It takes only two things to keep people in chains:
The ignorance of the oppressed
and the treachery of their leaders.
Modern Monetary Theory (MMT) is a close cousin to Monetary Sovereignty (MS), the theory espoused on this site.
Both recognize the fact that federal finances are unlike state and local government finances. The federal government uniquely has a sovereign currency, the dollar, which it can create endlessly. Thus, federal spending is not funded by taxes or borrowing.
Fundamentally, MMT and MS are identical, but one important detail concealed by the devil has to do with MMT’s “Job Guarantee” (JG).
We have discussed JG many times, and continue to do so, because MMTers claim it is one of the most important parts of MMT.
They even have established a Center for Full Employment and Price Stability at the University of Missouri, Kansas City.
Here are excerpts from an article in The Nation:
The Job Guarantee: A Government Plan for Full Employment
There is no economic demand more urgent than putting Americans back to work. The government can do this by creating an “employer of last resort” program.
The Nation, By L. Randall Wray, June 8, 2011
There is no economic policy more important than job creation.
JG is a scheme only a university economist could love.
The idea is this: A federal government bureaucrat will create (or find in the public sector; that never has been clear) a job for anyone who wants a minimum wage job.
MMT refers to such job seekers as “buffer stock” or a “pool of employable labor.”
To be part of “buffer stock” or the “pool”:
- You will accept any minimum wage job you are offered, wherever in America it may be.
- You are qualified for any minimum wage job you are offered.
- Or, a federal government bureaucrat has the ability to find you the minimum wage job you want, and for which you are qualified, in a location convenient to where you live (even if you live in a small town in rural America).
- You prefer to work a minimum wage job, rather than not work, because you find such labor to be more emotionally rewarding than not working. (This doesn’t apply to wealthy people, of course.)
The whole thing is based on the MMT economist’s belief that the primary goal of you “buffer stock,” “pool employables” (sometimes known as “people”) is to labor, or if that isn’t your primary goal, it morally should be. Apparently, you cannot be happy unless you have some minimum wage job, somewhere.
If the MMT professors merely would open a window in their ivory tower, they might see this:
Why Can’t the Middle Class Find Good Jobs if There Are So Many Job Openings?
Money & Career Cheat Sheet, Sam Becker, October 07, 2017
Job vacancies and job openings are exactly what they sound like — open jobs waiting to be filled. These positions represent needs from employers, and as such, employers advertise them as jobs to be filled.
As mentioned, these openings are at the highest levels on record, which goes back to the year 2000 when the government started keeping track.
Bureau of Labor Statistics, show there are more than 6 million job vacancies in the U.S. economy. Why are employers unwilling to dip into the pool of 6.9 million unemployed people?
The answer, it seems, is a “skills mismatch.”
What does that mean? Those unemployed Americans out there don’t have the required skills or experience to be successful in the open positions.
A more obvious issue is the fact that many employers are reluctant to pay workers more.
Labor, like any other commodity, is subject to the rules of the free market. When there’s a shortage (as there appears to be right now), prices go up. But businesses don’t want to increase spending, and as a result they are allowing positions to go unfilled.
It’s not merely a matter of not being able to find quality employees. It’s that businesses are reluctant to pay more for them.
Pause for a moment to consider what you have read: There are millions of jobs available, but unemployed Americans don’t have the the skills to do them and employers are reluctant to pay what applicants want.
This doesn’t mean no one in America can do the job. It means:
Convenient to this location, there are no people who know about the job, can do the job, or who want the job, or who want the pay the job offers.
There are five crucial faults — job location, job awareness, job ability, job desire, pay acceptance — that separate JG from reality.
If the unemployed are looked at as mere “buffer stock,” these may be non-issues, but if they are considered to be human beings, these are killer issues. MMT economists, with their charts and graphs, fail to understand that.
If you have millions of workers who don’t have the skills needed to fill your positions, one option is to train them. But that’s something fewer and fewer businesses are offering these days.
More jobs than ever require college degrees, and many entry-level positions expect you to come in with some sort of certification or experience. This, of course, is at odds with the “entry-level” designation.
The fulcrum point of all of this is many employers simply aren’t offering attractive enough compensation packages to get the people they want. Yes, there’s a skills gap out there. But even that can be solved with high enough incentives.
How does the above square with MMT’s desire to pay minimum wage? Of course, it doesn’t.
That brings us to another (issue): The South and Midwest are where the most open jobs are.
And it’s not just areas of the nation. It’s not even which states have jobs. It’s not even which cities. It’s a question of transportation cost and time. Most people will not accept a job that is much more than an hour a way and/or costly to reach.
Someone living in a northern suburb of, for instance, Chicago, would not consider a job in most of the Chicago business area — especially for a minimum wage job. Too far away and too costly to reach.
When employers can’t get people to work for the wages they’re offering, what are they supposed to do? The answer is to offer higher wages — and keep raising them until people start to bite.
Or mechanize, so live employment is less necessary. Machines are a tempting option: No absences, no complaints, no labor problems, no errors, no salaries, no benefits, no lunch breaks.
A lot of employers are willing to let the 6 million unfilled jobs sit there rather than offer higher wages to fill them. That is why we have a record number of job vacancies and why we have millions of unemployed people who aren’t interested, or, as employers say, aren’t qualified.
MMT’s view of people as eager pegs to be dropped into holes, is at odds with reality.
And here is another reality: The future is not more working hours, but fewer.
The goal for most people is to be able to do what they want, when they want — to live a happy life.
For some, this means being productive. For others it means reading, vacationing, being healthy, having friends, raising children, etc.
To each his own.
MMT’s professors repeatedly have stated, “There is no economic policy more important than job creation.” They are wrong. Slaves in the South were fully employed. They were not happy.
People want happy lives. Minimum wage jobs are not the road to happy lives. There’s an old line, “No one ever says, ‘I wish I had spent more time in the office.'” Working for money seldom is a goal. The real goal is money and what money can buy.
Ask any retired person.
Monetary Sovereignty says “The most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.”
While narrowing the Gap between the rich and the rest cannot be accomplished by JG’s minimum wage jobs, it can be accomplished, beginning with Monetary Sovereignty’s Ten Steps to Prosperity (below).
Rodger Malcolm Mitchell
Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell
The 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.