Mitchell’s laws: Reduced money growth never stimulates economic growth. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
As I frequently have mentioned, Monetary Sovereignty (MS) shares many fundamentals with Modern Monetary Theory (MMT). There are differences however, among which are the prevention and cure for inflation and one of the tenets of MMT, called “Employer of Last Resort” (ELR).
(Sorry for all the acronyms, but they save typing.)
This post discusses ELR. MMT would like the federal government to become the ELR. There is a bit of history for this in the Great Depression’s Works Project Administration, which employed many people during the depression. However, WPA was not an ELR in the way MMT suggests, which is to offer a job to anyone who wants one.
Monetary Sovereignty has several questions about the MMT version of ELR:
1. What are the jobs? Many reasons for individual unemployment, including:
a. Unavailability of a specifically desired job
b. Unavailability of jobs that pay “enough.”
c. Unavailability of jobs near home
d. Job seeker’s lack of qualifications or over-qualifications for available jobs
e. Job seeker’s personal background, including age, education, personality, illness, criminal history, etc.
2. Where are the jobs being offered? Unemployed people can be found in every city, every county and every state. Is it possible to offer appropriate jobs for every unemployed within a reasonable distance from every location?
3. What does each type of job pay? Income needs are different for different people in different locations. Working takes time away from job-seeking, so people, requesting help from ELR, elect to reduce efforts to find a better job. If the jobs pay too little, do they extend poverty? If they pay too much, do they encourage sloth and/or compete with private companies?
4. What mental and physical skills are required? ELR probably would pay more for jobs requiring certain mental and physical skills than would less demanding jobs. Can ELR jobs be matched to every type of mental and physical skill?
5. Who supervises each type of job? How will ELR hire supervisors for every type of job, from blue collar to white collar, in every location? And how will ELR supervise those supervisors? Who will make the rules and set the criteria?
6. Who hires? Similar to #5, who will evaluate and hire employees for every type of job in every location.
7. Why are people fired, a who does the firing? What are the criteria? Who supervises? What happens to people who are fired for any of the dozens of reasons why people are fired, from insubordination, to lack of attendance, to inability? Are they given another job?
8. How does this affect private companies that provide the same products and/or services being provided by ELR agencies?
Providing money to the unemployed would stimulate the economy, but I suggest the MMT device for providing money – i.e., providing a job – would create a giant bureaucracy filled with bully straw-bosses, plus jobs that provide neither satisfaction nor opportunity for meaningful growth, and jobs that interfere with the job-hunting process. It would doom us to a nation filled with non-productive equivalents of fast food servers and Walmart greeters.
Rather than attacking unemployment directly, by offering government, make-work jobs, I suggest the government stimulate the overall economy (via increased federal deficits), enabling the private sector to offer more jobs. A stimulated private sector will provide more meaningful and economically beneficial jobs than will a government bureaucracy offering jobs to anyone who wants one.
Because you adherents of MMT have given much thought to ELR, I welcome your comments. I admit to the possibility I may have overlooked a key issue.
Rodger Malcolm Mitchell
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports