One more reason why the MMT Jobs Guarantee is a con job

Image result for ben bernanke using a computerBen Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”

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The previous post, The MMT Jobs Guarantee con job gave several reasons why JG is unworkable, and in fact, will hinder employment. For example:

  1. Jobs are not hard to find. There are millions of jobs available.

    May 8, 2018: U.S. employers post record high 6.6 million open jobs
    By Christopher A. Rugaber Associated Press

    U.S. employers advertised 6.6 million open jobs in March, the most on records dating back to December 2000, suggesting businesses want to staff up to meet strong demand.

    Job openings rise to record high as employers battle for qualified workers
    The number of U.S. job openings increased by 472,000 to a seasonally adjusted 6.6 million in March, a record high, the Labor Department reported Tuesday. The latest statistics in the monthly Job Openings and Labor Turnover Survey suggested that as hiring has improved, employers have found it increasingly difficult to find qualified workers.

    A job is not hard to find. The right job is hard to find. The job in the right location — the job you want to do and are qualified to do — that job is hard to find.

    Image result for man holding a sign on a corner
    Congratulations on your JG job.

     

    JG will not find the right job for you. At best, it might find a job, take it or leave it.

  2. Most people do not work for the joy of labor. Most people work for money, or more accurately, for financial benefits.
    .
    Continuing the above article:
    .

    The unemployment rate is at a 17-year low, but stagnant wages, chronic underemployment and growing inequality are leading more Americans to take on so-called side hustles.

    Some want to supplement their incomes. Others are just trying to eke out a living. Nearly 1 in 4 Americans now earn money from the digital “platform economy,” according to the Pew Research Center.

    Most of that work is for domestic tasks, such as housecleaning and repairs, or driving for companies such as Uber.

    By moving into shops and cafes, on-demand work stands to reshape a broader slice of the U.S. economy. There are implications for low-wage workers, too, as a new class of employers fills its labor pool with on-call temp workers.

    Retail and hospitality — which accounts for 20 percent of U.S. positions, according to the Bureau of Labor Statistics — is the on-ramp for many employees to better jobs.

    But the sector is also pinched by rising minimum wages and health-care costs, and employers are seeking more flexible work arrangements that respond to the ebbs and flows of their businesses.

    But labor experts say companies such as Snag Work could set a dangerous precedent. Employers are already wary of hiring full-time employees because of overtime and health-care costs, they say, and having a pool of potential gig workers at the ready could make matters worse for those seeking the stability, benefits and protections that come with full-time work.

    Despite JG beliefs, laboring for money neither is inherently more moral or emotionally more satisfying than receiving money without labor.

    Many retired people and wealthy people tend to be quite satisfied with their lives, while not having a paying job.

You can see other reasons why JG is unworkable by visiting The MMT Jobs Guarantee con job, but there is one additional reason, not mentioned in the prior post.

What becomes of JG job searchers, creators, supervisors and trainers when jobs are plentiful vs. when jobs are scarce?

The reason relates to the current situation where unemployment is low, and available jobs are plentiful. This is not a permanent or even a long-term situation.

Unemployment and jobs availability change markedly through time.

But by any measure, implementing JG would require a large federal bureaucracy, and depending on the degree to which state and local governments are involved, large state and local bureaucracies.

These bureaucrats not only would require significant training themselves, but any private job searchers, job creators and job trainers would need to be hired and trained.

So the question becomes:

3. What would happen to the thousands of people hired to implement JG during those periods, like today, when JG scarcely is needed, if at all?

Would these thousands of people be retained during slack periods, to twiddle their thumbs? Or would they be fired, which later would require another round of hiring and training?

And if the latter, wouldn’t this new round of hiring and training always be behind the curve, so that many months or years pass before the program once again, is up and running?

If you have had occasion to debate with a JG adherent, you probably have discovered there are an infinite number of JG’s. For each objection, a new JG is invented, until the only common element is the words “Jobs Guarantee.”

In my personal experience discussing and debating JG, I’ve been told the program involves one or more of:

–federal jobs, local government jobs, and/or private jobs
–JG implementation government or private employees, or no program employees
–supplementary Basic Income payments
–minimum wage (about $7 hour) or enhanced minimum wage of $15 hour
–prior job training by program trainers, or on-the-job training by the employee’s supervisors
–Benefits like vacations, health insurance, prenatal programs, education, special clothing, IRAs
–Part time, temporary, or full-time jobs

I also have been told JG employees would not compete with or replace existing employees, though I cannot imagine how that would work.

4. Finally, the private sector already is doing JG, far better than the government would. Continuing with the article:

Snag Work and other new platforms are the go-betweens, allowing users to pick up open shifts from retailers, restaurants and hotels that have gaps in their schedules.

Wonolo, which bills itself as 40 percent cheaper than traditional temporary staffing companies, counts Coca-Cola, McDonald’s and Papa John’s Pizza among its clients. Other start-ups include AllWork and Coople.

Snag Work, which recently expanded to Washington, D.C., says the arrangements are mutually beneficial for cash-strapped workers and understaffed businesses. “Workers now have lots of options to pick up shifts — Instacart, TaskRabbit, Postmates, Lyft,” said Peter Harrison, chief executive of Snag, the parent company of Snag Work, which says it has 2.1 million active users.

“But for small businesses, there are not ways for them to participate in this revolution. They’re suffering for it because they’re losing workers to these other platforms.”

That’s where Snag Work comes in, he says. This is how it works: Interested workers sign up online and are vetted by Snag Work via Skype interviews and background checks. They can search for open shifts — which typically pay $10 to $15 an hour — on the company’s app and sign up for the ones they’re interested in.

They clock in and clock out and are paid through Snag Work’s online platform. A spokeswoman for Snag Work said the company provides workers’ compensation coverage to all workers.

The federal government should encourage and regulate businesses like Snag Work, rather than create a competitive, job-hunting/ job-creating business of its own:

Temporary workers also have fewer rights. They can’t unionize and don’t have the same legal protections against workplace harassment that other employees do, according to Erin Johansson, research director at Jobs With Justice, a nonprofit that advocates for workers’ rights.

State legislatures across the country are considering bills that would legally classify gig workers as independent contractors, stripping them of a number of workplace rights and protections.

Until now, the distinction between on-demand employee and contractor has been largely unclear, as evidenced by a number of lawsuits alleging that companies such as Uber, Grubhub and Handy are incorrectly classifying their workers as independent contractors.

Stallings, the full-time gig worker, said he regularly picks up dishwashing shifts at the Five Guys near Virginia Commonwealth University.

“The other workers get a little upset when they hear I’m making more than minimum wage,” Stallings said. “You’ll hear them talk about how they’re struggling to keep full-time hours, and then I come in to wash dishes, and at $10 an hour, am making almost as much as the cooks are.”

In summary, JG is a complex, convoluted, naive program created by people who seem not to understand the realities of job hunting. So they assume they simply can supply A JOB, and anyone unemployed will be delighted to have it.

Think of how much easier, faster and more beneficial it would be simply to:

Step #1. Eliminate FICA, then
Step #2. Expand Medicare to cover everyone, then
Step #3. Give Social Security to everyone, then
Step #4. Provide free education for everyone who wants it, then . . .

You get the idea. I’m suggesting the 10 Steps to Prosperity (below) — good at all times for all economic situations.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

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The most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-lesses.

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.

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MONETARY SOVEREIGNTY

 

12 thoughts on “One more reason why the MMT Jobs Guarantee is a con job

  1. Rodger,

    Maybe the bigger problem is the existence of money. It’s such a pain. Inflation seems to eat away at progressive change. Eventually, the federal budget will be in the tens of trillions of dollars. It’s so silly-sounding.

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  2. Agree, Rodger.
    .
    Uncle Sam is highly competent at writing checks, but has a mixed track record at doing other things. I suggest that Uncle Sam should maintain a healthy economy by doing what it does best — writing checks!
    .
    This could be something along the lines of your 10 point program, or the Abba Lerner / C.H. Douglas proposal to give every citizen a “social credit” calculated to keep the economy at full employment, or Henry Wallace’s proposal to release just enough federal grant money each quarter to maintain full employment, or Nixon’s “revenue sharing” with the states. Just write checks until the economy is humming.
    .
    My first choice would be to write checks only to the people who need checks. My second choice would be to write checks to every citizen. My third choice would be to write checks to states, local governments, or government contractors with the hope that some of those dollars would trickle down to the people who need them.
    .
    You and I are hurting a lot of MMT feelings by pointing out the obvious flaws of their beloved JG that they just know would be best for poor people even though MMTers themselves have zero intention of working in a JG.

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      1. Oh yeah. They attack you personally, or they suggest that you have not read the JG literature. It couldn’t possibly be that you have real world experience and they don’t.

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  3. The negative income tax, universal basic income, social dividend, by whatever label seems appropriate has some pluses. If it was just about the level of a federal minimum wage 40 hr week job, and universal health care for all, then all employers would be free of having to worry about the minimum wage and providing health benefits. If someone wanted to work at a part time job with a pay that is possibly lower than the minimum wage, it would be ok because the worker is already getting the minimum wage and health care just for waking up in the morning. Also, the majority of people like to do something, and if they do, they earn more income, and the combination of a basic income and a decent private sector job market (with, of course, the money supply being kept at a good level), would help reduce poverty greatly. However, there is no doubt that part of this equation should be the public infrastructure issue. That alone would be a ”job guarantee” for at least a decade. After much of the work is done, and as automation advances, then a basic income, and a government sector that does what needs to be done (not creating work just to put people to work) and a good entrepreneur climate should be a good formula for real beneficial economic performance.

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  4. Rodger,
    I like almost all of your posts but I think your attack on the JG is unfair and short-sighted, unimaginative.

    There is already a vast federal and state Nanny State bureaucracy to deal with the effects of unemployment and poverty. That is, crime, cops, prison officials, judges, probation, social services to encourage people to search for jobs, etc. I can imagine a JG shifting people from ethically difficult and uncomfortable positions at public prisons and private prisons and social services counseling and monitoring to helping implement JG work.

    I don’t imagine a JG would eliminate crime, but I do imagine that people who AT LAST have an opportunity and incentive to go to work — they could be volunteering at Habitat for Humanity but you don’t get paid — is helpful to keep people off the streets and out of trouble. Yes, social management, but less so and less punitive than current systems.

    JG is designed to be voluntary and to incentivize work over cash benefits, without the fear of losing Medicaid because you took a temp job.

    JG is designed to PULL people into private sector jobs, to help the private sector find viable experienced basic labor, AND to help them hire people and expand by increasing Demand in tandem with the supply of Labor to fill that Demand.

    I just learned about a New Deal era proposal to make 30 hours = Full Time. That was defeated by the New Deal, but some companies implemented it anyhow.

    We have cities and states asking for *volunteers* to work on public cleanup projects and other projects, because local govts lack tax revenue to actually hire people. Hospitals even use elderly volunteers at their front desk.

    Without explaining, I can understand why BIG would be inflationary. In the past, govt and experts determined that a cash allocation handout program which would be large enough to really eliminate poverty without stubborn pockets would inherently be inflationary, which would quickly eat up the gains of the anti-poverty program.

    I think you know, the real definition of inflation isn’t merely rising prices over time, but a spiraling accelerating effect month after month for a certain number of months.

    (And of course the super wealthy LOVE inflation and OPENLY CELEBRATE inflation — inflation of the prices of assets they own and hope to own. The inflation they hate is wages increases and prices of things they don’t own, aka costs.)

    JG, to me, looks like many useful mechanical and electrical machines that are designed with negative feedback loops as limiters.

    BIG and such looks to me like positive feedback loops, which means a runaway system … more like the Housing Bubble where feedbacks increase inputs in an upward spiral.

    I understand WHY you were branded a closet Austrian, unfairly. That is, ugly as it may seem, and Milton Friedman noted this, a social services system run thru social services institutions and workers is politically self-perpetuating. There are internal advocates who — for selfish and unselfish reasons — want to see it continue to exist. Unemployment and speculative bubbles and busts are inherent to capitalism, so there’s no reason to believe the need for mitigation will vanish some day.

    In contrast, Milton Friedman’s ideal was to run his idea of social services — here’s a check, spend it wisely, good luck — and ELIMINATE EVERYTHING ELSE — with no internal political pressures for COLA increases or to prevent cutbacks, because the compassionate hand of this Nanny State would be run thru IRS officials and IRS computers.

    As much as people like to hate “gubbermint” I hope it’s obvious that there are broad conceptual fundamental difference between robust social services via HUD and similar agencies vs robust social services via the Internal Revenue Service.

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  5. After reading this, while I still would not oppose a JG, I can’t help but think that the real reason why a JG is more popular than a UBI is because of the outdated and specious notion that “everybody needs to work for a living”. The late, great Buckminster Fuller must be spinning in his grave right now.

    But back to the actual merits of a JG, I do think that Pavlina Tcherneva did make a good economic case for one nonetheless. Personally, I would prefer there to be both a UBI and a JG.

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    1. Ajax, I can’t say I know a lot of studies, but several MMT and JG proponents said the Jeffes program in Argentina was successful because people wanted to work.

      Part of that may be the culture and shame of “mooching”. FDR was aware that many people wouldn’t accept Social Security if they believed it was “charity” — pride and shame would prevent the SS program from being a huge success, including success in boosting Demand during the Depression and preventing future Depressions.

      “Everybody needs to work at a stupid job for a living” may be false, but I think it’s true that people thrive and feel better when they are participating with other humans in doing something good and useful — all the better if they get paid.

      For MMT people, the point of the JG isn’t work or starve. They want to keep and even expand Unemployment Benefits, SNAP, etc. Many people may need some months to seek a position vs taking a $10-15 JG near full time. That’s the purpose of unemployment benefits … and that shouldn’t leave people desperate. If you had a middle class home and cars before you were laid off, being a good and useful consumer, possibly owing loans, you shouldn’t be reduced to 2/3 max or minimum wage where you can’t make your house payment or rent or car note. That’s just the unnecessary imposition of fear.

      I have read the critiques of UBI and have a rough unschooled in econ idea of why they feel UBI is untenable wrt inflation. We are talking about paying UBI to millionaires and billionaires too … it’s “universal”. AND why a bare minimum income with no evident upward mobility option — including stuff like getting my lazy butt out of bed and off of Twitter — is less useful than the option of a JG that has at least some measure of opportunity behind it.

      You’ve probably read or heard Warren explain that employers usually have strong trepidation about taking the risk of the long shot of hiring the long-term unemployed who may have never showed up to a job every day, both looking at prejudices and looking at real risks and real likely costs.

      In that realm, a JG is evidence that a person showed up at work every work day for 26 or 52 weeks. Hopefully that would blossom into an $18 or $20 job for people who are capable of more than the bare minimum, and go from there.

      I’m thinking of a few guys I saw hanging out at McDonalds … one said he was working as a dishwasher at another joint, but my initial impression was “group home” except they didn’t have a caretaker with them. Having attended AA meetings for 30 years, I can tell you that some members are skilled workers, licensed professionals, business persons, executives, politicians, IT, sales, etc. but there are plenty more who read at 4th grade to 8th grade literacy and comprehension, and may not display a lot of ‘couth’ that is important in the business world, even checkout cashier.

      Not to mention those I’ve met with disturbing emotional and cognitive issues which they were medicating with abuse of alcohol and drugs.

      I’ve met people with physical disabilities such as pain that allow them to work a few hours per day but not 40-50 hour weeks.

      Some of these people ought to be on a disability check.

      Some ought to have a part time job option other than roofing and construction with functional drunks and addicts who smoke crack or shoot up during the work day. That would be good to have a JG choice. Hopefully, JG supervision should minimize that nonsense (ok, that’s pie in the sky but we can dream). JG is “guaranteed” opportunity, but within guidelines not free-for-all any nonsense.

      Jordan Peterson pointed out that even when the US military is eager to take “bodies”, they reject anyone whose IQ tests below 72 (I think he said), and that’s some 15% of the population who can’t even join the Army. What can business and society do with them? Monthly housing and allowance isn’t *universal* incomes for all.

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  6. Lowering the definition of Full-Time work without loss of pay would put upward pressure on wages and increase employment. In my view this needs to be a necessary part of any UBI program. This part pries money from the non-productive paper wealth generating more paper wealth sector. Coupling this with a modest UBI, we can discuss the nominal rate, is superior to a Job Guarantee, but I won’t get into that now.

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