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It takes only two things to keep people in chains: The ignorance of the oppressed and the treachery of their leaders..
If ever you have wondered about the differences between Modern Monetary Theory (MMT) and Monetary Sovereignty (MS), the title question provides a good clue.
While MMT and MS are built on the same factual foundation — i.e. federal taxes do not fund federal spending — the two economic philosophies diverge by what they suggest be done with that information.
MMT believes there is an unemployment problem while MS believes the corresponding problem actually is a lack of money.
Thus, MMT proposes to solve the unemployment problem via a Jobs Guarantee program in which the federal government guarantees a job to anyone who wants one.
MS, by contrast, proposes the Ten Steps to Prosperity, with most of the Steps directly or indirectly addressing the lack-of-money problem without the need for the federal government to provide jobs.
Interestingly, “MMTers” generally subscribe to a minimum wage, which clearly is a money problem, while the objections to a minimum wage are the potential for it to cause unemployment.
Thus, MMT seems to acknowledge that unemployment really is a money problem, but insists the money problem must be solved with jobs.
This all came to mind when I read a few excerpts from the following article referencing the Center for American Progress:
Toward a Jobs Guarantee at the Center for American Progress (!)
Posted on May 17, 2017 by Lambert Strether
How would the JG work from the perspective of a working person (not an owner?) Or from the perspective of the millions of permanently disemployed? The MMT Primer:
If you are involuntarily unemployed today (or are stuck with a part-time job when you really want to work full time) you only have three choices:
1. Employ yourself (create your own business—something that usually goes up in recessions although most of these businesses fail)
2. Convince an employer to hire you, adding to the firm’s workforce
3. Convince an employer to replace an existing worker, hiring you
It is the “dogs and bones” problem: if you bury 9 bones and send 10 dogs out to go bone-hunting you know at least one dog will come back “empty mouthed”. You can take that dog and teach her lots of new tricks in bone-finding, but if you bury only 9 bones, again, some unlucky dog comes back without a bone.
The only solution is to provide a 10th bone. That is what the JG does: it ensures a bone for every dog that wants to hunt.
It expands the options to include:
There is a “residual” employer who will always provide a job to anyone who shows up ready and willing to work.
It expands choice. If you want to work and exhaust the first 3 alternatives listed above, there is a 4th: the JG.
MMT sees the problem as not just “unemployment,” but “involuntary unemployment,” so naturally its solution becomes “employment.” They’ve indicated the solution by their statement of the problem.
But why is the problem “involuntary unemployment” rather than simply lack of money? Here is the answer given in the article:
Research by Pavlina Tcherneva and Rania Antonopoulos indicates that when asked, most people want to work.
Studying how job guarantees affect women in poor countries, they find the programs are popular largely because they recognize—and more fairly distribute and compensate—all the child- and elder care that is now often performed by women for free (out of love or duty), off the books, or not at all.
Enough of this crap jobs at crap wages malarky!
See if you can follow the “logic:” People want to work. The proof is that women in poor countries now work for free, but would prefer to work for money. Huh?
And as for the last sentence regarding “crap jobs at crap wages,” that is exactly what JG promises. How could it be otherwise?
Before you try to answer that question, here are a few questions I have asked JG proponents, and never seem to get consistent answers.
(As you investigate JG, you’ll find it means different things to different people, and no sooner do you object to one feature, they change the features. It’s almost like objecting to auto pollution and being told the subject was bicycles, but when you object to bicycling dangers, you are told the subject is autos.)
Here are the questions:
- Who exactly would be the employer: The federal government or the private sector?
- If it’s the federal government, exactly which jobs would it provide, and where in the country would it provide them?
- Who would create and supervise those jobs? How would JG be different from current federal employment?
- If the private sector is to supply the jobs, how would the government find those jobs in every town, all over the country?
- Would JG employees take jobs from non-JG employees? What would be the qualifications for a JG employer?
- Why do local newspapers and online job services advertise hundreds of thousands of jobs, if the problem JG supposedly solves is a shortage of jobs? Why aren’t those jobs filled?
- What are the criteria to remain a JG employee and who would supervise those criteria? Who would do the hiring all over the country?
- What would JG employees be paid, and how would that compare with non-JG employees?
- Who would determine raises, promotions, and firings?
- Who would handle employee complaints? Would there be unions?
If you feel you know the answers to those questions, please add them to the Comments section so we all can learn.
Now, we return to the elephant in the room: The notion that people want to work, or more accurately, people prefer to work vs. not work.
That “10th bone” to which the author referred (above) needn’t be a job. It just as well could be an alternative source of income.
I don’t work for a living. Most of my friends don’t either. And none of us wants to. We prefer not working. I believe this desire not to work is common.
So why is the problem stated as “involuntary unemployment,” rather than “involuntary lack of money”?
Unknowingly(?), MMT has based its JG on a kind of righteousness, even a spiritualness that says labor is noble and virtuous, while idleness is a deadly sin (sloth). By that idea, anyone who prefers to receive money while not working is a sinner, a “taker.”
It is a belief promulgated, ironically, by the people who most indulge in idleness: The very rich.
The lifestyles of the rich and famous are anything but “work,” unless you consider clipping coupons, receiving dividends, sailing yachts to sunny islands and being waited upon hand and foot by faux-adoring sycophants, to be “work.”
Yes, many people enjoy their jobs, just as they enjoy playing a backyard game of volleyball, but those jobs probably would not be the jobs offered by JG.
The reality is that the sole purpose of JG is to provide a “legitimate” source of money, not to provide inner joy and satisfaction. But that purpose can better be satisfied via gift vs. job slavery.
Why then, have the rich implanted the Auschwitzian idea that “arbeit macht frei” (work sets you free)? Because that is how they maintain a ready supply of workers — especially lower-wage workers — to the factories and businesses owned by the rich.
Get people to believe that they cannot be “good” unless they work, and they will work. Faith is the most powerful of motivators.
Implant the belief that the poor are lazy sinners, who do not deserve the fabulous lives enjoyed by the rich, and they will claim to want work. But few people awaken looking forward to an emotionally empty day, forced endlessly to repeat “Want fries with that?” rather than kicking sand on a beach.
The idea that people cannot be satisfied with their lives unless they labor, is utter nonsense, a notion my friends and contemporaries, and indeed, many millions of people disprove every day.
Not only do the rich want a ready source of laborers, they want to distance themselves from the poor (aka Gap Psychology), and what better way than to contrast the life of the working poor with that of the leisure rich?
Institute the MS Ten Steps to Prosperity, and there will be neither demand for nor need for the emotionally cruel, impossible-to-execute, MMT Jobs Guarantee — crap jobs at crap wages for those who have no good choices.
Rodger Malcolm Mitchell
The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.
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.
2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )
This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can 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 A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Economic Bonus)) 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 EVERYONE Five 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 benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
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.
6. ELIMINATE FEDERAL TAXES ON BUSINESS
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce 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 business 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.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
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.
The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.
12 thoughts on “Would you rather have a job or equally-paying unemployment?”
You need both. It is becoming increasingly difficult to find enough jobs considering the trend to automation etc is reducing the need for the economy to have full employment to function. So job guarantees will in future involve make work choices and these needs must be through federal MS governments. The private sector is not going to stuff its profits with make work jobs. It’s the exact opposite of their trend, to do more with less manpower.
It doesn’t mean boondoggles or feather bedding jobs but perforce many will be menial, like picking up rubbish, but that suits some people.
I like the idea of a UBI, paid to workers and everyone else, say over 16. The MS government can afford it and in any case its not a welfare cost as conservatives would put it. It is a benefit, a contribution to the economy. People with money will spend it into the economy, so it will grow. And it takes away the stresses of seeking suitable jobs that don’t exist. If you want to be an artist, for example, you can live with a UBI, paying a living wage, or stipend.
Rooseveldt is on record as saying if a job didn’t pay a living wage the job was not worth supporting.
MMT doesn’t realize they’re up against evolution by insisting people work voluntarily. People want more than just work; they want meaningful work. The old days of take anything and be glad are over with. Also, growing automation is unstoppable and so too must be growing unemployment.
We will have to find a way to make it affordable to not work for a living, but to be paid for what really interests you. If people were paid only for needed and necessary production and services, most jobs would disappear, i.e., doll makers, political hacks, cartoonists, etc.
Automation ultimately is about freeing up the human mind to think about solving real problems, and not for a clever way to just make money.
“Also, growing automation is unstoppable and so too must be growing unemployment.”
But unemployment rates are not relatively high. And if you don’t think the unemployment rate calculation is accurate, that affects the nominal rate of unemployment, but doesn’t explain why those rates have been falling.
Good Article — you defend your points eloquently. You can add this as #11 to your Jobs Guarantee questions: What would happen if a worker was injured on the job? Would they receive Workers’ Compensation or Disability Insurance?
It’s possible to have BOTH a lack of jobs that people can do AND a lack of skilled workers for jobs that need to be done. It’s also possible to have lots of jobs that don’t really need doing and lots of people doing those. For example, do we really need more financial advisors when nearly all of them fail to beat the dumb semi-mechanical S&P index over time? And some of these “money managers” make millions, even billions.
On the other side, we in NYC have over 60,000 homeless people. There are parks that are nearly unusable due to homeless encampments. We need more housing. We need more people to building houses (really, apartment buildings), to refurbish apartments, etc. Yet this need goes unfulfilled. Why? Leaving aside the twisted economic tax policies that reward land hoarding and speculation instead of building, it seems clear there is a REAL need – as opposed to the term “economic desire” which seems to be based on whether someone has the money to pay for something – for new housing. You could say it’s a money issue not a jobs issue, but money alone won’t get the apts built/refurbished. People have to work to provide this, and they might not work as much if they were getting almost as much for not building/refurbishing apts. as they were for doing that.
Right. The key words are in the last sentence: “Might not,” and “almost as much.” Think about it.
“The Trump administration prepared talking points for congressional Republicans, stating the “budget strives to replace dependency with the dignity of work through welfare reform efforts.”
Ah yes, the “dignity” of work. Just what the rich recommend for the rest of us. But they will help us have “dignity” by cutting social programs (aka “welfare reform.”)
When you drag your tired body to your job, aren’t you glad to feel dignified?
I don’t know why MMT doesn’t just advocate larger unemployment insurance payments. We could even have the federal government fund it instead of the states. The payments would be, say, $1,000 per week for the entirety of each person’s unemployment. The economy would always be in a boom state.
Yesterday I cam across an interesting piece by David Graeber. I think what he says complicates support for a JG;
And this on a UBI;
He says that work today is designed to make you miserable etc.
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Yes, in the JG (MMT) world, people need to work, because people who do not work are immoral — unless they are rich, in which case it is perfectly fine not to work.
So, MMT wants to give people value by giving them jobs — any old jobs — rather than giving them money, seemingly because if you give people money, you make them worthless, but if you give them jobs — especially crap jobs — you give them value.
MS and MMT begin with the same facts, and then go in separate directions. I can understand people like Randy Wray and other professors at UMKC thinking that way. They are professors.
But I am surprised if Warren Mosler, who is a businessman, thinks that work in of itself, is necessary for humanity.
Or maybe, Warren is so rich he feels that poor people must work while rich people are entitled to do nothing — the ultimate entitlement.
do you concur with David’s thesis about the value of work today and what he describes as bullshit jobs? I’m not as sure as you that Wray etc see a UBI the way we do. Bill is OK for those who choose poverty he says. He definitely is no fan of a UBI.
I already have discussed the impossibility of implementing a nationwide JG, with anything other than “bullshit jobs.” (https://mythfighter.com/2014/01/25/the-jg-jobs-guarantee-vs-the-gi-guaranteed-income-vs-the-eb/)
Bill Mitchell’s bottom line: A Basic Income Guarantee leads to shortages of labor, goods, and services, which will lead to inflation.
It is an argument against all social spending, though he seems not to recognize it.
Inflation is a function of the Demand/Supply for goods and serves vs. the Demand/Supply for money. His concern addresses the former and omits the latter, particularly the Demand for money, which is controlled via interest rate control.).
(MMT believes interest rate increases actually cause inflation by increasing costs, a hypothesis the Fed puts to lie every day, as it successfully controls inflation.)
Further, Mitchell forgets about Productivity, an increasingly serious situation, particularly with the advent of Artificial Intelligence.
Finally, poverty is an imbalance between income and consumption costs. The Ten Steps to Prosperity (https://mythfighter.com/2014/11/09/a-brief-reference-what-you-need-to-know-when-discussing-economics/) addresses not only income, but more importantly, consumption costs.
Bill is one of those who believes that poor people are slugs, and if you bring them above the poverty line, they will be satisfied with that level and fail to work. I suggest he is wrong.
For all of the above reasons, I reject his thesis.
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