The Social Enterprise Sector Model for a Job Guarantee in the U.S.

By Pavlina R. Tcherneva

Jesse Myerson created a firestorm over mainstream media with his Rolling Stone piece “Five Economic Reforms Millennials Should Be Fighting For”. I’d like to address the very first of these reforms, the Job Guarantee (JG), as Myerson references my proposal for running the program through the non-profit sector and discussed it in several interviews on Tuesday.

Last month, I did a podcast with him about this program. Let me focus on some questions that keep popping up about the proposal, e.g., Josh Barro’s Business Insider piece.

What is the problem?

It is fundamental. It’s not just a problem of today’s deeply ailing economy. It’s permanent. There are always people willing to work, whom profit-driven firms do not wish to hire.  Even when economies are growing rapidly, there are never enough job openings for all who want to work. That number is 24.4 million people today: 10.9 million officially unemployed and 13.5 million in hidden unemployment (

The mark of unemployment is itself an obstacle to getting a job. The average employer equates 9 months of unemployment to 4 years of lost work experience. (Eriksson and Rooth AER, 2014). And so unemployment breeds unemployability, feeding the decades-long uptrend in long-term unemployment, while the economic, political and social costs are mounting.

Whenever I write about unemployment, I always stress the long run. The point is to solve the problem in recessions and expansions. Virtually no economist or pundit outside MMT makes this point. I predict that, while it is fashionable to entertain various solutions for the unemployed today, as soon as the economy recovers sufficiently, they will be forgotten.

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).

So let’s move right to the design and implementation of a JG through the non-profit sector.*

The social enterprise sector creates the jobs, not the federal government!

The JG is an employment safety net. It is not incompatible with or a replacement for private sector employment. Quite the contrary, one of its core features (the buffer stock), makes it symbiotic and interdependent with private sector activity (more below).

The federal government funds it, but non-profit social entrepreneurial ventures (SEVs) and traditional non-profit organizations propose, manage, and run the projects. We can use the already existing infrastructure to launch it. Convert the nation’s ‘unemployment offices’ to ‘employment offices’ and let them register all unemployed who wish to work in the social sector at a base wage (e.g., a living wage). Allow nonprofits and SEVs to hire from the registered to do the kind of important work they are already doing.

Why the non-profits and SEVs?

The non-profit and social enterprise sectors produce original, innovative and sustainable solutions to seemingly intractable socio-economic problems, which the private sector has failed to solve. Their mission and reason for existence is to create social value and address very specific problems like poverty, hunger, homelessness, environmental degradation, community blight, inadequate care and education for all, and other. The work of this sector is perhaps the one bright spot in our economy today. Yet delivering large-scale solutions to these problems remains a challenge for two reasons: 1) its work is always underfunded and 2) it is always understaffed. The Job Guarantee solves both problems—it provides funding and labor.

So, let’s add full employment to the list of social problems that need a solution by recognizing that a job for all who wish to work for the public interest creates social value and itself serves the public purpose. A JG is a sustainable solution to the problem of unemployment. By harnessing the entrepreneurial sector’s energies it becomes the institution that delivers true full employment over the long run. For this task, policy needs to do three things:

1)    Explicitly marry the various social objectives of the social sector with the goal of providing jobs for those who wish to work. Let the unemployed participate in the very process of social provisioning, by guaranteeing a job offer in that sector to anyone ready, willing and able to work.

2)    Scale up the social ventures that are already successfully operating on the ground. No need to reinvent the wheel. Just permit them to do more.

3)    Reproduce already successful work models in places where no such non-profits or SEVs exist.

Non-profit and much SEV work is countercyclical

This is a key point: the social sector is countercyclical.  As we have discussed many times, a core feature of the JG is its buffer stock mechanism.

When economies falter, community needs increase and social problems multiply. This is precisely the time when the social sector needs to perform much more work and requires extra helping hands.  That is also the time when the JG expands. Those who have lost their jobs would now move from private sector employment to social sector employment (rather than from employment to unemployment). Since it is a job guarantee, the program is also open to new entrants and all who wish to work in the social sector for a base wage.

When times are good, some social problems are alleviated, spending on programs shrinks, fewer workers are needed, and many of them transition to better-paying jobs in a recovering private sector. Because social needs continue to exist, the nonprofit sector is perfectly suited to providing jobs for those who have been left behind by a growing economy. Unlike conventional stimulus programs, the work of non-profits and SEVs does not disappear during expansions.

Fit the job to the worker

A common concern is that we cannot find productive work for everyone. The experience of the New Deal and Argentina’s Plan Jefes shows that such programs can be up and running in 4 to 6 months and useful tasks can be performed even by the least skilled and least educated citizens.

Without a doubt, the public sector can initiate massive public works projects today and rebuild the crumbling U.S. infrastructure. And that should be done regardless. But public works are a clumsy method for providing jobs for everyone over the long run. Building a bridge is not always the best solution to employing the unemployed. It is much better to find them a job in a sector that is already countercyclical, so a job placement in a non-profit or SEV is the way to go.

Since the JG guarantees a job at a base wage for everyone, irrespective of skill or level of education, the program would in reality fit the job to the worker (rather than the worker to the job). One way to do this is, after assessing the needs and resources in a community, to permit the non-profits, SEVs and (through them) the unemployed themselves to propose the types of work that they wish to do in those communities. This is a true bottom-up approach—powered by communities, localities, and the individuals themselves.

A HuffPoLive interviewer asked Myerson: “Well, I’d like to travel the world like Anthony Bordain. Can I set up a non-profit to do that and would the government guarantee me that job?”

The answer is ‘no’. Every proposal in the JG would be designed to serve some public purpose and address an important social problem. A basic grant review process can approve or deny these projects, subject to the same guidelines that already exist for non-profits.

What kind of jobs?

Non-profits and SEVs already work to produce sustainable and reproducible low-cost solutions for the most overlooked and blighted areas in our nation, such as low cost urban fisheries, community clinics, farms, aquaponics, youth mentoring projects, veteran services, and many other. Many support community sustainable agriculture initiatives, work to address the dual challenge of homelessness and AIDS, provide internship opportunities for at-risk-youth, or renovate and beautify decrepit urban spaces with murals and art projects.

Consider just one problem of many that countless U.S. communities face: the food desert problem. A food desert is an area with little or no access to healthy and affordable food. Many rural and urban such areas rely on gas stations or convenience stores for food. There are no gardens, farmers’ markets, or other sources of fresh produce. Areas suffering from food insecurity also have the highest health-related and other social problems. Addressing the food desert issue in the U.S. alone can generate millions of jobs. And this is just one example.

Program funding

The program is sustainable when the federal government provides the funding. But it need not fund 100% of the total cost of these projects. Many non-profits and SEVs already have some resources and, as it was done in Argentina, the government could commit to paying 60-80% of the total costs of the project. The social sector firms would provide the rest, either by raising funds from their private donors or by supplying part of their infrastructure for the execution of the projects. Additionally, the government could determine that it would appropriate 80% of its budget toward wages and only 20% toward materials (that was about the ratio that New Deal projects used). This is the kind of public-private partnership that seals the social contract.

A final word about the private for-profit sector

Imagine 25 million people with no income or precarious forms of income. Now imagine 25 million with a decent base wage. The effect on the private for-profit sector would surely be more stable demand, ringing cash registers, increasing profits, growth and, yes, a lot more better-paying private sector jobs.

The Job Guarantee is voluntary. No one is forced to take the job. And if someone wants to set up their own mom-and-pop shop or for-profit SEV instead, the very existence of the JG ensures that they will be starting their business in a much more stable economy with much more stable demand than we have ever experienced. They might even offer a better paying job to some of those JG workers. Experience with direct job creation around the world, shows that it promotes private sector employment much more aggressively than conventional stimulus policy.

Millennials are clearly not optimistic about their future, but they have great many ideas about the kind of communities they want to live in—from the Kansas City urban farming guys to the young entrepreneurs in Detroit—they are working on potentially transformative initiatives. A Job Guarantee policy can support them while providing a basic employment safety-net for all.

As Salon’s Brian Beutler correctly observed, the astute conservatives understand what’s at stake here: not that the Rolling Stone article is advocating for some form of communism, Stalinism, or some other than the preferred –ism, but that young people are beginning to demand a renewed role for government policies that serve the public interest. Worse, that a policy like the JG represents a foundational rethinking of the safety-net in a way that provides economic opportunities to all. It is a call for a bolder New New Deal for the modern world.

* See Randy Wray’s primer and new series for answers to other questions about the JG.


34 responses to “The Social Enterprise Sector Model for a Job Guarantee in the U.S.

  1. Nice article. I just wanted to make a general point to MMT community generally. I haven’t come across a MMT evaluation of the emerging Artificial Intelligence revolution in which many envision mass unemployment for people because computer algorithm and AI powered robots make much of human labor obsolete.

  2. Joe Firestone

    Thank you, Pavlina. Excellent short treatment of the JG idea and why it would be a great advance. I’d like to see a post that proposes the specifics of a living wage and benefits program under the JG and analyzes its likely impact, if enacted.

  3. Outstanding, thank you.

  4. Re: “creating jobs for the jobless always.”

    The American institution of pre-Civil War slavery created full employment. No slave was ever without a job.

    So just having something called a “job” should not be the goal. As Pavlina pointed out in a paper about Keynes, “the objective, for Keynes, is to create not only jobs, but stable and good jobs.” Pavlina needs to heed Keynes’ advice.

    Re: “Let the unemployed participate in the very process of social provisioning, by guaranteeing a job offer in that sector to anyone”

    But what if “social provisioning” is not the unemployed person’s area of interest? Should a rocket scientist be “coerced” (as Bill Mitchell puts it) to do “social provisioning?” A cowboy? A logger? A butcher? A manufacturing engineer? Whatever happened to Minksy’s promise to create jobs that fit the individual’s skills?

    Obviously “social provisioning” is something that Pavlina personally believes in. That is her right. But not everyone thinks like her.

    Re: “Building a bridge is not always the best solution to employing the unemployed. It is much better to find them a job in a sector that is already countercyclical, so a job placement in a non-profit or SEV is the way to go.”

    Only if the SEV job matches the individual’s interests and career goals, and serves the public purpose as determined by open debate and voting in Congress.

    Re: “permit the non-profits, SEVs and (through them) the unemployed themselves to propose the types of work that they wish to do in those communities.”

    What about the rural unemployed who do not live in a “community?” There is no “community” where I live.

    What if my community wishes to form an armed militia? What if they want to form a KKK-style neighborhood watch that polices the neighborhood of immigrants and people of color? What if my community wants to use JG workers to exterminate endangered species?

    Re: “A basic grant review process can approve or deny these projects,”

    So instead of making decisions in a democratic process, Pavlina would have decisions made by some mysterious undemocratic “grant review” bureaucrat ? I strongly disagree. Appropriations should be openly debated and voted on by Congress.

    Re: “urban fisheries, community clinics, farms, aquaponics, youth mentoring projects, veteran services”

    Fisheries, farms, clinics, and aquaponics would compete with for-profit fisheries, farms, clinics, and aquaponics. One of the commonly agreed upon rules for the JG is that it should not compete with the private sector.

    Re: the community clinics, do you think you are going to hire random unemployed people to function as doctors in a clinic, and only pay them minimum wage? Good grief.

    Re: youth mentoring projects. Vague — that could mean anything.

    Re: “Addressing the food desert issue in the U.S. alone can generate millions of jobs.”

    But that would compete with private sector production of food, and there is no shortage of food production in this country, there’s just a shortage of money with which to buy food.

    Re: “the government could determine that it would appropriate 80% of its budget toward wages and only 20% toward materials ”

    The 80% wages formula would limit JG work to services and to menial grunt jobs, like picking up trash. Obviously Pavlina has no experience at managing and budgeting real world projects (I’m speaking as an engineer who has managed and budgeted real world projects).

    Most public works projects are going to be closer to 80% materials & equipment, and only 10% – 20% wages.

    Re: “The Job Guarantee is voluntary. No one is forced to take the job.”

    Since MMT has failed to propose an alternative safety net — the JG *is* the MMT safety net — and since the vast majority of unemployed Americans receive no unemployment benefits, it’s dishonest to say that the MMT JG would be voluntary. It would be “coercive,” as Bill Mitchell admits, when the alternative is starvation and homelessness.

    If there is an ongoing need for public purpose projects, then why not create permanent, well paid positions to do those projects, instead of relying on minimum wage “transition” workers? Why not create a permanent government agency to perform the task instead of outsourcing to private organizations?

    I repeat Pavlina’s reminder that “the objective, for Keynes, is to create not only jobs, but stable and good jobs.” A temporary minimum wage job in some field that is not matched to the individual’s training and aptitude does not satisfy Keynes’ requirement.

    Mind you, I support direct job creation, but it would make more sense to me to 1) fully fund existing government programs, which by itself would probably solve 90% of the unemployment and 2) create new federal programs to address new public purposes like sustainable energy, public transportation, free public health care.

    For example, my mail is delivered only 3 days a week in the summer and not at all in the winter. We don’t need a JG temp or an SEV to deliver my mail, we just need to fully fund USPS and mandate that they provide year round service. That would create new mail carrier jobs that serve the public purpose.

    Another example, the county road that links me to civilization is not maintained in the winter so I have to maintain it myself. There is already a local road district responsible for maintenance, but they lack funding. The solution is not a JG or an SEV, but to provide funding for the existing road maintenance departments. That would create jobs that serve the public purpose.

    The hiking trails on nearby public lands are sadly neglected. The Forest Service is responsible for maintaining the trails, but they lack funding. I suppose you could assign a JG temp to maintain the trails, but wouldn’t it be better to fully fund the Forest Service so they could hire permanent staff to take care of our public lands?

    In the 1930’s our National Forests were dotted with ranger stations and fire lookouts, manned by Forest Service rangers who acted as caretakers for the public lands. Due to funding cuts, those ranger stations and fire lookouts have mostly been abandoned. I suppose you could assign a JG temp to fill in for the missing rangers, but wouldn’t it be better to fully fund the Forest Service so that it could hire permanent rangers, more in keeping with Keynes’ goal of “stable and good jobs?”

    One of the MMT’ers has suggested deploying JG’ers to work as teacher’s aids in public schools. Well besides the fact that public schools are being closed due to privatization — privatization that is supported by Warren Mosler — public schools are also being closed and staff laid off due to austerity budgets. Rather than having minimum wage temps substitute for full time professionals, wouldn’t it be better to fully fund public schools so that they could hire permanent staff and pay a middle class wage?

    Bill Mitchell has suggested using JG’ers to do environmental monitoring. But my state already has a Department of Environmental Quality that is supposed to do environmental monitoring, plus there’s the EPA. If you want them to do more monitoring, wouldn’t it be better to fully fund those agencies so they could hire permanent, professional staff to do the monitoring? Wouldn’t that be more in keeping with the goal of “good and stable jobs?”

    I would like to add a “rule” to the JG proposal — that JG workers should not be used as a substitute for existing government programs. If a government program is short on staff, then the solution is to adequately fund the program, not to substitute minimum wage JG temps for permanent professionals.

    Likewise if there is some public purpose that is not currently being served, then instead of funding a private SEV that is not accountable to the public, I would prefer to create a government program that serves the purpose.

    • Dan,


      “Fisheries, farms, clinics, and aquaponics would compete with for-profit fisheries, farms, clinics, and aquaponics. ”

      As long as your customers are non-profit food banks for the needy, I don’t see the problem. Any food they can’t sell is collected and goes into a not-for-profit’s methane digester to produce natural gas, that’s sold to the local utility. If they’re doing it right, reportedly, the residue, biochar, works pretty well as fertilizer. Need a lot more data, and JG workers would be invaluable to the Ph.D.’s conducting those tests.

      In Lake Michigan, if we could get federal funding to dredge out the invasive mussels, it could be the first step, rebuilding the food chain from the plankton level up, in bringing back thousand of commercial fishing jobs.
      “The Decline of a Once-Great Fishery”

      “‘The lake left me. It’s gone.'”

      Assuming we don’t do more harm dredging mussels (heavy metals in sediment….), we need fisheries to restock the Great Lakes with perch, trout,….

      Since the mussels aren’t going away, the dredging is probably a semi permanent operation, until a better solution can be found.

      The link below is from ’98.
      “Biogas production from solid wastes removed from fish farm effluents,”

      Can we generate natural gas from fisheries? If so, it makes the fisheries a lot more profitable. Just like with the biochar experiments, the Ph.D.’s assaying field studies on biochar will need a lot of grunt labor.

      What kind of engineer are you and what are some of the projects you’ve worked on?

    • Very good points, Dan Lynch! Yes, fully funding good government programs should take priority over JG. If at the end of it there are still unemployed, then yes, do JG, but I suspect that if the government fully funds all the things needed for the infrastructure of a country, then there will be very little unemployment left.

      • Simply spending enough to end unemployment will cause unacceptable inflation, because the demand for skills will never exactly match the supply, and the price of the scarce/unavailable skills will be bid up while other workers remain idle. There must be a buffer. JG is about whether the buffer is the unemployed, or the JG workforce.

        • golfer1,

          Are you talking about cost-push inflation or demand-pull inflation?

          FWIW from Dr. Kelton

          • Demand-pull. We had cost-push in the -70’s due to the oil monopolist raising prices. That could happen again, regardless of the state of the economy otherwise.

            Re that link, I agree we’re nowhere near inflation danger today, but I still maintain it is not possible via traditional pump-priming – increasing deficits to raise aggregate demand – to get to 0% unemployment without inflation. And Stephanie has written to that effect. JG is the only way I know, in a monetary economy, to do it. And there must be a non-zero JG workforce, because skill supply will never exactly match demand in anything but a trivial-sized economy.

  5. Pavlina R. Tcherneva

    Dan, since we have already answered these questions many times, and your very first example is slavery, I can only assume that this very long post is a ruse. But I will not respond in kind.

    As we have said and written many times:

    The point of the JG is to create a basic standard of what constitutes a decent, living-wage job for anyone willing to work?

    Conventional public service needs to be funded and staffed well. All the things you list need to be done (e.g., my infrastructure example above). JG is in addition.

    The true measure of the success of the program is finding a job for the willing to work person, whom private firms or conventional public services will not employ: the least skilled, least educated, formerly incarcerated, at-risk youth, etc. If members of these groups wish to work, JG finds them a job—that’s the meaning of fitting the job to the person. Not that the rocket scientist needs to be fitted to a NASA job. Staff NASA, the EPA, FDA, hire more scientists. That’s separate from the JG.

    JG does not replace any existing program (though expenditures on these would fall on their own). Unemployment insurance, food stamps, all remain. I would add other forms of income support for some groups –e.g., universal child allowance. I would strengthen Social Security, offer more generous veteran disabilities. The point is, what would you do for those who wantto work and do not want unemployment insurance extensions for 5 years, or even the standard 26 weeks? The unemployed and the firms know well what the mark of unemployment does to them. The formerly incarcerated have enormous obstacles to obtaining jobs. The JG helps them get that job.

    Since you quote my Keynes paper, you may have noticed that Keynes had the same concern for the least ‘employable’ and preferred ‘experimentation’ and ‘targeting’ of jobs in distressed areas. The JG is a re-envisioning of his ‘on-the-spot’ employment approach. Full employment to Keynes was less than 1% of unemployment! To achieve that, we have to fund employment for the most disadvantaged members of society. The highly skilled and well-educated unemployed individuals are the most employable—they are hired first and fired last. They experience different employment cycles from the poorest of the poor. They too can work in the service sector for a living wage if they wish to, upon becoming unemployed. And they will quickly transition out of it. The JG offers an opportunity for the least advantaged members of society. It is a true bottom up policy.

    I am not sure what the point was to your semantic objections. ‘Social provisioning’ is the process by which society reproduces itself—the stuff we do–working is a core part of that. ‘Community’ is the place you live—rural or urban, big or small.

    In short, I have yet to find a single good reason, why government should deny a job opportunity to even the least educated and least skilled individuals at decent pay, if they wish to work.

    • Stephanie Kelton

      And the moderator is watching.

    • Very good post and helpful clarification, Pavlina. Thanks for taking the time to add the latter. I hope you keep posting (and doing other research/writing) on the SE/JG theme, which I think is a very important (and potentially politically helpful) element of the JG vision.

      If you’ve got a recommended reading list on this theme, please share it. Thanks again.

  6. Mr. Tcherveva, I really enjoyed reading your excellent article. I wanted to share with you another wonderful article by economist Dr. Jack Rasmus, who also, has a very interesting job proposal for America — (“A QE for jobs program alternative”)— as well as those who responded to consider…

    The Federal Reserve, QE, & Jobs

    September 15, 2013 by jackrasmus

    Over the past five years the US central bank, the Federal Reserve (Fed), has printed nearly $4 trillion in liquidity (money) which it has provided to banks and professional investors. This is called ‘Quantitative Easing’ (QE). QE means the Fed essentially prints money and buys bonds—mostly toxic subprime mortgages to date—from institutional investors (i.e. banks, shadow banks, foreign banks, other investors). In addition to printing nearly $4 trillion with which to buy bonds from banks and investors, since 2008 the Fed has also conducted various ‘special auctions’, by which it has loaned additional trillions of dollars at little or no interest to banks. Still more trillions were loaned were loaned by the Fed by means of policies that resulted in near zero interest rates (between 0.1%-0.25%) at which banks could borrow money.

    The Fed’s QE purchases represent a massive direct subsidization of banks and investors, since the Fed’s bond purchases were almost certainly bought in most cases at prices well above the collapsed value of the bonds—most of which were mortgage bonds including toxic subprime mortgages. But we’ll never know the exact price the Fed paid bankers and investors for the bonds, since the Fed doesn’t provide specific reports on individual deals and purchases; not even to Congress. Only the aggregate data is reported.

    The total of QE, special auctions, and near zero interest rates made available to bankers and investors since 2008 comes to at least $10 to $15 trillion. Some estimates range as high as $20 trillion. The number rises still higher when similar QE and free money measures by foreign central banks is taken into account; specifically, by other major central banks like the Bank of England, Bank of Japan, and the European Central Bank (ECB).

    Justifying QE1: Economic Recovery

    The Fed originally argued in 2009 that this massive, free money injection and bank subsidization was necessary to stimulate the US economy and generate a sustained full recovery as quickly as possible. But even if the Fed and its policies were responsible for all the economic growth since 2009, an impossible assumption that ignores all other contributions to growth, that contribution would still amount to only 8.2% GDP growth over the past five years—which is about only half the GDP growth after five years that occurred in prior recession recoveries since the 1970s.

    The Fed’s QE policies these past five years have come in four doses. There was the initial QE1 in 2009, amounting to $1.75 trillion in bond purchases. The US economy then stalled out in the summer of 2010. Then came the $600 billion QE2 in the fall of 2010. The economy stalled a second time in 2011, leading to what was called ‘Operation Twist’ (QE 2.5?) that provided another $400 billion in mortgage bond purchases. When that petered out, it was followed by QE3 last September 2012. Unlike its predecessors, QE3 has had no limit. It calls for Fed purchases of $85 billion a month for ‘as long as necessary’. So QE3 has now amounted to about another $1 trillion, and continues to rise by $85 billion every month.

    While there is talk that the Fed may start to ‘taper’ (reduce) its $85 billion a month, don’t expect much of a change. Maybe $10 billion a month or so reduction. QE will therefore continue for some time. That’s because, as this writer has argued elsewhere, bankers and big investors are now ‘addicted to the free money’ regime that characterizes 21st century finance capital globally today.

    Just the mention of a possible ending of QE by the Fed this past June sent bankers-investors globally into financial fits and paroxysms last June. Stocks, bonds and other financial assets fell into a major tailspin in a matter of weeks. The Fed quickly denied it had any such intention of ending QE. The markets quickly recovered and went on their merry financial bubble way once again. That event of possibly reducing QE, and financial markets’ extreme reaction, this past summer has been called the ‘taper tantrum’. What’s coming in the next few weeks, however, is at most a ‘taper tweak’.

    Justifying QE2: Restoring Price Stability

    The Fed initially launched QE1 in early 2009, claiming it would stimulate the economy and generate a recovery. But no such thing happened. In the summer of 2010 the economy weakened again. The Fed thereafter switched its excuse. It next argued in 2010 a second QE was necessary, this time to head off the growing trend in the economy toward deflation (price declines) at the time.

    Deflation is a very dangerous thing. As long as prices continue to fall, businesses will hold off investing and consumer households from buying. For businesses, deflation creates uncertainty whether they can sell their goods at a price high enough in the future to cover their production costs in the present. For households, deflation results in consumers ‘waiting for prices to bottom out’ before actually purchasing again. The recent housing market in the US is a good example. Home prices continued to fall for four years, about 40% on average. During the period of home price declines the housing market did not recover, despite the 30%-40% price drops. It wasn’t until late 2012, as home prices began to rise, that home buying recovered a little and home prices began rising a little, by about 12-15%. Thus deflation means both business investment and household consumption ‘freeze up’. That means no recovery. The Fed therefore argued another round of QE was needed to halt deflation and get prices rising again, so that investment, consumption, and recovery could follow.

    But the Fed’s claim that QE 2 was needed to prevent deflation and raise prices (to a Fed target of 2.5%), as a way to encourage investment and consumer spending, didn’t materialize either. Between 2010-2011, the period during which QE2 was in effect, consumer and wholesale prices for goods and services continued to slowly drift lower, flirting dangerously with deflation. While QE policies may—and often do—result in price bubbles for financial assets (stocks, bonds, etc.), they have little effect in terms of inflating prices for normal goods and services.

    So the Fed’s QE1 did not generate a sustained recovery for the US economy (which has been bouncing along the bottom now for four years since the ‘end’ of the recession in June 2009). And its QE2 did not result in getting prices to rise to the Fed’s minimal target of 2.5%. The primary goals of QE in its first and second iteration therefore failed.

    Justifying QE3: Reducing Unemployment & Creating Jobs

    Enter QE3, and the Fed’s third justification for introducing yet another third round of QE3 in the fall of 2012. The new excuse was that another QE was necessary in order to reduce unemployment rates and get a job recovery underway. In September 2012 the Fed announced it would launch another QE, printing and injecting $85 billion a month into the economy, until such time as the ‘U-3’ unemployment rate fell—from the 8.1% level in September 2012 to a 6.5% target level. The U-3 rate has come down over the past year to 7.3%. Meanwhile, the more accurate U-6 unemployment rate still remains around 14% and more than 20 million continue unemployed.

    But the Fed’s QE3 has not really been responsible for reducing even the unemployment rate from 8.1% to 7.3%. That reduction has been the result of millions of unemployed leaving the labor force altogether over the past year, and from jobs ‘churning’ from declined in full time jobs to increases in part time and temporary jobs.

    Over the past year, 2012-2013, it is true that the US economy has created 2.3 million jobs. But this has been largely part time and temp jobs, with low pay and essentially no benefits.

    ‘Jobs Churn’: The US Jobs Market Today

    The main characteristic of the US job market today is perhaps best described as a ‘job churn’. While the US is not losing jobs, it is not creating them very well—at least not decent paying jobs.

    The US is ‘churning out’ full time jobs and replacing them with ‘contingent jobs’. Since January 2013 through July 2013, just under a million jobs were created; but no fewer than 650,000 of these were part time and temp jobs. Meanwhile, 250,000 full time jobs disappeared over the same period. This ‘job churn’ has other dimensions as well.

    In addition to replace full time with part time-temp jobs, it is providing jobs for millions of new entrants (at mostly part time-temp status) as millions more leave the labor force altogether.

    It is substituting high paid jobs for low paid. As a recent study showed, 60% of the jobs lost since 2008 have been ‘high paid’ (more than $18/hr. on average), while 58% of the jobs created since 2008 have been ‘low paid’ (less than $12 an hour).

    Not only substituting new entrants to the labor force for those leaving the labor force; not only full time for part-time/temp jobs; not only high paid for low paid. The economy is churning out union jobs and replacing them with non-union jobs as well.

    It is a sad but remarkable fact that while the economy added a couple million jobs since 2012, US unions experienced an unprecedented decline of 500,000 jobs in 2012 alone. That loss amidst job creation has never before occurred for organized labor. At that rate, its meager 6% or so unionization rate in the private sector today will fall to 3% or less by the end of the current decade—i.e. the lowest ever, signifying the virtual disappearance of organized labor in the private sector in America for all practical purposes.

    QE as 21st Century ‘Trickle Down’

    Notwithstanding the foregoing facts, if one still insists on maintaining that the Fed’s QE3 has reduced unemployment, it is clear that QE to date is an incredibly inefficient, costly, and wasteful way to create jobs.

    For example, let’s assume QE3 and Fed monetary policy is responsible for half of all the 2.3 million jobs created over the past year—a generous assumption. But let’s assume it nonetheless. That’s 1,150,000 of the roughly 2.3 million jobs created over the past 12 months. Let’s further assume that about 400,000 of that 1,150,000 represents part time-temp jobs. Next, if two part time jobs roughly equals one full time job, that’s 200,000 full time equivalent jobs created by QE and the Fed the past 12 months. Add that 200,000 to the remaining 715,000 full time jobs assumed created by QE3 over the past year, adds up to a total of 915,000 full time jobs created by QE/Fed over the past year. Let’s round it all up, to an even 1 million jobs created by QE3.

    Now let’s take the $1 trillion cost of QE3 over the past year. Divide the $1 trillion by 1 million jobs and the result is a cost of $1 million per job created. That’s an absurdly inefficient and wasteful job creation program!

    So who has really benefited from the Fed’s $1 trillion QE job creation program?

    Taking the calculations one further step, the average wage of the 1 million jobs is reasonably no more than $15/hr—given the composition of 400,000 part time-temp, low paid jobs in the total. That $15/hr. is about $30,000 a year. The ‘benefits cost’ load is no more than 10% of the base pay, since many of the jobs are part time-temp with essentially no benefits. That’s another $3,000. That’s $33,000. That leaves $967,000 of QE3’s Fed printed money going into the pockets of someone else other than the worker who got the QE created job!

    The ‘someone else’ in this case include the bankers and investors to whom the $1 trillion was provided in the first place. The bankers and investors then mostly loaned out the QE mostly to other speculators, who in turn likely invested it in the stock, bond and derivatives markets—thereby driving up the financial asset prices for these securities which, when sold, realize super-capital income gains. Given the absurdly low capital gains tax rates that exist, the bankers-investors get to keep 85% or more of their profits (realized income). Alternatively, they might not loan out the $967,000 billion from the Fed QE windfall to other financial market speculators, but loan it to offshore emerging markets, like China. In either case, the $967,000O doesn’t create any jobs in the US since it doesn’t result in investment in the US. Or, thirdly, they might just hoard the cash; or send it to their offshore tax havens in order even to avoid paying the nominal capital gains tax; or, if they’re a public corporation, as most banks are, use it to buy back their bank stock, payout more dividends to shareholders, or use it to purchase their competitors (mergers & acquisitions). None of that creates jobs either.

    The net outcome of QE is the escalating incomes of bankers, investors, wealthy shareholders and high net worth individual households. That means even more income inequality in the US.

    It is not coincidental that during the period of QE1-QE3 in the US, income inequality has accelerated at an even faster pace than in the past. As the most recent data on income inequality trends, released by Professor Emmanual Saez of the University of California earlier this month as part of his on-going study of income inequality trends, shows: the wealthiest 1% households accrued 95% of all the income gains in the US economy between 2009-2012.
    QEs mean bankers and investors get $967,000 and the worker gets $33,000. That’s the essence of the Fed’s current QE3 job creation/unemployment rate reduction claims!

    If one were to assume this ratio represents ‘trickle down’ economics in practice today, it would mean that for every one dollar in income for the worker, the capitalist-investor-banker is now getting 29.3. Of course, that 29.3 invested in financial securities generates even more income over time. The ‘trickle down’ ratio rises further and is virtually unlimited to the upside for the wealthy investors who benefit enormously from the free money QE policies of the Fed—while workers struggle to make ends meet working increasingly part time and temp jobs with low pay and no benefits.

    A ‘QE for Jobs’ Program Alternative

    It doesn’t take much imagination to envision a better, more efficient, less wasteful way to create jobs. If the Obama administration had a 21st century Works Progress Administration direct job creation program, it could have the Fed print the $1 trillion QE3 and create 20 million jobs at a fully loaded full time $50,000 a year. That would instantly wipe out every U-6 jobless person in the US. That’s 20 million jobs at $50k vs. the Fed’s current ‘unemployment reduction program’ of 1 million jobs at $33k.

    Why should the Fed print money and subsidize the incomes of super-wealthy investors and their banks? Why shouldn’t the Fed use its printing press to instantly finance the creation of 20 million jobs directly by the US government? That’s a jobs program that would add nothing to the US deficit and debt, just as the Fed’s QE programs have added nothing to the US deficit and debt.

    Those who argue to do so would result in a major inflation are simply ignoring the facts. Nearly $4 trillion in QEs to date have had no effect on inflation in goods and services. They have only inflated financial securities prices. Inflation in real goods and services continues to drift lower, flirting with bona fide deflation. If the Fed wants the get goods and services inflation to rise to 2.5%, a QE for Jobs program noted above would likely do it.

    Others might argue that a $1 trillion ‘QE for Jobs’ program would mean the Fed would have to print $1 trillion every year to keep paying for the jobs in subsequent years. But that’s nonsense. It doesn’t take much imagination to understand that $1 trillion in jobs-related income in the hands of 20 million workers would result in a major boost to consumption. That in turn would result in businesses finally investing in the US and creating jobs to match the consumption demand. As real investment rose, the Fed ‘QE for Jobs’ might actually be scaled back in magnitude.

    A ‘QE for Jobs’ program would also represent the greatest reduction in income inequality overnight in US history. It would also mean an annual first year boost to consumption of at least $500 billion. Considering possible ‘multiplier effects’, that would mean a boost to US GDP of more than $1 trillion. That would in turn easily push the US economic recovery to an annual GDP growth rate of more than 7% to 8%–and result in the fastest (not currently slowest) economic recovery on record for the US.

    Jack Rasmus
    September 15, 2013

  7. Pingback: The Social Enterprise Sector Model for a Job Gu...

  8. Great article! I’m sure I will be referring to it in the future when critics I encounter say that there are no jobs the private markets can’t or don’t already create.
    One question though. Would job creation become a subsidy for under-paying workers, much the way that low-income benefits wind up subsidizing big corporations like Wal-Mart and McDonald’s so they don’t have to pay a living wage? I’m a little afraid that a federally funded jobs program would become a permanent subsidy to corporations who routinely underpay workers.
    Would a Basic Income Guarantee for all – like Alaska’s oil fund, or like Switzerland recently tried to do through a ballot initiative – be a better option?

    • If the BIG is a living wage, then no. We are all better off when we all work and produce things for each other. Financially, it could be the same for some, but the result in the real economy would be different. You’d have less output, and you’d still have trouble finding enough volunteers to do work that is in the public interest, but does not produce salable output.

      There are already an assortment of cash and in-kind programs in the US that function as a BIG, but they generally do not amount to a “living wage” without employment.

      JG would have a negative impact on employers of low-compensation workers. JG would be a better overall package for a full-timer with a family. It is possible that these employers could still find enough non-breadwinners to fill low-paying jobs, but more likely they would have to raise wages or automate or find other ways to do the things that these workers do.

      JG would not pay workers who work at Walmart, or any private sector employer, or any existing government employees, if that is what you were thinking.

      Just giving money to most everyone is an effective demand stimulant. It worked in 2008 to delay the onset of the Great Recession for a quarter. There is no reason for it to apply to Warren Buffet, though, and no chance for it to pass politically, absent a similar crisis, without some means-testing. But, generally, a good idea, as part of an overall plan including tax cuts and infrastructure spending as well as JG. Perhaps done via a refundable personal tax credit.

  9. What an excellent post, Pavlina. I’ll tweet it to Labor Secretary Perez and Rep. John Conyers.

    I would love to see AmeriCorps and the Peace Corps at least doubled in size. Also, maybe an increase in the military’s size because it is extremely difficult to enlist right now. For prospective Marine officers, you have to score nearly perfect on the physical fitness test just to be considered.

  10. Thomas Bergbusch

    I think that the a combination of not-for-profit delivery arms and employment office oversight would work well. Social enterprises, as a class of organizations, are not a good option for JG. It has to do with their structure (or the variety of social enterprise structures) as, with notable exceptions, SE’s business success is as cyclical as that of other firms, and yet they have to ALSO serve their social mission. The rhetoric about not having shareholders skim off financial surpluses is true to an extent, but lots of studies have shown that as time goes on, SEs tend to have to devote less and less time to their social missions and more and more to the running of the business. So, then, one envisages a subsidy to keep SEs afloat — but such subsidies are better provided directly to simple, traditional charities, to run the delivery of the JG. Unless social enterprises go about their missions WITHOUT excessive public subsidies, the benefits of the model are usually lost; SEs should be allowed to have higher churn rates than NFPs, which, properly supported, can provide crucial stability to a JG program.

  11. Some of Dan’s points do seem legit, and those concerns have been addressed often.

    Mosler describes JG as a “transition job”. In a healthy economy, very few people would make a career out of JG, although that should not be prohibited. So, yes, the rocket scientist, the cowboy, and the butcher should do the same jobs as the rest, until their industry is ready to rehire them. Buggywhip makers might use JG to get trained for a new career with more demand.

    The arena for JG workers is primarily jobs staffed by volunteers today. Why are those jobs like that? Why is the private sector ignoring these? It is because the job does not produce enough salable output to fund itself. NGO’s don’t do rocket science, they cook soup for homeless people. They can’t afford to hire workers, or they would have already done it. There are plenty of jobs, just not enough people willing to do them at the going rate, and not enough money to raise the rate. JG raises the rate for those jobs, which are there, and going unfilled, regardless of the lack of a profit motive. If there is a job already funded by its productivity in a profit-earning business, JG should stay away from it. To operate in that arena only shifts people around, does not increase employment or incomes.

    ISTM the federal government should fund the entire labor cost of the JG participants, plus an allowance for the NGO to pay permanent supervisors of the JG workers, and other overheads involved in higher staffing. Requiring a charity to fund part of the JG pay only detracts from their ability to buy what they must buy out of their other sources of funds. That should be avoided.

    And government needs to do the things it is responsible for, good economy or bad. Roads and bridges should not be left unfinished because the economy improved. Understanding of MMT will remove the obstacles to fully funding things like park rangers and other partially neglected duties, which will lower unemployment, but as a side effect, not a goal.

  12. “A HuffPoLive interviewer asked Myerson: “Well, I’d like to travel the world like Anthony Bordain. Can I set up a non-profit to do that and would the government guarantee me that job?”
    The answer is ‘no’. Every proposal in the JG would be designed to serve some public purpose and address an important social problem. A basic grant review process can approve or deny these projects, subject to the same guidelines that already exist for non-profits.”

    This is where any of these JG proposals run into trouble. Behind any job is a demand that some work be done. Someone has to be doing that demand. The “demander” is the one doing the funding, ie. the federal gov’t. The funder sets the monetary value of the work done and leaves the distribution of that monetary value to the people or institutions doing the work. If there is no “demander”, which is equivalent to gov’t deciding it doesn’t want to buy anything, it doesn’t matter what distribution method for the proceeds is chosen. But everyone has their list of “wants” and “don’t wants” and the politics determines which ones get monetized.

  13. Thomas Bergbusch

    Besides, it has been argued that one of the aims of the JG is precisely to pay workers for activities that support the public good but which are not in direct competition with the private sector. As social enterprises require income streams from the sale of goods and services on the “open market”, they compete directly with conventional firms (and more power to them!), but that hardly strikes me as a business model compatible with the aims of the JG .

  14. I’m not expert on this, would like to ask a question: why bother with all the headaches of administering a JG program and just skip to a straight guaranteed basic income, and make it available to everyone. It would just seem more efficient to give everyone $1000/month for passing go, just like in monopoly. If you can live on that and don’t want to work, fine. If you are working, we’ll then you have a little extra disposable income to spend into the economy. Wouldn’t this be this ultimately efficient ( by consolidating other social support program into this one) way to keep the economy growing while also also ensuring a basic minimum for everyone? And this would probably take less money then all the QE that has done nothing for the bottom 99%

    Having owned a small business, I can tell you all, there is nothing better than having consumers with money in their pocket willing to spend it on goods and services.

    • Jack, imho, the job guarantee is much more doable for Republicans and Democrats. Guaranteeing basic income will come across as welfare and I think would be a much harder sell, more “pity liberalism.” Also, imho a federal job guarantee provides an increased level of accountability. To get paid, people have to actually show up. Without that ongoing counterweight, it makes it a lot easier for folks to game the system.

      “…The hearing highlighted the extremely disturbing case of Linda Weston, a woman from the Tacony section of Northeast Philadelphia who allegedly enslaved and abused mentally disabled adults to steal their Social Security benefit checks.”

    • Jack, other thing, I agree with your fundamental point, the absence of aggregate demand is the bigger problem. Per Modern Monetary Theory, since Nixon (and FDR) took us off the gold standard, (Federal) “Taxes for revenue are obsolete.”

      “…The necessity for a government to tax in order to maintain both its independence and its solvency is true for state and local governments, but it is not true for a national government. Two changes of the greatest consequence have occurred in the last twenty-five years which have substantially altered the position of the national state with respect to the financing of its current requirements.

      The first of these changes is the gaining of vast new experience in the management of central banks.

      The second change is the elimination, for domestic purposes, of the convertibility of the currency into gold.”

      Bringing back a full holiday on the payroll tax (employee side and employer side) is the quickest way to jump start aggregate demand.

      One of the things that helped killed a lot of Occupy settlements was the population that a federal job guarantee is meant to serve. Occupy was overwhelmed by the unmet basic needs that the homeless, mentally ill, unemployed …..

      I’m hoping we can get a little traction on the right with “fiscal conservatives,” who could reasonably be expected to lead the charge for LOWER federal taxes. But, that would mean abandoning their circular firing squad as deficit hawks, crushing aggregate demand with federal taxes on the 99%.

      • JC, Dan Lynch’s post fairly outlined many of the logistical realities of administering a JG program. While extremely noble in it’s cause, a JG has too many administrative headaches to achieve the same end result as giving a minimum basic income, and the end result is to make sure everyone has some money in their pocket to pay for shelter and food. And by doing a basic income, everyone gets to participate which removes the venomous emotional response of “why should i have to work and that person doesn’t!”

        Bernanke was the one who came up with helicopter drop, but all he did was drop it on the top 1% of the mountain, so it never trickled down to base where the 99% of masses could actually use it.

        Btw, I always like to say Lincoln took us off the gold standard first… we’ve known since 1862 we don’t need gold or govt debt to make our money function in the economy….:-)

        Has liberal fiscal spending ever failed to stimulate the economy?…. if fiscal works, why do we avoid it with such contempt. All we need to do is mint 1 of Joe Firestones $60T platinum coins and we can functionally fund the govt for the next 100 years from a position of credit money vs the current debt money.

        I’m no PHD economist, but in my mind and having owned a small business, this chart is the single biggest problem our economy faces today: Since our nat. debt is now $17T, we know there’s plenty of money “in the system” it’s just not flowing around. My guess on this is because the 1%’ hoarders, with technological developments and tax gimmick-try, have become too efficient at money accumulation. But till the time we fix it, the tax holiday does provide some immediate help to the 99%.

        • Jack, thanks. I think we fundamentally agree.

          With respect to the “logistical realities,” imho they are always present with low-skill workers. Right now, GEO and their competitors in the corporate prison business are raking in most of the “welfare” from managing them.

          If you can get either party to back a basic income guarantee, you’re a helluva salesman.

          Can you imagine the screaming about an ex-con, convicted of a violent crime, receiving the same amount of money as someone who has never been arrested? I don’t think Joe and Jane Sixpack will go for it.

          Yes, per you the 1% get their welfare laundered through Wall Street.

          From 2011: “Bank Of America Dumps $75 Trillion In Derivatives On U.S. Taxpayers With Federal Approval”

          To add a little perspective, US GDP in 2012 was around $16.5 T. We blew a lot more than the $6T, they’re claiming in Iraq and Afghanistan. Social Security’s Trust Fund is valued at around $2.3T.

          I don’t think anyone knows what our total exposure to derivatives is, but I’ve seen estimates of $700T.

          According to the link below, Harry Reid and a lot of Dems want to cut Disability benefits by about $100 million/year to pay for unemployment benefits.

          “An awful idea: Hammer the disabled to pay for unemployment benefits”


          Politically, given the “penny-wise dollar-foolish” atmospheres, I think the JG is a much easier sell.

          I stand by my quality control concerns w/r/t administering a guaranteed basic income. One of dozens of scams would be to claim theft walking home after cashing the check. So now the rent is due and how is the government supposed to determine if the theft was genuine or part of an organized ring? Smart thugs would only have “clients” who “lose” about 1 check a year. If the neighborhood bully tells you that losing your check once a year (lying to the police and saying it was stolen) will get you a replacement check, plus an extra $100, how many people are going to say “no?”

          • I agree the reality of either a basic income or JG are slim, apparently so are most things that would help or be for the good of public purpose. Although I’d love to see if Switzerland can pass the basic income so we can get some real live data….

            – as for the for profit prisons, just one word: scary. Nothing good comes from privatizing public services. All it means is slash employee wages, cut corners on regulations, makes execs rich, and ultimately raises prices anyway.

            – the derivative mess just reinforces privatizing profits while socializing losses, but (to borrow a line from spaceballs) it can do it at “ludicrous speed”.

            – Instead of fixing the tax code to be fair, it appears to be easier to pick on the poor and disabled benefits, where’s the humanity in that?

            – don’t get the part about losing the check….it would be direct deposited or reloaded on a cash card just like current benefits.

        • I think all of Dan Lynch’s points have already been hashed out, and none of them present difficult obstacles. The infrastructure for managing JG is already largely in place in non-profits everywhere. Most of what JG would do (if I were King) would not be to undertake lots and lots of new projects, it would be to fully staff places like food banks and Habitat for Humanity, which depend on volunteers and can never find as many as they could use. It is well worth the work to manage it (which those organizations would be eager to do), because it gives the workers involved the employability that many long-term unemployed now lack.

          And it’s counter-cyclical. It manages itself, in terms of how much and where to do it.

          JG is not WPA and CCC. Those projects need to be done in good times as well as bad. They don’t go away when the economy improves.

    • Without other changes, I think $1000 a month to everyone is too much. One MMT proposal is to eliminate FICA, which is about $250 a month per worker, on average (and workers are only 43% of “everyone” 18-65), and that is estimated to be enough to eliminate the output gap, i.e., employ almost everyone looking for work.

      The difference is that JG allows people to work at a paying job, which makes them more employable in the private sector. While it may be good for an individual to have income without working, and good for businesses if more customers had more money, the real economy suffers when workers don’t work. Our real standard of living depends very heavily on what we produce, not on what we spend.

      That said, giving money to most everyone is good for demand, as you well know, and in small amounts doesn’t create disincentives. It’s a perfectly valid way for government to start fulfilling its obligations toward the economy and its citizens. Along with tax cuts, infrastructure spending, and JG.

      • I admit, i’m no expert, but dan’s points did seem to id a lot of logistical issues to me anyway. I say that thinking about what the desired end result or goal is….put money in peoples pockets to spend. There’s all kinds of heretical theories on the evils of just giving people a basic income (money) vs. a JG (still some heretical theories on this too). Ohhh the disincentives, lord have mercy. (slight sarcasm)

        But with a basic income, everyone gets a share to participate (no friction between have and have nots as everyone is a – have). If you want to work, fine, you make more. Just want to stay home, fine, you spend it on food, etc. anyway (no one is livin la vida loca on $1k-mo).

        Also, just think, employers could “afford” to offer HIGHER PAY to motivate people (the ultimate counter disincentive) to go to work, because they have more customers with money buying more stuff……and this is the goal we need to keep our eyeon. Should be interesting to see if Switzerland can enact this program to see it in action.

        As for the 1k/mo, it may seem like a lot (I think it’s enough to be a disincentive) , but the idea is to replace all existing programs. A snap benefit can be 900/mo. So, 1k (switzerlands plan called for $2800/mo) for every adult isn’t far off. Plus, have we ever done too much fiscal? And we just mint 1 $60T and we can certainly pay for it for a while….:-)

        Think about this: Typical Retail establishment employs about 45 people per $10m/yr in sales. Amazon employs only 15 people per $10m/yr in sales. Conventional employment models are be shattered through technolgy. So, whether basic income or JG, something is going to have to be done to put money into peoples pockets to spend, or businesses will continue to see declines in revenue as consumers as a whole have less and less money to spend. That is the snowball to rolling to the bottom.

        • I meant: (I “DON’T” think it’s enough to be a disincentive)

        • All good points, but let’s do a little math. $1000/mo x 330M people x 12 months is almost $4T a year. More than the current total Federal expenditures. Even replacing current poverty programs (I don’t have a number, but I’d be very surprised if it was $1T – it’s only been $20T total since 1967), it’s an enormous increase in spending, way more than enough to employ everyone; thus the excess cannot increase production, it can only raise prices.

          As for Amazon, that trend has been going on since the “standard” workweek was 80 hours or more. As productivity increases, it takes fewer and fewer hours of work to support a family. We will adjust to that as we always have, by working fewer hours per week, increasing vacation time, retiring earlier, spending more years in school. It may be interesting to contemplate what will happen when everything is totally automated, all work performed by robots and directed by AI machines, and all learning is online. Maybe then, if we are still a monetary economy, the only source of income anyone needs will be the $1000/month.

          • OK, how about a “Fiscal QE”.

            Following any month in which inflation yoy is under 2%, and unemployment U6 is over 8%,

            Every taxpayer whose 2012 income tax was $0 gets a check for $1000
            For 2012 income tax between $0 and $2000 the amount is reduced by 50% of the 2012 tax. Over $2000, no check.

            The money is credited to the TGA account by the Fed. No borrowing. It’s off-budget.

            About half of the people who file tax returns pay no income tax. I think that’s about 70 million returns, so about $70B a month.

            In order to allay fears of inflation, the Fed could do this instead of buying $75B of QE assets each month. So it’s a wash, as far as reserves, M1, M2. No difference to those who think the Fed controls anything. For those who like QE, this offsets the effect of the taper.

            For MMTers, it puts the money into the hands of people likely to spend nearly all of it, increasing aggregate demand, which the current QE does not. To the extent that they don’t spend it, the program will continue longer, until their savings desires are satisfied.

            It’s taxable income on the 2014 return, so no “free lunch”. Sometime around June, when the 2013 returns are all in the computer, 2013 income tax can be used instead of 2012.

            To further allay inflation fears, following a month in which yoy inflation is > 3%, all tax brackets are increased by 1 percentage point. 10% goes to 11%, 15% goes to 16%, … 39.6% goes to 40.6%. Dividend and capital gains rates also increase by 1 point. Withholding tables are changed immediately.

            Congress would have to act, but maybe it can be part of the debt ceiling compromise.

            Fiscal QE. QE for the people instead of the banks.

            We still need JG to get to 0% unemployment, but FQE would quickly get us back to historically reasonable levels of income and employment.

  15. ” I have never criticized the remedial actions that were taken immediately thereafter to help the people who were so badly hurt. That was a desirable thing. And it was the reaction to it. The bad things about the New Deal were not those. The bad things about the New Deal was not the Works Progress Administration which offered temporary jobs, the Civilian Conservation Corps. That was not the bad things. Those were the good. ”

    – Milton Friedman about great depression.