I just received the following letter from a woman, Elizabeth Estrada Lopez, who read the recent post, Affordable housing laws are not a solution. They are a symptom.
I was so impressed by her situation and by her wisdom, I wanted to share her letter, and my response, with you. She wrote:
Lack of money or low wages is a valid point.
Affordable housing is not fair housing.
Many below & poverty level wage people, like myself, who work very hard and need affordable housing, are placed in impoverished areas or areas where there is no public transportation and end up paying more in gasoline to travel back and forth to work & grocery shopping that is it a lose-lose proposition.
People fail to thrive grouped in impoverished communities.
The environment is a daily discouragement creating more stress and low self-esteem. This is my experience and is not a blanket statement that covers the world.
I responded, “Thank you, Ms. Lopez. I hope you don’t mind that I intend to quote you in a future post. You make several good points that I would like to write about. Be well, Rodger Malcolm Mitchell.
She, in turn, wrote, “Yes Sir. I want to help society in any way I can.”
Oh, if only our politicians had the same attitude as Ms. Lopez.
As the article stated, the widespread, false belief that the federal deficit and debt are too high, “unaffordable.” and “sustainable” is fostered and disseminated by the rich to keep down those “below & poverty level” people like you.
The reason is “Gap Psychology, the desire to distance oneself from those below, on any comparative measure.
“Rich” is a comparative, not an absolute, term. A man having $1,000 is rich if everyone else has $1,000, but he is poor if everyone else has $1 million. So, there are two ways to become richer: Obtain more for yourself, or force others to have less.
Poverty is not a lack of work. Poverty is not a lack of effort. Poverty is not a lack of intelligence. Poverty is a lack of money, and the solution to a lack of money is to give impoverished people money.
Period.
The federal government has infinite money. The federal government could and should give people money. Doing so, would eliminate, or at least dramatically reduce, poverty.
There is another, widespread, false belief, and that is, if the government gives people money, they won’t work.
The rich like to portray the poor as lazy and deserving of their poverty. So in the minds of the rich (and many in the middle-income groups) giving people money is immoral, in that is encourages sloth.
Utter nonsense.
The fact is that by any standard, the poor on average work harder than those above them, economically. No one labors less than the rich except for the very rich.
Sadly, even Modern Monetary Theory (MMT), an economic philosophy that understands the federal government’s unlimited money supply, offers as a solution, something they call a “Jobs Guarantee” (JG). It is a process by which the federal government finds or creates minimum-wage jobs for the unemployed.
The only thing the “Jobs Guarantee” guarantees is that the poor will work hard, stay poor, and live in the impoverished areas you described, and never escape.
Question for economists and politicians: If the poor need money, why give them minimum wage jobs? Why not give them the money they need?
Answer: Because of some deeply ingrained belief that “if given money, the poor won’t work. They need the moral pride that comes with having a job.”
Again, utter, puritanical and paternalistic nonsense. A minimum wage job does not provide morality or pride. It only provides insufficient money, together with the “daily discouragement creating more stress and low self-esteem” you, Ms. Lopez, described.
If a person loses her job, has she suddenly become lazy or immoral? Of course not, but it is a myth the rich like to spread.
Today’s America reminds me of a billionaire uncle who won’t help his impoverished nieces and nephews because of self-proclaimed “moral reasons.”
My heart goes out to you, Ms. Lopez. You write like an intelligent and decent woman, whose poverty is not due to any character flaw, but rather to fate.
When I read a letter such as yours, all I can think is, “There but for the grace of God, go I.
I will send a copy of your letter to a few Senators and Representatives. Perhaps they will think more seriously about how to help the impoverished, and not merely disparage them.
Meanwhile, you and your family, friends, and neighbors, please be sure to vote for the politicians most likely to empathize with your plight, and offer real solutions.
One day, Americans will understand the needs of the poor, the power of our government, and the solutions for the less fortunate. Some may say, “yes, but not now.” I say, “If not now, when?”
Much good fortune to you,
Rodger Malcolm Mitchell
Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..
THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.
The most important problems in economics involve:
Ten Steps To Prosperity:
- Eliminate FICA
- Federally funded Medicare — parts A, B & D, plus long-term care — for everyone
- Social Security for all or a reverse income tax
- Free education (including post-grad) for everyone
- Salary for attending school
- Eliminate federal taxes on business
- Increase the standard income tax deduction, annually.
- Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.
- Federal ownership of all banks
- 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 the rest.
MONETARY SOVEREIGNTY
#Monetary Sovereignty - Mitchell 
Excellent article, Rodger.
I know someone will probably quote the infamous Charles Murray’s specious argument about so-called “latent poverty”, which is at best a begging-the-question fallacy and at worst utterly racist and classist. Even Murray himself doesn’t entirely believe in what he says, since he himself actually advocates a form of UBI (albeit as a replacement for all of the myriad social welfare programs he despises, not as an add-on).
Thus he at least partially undermines his own patronizing and paternalistic argument that the government shouldn’t provide “welfare” to those who would be poor without it, since that does nothing to reduce “latent poverty” even though it reduces poverty. He must not see the irony in his own beliefs, typical of right-wingers.
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I grew up in poverty in a single parent home on social assistance. In the golden age of capitalism. In Canada. I studied and then worked as a social worker for 48 years. Thus I believe that I am qualified to comment here. Aside from the careless misspelling of Ms. Lopez your response to her was lovely as was the description of her situation in her own words.
Where I am going to take issue is with your causal and poorly informed dismissal of the Job Guarantee proposed by the MMT crowd. You left out the context. Our present system believes that jobs and workers produce inflation and fabricated a BS concept based on the Phillips Curve called NAIRU. That has not gone away although inflation seems to have.
During my working years, my clients were unable to find a job and desperately wanted one but they were not available. The job guarantee is meant to allow them to work at minimum wage — set at a living level — in meaningful work thereby maintaining their self-esteem. People want to contribute.
My mother on social assistance wanted to contribute but with only one year of English education was often at a disadvantage. She made leather purses, wallets and repaired same for people which made her feel valued. When she reached old age — 90+ — she went to live in a retirement and then nursing home and complained about being useless. She has lost what little purpose she felt that she had and became depressed.
Her poverty and my mother’s poverty are NOT due to fate as you suggest. It is due to bad economic design of work and society.
Getting a job after a prolonged period of unemployment is very difficult. You should look at the MMT literature about that.
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Thank you for your comments. I have reviewed the MMT literature extensively, and have had conversations with Randall Wray, Stephanie Kelton, and Warren Mosler — three leading lights in MMT. I also just finished reading Stephanie’s new book. I am quite familiar with the details of JG.
Now, I propose that you read some of my analyses, which you can find here, here, here, and here.
Fundamentally, JG is based on the notion that people should not be given money, but rather should have to work to obtain it. President Franklin D Roosevelt felt that way, when he said, “Continued dependence upon relief induces a spiritual and moral disintegration, fundamentally destructive to the national fiber.”
Spoken like a rich man, who didn’t realize the hypocrisy of someone who has been given so much, pontificating on the “spiritual and moral disintegration” of receiving money without work.
Perhaps your mother felt “valued” by making purses. Perhaps you too would feel “valued” by making purses. With that experience, do you advise your clients to make purses? If not, why not?
You claim the JG would allow your clients to work at “minimum wage — set at a living level — in meaningful work thereby maintaining their self-esteem.”
Since when is a minimum wage set at a living level? Since when are minimum wage jobs “meaningful”? For how many people do minimum wage jobs provide “self-esteem.”
I am amazed that your clients were unable to find minimum-wage jobs. Could it be that the available minimum wage jobs were not jobs your clients wanted? Could it be that being a Walmart greeter,an envelope stuffer, or a school-bus driver did not provide enough self-esteem?
Are you saying that if someone received a minimum wage without working, they would not have self-esteem, but would only achieve this self-esteem by laboring?
If so, I have a suggestion: GIVE people the money, and let them volunteer to work FREE for the self-esteem. Plenty of no-salary jobs available. The people get the money and the “self-esteem.” Problem solved.
Before you become too wrapped up in a completely unworkable, unrealistic program, please read the references I have provided.
Then, we can talk.
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Roger, I myself am still somewhat on the fence regarding the MMT JG program vs. UBI but it seems you give pretty short shrift to it in your posts that tends to misrepresent (IMO) what the JG is designed to do. Based on my understanding of the JG some of the keys points:
1) The wage offered by a JG would be based on a livable wage not the current Federal minimum wage, basically something closer to $15/hour as well as provide health care (assuming Medicare for all doesn’t exist). The JG of course would set a wage floor in the economy and help raise people out of poverty.
2) JG would only be offered to those who want a job and can’t find one so it is entirely voluntary on the part of the participant. It wouldn’t eliminate unemployment benefits altogether. The JG only guarantees access to a job, it doesn’t guarantee they can keep any job if they don’t meet specific job performance criteria. Paying people basic income and having them “volunteer” has its own problems . Volunteers are unreliable and can quit with out any notice. Not sure how organizations plan projects if you don’t know if your workforce is even going to bother showing up on any given day. JG employees have to meet all the same requirements that regular employees must meet.
3) These are not “make work jobs” that the federal government creates. The federal government would provide grants to local governments and non-profits based on local community needs. The intent would be that the jobs would go toward ready “off the shelf projects” once there is sufficient labor surplus in the market due to recession. Key point is the work is driven by the local market and not government driven, only government paid. This work should also have tangible benefit to the local community from improved services and/or resources (such as libraries or public parks). In a recession, non-profits and local governments often have to deliver more services with a reduced revenue stream. My wife works for a non-profit and they desperately need help but can’t afford to hire the help they need.
4) As a hiring manager myself, once a person looses a job, the biggest barrier they face in going back to work is the gap in work history. A JG would be much better than being on long term unemployment when trying to re-enter the private sector job market. Having a continuous work history and recommendations from JG employers would facilitate the transition to private sector employment (volunteer jobs don’t usually help as much as paid employment)
5) UBI is political non-starter in this country as it would become a permanent carrying “cost” that would be under constant political attack from the right. JG would still be a much easier sell politically as it would be an automatic stabilizer that only kicks in during economic recessions and would be offset from reduced unemployment benefit payments. There would also be a tangible public benefit from the JG funded projects. From a public perception standpoint, people would be at least “working” for benefits and making contribution to local communities.
This is basically a government paid program managed by local communities and non-profits. I am not sure how that is either unworkable or unrealistic. Governments would seem to have a greater vested interest in maximizing labor resource utilization for the common good rather than simply paying resources to remain idle and consume. While UBI and the other 9 steps may be more beneficial to the individual in pure economic terms, in purely political terms, they are way more unrealistic than JG. We shouldn’t let the good be the enemy of the great.
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You wrote: ” . . . your posts that tend to misrepresent (IMO) what the JG is designed to do.”
Sadly, everyone seems to believe in a different JG. Criticizing JG is like picking up Jello with chopsticks.
You wrote: “The JG, of course, would set a wage floor in the economy and help raise people out of poverty.’
The “wage floor” is what is known as a “minimum wage,” which the authors of JG specifically require so as not to compete with the private sector.
You wrote: “It wouldn’t eliminate unemployment benefits altogether.”
Altogether? It would eliminate some unemployment benefits? Why and how much? Seems counterproductive.
You wrote: The JG only guarantees access to a job, it doesn’t guarantee they can keep any job if they don’t meet specific job performance criteria.”
Not much of a guarantee, is it?
You wrote: “Volunteers are unreliable and can quit without any notice.”
Isn’t the whole concept of a minimum-wage, JG, to be a temporary — until the person is able to get a better job?
You wrote: “The federal government would provide grants to local governments and non-profits based on local community needs.”
Do these grants require the local governments and non-profits to pay no more than minimum wage? If not, then they are just pure grants, having nothing to do with JG.
You wrote: “Having a continuous work history and recommendations from JG employers would facilitate the transition to private-sector employment (volunteer jobs don’t usually help as much as paid employment)”
Think very carefully about this. Make a list of the reasons why volunteer jobs don’t usually help as much as paid employment.
You wrote: “UBI is a political non-starter in this country as it would become a permanent carrying “cost” that would be under constant political attack from the right.”
Fortunately, that didn’t deter Roosevelt and Johnson from creating Social Security and Medicare.
Monetary Sovereignty is under constant political attack. Shall I simply surrender now?
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I have read your blog and like it. What is missing is what Keynes called Animal Spirits which is in a sense what I addressed and I believe you dissed.
I have more than once in my life been responsible for hiring people to work for my agency. One of the first things I notice is their work record. That seems to be the chief justification MMTers use for the JG. And in my experience is a valid concern. I have always had a choice amongst many candidates for one or two jobs and the ones who got the job(s) were the ones with a track record of work.
In my country — and I believe yours — the primary reason for people to be out of work has been the NAIRU for which I do not remember seeing you reference. You called being out of work or poor “fate.” I am old so memory and attention may not serve me well here. Lol But the NAIRU is an important part of the JG argument and I believe that there is already agreement that fighting inflation that way is wrong-headed. My experience in hiring people to work for me is relevant.
I also use to teach about employment in a business school and the stats at the time were that every job for which a new hire was made cost about $10,000 when you add up all the cost factors. And that was in the late 80s. So making the right or good choices is important.
During this COVID crisis when businesses are hurting and people are suffering due to layoffs my country has implemented guaranteed incomes for several months and is looking at mandating other social safety items such as pay for sick leave, day care and likely pharmacare.
You dissed the self-esteem issue — animal spirits if you wish — which suggests to me that you have never really felt what that was like. Human psychology says that people want to be involved and consider what they do to be important. When the economy is in a downturn — those are inevitable and not always due to the NAIRIU — the efforts to get work is mind numbing and dispiriting. If depression ensues — it often does — getting a job does not always lift it. The brain usually needs some rewiring.
Also I never said that they were able to find work at the minimum wage. I said that even those jobs were not available.
I have no issue with helicopter money — my words but that is what you are in essence talking about — and at a living income level which is also where minimum wage should be. But many people in my experience would prefer to have meaningful work. The job guarantee can be that. But it is not the binary choice that you are implying with your opposition it seems to me. Kelton is not opposed to a form of UBI but is not clear about what it is about and what it hopes to accomplish. That conversation has to happen.
As an aside, I first heard about the concept of Sovereign Money in the 90s from a chap named Ken Bohnsack if I recall the name correctly. I used some of his ideas in talks I gave through the COMER where an article about his work was published. He also presented at one of our conferences. The last time that I saw him, I believe, was at the AMI founding conference in Chicago. His ideas were somewhat different from what you present which may be why you call it Sovereignty Money instead of Sovereign Money as he did.
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Thank you for your thoughts.
I didn’t “dis” self-esteem. I dissed minimum wage jobs as a way to achieve self-esteem.
Most minimum wage jobs are repetitive, mind-numbing or back-breaking crap. — exactly the jobs to which a federal bureaucrat would direct a JG applicant.
One of the dozen serious problems with JG is that the U.S. is a big place, and the notion of federal bureaucrats finding acceptable jobs for people all over America is naive.
The primary reason why a person can’t find a job is not that there are NO jobs. Rather, the available jobs are not THE RIGHT jobs.
Would you really take ANY job that is offered to you? Be honest. Or does JG rely on abject poverty and desperation to succeed?
Far more important in the loss of self-esteem is the lack of money. Money is the key, not labor.
I haven’t had a paying job in over 12 years. My self-esteem is just fine, thank you. Why? I have enough money.
I can volunteer to do what makes me feel good — for instance, this blog.
Contrary to popular myth, inflation is not caused by too little unemployment, nor is it caused by federal spending. Inflation is caused by shortages of goods, usually shortages of food and/or energy. See: https://mythfighter.com/2010/04/06/more-thoughts-on-inflation/
I previously sent you four links that describe my position. I can tell you didn’t read them, so there’s no need for me to repeat what they already say.
By the way, my site is called “MONETARY SOVEREIGNTY,” and I write about “sovereign money,” which I have been doing since 1995.
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I did read your blog. Apparently you did not read my response. I would disagree with your explanation of inflation — namely a shortage of goods cost push? — but I have done it before and will not repeat myself. The JG is not necessarily about a federal bureaucracy but rather using the local facilities that are already in place even if not federal.
Many jobs at minimum wage are NOT as you describe. Many are. Data?
My tenant quite liked doing his minimum wage job working in a supermarket stocking shelves but then he is over 6 foot and strong. His workouts are more strenuous. Unfortunately as a physical trainer, because of COVID, the only work he could get was in a supermarket and he was glad to get that because even at minimum wage — Canada’s is $14 per hour in this province which is comparable to o Seattle and maybe other US cities but twice the national number in the USA — he was able to pay his rent, buy food, and go on a camping trip with his friends before returning to school. He would have hated to be paid for not working as you are suggesting.
Doing your blog as a volunteer is excellent but there are others who could blog — I have a friend doing nutritional approaches for parents and is vlogging — But NOT being paid. She would prefer to receive the job guarantee cash via an NGO that helps parents plan meals for their kids and provides other advice to parents. They cannot afford to pay her a living wage. But they like her work and believe that it is valuable. She also has some expertise to offer on environmentalism but the local NGO cannot afford to hire her. The JG would make that possible. Sovereign cash would also make it possible for her to pay for her keep.
I do not see why you push the one over the other.
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You wrote: “The JG is not necessarily about a federal bureaucracy but rather using the local facilities that are already in place even if not federal.”
Are you suggesting that:
1. A federal JG program would not involve a federal bureaucracy? Hmmm.
2. Instead state and local bureaucracies would be involved?
Hey, I have no objection to government bureaucracies. They employ people, and the federal bureaucracies don’t cost the public a cent, thpugh the local bureacracies do. I just question their ability to do what JG would require.
You wrote: “. . . he was able to pay his rent, buy food, and go on a camping trip with his friends before returning to school. He would have hated to be paid for not working as you are suggesting.”
So, given the choice of being paid for stocking supermarket shelves vs. being paid, but not having to stock shelves, your tenant would prefer the former? Surely, he is extraordinary and among a distinct minority.
But then, if he were GIVEN the money, what’s to stop him from going to the supermarket manager and saying, “I’ll stock your shelves for free, just for the exercise?” And he would have lots more time for camping.
And then there is your other friend, who would like a JG job, but the job would have to be as a paid Vlogger. This the first iteration of JG I’ve heard in which a person creates a non-paying job and then goes to the JG office and says, “I want to be paid for this job I already am doing free.” Interesting, though I’m not sure that’s what JG is.
It occurs to me that you may think of JG, not as a jobs guarantee, but rather as a money source to which local governments apply for funds. Is that your concept? If so, that is quite different from anything I ever have heard, and it is a long way from a jobs guarantee.
But as I have said, everyone has a different version of JG, and critiqueing them all is like trying to pick up Jello with chopsticks.
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