The solution to joblessness

This site is devoted to “Monetary Sovereignty (MS),” a sister to “Modern Monetary Theory (MMT).

Both explain that:

  1. Federal taxes do not fund federal spending
  2. The federal government neither needs nor uses tax dollars
  3. Neither the federal debt nor federal deficits are burdens on the government, future taxpayers or on the economy.
  4. And a great many other facts about federal finances.

However, we disagree dramatically on one important issue: What to do.

Isn’t it interesting that two groups can agree on all the underlying facts, yet come to radically different conclusions about what to do with those facts?

Last I heard, MMT economists still believe in something called “JG” (Jobs Guarantee), wherein the government will provide a job to anyone who wants a job. In several previous posts,  we have described why this not only is a bad idea, but a disastrously bad, economically naive idea.

You can see the details of the argument by clicking the above link.

Meanwhile, I just came across a very nice synopsis you may find interesting:

From Your Quora Digest

There are almost 6 million job openings in the US. Why are Trump supporters not getting these jobs instead of complaining there are no jobs available?

Because you’re not going to convince a guy whose family spent three generations on a manufacturing line in Detroit that he should uproot his family and move to Austin, sign up for community college classes on how to program Java, a take a job at half the pay and benefits he used to get.

He’s an American, too. He worked hard his whole life to achieve the American Dream, just like everybody said he would, and then “they” pulled the plug on him.

He doesn’t know who that ubiquitous “they” is. But Donald Trump does. And Trump says only he can fix it.

So they grab on, because they want to believe in something, in someone, who says he’s got the answers. Sadly, he doesn’t, and their hopes are going to be dashed once again.

By Robert Dixon

And there, in one short paragraph beginning with the word “Because,” Mr. Dixon shows you one of the fundamental problems with JG.

Unknowingly, JG parallels Donald Trump in recommending virtually the same, unrealistic solution to joblessness. They had it first, he came in later, and both are wrong.

Joblessness is not the problem; it is the symptom of the real problem: The wide Gap between the rich and the rest. Narrow the Gap, and unintentional joblessness will all but disappear — and the jobs will be better.

It is naive to address a symptom without treating the basic problem.  And that treatment is The Ten Steps to Prosperity (see below).

I respect MMT, because it tells the realities of federal finances and fights against the “Big Lie” (that federal taxes fund federal spending).

Now, if only I could convince them to get off the JG horse, and promote the 10 Steps.

If only.

Rodger Malcolm Mitchell
Monetary Sovereignty



The single most important problems in economics involve the excessive income/wealth/power Gaps between the rich and the rest.

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of The Ten Steps To Prosperity can narrow the Gaps:

Ten Steps To Prosperity:
1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
This article addresses the questions:
*Does the economy benefit when the rich afford better health care than the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE AN ANNUAL ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA, AND/OR EVERY STATE, A PER CAPITA ECONOMIC BONUS (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:

Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012

Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONEFive reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefiting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
Corporations themselves exist only as legalities. They don’t pay taxes or pay for anything else. They are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the government (the later having no use for those dollars).
Any tax on corporations reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all corporate taxes come around and reappear as deductions from your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and corporate taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.

Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.



10 thoughts on “The solution to joblessness

  1. The “jobs guarantee” cultists do not understand that there is a difference between

    [1] Wanting everyone to have a decent quality of life


    [2] Wanting everyone to work.

    The “jobs guarantee” cultists also refuse to hear that the “Mincome” experiment in Canada proved that people who receive a monthly stipend work more, not less. When people are relieved of financial stresses, they tend to become more ambitious and enterprising. They start dreaming big. They start talking to their neighbors. They discuss pooling their resources to create commercial co-ops. They become more assertive in looking for jobs, knowing they will not be forced to take the first awful job they find. They enjoy a reduction in myriad social ills such as crime, sickness, substance abuse, spousal abuse, and so on.

    All of this is rejected by the “jobs guarantee” cultists. They don’t want average people to become ambitious and enterprising like the rich. They want average people to toil. They think that what’s important is not a person’s quality of life, but that he toils.

    Slaves on plantations had a jobs guarantee. Did that make them happier?

    But…suppose we agree that most people would be happier if jobs were more plentiful. In that case, the question is, “How do we create more jobs?” The “jobs guarantee” solution (in its myriad, vague, and protean forms) is unworkable and unnecessary.

    Instead, why not insist that the U.S. government create more money for projects that create jobs, such as national infrastructure repair? Why not have programs like the WPA of the 1930s? The possibilities are endless.

    The reason why the “jobs guarantee” cult continues is that it is unworkable in the real world Therefore it promotes endless chatter, like debating how many angels can dance on the head of a pin.


    1. elizabethharris001 – Apparently, you are not familiar with the extent to which the JG concept has gone far beyond vague and protean. In fact the WPA kind of jobs that you promote are exactly the kind that are included in the JG concept, as well as Civilian Conservation Corps types of jobs and paid jobs for artists and writers allowing them to continue to do what they are already doing.

      You are also mischaracterizing the JG as requiring people to work. The idea is to offer a job to all those who are able AND willing to work. Other provisions would be necessary for those who are unable or unwilling.

      Your ad hominem attacks and your straw-manning don’t help your argument, either.


  2. Rodger – I disagree with your analysis of the MMT Jobs Guarantee, but today I only want to address one point you made in the post. Under a JG, particularly as elucidated by Pavlina Tcherneva (sp?), no one would need to uproot their family and move in order to take advantage of the JG. The determination of what kind of work would be offered is to be made on a local basis, taking into account the needs of the local community. As an example, in northern cities, a lot of people could be employed weatherproofing homes to reduce energy consumption. Communities with a high proportion of elderly may have more jobs provided in elder care work.


    1. Having a job is not an end. It is one, small, partial solution to the problem of the widening Gap between the world’s and America’s rich and the rest, which in itself bears on the fundamental problem of human well-being.

      John, it is true that JG might, in specific cases, provide some people with satisfying jobs (however “satisfying” may be defined), but to understand all the reasons why JG is an impractical solution to the Gap, requires reading the link mentioned in the post.

      That is why I referenced the link.

      Unfortunately, MMT has focused on, and tied itself to, “The Center for Full Employment and Price Stability” at UMKC, which treats full employment and price stability as the solutions to economic misfortune.

      If the ultimate goal is the well-being of the citizenry, “full employment” ranks quite low as a means of attaining that goal, and “price stability” essentially is a meaningless description of an arbitrary concept.

      The notion of the federal government acting as Employer of Last Resort (the former name for JG), or as national employment agency is ludicrous, and a perfect example of academics ignoring business reality.

      There are plenty of physical jobs available of the “weatherproofing homes or caring for the elderly” type. Would you yourself find them attractive?

      There is, in fact, no shortage of jobs. Look in your local paper. Millions of jobs. So why is there unemployment?

      Think carefully before you answer that question. List all the reasons not everyone has a job?

      I won’t go into further detail here, since I have written so extensively about these ideas in the previous posts.

      After you have read them, we can talk further.


      1. Of course a JG is only a small part of the solution to the problem of the Gap. I have yet to see any of the MMT academics say that your 10 points are not valid (except for #3). The other nine are all things that can be accomplished once there is recognition and acceptance of the power of our sovereign fiat and the workings of our monetary system (ending the Big Lie).

        There are many reasons why there is unemployment as you have listed, but the overriding reason is a lack of aggregate demand. Your nine undisputed points would go a long way to increasing demand which would lead to additional hiring by the private sector to produce the additional goods and services demanded. That’s why the original label for the JG was Employer of Last Resort, meaning after private enterprise has hired all the additional workers it needs.

        I have been reading your posts for several years, and have read the ones you link to in your third point….. And I just skimmed them again to make sure I understood them. You are making some assumptions that may not be valid now. I don’t remember how detailed the JG proposals were in 2012, but the ones I have seen recently answer most of your objections about a huge bureaucracy, wage levels, the types of jobs, and others.

        Again, I see the JG as a small but important part of a program that starts with your other nine points to increase aggregate demand and therefore employment.

        I suspect we are going to have to agree to disagree. And, that’s fine with me. Let’s concentrate on ending the Big Lie and getting our government to use its sovereign fiat to provide the public goods and services that private enterprise refuses to provide because they can’t profit from them. And put your other nine points into practice. Then we can figure out whether a JG or Basic Income Guarantee (BIG) works better.

        L’shanah Tova.


        1. “I have yet to see any of the MMT academics say that your 10 points are not valid (except for #3).”

          What is wrong with #3?

          Why do JG cultists loathe the idea of average Americans getting a “free lunch” like rich people get?

          Why do they think that only by working for a salary can average people have a high quality of life?

          Why can’t we have Universal Social Security, or something like Canada’s Mincome program?


          1. Why do Basic Income Guarantee (BIG) cultists think that offering a job to everyone who is willing and able to work is such a bad thing? Research has shown that working at a job is, for most people, a very important contributor to their psychological health and well-being.

            You’ve almost got enough straw men to field a basketball team.


          2. “Cultists”? Puleeze. UMKC has a “Center for Full Employment and Price Stability” just for cultists.

            The Chicago Tribune’s “Help Wanted” pages already offer jobs to anyone willing and able to work. Take a look at those jobs and count how many you personally would want and are qualified for.

            Now, you expect a government bureaucrat to find you a job you want and are qualified to do??

            But wait, do you know what those “full employment” jobs will pay? MMT says, “minimum wage,” so as not to compete with the private sector.

            That’s the MMT solution to the Gap: A bunch of minimum wage jobs no one wants and for which no one is qualified.



  3. John, you said, “a JG is only a small part of the solution to the problem of the Gap.”

    The problem is, it’s not a solution. It’s a digression.

    With MMT focused on this digression, and even having a “Center for Full Employment and Price Stability,” it is clear they have lost sight of the problem and of the solution.

    They arbitrarily have decided that the primary solution to our economic ills is full employment and price stability.

    So there they go, expending valuable time, energy, and money in that direction, which you believe might be a small part of the solution, thereby neglecting the rest of the Ten Steps.

    Imagine the most important health research organization in America focused on a “Center for D Vitamin Tablets.”


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