production of bread is less efficient then through the private sector?
To think this is insane is not ideology!
“For example, officials agreed that the bread provided by Jefes workers to poor neighbors was meeting a real need; however, they believed that modern private sector bakeries could meet this need much more “efficiently” with skilled labor. They told us it would be better to pay the women to stay home so that they could simply buy bread from modern bakeries.”
So, in fact the production of bread has to be a government service, even if the production of bread is less efficient then through the private sector?
It is not ideology to think this is insane!
A JG has not to replace private business!
No producer of bread can compete with an inefficient but highly subsidized producer, but that doesn’t mean the inefficient produce is better. You will have a great economic loss for everyone.