MMT’s “Jobs Guarantee”: The final nail in the coffin of this naive, foolish program

In previous posts (here, here, here, and others) I have given you many reasons why Modern Monetary Theory’s (MMT) “Jobs Guarantee” is naive foolishness.

For instance:

1. Jobs are not hard to find. Millions of jobs are available. It’s the right jobs that are hard to find. (Right skills, right pay, right location, right benefits, right working environment, right opportunities for advancement, right learning potential)

Image result for overburdened bureaucrat
“And I’m supposed to find them good jobs?

2. The federal government bureaucrats are ill-prepared to:

a. Find or create jobs,
b. interview,
c. hire,
d. supervise,
e. promote and demote,
f. switch jobs, and
g. fire the millions of people who should be fired.
h. while determining pay scales

for every kind of job in every city, suburb, and hamlet all over America.

3. The federal government is ill-prepared to provide healthcare, maternity leave, vacation days, IRAs and myriad other benefits appropriate to different employees all over the nation.

4. If people are hired only because they need jobs, rather than because the jobs need people, nothing prevents those jobs from being make-work.

Image result for workers standing around
“Good news! We just found you an interesting job. Stand around and look interested.”

And now comes proof, if more proof is needed, of the federal government’s incompetence in the whole “jobs” area:

The $1.7 Billion Federal Job Training Program Is a Massive Failure
The program’s goals might be admirable, but the reality is a whole different story.
Joe Setyon, Aug. 28, 2018

The Department of Labor’s Job Corps program is supposed to teach disadvantaged young people the skills they need to get good jobs. But the program, which costs taxpayers about $1.7 billion per year, is apparently a failure.

O.K., it doesn’t cost taxpayers one cent.

A Monetarily Sovereign government has the unlimited ability to create its own sovereign currency, which it does by the simple act of paying creditors.

Federal taxes do not fund federal spending. (See link.)

But even that isn’t the most important point.

About 50,000 students enroll in the program each year, about two-thirds of whom are high school dropouts, according to The New York Times. Results aside, the program’s goals are admirable. As The Wall Street Journal reported in April:

Launched in 1964, Job Corps works with 16- to 24-year-olds who grew up homeless or poor, passed through foster care, or suffered other hardships.

The goal is to equip these young adults with skills for careers in advanced manufacturing, the building trades, health care, information technology, business and more.

Unfortunately, that’s not what’s happening. A March audit from the Labor Department’s Office of Inspector General sampled 324 Job Corps participants who were five years removed from graduation.

The median annual income of 231 of those participants (wage records weren’t available for the rest), was just $12,486 as of December 2016.

The audit acknowledged that “Job Corps could not demonstrate beneficial job training outcomes.”

And that is the point. The federal government bureaucrats were supposed to do what high school “Workplace Preparation” courses accomplish — and predictably, they failed.

(Workplace preparation courses prepare students to move directly into the workplace after high school or to be admitted into select apprenticeship programs or other training programs in the community.

Courses focus on employment skills and on practical workplace applications of the subject content.

Many workplace preparation courses involve cooperative education and work experience placements, which allow students to get practical experience in a workplace.)

That’s not all. Job Corps spends about $50 million a year on “transition services” to help graduates find jobs.

But in 94 percent of the cases sampled, “Job Corps contractors could not demonstrate they had assisted participants in finding jobs.”

A 94% failure rate: These are the same federal bureaucrats who are supposed to find jobs for millions of people all over the country — millions of people who don’t have the “benefit” of federal jobs training??

A terrible waste of time for the job-seekers.

One former North Texas teacher, who quit in 2015, says the entire program is failing. “Job Corps doesn’t work,” the teacher, Teresa Sanders, tells the Times. “The adults are making money, the politicians are getting photo ops.

But we are all failing the students.

No surprise there. It’s what I’ve preached for years.

Labor Secretary Alexander Acosta admits the program “requires fundamental reform.”

“It is not enough to make changes at the margins,” he tells the Times. “We need large-scale changes.”

If a small program fails, the government’s approach is to make the program biggere, so that the failure can be bigger.

Despite its shortcomings, Jobs Corps is popular among both Republicans and Democrats in Congress (to Democrats, it’s a government program aimed at reducing poverty; to Republicans, it incentivizes hard work), so there’s only so much Acosta can do. “

Does that sound familiar, MMT? Reducing poverty and incentivizing work are two of MMT’s goals (i.e. excuses) for its Jobs Guarantee.

But why do we need to incentivize work? Why has sweat become a moral imperative?

You have a program with a rich and complicated history that’s one of the biggest leftovers from the war on poverty, and it is enormously complicated to make any significant changes,” Eric M. Seleznow, a former deputy assistant secretary for the Labor Department’s Employment and Training Administration during the Obama administration, tells the Times.

He notes that “competing interests from Congress, program operators, advocates, as well as complex legal requirements present a lot of challenges.”

If Job Corps is salvageable, then it can do some real good. But if real reforms aren’t going to happen, Congress should shut it down.

So let this be the final nail in the coffin of the “Jobs Guarantee, and instead, let us begin to focus on the Ten Steps to Prosperity (below).

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

2. Federally funded medicare — parts a, b & d, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.

MONETARY SOVEREIGNTY

 

28 thoughts on “MMT’s “Jobs Guarantee”: The final nail in the coffin of this naive, foolish program

  1. How does the economic benefit reduce inequality? Also, while your economic benefit (which is nothing but a dressed up universal basic income) does give the poor an income, it just means that it will increase inflation unless you can actually pass tax increases.

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  2. Inequality is reduced because most of the proposed benefits would go to the 99.9%.

    Does “dressed up” include eliminating FICA, Medicare for All, free education for all, Social Security for all, eliminating business taxes, reducing taxes on the 99.9%, increasing taxes on the .1%, federal ownership of banks, and more deficit spending to benefit the 99.9%?

    As for inflation, are you saying that deficit spending causes inflation, so we should stop deficit spending? It hasn’t seemed to work that way. See:

    https://fred.stlouisfed.org/graph/fredgraph.png?g=l6eg

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    1. No, deficit spending doesn’t create inflation. We know that’s a neoliberal lie; however, an economic benefit that gives just as much to the poor as the rich would lead to inflation without progressive taxation (which you are in favor of and so am I). It’s more important to argue against neoliberalism at this time vs fighting within the community of people who already understand macroeconomics. This article is a hit piece that further divides us that understand the role of federal financing.

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      1. “an economic benefit that gives just as much to the poor as the rich would lead to inflation without progressive taxation” Wrong as a statement, and irrelevant to anything I’ve written.

        “fighting within the community of people who already understand macroeconomics.” I agree with that community about many things, but they are 100% wrong with regard to their “jobs guarantee,” which seems to be their primary focus.

        The jobs guarantee would be a disaster. Shall I just sit by, because they “understand macroeconomics,” and propose an awful solution?

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    1. I’ve been reading this nonsense for 18 years.

      “there are never enough jobs available for all who want to work” Wrong. There are plenty of jobs. They just aren’t the right jobs.

      “Federally funded but with a decentralized administration, the PSE program would pay $15 per hour and offer a basic package of benefits.” Unworkable, and counterproductive for the reasons I stated in the above post, which clearly you didn’t read.

      I repeatedly am troubled by people who send me links, and tell me I’m wrong, but don’t bother to read what I’ve written or discuss the specifics.

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  3. A jobs program can be easy. Have people at the county level come up with a list of things that need doing but they can’t get done. Toss out the ones that require too much skill or equipment or have difficult logistics or require putting the workers in trusted positions with the public. For example: No child care jobs, no helping the elderly, nothing to do with cash and so forth. And then from the rest select the easiest jobs that the lowest skilled person can do. And that requires a group of people to do effectively.

    For example, around here we have a solid waste garbage problem in many of our forested areas because of the homeless in some areas and inconsiderate campers or recreators in other areas.

    The local governments can only do so much and they are overwhelmed. However with a bunch of JG people available maybe a small dent can be made in the problem. So you bus the JG workers to the nearest problem area and set them to cleaning the place up. Even if they fail overall it’s going to be better than it was.

    Of course with a properly large fiscal stimulus the unemployment rate should fall so close to zero that we can stop having this debate as no one will need a JG or a UBI.

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    1. But there is no shortage of jobs. There is a shortage of the RIGHT jobs.

      Go online and look at the jobs sites. I went to one called jobs.com. Today, it claims to offer 3,551,688 jobs. Scroll through and determine how many of those 3,551,688 jobs you would want.

      Have you ever looked for a job? What were your criteria? Would you want to go to forested areas to pick up solid waste, in winter, at minimum wage, at the age of 60?.

      Yes, yes, I know. If someone were desperate enough, they will do anything. At least that is the JG theory. So JG relies on millions of desperate people. Isn’t that a wonderful idea?

      Rather than relying on desperate people, how about implementing the Ten Steps, so people wouldn’t have to live lives of desperation.

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    2. JG is based on the false belief that there is a shortage of jobs. But there is no shortage of jobs. There is a shortage of the RIGHT jobs.

      Go online and look at the jobs sites. I went to one called jobs.com. Today, it claims to offer 3,551,688 jobs. Scroll through and determine how many of those 3,551,688 jobs you would want.

      There are many other sites offering many millions of jobs. So why are these many millions of jobs available, if there is a shortage of jobs? They are not the RIGHT jobs.

      Have you ever looked for a job? What were your criteria? Would you want to go to forested areas to pick up solid waste, in winter, at minimum wage, at the age of 60?.

      Yes, yes, I know. If someone were desperate enough, they will do anything. At least that is the JG theory. So JG relies on millions of desperate people being given shit jobs, and by God they should be grateful.. Isn’t that a wonderful idea?

      Then JG, which changes every day, offers this, today: “A Public Service Employment (PSE) program that would offer a job at a living wage to all who are ready and willing to work. Federally funded but with a decentralized administration, the PSE program would pay $15 per hour and offer a basic package of benefits. (See: http://www.levyinstitute.org/publications/public-service-employment-a-path-to-full-employment)

      So if a “public service” program (whatever that is) that is forced to hire any boob who stumbles in the door, pays $15 per hour (This is a “living wage”???) , plus benefits, what does a REAL job pay? And what happens to real employers who must compete with that $15 per hour?

      JG is a simplistic, ill-considered program based on the idea that people are cogs to be inserted in the wheel of commerce, and that work is “good,” while receiving benefits without work is “bad” (unless you’re rich in which case you are entitled to all government benefits, like tax cuts).

      Rather than relying on desperate, dehumanized people, how about implementing the Ten Steps, so people wouldn’t have to live lives of desperation.

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  4. It seems to me we have no viable solution. You diss the JG and the MMT people diss the UBI. so neither of them work well you each say. Jobs are shit jobs and the UBI is a neo liberal way of wiping their hands of any liability.

    My version is both. A JG for the majority, [as it used to be post WW2] and a UBI for those who fall through the cracks [not strictly a UBI, as the Koch Bros would miss out]

    and still go with your 10 steps.

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  5. Indeed, while I do not oppose a JG, you do make some excellent points. The only federal jobs programs that could be considered successful have been the WPA and WPA-style ones from the New Deal and beyond–none of which actually “guaranteed” jobs to anyone. We could certainly use more of those, no doubt, to create the right kinds of jobs doing actually useful and meaningful work. But the idea that we must incentivize work for the sake of work because everybody must work for a living because *reasons* is woefully specious and outdated, as the late, great Buckminster Fuller famously noted back in 1970. So a UBI or EB clearly beats the JG as far as Big Ideas go, hands down.

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      1. Indeed. And the only way to beat the Ten Steps would be to add to it and turn it into a sort of Twelve Step Program for Economic Recovery. Step Zero (done before the others) would be to pass the NEED Act. Step 11 would be the Universal Exchange Tax, or at least some sort of financial transactions tax to help tame the world’s largest casino, Wall Street. (It would be a federal tax, but state and local governments could easily piggyback on it with their own taxes, thus reduce or eliminate other taxes.) And Step 12 would be to “pay it forward” by helping other countries (especially in the Global South) achieve similar prosperity via a global UBI/EB funded by a Tobin Tax on currency exchange (FOREX) transactions.

        http://www.monetary.org

        http://universalexchangetax.com

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        1. Not too sure about the NEED act. Kucinich doesn’t understand federal financing, so he thinks federal “debt” should be retired. I agree about fractional reserve banking, for two reasons: It doesn’t really exist, since banks have access to unlimited reserves (It should be called “fractional capital lending.”) Second, all banks should be federally owned (Step 9 of the 10 Steps to Prosperity)

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          1. It seems that very, very few people actually do understand federal financing. Kucinich understands more than most people do, to be sure, but still at least partially believes (or perhaps does not want to explicitly expose as false for whatever reason) the Big Lie that federal taxes actually pay for federal spending (and that at least 99.9% of Americans seem to believe). The NEED Act is carefully crafted to ensure as smooth and seamless a transition as possible.

            As for agreeing about fractional reserve banking, does that mean you agree with Kucinich (who is against it at least in theory) or do you agree with the concept itself as long as it is federally run?

            Federal ownership of ALL banks will likely be a tough sell. Perhaps we could have it that 1) all “too big to fail” banks will be given a choice: break up into smaller banks or get nationalized, 2) banks that choose to remain private will have to go full-reserve, full stop, while those that nationalize can have unlimited “fractional” reserves. Or 3) those banks that refuse to be nationalized will simply be bought by the federal government, whose infinite money will always win, and everybody has their price. Though state and local governments should also be allowed to run their own public banks as well, like the Bank of North Dakota already is.

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          2. I suggest that all banks be nationalized. Otherwise, the big banks will find some loophole that will make them appear “small,” especially if another Trump is elected.

            The money supply is best left in the hands of the federal government than with for-profit banks.

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          3. I get what you are saying about banks weaseling their way in to finding loopholes, especially if another Trump is elected. Nationalizing banks is a great idea overall.

            How do you feel about credit unions though? And state and local public banks? Those should be fine if left to their own devices I think.

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          4. True, after all, as the saying goes, “you can’t fight CITY Hall”. State and local governments do indeed tend to be significantly more corrupt than the federal government as a rule (though now the Trump administration is easily as corrupt as a typical Chicago government IMHO). Grifters gonna graft, believe me. Crime that pays is crime that stays. But decentralization can also have its benefits as well, double-edged sword as it may be.

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  6. Good article. I was wondering how you would respond to an article about the Argentinian experience with their (albeit very limited) JG-style program in the early 2000s. I would argue that their program was far too limited and small-scale to be generalizable for the sort of program that MMT proponents advocate, and while unemployment rates were greatly reduced, they still high by American standards.

    https://www.nakedcapitalism.com/2012/04/randy-wray-the-job-guarantee-and-real-world-experience.html

    Given these facts, the Ten Steps to Prosperity would easily beat that. And if the government still needs to create jobs, which they may, WPA-style programs (which create jobs without “guaranteeing” them) are still the best choice.

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    1. The Wray-MMT focus on making people work, rather than providing them with benefits, is miguided, and Puritanical, based on the belief that morality requires labor (except for the rich).

      Consider these paragraphs:

      “The Jefes program provided a payment of 150 pesos per month to a head of household for a minimum of 4 hours of work daily. Participants worked in community services and small construction or maintenance activities, or were directed to training programs (including finishing basic education).
      “The household had to contain children under age 18, persons with handicaps, or a pregnant woman. Households were generally limited to one participant in the Jefes program.
      “Most other safety net programs were eliminated or reduced in order to shift funding to Jefes.”

      The good parts were the 150 pesos a month, and the training programs. Forcing people to work in community service, small construction and maintenance might work in a destitute population like Argentina’s, but it would be ridiculous in America. And eliminating safety-net programs is just plain cruel.

      Like

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