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.
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[Same caveat as always: I agree with most of Modern Monetary Theory. That said, I have certain quibbles.}
Based on comments I’ve received, both on this blog and in correspondence, there seems to be some confusion about what the MMT (Modern Monetary Theory) proposed JG (Job Guarantee) really is, and why it is .
The confusion about “what” revolves around the question: Who provides the jobs, the government or the private sector? That is, under JG, would unemployed people be able to work for, and be paid by, the federal government? Or would the federal government merely pay private industry to hire the unemployed? Or both?
Here is what Randy Wray wrote to Warren Mosler and me on January 11, 2012, regarding JG (formerly called “Employer of Last Resort” –ELR):
I do not know of any proposal that advocated creation of any new “company” or bureaucracy. I, personally, have never advocated any new federal govt jobs (altho I am not necessarily against that as a supplement). So I have no idea where you got these ideas.
At most, I have advocated federal funding, paying to a social security number (a private bank account); and using existing unemployment offices as necessary to help link workers to jobs. but I’m not sure even that is needed. I think we might need one new Federal government employee to run the program. Everything else is already in place.
O.K., that’s clear. Randy says the federal government would supply the money, and function as a kind of super employment agency, and private industry would supply the jobs. (Note that the former title, “Employer of Last Resort,” implies government jobs).
But wait. Here’s a summary from a writer who posted to Wikipedia:
The JG is based on a buffer stock principle whereby the public sector offers a fixed wage job to anyone willing and able to work thereby establishing and maintaining a buffer stock of employed workers. This buffer stock expands when private sector activity declines, and declines when private sector activity expands, much like today’s unemployed buffer stocks.
According to that writer, the government would supply the money and the jobs. I’m not sure there is an “official” MMT view on this. If ever a JG were instituted, it probably should be something like the Randy Wray version. It is much closer to the Monetary Sovereignty idea: Merely extend unemployment compensation.
All of this takes us to the stated purpose of JG: To create “full employment with price stability.” There is, in fact, a Center for Full Employment and Price Stability at the University of Missouri at Kansas City (UMKC), the heart of MMT in America. Clearly the association of full employment with price stability is an important part of MMT.
And here may be where Monetary Sovereignty (MS) truly diverges from MMT, for MS disagrees with the need for full employment and it disagrees with the use of employment to achieve price stability.
Here is what the Wikipedia author said:
A job guarantee (JG) is an economic policy proposal aimed at providing a sustainable solution to the dual problems of inflation and unemployment.
When private sector employment declines, public sector employment will automatically react and increase its payrolls. So in a recession, the increase in public employment will increase net government spending, and stimulate aggregate demand and the economy.
Conversely, in a boom, the decline of public sector employment and spending caused by workers leaving their JG jobs for higher paid private sector employment will lessen stimulation, so the JG functions as an automatic stabilizer controlling inflation. The nation always remains fully employed, with a changing mix between private and public sector employment.
Since the JG wage is open to everyone, it will functionally become the national minimum wage. To avoid disturbing the private sector wage structure and to ensure the JG is consistent with price stability, the JG wage rate should probably be set at (or slightly below) the current legal minimum wage.
Yes, that is completely different from Randy Wray’s concept, which demonstrates the confusion, and does not answer the question, “Why full employment?” I won’t repeat the contents of previous posts, which in summary said, employment neither is a public nor a private goal. Most people seek jobs, not as an end, but as a means to income.
(Yes, I know. People have a need for activity, but relatively few would work in their current jobs, were they not bribed. The popularity of weekends and vacations speaks to that. Surely, few young people have told their parents, “I want to grow up to become a Burger King server.)
It is the nature of minimum wage jobs that while they may be useful, they are not economically constructive. Human advancement does do not emanate from minimum wage jobs, so the drive to increase the availability of those jobs seems misplaced. Far better, simpler, faster, easier it would be to provide the end (income) than to create a convoluted, complex system for providing the means (minimum-wage jobs) to the end.
And that leaves us with price stability (inflation). There is a hypothesis, with some historical merit, that unemployment mitigates against inflation, and “too-full” employment causes inflation. This hypothesis is called “Non-Accelerating Inflation Rate of Unemployment” (NAIRU) – the level of unemployment below which inflation rises.
The logic is simple. When unemployment falls “too low,” and employees are hard to find, competing employers must increase wages, which adds to costs, which pushes up prices. Conversely, when unemployment rises, employers feel free to offer jobs at lower salaries, which cuts costs and subsequent prices.
If the U.S. were a closed society, NAIRU would work. We aren’t, so it doesn’t.
Especially in the past two decades, international trade has become the growing norm for product and service supply. If a product or service can’t be found at a low price in America, that product will be produced in China. Or India. Or Thailand. Or Mexico. Or Vietnam. Or any of a few dozen other nations.
The fact that no nation is an island unto itself means that to an ever-increasing degree, inflation has become more a worldwide phenomenon caused by energy (mostly oil) prices and less by local conditions.
Given that minimum-wage employment, in of itself, neither is a productive nor a demanded goal, and controlling unemployment no longer controls inflation, the entire “full employment with price stability” paradigm becomes obsolete.
Rodger Malcolm Mitchell
http://www.rodgermitchell.com
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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
#MONETARY SOVEREIGNTY
#Monetary Sovereignty - Mitchell 
If there is no longer any relationship between unemployment, which is local, and inflation, then just go ahead and increase the deficit until unemployment disappears, because there’s no danger of wages and prices rising, because China will step in and supply the lower-priced goods, using their lower-priced labor.
Everyone will be happy. Oh, except those Americans who used to make the stuff that China is now making. The trade deficit goes up, absorbing the extra dollars we spent.
OK, so increase the deficit even more!! If we can make the deficit high enough, it will create more demand for our high-priced American jobs, and THEN everyone will be happy.
Especially those Chinese who can learn to start a global stock exchange, and offer lower commissions for trading there. Or learn to program those iPads, as well as manufacture them.
If global trade now rules the economic universe, so that inflation is a global phenomenon, then so is unemployment. Just expand your equations from gross Domestic product to gross World product. Savings of the non-government sector = deficits of the government sector. Governments around the world, at least the monetarily sovereign ones, will have to coordinate their policies to make sure that we don’t have unemployment. If China won’t cooperate, then the US deficit will have to be large enough to employ all the Chinese, before it can have any effect on American unemployment, because the Chinese will always be willing to do the same jobs for less money.
But floating exchange rates will save us, no? The more we import from China, the more the yuan goes up and the dollar goes down, until price levels and living standards become equal the world over, and transportation costs once again segregate markets. Maybe that is where we’re headed, in the end, but we have a long way to go.
But, is inflation a global phenomenon? Does it not vary from country to country, most especially among the monetarily sovereign countries? Is inflation in Switzerland or Japan the same as in the US or China? And do they not all buy the same oil on the same global oil market?
As for JG, I think you’re becoming too hung up on the nature of the jobs: what do they do, and who is the employer (public sector or private). In order for JG to be effective and not distort labor markets, the workers cannot do things in competition with either the public or private sector. As you have said, private sector employers who can get subsidized unemployed labor would fire everyone else, and hire only the unemployed and subsidized. Making JG workers government employees also doesn’t work. Government employees are highly unionized, and do not work for minimum wage, and the unions would insist that these new public employees also be unionized.
JG workers must do things that are not being done now, at least not in sufficient quantity, and that will not be missed when the economy improves and they find employment elsewhere. They won’t be flipping burgers, or building bridges, or cleaning the streets. All those things have to go on regardless of the number of unemployed. Besides providing training and letting them do job search activities, the work that is being left undone now and won’t be missed later is volunteer work at non-profit and charitable organizations. The demand for it fluctuates naturally in correlation with the number of unemployed.
The question you raise is how to support the unemployed, who are so because of the nature of the system. Helping them to adjust to changing economic conditions, and improving their financial situation in return for helping each other, seems to me quite a compassionate and economically effective solution, as compared to the current one. Raining and extending UI to sustain their previous standard of living in perpetuity is nothing more than a permanent vacation.
I’m not so fascinated with the debate over whether JG is or is not a part of MMT. Maybe we need competing isms, named after individuals (a la Keynesianism), so that someone is entitled to make that decision. Moslerism and BMitchelism include a JG, but RMitchelism does not.
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“If there is no longer any relationship between unemployment, which is local, and inflation, then just go ahead and increase the deficit until unemployment disappears . . . “
As usual, John, you’re so anxious to disagree (Is it because your parents did that to you?), you fail to read. I don’t care about unemployment disappearing.
And yes, increase the deficit. And yes, the trade deficit goes up, enriching the world and impoverishing us not one bit. (See item 12 at https://rodgermmitchell.wordpress.com/2011/02/04/jacuse-mainstream-economists/).
Keep them negative comments comin’. I’ll get it right (aka John’s way) one day. 🙂
Rodger Malcolm Mitchell
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I don’t disagree that increased incomes, even if they did not reduce unemployment, are a good thing. Absent a JG program, extending unemployment benefits seems to be the best we can do.
So, I will modify my first sentence: Increase the deficit until everyone has a sufficient income, whether employed or not.
(But I think the causality goes this way: deficit up ==> increased aggregate demand ==> increased production ==> increased employment ==> increased income. Even if the increased deficit goes all to the unemployed, the only way unemployment will not be reduced is if all their additional spending goes to imports, which seems unlikely? So I think unemployment will be reduced whether you care about it or not.)
Your comment indicates that you have a second disagreement with MMT, or at least with Warren, on the trade deficit. He says our imports are a benefit to us, not to our trading partners. If the US trade deficit goes up, we enrich ourselves, not the rest of the world…according to Moslerism, and maybe to all of MMT.
Is the employment thing the only point you thought I disagreed on? You agree, then, with my thoughts on the exchange rate, and world employment? And equalization of living standards?
How does Monetary Sovereignty explain the varying inflation rates in different countries, despite the common worldwide oil price? (Not that I would automatically disagree with your explanation, you see, I just want to hear it first.)
As the issuer of the world reserve currency, is the US responsible for the GWP, and world incomes? It would seem that by running a sufficient deficit, we could increase incomes (if they are willing to increase employment) in other countries. It seems more likely that other monetarily sovereign countries must have some responsibility for their own policies, though. But perhaps it is a shared responsibility.
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Oh, sorry, item 12 says (in agreement with MMT) our trade deficit enriches us, not the rest of the world. Have you changed your view on that?
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Our trade deficit enriches us with goods and services. It enriches the rest of the world with dollars, which our Monetarily Sovereign government uniquely can create in endless amounts..
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From item 12:
“When China exports to America, it expends massive amounts of energy, manpower, time and scarce resources to create products, which it sends to us in exchange for dollars, which we create at no cost, by touching of a computer key. Thus, China is our slave, working and sweating essentially for nothing.”
Doesn’t sound “enriching” to me.
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They get dollars. But you know that.
Really, I hope you’re not married. Anyone who spends their life in a silly and ongoing attempt to prove someone wrong, really should live alone.
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There is a hypothesis, with some historical merit, that unemployment mitigates against inflation, and “too-full” employment causes inflation. This hypothesis is called “Non-Accelerating Inflation Rate of Unemployment” (NAIRU) – the level of unemployment below which inflation rises.
The logic is simple.(WHAT CAUSES INFLATION)
When unemployment ( SUPPLY) falls “too low,” and employees(UNITS ) are hard to find, competing employers(DEMANDS) must increase wages (COMPENSATION), which adds to costs, which pushes up prices. Conversely, when unemployment (SUPPLY) rises, employers (DEMANDS) feel free to offer jobs(UNITS) at lower salaries(COMPENSATION), which cuts costs and subsequent prices.
This is a great article for debate as to JOBS and/or INFLATION.
I can not find why it would matter whether private or government means were used to “distribute the bribe”.
Shouldn’t this really be a debate as to whether or not all members of a truly great society are entitled to “live,liberty,and the pursuit of happiness”.
And what would you do to any of the new great thinkers that will be born,MAKE THEM GET A JOB?
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As I mentioned in my comment on the previous post, there are at least four other reasons for promoting full employment. In my view these require an expansion of the public sector with the government directly hiring people.
1. We need to do a much better job at accomplishing the things that only the private sector can accomplish, or accomplish well, and that we are failing to accomplish now on a massive scale. These include strategic economic investments that require organization and expenditures on a very large scale, and require tending to the conservation and improvement of the public’s wealth.
I don’t understand the attitude of those who think they live in a world in which all the important things are being done, and so any government hiring would consist in menial and unimportant service jobs, and with a bureaucracy whose cost doesn’t justify the benefits. The world I live in seems instead to be a world of chronic and massive underinvestment, in which we are leaving a much worse future to our descendants than has to be the case, all because we are addicted to a blind ideology of small government and near total reliance on the private sector.
We have engaged in this kind of stupidity before, particularly during the Great Depression when we languished through a decade of misery and half measures before the public sector was unleashed during WWII. The war effort then doubled the size of the US economy, and laid the industrial and infrastructural foundation for decades of subsequent prosperity.
2. We need to give people the opportunity to participate in their society and thereby build social solidarity. People who are contributing to any kind of social effort generally feel more integrated into society, have more self-respect, have more friends and acquaintances, have stronger networks of social support and are more socially and politically engaged.
Yes, people work to achieve income. But that doesn’t mean that they all seek to have an income without working for it. Yes, some people are content to live off the labor of others. That might be the way a lot of Wall Street investors think. And it might be the way a few scattered deadbeats here and there think. But most people want to earn the benefits they receive from the work of others.
Many ancient societies were based on a system in which slaves did a lot of the work, and a few privileged souls enjoyed the wealth and leisure that the slave work made available. We have improved that system of social relations somewhat, but we are not all the way there. There is still massive inequity and exploitation in the distribution of wealth and work. A democratic society of equals needs to be based on an equitable bond or reciprocity – a social contract. It needs to value and promote work, provide the opportunity for everyone to earn their share of the fruits of cooperative living, and then distribute those shares fairly.
Is this puritanism? Maybe it’s my New England heritage speaking? I don’t know. But if it is then three cheers for puritanism! The fact is that in America most people have internalized this work ethic. And it’s a good thing too, because it’s one of the internalized norms that prevent us from sliding all the way back into a plutocratic neo-feudalism.
3. We need to eliminate the permanent buyers’ market for labor. We should force businesses to compete more aggressively for workers by offering those workers a better deal than they offer now. This will raise living standards and help restore the disappearing American dream. Full employment will exert strong pressure from below which will improve the distribution of income, build job security, ameliorate the miserable working conditions of low-skilled labor in contemporary America, and counteract the massive agency failures that have lead to management paying themselves ridiculous salaries and bonuses while looting their companies. Don’t tell me private sector companies can’t afford to pay people more. They can if their pampered elite management is forced to take less.
4. We need to achieve our potential. When a lot of our people are not working, we are simply failing to achieve all we can achieve as a society. This should be patently obvious.
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Dan,
Thank you for your thoughtful comments. Here are my immediate thoughts regarding your four points:
1. I heartily agree. The Tea Party, debt-hawk, anti-government, anti-deficit doctrine is perhaps the most stupid, damaging myth ever foisted upon an ignorant and gullible public.
2. I agree that people will not use federal payments as an excuse for not seeking work. However, I do not believe providing millions of minimum-wage jobs would provide the social participation you mention.
3. I disagree with government forcing businesses to “offer workers a better deal.” Businesses compete, and having the government force them to pay higher wages, offer more vacation time, or anything else you might consider “a better deal,” inevitably will injure their ability to compete, not only domestically, but internationally, much to the detriment of workers.
Note all the complaints about shipping jobs overseas, which is a result of American businesses offering a “better deal” than other nations’ businesses.
That said, I do believe maintaining a balance between unions and business serves a valuable function. The pendulum has swung on this issue, and today, the unions may have too little power. However, this is a very complex issue, and sound bites on this blog will not do.
4. Again, our potential is not achieved with millions of people in minimum-wage jobs.
I continue to believe, the problem is not one of job-lack, but of income-lack.
Again, thanks for your comments.
Rodger Malcolm Mitchell
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A little OT, but the reasons that workers in many overseas countries can do the same work for far less compensation than U.S. workers can are some combination of : 1) in many of those countries most people are so impoverished that even the pittance their industrial workers are paid is an improvement; 2) their governments enforce what are essentially slave labor conditions; 3) at least some of their people can have the equivalent of a U.S. middle class (or better) life on far less money because the endemic poverty around them results in much lower living costs. None of these are things we’d want the U.S. to emulate.
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Hi Rodger,
Have found your site via MNE. Have been very interested in this back and forth in recent weeks about the JG. You replied to Dan above that the problem is not job-lack but income-lack. Dan stated that the job of the government should be to create a situation where private businesses must compete more for labour, so driving its price up.You disagree saying this will just ship more jobs overseas.
I’m in the UK, where if you have a family and you work for the minimum wage, you are basically living in relative poverty. I’m sure the same must true in the US. So a JG would seem as Dan argues to offer a way of raising wages to a reasonable minimum. You disagree, but you still seem to want to raise people’s incomes. This is a very convoluted way of asking the question, if you don’t believe the government should seek to influence private sector wages, how do you raise the incomes of all? If full employment is not desirable what do you do with the 5+% who even at the peak of the cycle will still not be able to find work?
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Extend unemployment compensation. Eliminate business taxes. Eliminate the FICA tax. Reduce income tax rates.
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Rodger, I think we can do things to change the internal structure of compensation packages with causing a competitive disaster. We can use a combination of tax penalties and a more competitive labor market to force companies to shift revenue from the top to the bottom of their payrolls, without increasing their overall costs. As longs as the rules are applied across the board in the US, this does not impose any competitive advantages on some companies in preference to others. And I find it difficult to believe that will make it harder for companies to compete abroad. The ratio of CEO wages to lowest paid employee wages in the US is now in the hundreds. In the prosperous countries of Sweden and Japan it is 12 to 1 and 11 to 1 respectively. I think we have a self-destructive mess here with our preposterous compensation packages, and have to fix it.
I agree about the minimum wage jobs. I am not advocating the minimalist JG proposal of simply establishing a minimum wage with a jog guarantee. I am advocating a massive program of serious public investment, with a lot of real, important work. The JG element would play a minimal role in employing only those few people who remain unemployed after we mobilize and expand the public sector to do all of the important things it should be doing.
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Agreed, except for tax penalties. Instead, limit top-to-bottom compensation by some factor. Could be difficult, as companies will find ways around it.
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RMM,
When you say limit top-to-bottom compensation packages, are you referring to some sort of maximum wage law? I don’t mean an absolute maximum wage, but a relative one (e.g. 30-1)?
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Actually, I was trying to phrase it within Dan’s suggestion.
I don’t suggest limiting top compensation. Rather, I suggest increasing bottom income, by eliminating FICA and increasing the standard income tax deduction by $10K every year, until no one in the 99% paid any federal tax at all. Also, I suggest the federal government provide free health care insurance.
That would have the effect of narrowing the gap.
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RMM,
Is there any advantage to reducing standard income tax deductions year-to-year “until no one in the 99% paid any federal taxes at all” …as opposed to just eliminating federal taxes altogether in a single act of congress?
(As a side, how bizarre it is that no one in Congress seems to have the slightest understanding of monetary sovereignty? Some of them must understand, right?!)
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jKra,
Eliminating the income tax is a big step, so to maintain economic control, I recommend taking a series of small steps.
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Essentially agree. We are addressing the wrong issues and therefore misstating the design problem, which makes it difficult to articulate an appropriate design solution.
Contemporary mainstream economics is obsolete in a global (closed) economy in which availability of real resources, clean abundant energy in particular, is the overriding issue.
We need to be fashioning a global economics that recognizes humanity as a species struggling for survival and seeking to progress by adapt to an environment in flux. This design solution must provide a material life-support system for our species that is suitable for this age, not just this budgetary year, or the next quarterly report.
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The confusion on the JG is simple. Federally funded job in what is effectively a private sector activity places you in the public sector (public funds) until a profit-making private sector business takes you out of the JG pool (private funds).
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I think it does everyone a bit of a disservice to think of labor as anything but the business of selling ones time; thus for proper market health, workers and businesses looking to negotiate for that time should be on equal footing- neither party should be able to call on externalities to extort or otherwise force the other into making a bad deal, both should show a profit from the transaction. Alternately the time workers put into a company should be treated directly as an investment that with some combination of pay and equity being the short term dividends that they earn.
(On the other hand, for the average worker, the idea of “excessive” compensation is a bit dodgy, given that it’s too often used as a moralistic argument to trick the average worker into working at a loss, thus undermining the overall consumer market, rather than addressing real excesses where diminishing returns don’t provide sufficient feedback to justify that level of compensation.)
I stand more in the Basic Income Grant camp, both because it equalizes the relationship between buyers and sellers of labor (wages can be lower- the minimum wage can basically be discarded and factors outside of direct productive value, like family size, no longer have to be factored in on either side, while starvation can’t be used to extort workers into underselling themselves or otherwise prevent them from selling on a more equitable share of the profits they help generate) and because it does effectively create the buffer stock/employer of last resort that MMT wants from a job guarantee by effectively paying people to find a productive use for their time on their own terms; it effectively finishes monetizing domestic maintenance, volunteer work, artistic or entrepreneurial endeavors, and the like given that money is the only official way to formally acknowledge that such work adds value to society.
A very small number of people certainly may drop out and subsist on the bare minimum, but that will be vanishingly few overall, so long as paid work is profitable, because the motivation to do such work reinforces itself based on the perception that such work affords greater luxury, not based on the fear of deprivation. (Conversely it’s not social programs that discourage people from working, but economic malfunctions and poor implementations that make the effective cost of legal work greater than the revenue from it that lead to such cycles of economic decay)
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I like the “basic income” concept. A few devils in the details, but the overall idea is good, especially for a Monetarily Sovereign government.
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Mr. Mitchell,
Regarding the “controlling unemployment no longer controls inflation” claim you make above; if the unemployed are getting transfer payments/welfare then there is definitely an inflation that is being controlled, and pressure, by unemployment.
Do the unemployed in MS get unemployment benefits AND NOT PRODUCE ANYTHING?
If so, in my opinion, and that of Minsky’s, you will have inflationary pressures. If you haven’t you should read Chapter 11, “Inflation,” in Minsky’s “Stabilizing An Unstable Economy” (1986).
Apologies if you have already addressed this elsewhere; I haven’t been able to keep up with all your posts (apologies), or anyone else’s on the JG/ELR discussion ! Doin’ my best though. Thanks Mr Mitchell.
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jown,
I believe you are saying that federal spending causes inflation, which historically, is not true. See: https://rodgermmitchell.wordpress.com/2010/04/06/more-thoughts-on-inflation/
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Mr. Mitchell,
I am not holding, “across-the-board,” that federal spending causes inflation. LOLR actions/debt-deflation actions/bailouts, welfare, and military spending however, do tend to be inflationary.
Therefore, it is the type of spending that the government is doing and has to do with the ratio of the production consumer goods vs. the consumption of those consumer goods. This is one part of the Minsky piece you will find in Chapter 11. I really suggest you read it.
The point is that the “wrong type” of government spending is inflationary. This is not an “across-the-board” “catch all” claim re government spending. Please don’t get me wrong.
THE PRESENT ISSUE: again, in your MS paradigm, are the unemployed receiving welfare/transfer payments? Please answer this. Please.
Thank you.
p.s. after you have answered the issue of whether, in your MS paradigm, the unemployed are receiving transfer payments then please fully DEFEND your position.
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jown, I have seen no data to suggest that some types of government spending are inflationary and other types are not, nor do I see why that would be so. All federal spending comes from the same place, and once it enters the economy, it spreads throughout the economy. There is no spending that goes to one place and stays there or disappears.
Further, historical evidence shows that federal deficit spending has been at most a minimal cause of inflation, if at all. See: https://rodgermmitchell.wordpress.com/2010/04/06/more-thoughts-on-inflation/
The commonly used term, “transfer payments,” involves social RE-distribution, which is not appropriate for a Monetary Sovereign nation as there is no “RE” to the distribution. No one pays for federal spending.
If the states, counties and cities, which are monetarily non-sovereign, were to make the payments, they would be considered transfer payments.
That said, I suggest the unemployed receive unemployment compensation, and not be required to work for the money.
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Mr. Mitchell,
The data and theory and line of reasoning for “some types of government spending” as being more inflationary is in the 1986 Minsky book. If you are interested in this or find this necessary to acknowledge I again suggest you read, at least, Chapter 11 of Minsky’s Stabilizing An Unstable Economy.
Again, not taking anyone to task on deficit spending; I understand the benefits or possible “far off” liabilities of it. Please don’t get me wrong on this.
While “No one pays for federal spending” per se the overall fiscal posture is subject to “money” destruction/creation (i.e. “functional finance” considerations, roughly). You seem to be equivocating on administration vs. application here. (apologies if I am wrong; this is not my “bone of contention” with you though)
THE BONE: As to your stating that “I suggest the unemployed receive unemployment compensation, and not be required to work for the money”: this is inflationary and destabilizing as, of course, you are, among other things, subsidizing consumption without adding ANY consumption goods to offset that spending. This would be an example of “some types of government spending” being inflationary (above and in Minsky).
If you disagree on this specific point please defend your position as to how unemployment compensation is not inflationary. Again, please.
Thank you Mr. Mitchell.
As an aside: don’t you agree that LOLR actions “artificially” keep in place the level of spending at the time of “a crisis” as well as maintain corporate profits throughout that “crisis period”? This government “spending” is then maintaining a price level “in excess” then, true statement? (i.e. is inflationary)
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Albert Einstein, 1949: “I am convinced there is only one way to eliminate these grave evils, namely through the establishment of a socialist economy, accompanied by an educational system which would be oriented toward social goals. In such an economy, the means of production are owned by society itself and are utilized in a planned fashion. A planned economy, which adjusts production to the needs of the community, would distribute the work to be done among all those able to work and would guarantee a livelihood to every man, woman, and child.”
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That’s the communist, “From each according to his ability, to each according to his need,” Marxian philosophy. Einstein should have stuck to physics. Being smart in one science doesn’t guarantee brilliance in another. Communism is a proven loser.
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actually, guys, we already have a JG. it’s a open secret, way out in plain view. it’s a job in with the US Military. see, it didn’t originate with warren mosler–congress thought of it long ago!!
and if it’s not working very well in reducing unemployment (come to think it, that’s debatable actually), then that’s probably b/c not a whole lot of people want to risk employment at a job that could result in severe physical (and/or psychological) injury, not to mention death.
oh, which reminds me–this is the real reason behind Ron Paul’s desire to cut the military budget. though the unnecessary warfare is a problem for him, his biggest issue with it actually is that which he refers to as “Military Keynesianism.”
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