Mitchell’s laws: The more budgets are cut and taxes inceased, the weaker an economy becomes. Until the 99% understand the need for deficits, the 1% will rule. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
==========================================================================================================================================

Those of you who have seen the web site at MMP Blog 50: MMT Without the JG? Conclusion know I’ve taken a terrible pasting for daring to continue saying what I said previously in Why Modern Monetary Theory’s Employer of Last Resort is a bad idea and in MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?”

Because Modern Monetary Theory (MMT) and Monetary Sovereignty (MS) have so much in common, I hate to see MMT destroy its credibility, and by association, the credibility of MS, on an unrealistic idea. We’ve worked too hard to build that credibility.

Sadly, some MMTers have invested so much personal capital into the Jobs Guarantee (JG) idea, that emotionally they find it impossible to view JG dispassionately. In fact, one of the major proponents of JG has written a book about it, and there is no way that book will be “unprinted.”

For the uninitiated, JG (formerly called “Employer of Last Resort”) is a proposal whereby the federal government would guarantee a job to anyone who wants one. Simple enough.

JG is based on the reasonable notion that involuntary unemployment is bad. Without addressing all the reasons behind unemployment, JG provides a simplistic solution: Give people jobs so they will have dollars and have “something to do” that is “productive” – the most common themes expressed by MMT.

Here is a direct quote from one of the foremost proponents of JG: “JG creates jobs for those who want them, then trains workers on the job.” For a moment, visualize the nationwide, millions-of-workers reality of that, before you continue reading.

The devils are in the details, and what fierce devils they are.

*What jobs?
*What pay?
*Where are the jobs?
*Who hires?
*Who fires (Is firing even possible?)
*Who supervises?
*Who trains?

JG makes the tacit assumption that someone involuntarily unemployed will be so desperate he/she will take any job. But even in today’s economy, vast numbers of jobs are available, so many jobs, employers need to spend time and money, advertising for employees. Recently, I looked at Monster.com and found more than 1,000 jobs, waiting to be filled, just in Chicago alone. Add to that all the jobs being advertised in the Chicago Tribune, the Chicago Sun Times, the many other local papers, plus all the unadvertised jobs.

I saw all sorts of jobs: Office jobs, outdoor jobs, work-from-home jobs, restaurant waiters, busboys and dishwashers, fast food order takers, delivery people, lawn maintenance, maids, nannies, window washers, inside sales, outside sales, phone sales and sales trainees, warehouse and manufacturing workers, and on and on and on – these jobs exist. Walmart, Macdonalds, Starbucks et al continuously hire.

Yet, the unemployment rate in Chicago exceeds 8%. How can that be? Simple. From the standpoint of job seekers, they are the wrong jobs with the wrong pay at the wrong locations.

When I put forth that problem, MMT proponents respond, the government will match people to jobs. Oh really? Today, there are more than five million unemployed for 27 weeks or more (Federal Reserve Bank of St. Louis). These people live in big cities, small cities, villages and farms, spread all over the nearly 4 million square miles of this country. Who will match job seekers to jobs?

The JG program assumes people want jobs, when in fact, people want income, not jobs. Yes, I’ve heard the protestations that people need to be active and productive, and I’ve heard from people who say they love their jobs. Mostly, it’s all a myth.

If people loved their jobs, why do they prefer weekends to weekdays? Why are employers forced to pay higher than regular wages, just to get people to work more than 8 hours? In fact, why pay wages at all. Nobody pays people to go to Disneyland or to go Hawaii or to a movie. Nobody pays people for time off; people do “time off” for free.

How many people really prefer waking early in the morning, traveling an hour to work, taking orders from, and trying to please, a boss, worrying about being fired or passed over for promotion, then traveling another hour home – how many people prefer that to doing things they really enjoy like golf, fishing, tennis, sightseeing – or writing a blog?

What do people tend to do when they win a big lottery? Answer: Quit those jobs they “love” so much. (Of course, when they blow their winnings, what do they do? Look for a job. They need the money.)

So far we have touched on two JG myths: People will accept any job to get off the unemployment rolls, and the government is capable of matching people to jobs.

Now let’s get to salary. JG proponents either differ, are vague or noncommital on this crucial subject. One MMT leader says $30,000 per year plus benefits. (By the way, I keep saying “leader” because I don’t want to embarrass anyone by naming them.) Visualize the effects on all the employers, who pay less than $30,000, if everyone were guaranteed such pay. Massive numbers of firms would be driven out of business. The result: Fewer jobs, not more.

Another MMT leader says the JG pay should be at or below minimum wage, so as not to compete with private industry. But those minimum wage jobs already exist, as I’ve noted above. No JG needed.

Despite the fact that wage is one of the fundamental parts of any jobs plan, JG proponents don’t agree on what wage will be offered nor do they understand a wage’s effect on the economy.

So that’s the third JG myth: Wage doesn’t much matter.

Then we come to the “bufferstock myth.” To quote from the original JG post, “ . . . you can use the JG pool as a better wage- and price-stabilizing bufferstock than the “reserve army of the unemployed” can be.”

“Bufferstock” is a supply of people who are available to take jobs. It’s important, because if there is no bufferstock, employers can’t find people to hire, so must compete with other employers by offering higher and higher salaries, which leads to inflation.

But the notion of JG jobs being bufferstock requires that something about JG jobs must be less satisfactory than the jobs being offered by private industry – else people wouldn’t want to move. Bufferstock requires that the JG jobs pay less than minimum wage or in some other way, be less appealing to the JG jobholders.

But those low pay, less appealing jobs already exist – by the millions. So how does JG provide an improvement over the current situation? It doesn’t. It guarantees the same jobs the unemployed already have demonstrated they don’t want.

So that’s the fourth JG myth: JG provides bufferstock.

Then we come to a reality of employment, to which I allude in the headline: “You can’t fire me; I’m JG.” Businesses are controlled from the top. Someone in the role of CEO or president instructs subordinates, who in turn, instruct their subordinates.

To instruct there must be control, which is based on the ability to reward and punish. Rewards consist of compensation and promotions. Punishment means firing. But how does JG allow for increases in compensation or for firing?

The government would set some compensation level, and it’s difficult to imagine businesses being able to deviate from it for temporary jobs. And as for firing, how does one get fired in a jobs guarantee situation? Employers, being able neither to reward nor to punish, would have no control over employees, who would have no motivation to do as they are told.

So that is the fifth myth: JG provides good, productive employees.

In summary, JG seems wonderful when viewed from a distance: People need jobs; give them jobs. But under the microscope, it is an unrealistic disaster.

Finally, I can’t end without quoting one JG defender: “Jobs have a social benefit of social interaction and that’s where many people meet their partner for life these days.”

So you have it: Despite all its fatal flaws and myriad myths, JG can serve as eHarmony.com. That’s what makes it all worthwhile.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

==========================================================================================================================================
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports

#MONETARY SOVEREIGNTY

Mitchell’s laws: The more budgets are cut and taxes inceased, the weaker an economy becomes. Until the 99% understand the need for deficits, the 1% will rule. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
==========================================================================================================================================

The Republican party has become a mouthpiece for four extremist groups, none of which care a fig about the health, happiness or financial welfare of the American people:

Group #1. The pious (but definitely not “religious”), gun-loving right wing, that hates women so much, it doesn’t even want birth prevention, much less stem cell research to save lives or even a life-saving abortion life. And don’t get them started on gays.

Group #2. The Tea Party that wants to cut social benefits, under the masquerade of being against “big government.”

Group #3. The upper 1% income group, that sneers at the 99%, but needs their votes.

Group #4. The “defeat Obama no matter what” group that almost has forgotten why it hates him, but really, really, really does.

Combine all this crazy extremism, and you have a truly erratic situation. For instance, what does a wealthy Catholic woman do when she doesn’t want to get pregnant? Ah, problems, problems.

An even greater problem, what does the 1% party do when it needs to attract votes from the very people it despises? Well, first it spends millions of dollars and four years of trying everything possible to destroy the economy, hoping the 99% will blame the President. That worked, for a while.

But heaven forbid, if despite all their machinations, the economy begins to recover . . . well, if you can’t beat ’em, you have to join ’em, i.e., the Romney mantra. So what you were against, you now are for — more than just for, you actually created.

Here are excerpts from an article in TPM

TPMDC
Senate Republicans Signal Big Shift On ‘Obamacare’
Sahil Kapur MAY 30, 2012, 5:02 AM

Senate Republicans are echoing the House GOP’s shift in favor of some of the more popular “Obamacare” provisions, a sign that the party is uniting behind the strategy ahead of the election.

With a Supreme Court decision looming next month, House Republicans are privately weighing a plan to reinstate popular elements of the law if it’s struck down — guaranteeing coverage regardless of pre-existing conditions, allowing young adults up to 26 years old to remain on a parent’s insurance policy, and closing the Medicare prescription drug coverage gap known as the “doughnut hole.”

Whether coverage of pre-existing conditions is economically viable for insurers without an individual mandate is a dubious proposition, but practical realities are taking a back seat to election year imperatives. It’s not a hard sell to voters: you can have all the popular provisions of health care reform without the unpopular ones.

Actually, we could have all the popular provisions without the individual mandate. Our Monetarily Sovereign government, which on August 15, 1971, acquired the unlimited ability to pay any bills of any size, merely should pay for Medicare — for every man, woman and child in America.

Not only would this provide improved health care for the entire nation, while stimulating the economy, but it would remove the onerous burden of Medicaid from the states — three great results, all at one stroke.

Too logical? Too easy? Too beneficial to the 99%?

Despite the blowback from conservatives, who want nothing less than to wipe out the law in its entirety, top Senate Republicans are signaling that they’re behind the strategy of resurrecting some aspects of the Affordable Care Act.

I guess there has been some polling and vote counting. (OMG, you mean the people actually like guaranteeing coverage, insuring young adults and closing the Medicare “doughnut hole?” Who’da thunk? We better get behind it — but please don’t call it “Obamacare.”)

Next Romney (rightly) will claim it as his own. Remember, he was for it, before he was against it, before he was for it.

A GOP health aide explained the strategy on the shift: “Come up with a plan and come up with a plan quick to deal with popular … provisions.” The aide said Democrats would have a hard time turning down a Republican proposal to reinstate some of the law’s most popular pieces.

Now it’s a Republican proposal??? That would be like Bernie Madoff now claiming credit for proposing a plan to prevent Ponzi schemes. Where have you guys been?

The shift is notable because Republicans have spent more than two years pledging nothing less than total repeal of the law. Now, however, the party would be caught in an election-year predicament if the Supreme Court grants them their wish and overturns the law. Warming to these provisions is an important signal that Republicans believe the extent of their anti-“Obamacare” stance over the last few years is politically unsustainable. That’s not sitting well with conservative advocates.

Here’s the problem:

Group #1 is hates pretty much everyone who’s different from them. It wants only that women be pregnant, barefoot and live in the kitchen and the bedroom, and that there’s a gun rack in the pickup. They don’t care for group #2, they actively hate group #3, but they like the idea of group #4 (except they hate Romney almost as much as Obama).
Group #2 doesn’t care for groups #1 or #3, but loves group #4, as a way to take power.
Group #3 thinks groups 1 and 2 are lowbrow idiots, and doesn’t really care much about group 4, either. They will back Romney until it looks like he will lose, at which time they will jump on the Obama train. They can work with Obama (the fake liberal) just as well as with Romney (the fake everything). Money speaks all languages.
Group #4, doesn’t care about the other groups. They are ABO (Anybody But Obama) and sad to be stuck with Romney.

As long as they had the economy tanking, they all could forget their differences, and work together. But with the danger of voters awakening to the truth, we might see some internecine warfare.

On KTRS, Sen. Roy Blunt (MO),(vice chair of the Senate GOP Conference) floated the idea of high-risk pools to cover pre-existing conditions — an idea that presents its own adverse-selection quandary.

Blunt is part of group #4. But he’s stuck on the horns of group # 2.

(He said,) “You know, you do run a risk when you decide you’re not going to have insurance,” Blunt said. “And a lot of those — that odd, that occasional young person who believes they’re not going to need health care, doesn’t get it, and then they have a terrible accident or they have a unique illness that most young people don’t have. These high risk pools give them somewhere to go that is somewhere close to normal insurance.”

And who is going to pay for these high risk pools and “close to normal” (whatever that is) insurance?

Some Democrats think the Republican shift is merely a bluff. “They’re joking, right? This is serious?” Sen. Sherrod Brown (D-OH) told TPM. “The Republicans — the tea party has never been for consumer laws, never been for protecting families, never been for making Medicare work better. So it’s a continued sham.”

No sham, Sen. Brown. It’s just group #4 possibly taking over from groups #1, #2 and #3.

And what of Romney, the party’s peerless leader? He’ll say whatever they (1, 2, 3 or 4 on any given day) tell him to say and go wherever they tell him to go. He leads from the rear. Way, way, way to the rear.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

==========================================================================================================================================
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports

#MONETARY SOVEREIGNTY

Mitchell’s laws: The more budgets are cut and taxes inceased, the weaker an economy becomes. Until the 99% understand the need for deficits, the 1% will rule. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
==========================================================================================================================================

“Bathos” is the sudden, unexpected transition from tragedy to humor. You decide. Does this article meet the criteria for bathos? Here are a few excerpts from the article frighteningly titled:

Social Security disability trust fund projected to run out of cash by 2016
By Brian Faler, Wednesday, May 30, 6:08 AM

A government entitlement program is headed for insolvency in four years, and it’s not the one members of Congress are talking about most.

The Social Security disability program’s trust fund is projected to run out of cash far sooner than the better-known Social Security retirement plan or Medicare. That will trigger a 21 percent cut in benefits to 11 million Americans — people with disabilities, plus their spouses and children — many of whom rely on the program to stay out of poverty.

Wow! In only four years, the U.S. government will be forced to cut benefits to all those disabled people and their families. Why? Because the Monetarily Sovereign U.S. government — the government that because it is Monetarily Sovereign has the unlimited ability to create dollars — has run out of dollars!!!!

Tragic or hilarious?

“It’s really striking how rapidly this is growing, how big it’s become and how D.C. is just afraid of it,” said Mark Duggan, a University of Pennsylvania economist and adviser to the Social Security Administration.

Duggan said the disability plan has been running on autopilot for decades and lawmakers could find savings to help avoid the scheduled cuts.

Mark Duggan is an economist and an adviser to the Social Security Administration. He thinks “savings” are necessary to avoid cuts.

Tragic or hilarious?

The growing costs are also a result of the economy’s troubles. When people can’t find work and run through their jobless benefits, many turn to disability benefits for assistance.

“They’re desperate,” said Ken Nibali, a retired associate commissioner of the program. “Some who are marginal and struggling to have a low-paying job now literally have no options.” So, he said, “they figure, ‘I do have trouble working, and I’m going to apply and see if I’m eligible.’ ”

Sen. Tom Coburn (R-Okla.), said he has tried to interest fellow lawmakers in the issue, without much luck. “Nobody wants to touch things where they can be criticized,” Coburn said, adding, “the fund is going bankrupt” and “then what are we going to do?”

Sen. Coburn thinks a federal fund can go bankrupt and Congress won’t do anything about it.

Coburn and the rest of Congress: Tragic or hilarious?

Social Security is made up of two programs: the retirement plan supporting 40 million senior citizens and 6 million survivors, and the disability insurance program created during the Eisenhower administration.

The disability program pays benefits averaging $1,111 a month, with the money coming from the Social Security payroll tax.

No, the money doesn’t come from the payroll tax. Our Monetarily Sovereign government creates dollars by spending. It has no need for, nor use of, taxes. All federal tax dollars are destroyed upon receipt.

The author, Brian Faler joins the “bathos” club.

The program cost $132 billion last year, more than the combined annual budgets of the departments of Agriculture, Homeland Security, Commerce, Labor, Interior and Justice. That doesn’t include an additional $80 billion spent because disability beneficiaries become eligible for Medicare, regardless of their age, after a two-year waiting period.

The disability program is projected to exhaust its trust fund in 2016, according to a Social Security trustees report released last month. Once it runs through its reserve, incoming payroll-tax revenue will cover only 79 percent of benefits, according to the trustees. Because the plan is barred from running a deficit, aid would have to be cut to match revenue.

Our Monetarily Sovereign federal government has the unlimited ability to create its sovereign currency, the dollar. The disablity program is about to run out of dollars. Hmmm . . . What to do? What to do? Help! Can anyone think of a solution?

Congress can: Cut benefits to the disabled.

Tragic or hilarious?

. . . once people enter the program . . . fewer than 1 percent rejoin the workforce. Many worked “menial” jobs that didn’t offer health insurance, and the program gives them an opportunity to join Medicare long before they might otherwise qualify, Nibali said.

In Nine steps to prosperity; a short message to #Occupy Wall Street, the 2nd of the nine steps was, “Medicare — parts A, B & D — for everyone.”

So because our Monetarily Sovereign government won’t take this sensible and compassionate step, the people find a way to do it for themselves.

Neither President Obama nor House Republicans in their proposed budgets has addressed the disability program’s shortfall.

“We’re not trying to fix every problem in America with this one document,” said House Budget Committee Chairman Paul Ryan (R-Wis.) of his budget plan. “We’re trying to prevent a debt crisis, and this is not a driver of our debt.”

Paul Ryan outdoes himself every time he opens his mouth. There is no debt crisis for a Monetarily Sovereign government, that can pay any debt, of any size, any time. This is just the Tea/Republican method for keeping down the 99%. (Hey, let the disabled fend for themselves. They aren’t part of our 1%.)

Kenneth Baer, a spokesman for the White House budget office, said in an e-mail. “The president remains willing to work with Congress on a bipartisan basis to strengthen Social Security and protect the millions of beneficiaries.”

He added that lawmakers didn’t fully fund the administration’s request for more money to screen beneficiaries.

Get it? President Obama will “strengthen Social Security and protect beneficiaries” by removing people from the program. You just can’t make this stuff up. Our dear leader is a right winger hiding in left wing clothing.

And now finally, the winner of the “bathos” prize, a tragic/hilarious paragraph buried way down at the very end of the article:

Senate Finance Committee Chairman Max Baucus (D-Mont.), whose committee sets Social Security policy, said the program’s finances are less dire than they may appear. Congress can funnel revenue from elsewhere in the government to cover the program’s shortfall, he said.

I award five clowns to all those mentioned in the article, as well as the author, and I thank them for the entertainment. This bathos brought tears to my eyes.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

==========================================================================================================================================
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports

#MONETARY SOVEREIGNTY

Mitchell’s laws: The more budgets are cut and taxes inceased, the weaker an economy becomes. Until the 99% understand the need for deficits, the 1% will rule. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
==========================================================================================================================================

At MMP Blog 50: MMT Without the JG? Conclusion you will find the last part of a discussion about Modern Monetary Theory’s (MMT) proposal for a Jobs Guarantee (JG)

Very briefly, JG would have the federal government guaranteeing a job to any person who wishes one. Here is what Professor Randall Wray (UMKC) said about JG:

(Disclosure: I know Professor Wray. At his invitation I spoke at his school, the University of Missouri, Kansas City [after he read my book, Free Money] and I agree with the vast majority of his MMT beliefs)

At the above link, you will see the following:

Let us move on to a conclusion of our discussion of the JG. The contentious issue is this: can one adopt MMT while rejecting the JG?

I had made the analogy between disease and unemployment: would any reasonable person who understands the cause of a disease oppose a cure? If you knew that a vaccination can prevent smallpox, would you oppose providing vaccinations (at least to those who want them—I do not want to get into a debate about forcing vaccinations as we have never advocating forcing jobs on those who do not want to work)?

Now I do realize this is not quite a fair comparison because it is possible that there are many cures for the disease of unemployment. MMTers advocate the JG cure. I am open to alternative cures. I just do not hear any coming from the critics.

In Professor Wray’s defense, he was not aware of my post, “Nine steps to prosperity,” where I listed these “cures,” not just for unemployment, but for many of the ills that beset our economy:

Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Federally funded Medicare — parts A, B & D plus long term nursing care — for everyone (Click here)
3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here) Or institute a reverse income tax.
4. Free education (including post-grad) for everyone. Click here
5. Salary for attending school (Click here)
6. Eliminate corporate taxes (Click here)
7. Increase the standard income tax deduction annually
8. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)
9. Federal ownership of all banks (Click here)

In the comments section of Professor Wray’s blog, I said,

“Unemployment is just a symptom of a deeper problem: A bad economy. It was the economic slump that caused the unemployment, not the other way around. Treating the symptom is a bad way to treat the disease.

“Another symptom: Homelessness. Shall we also have HG (Home Guarantee)? And then there’s the symptom: Hunger. Shall we also have FG (Food Guarantee)?

I suggest we treat the disease, not just the symptom, for a lasting cure.

Further on Professor Wray’s blog:

Some try bait and switch: Let’s give them BIG (Basic Income Guarantee) instead of jobs. That does not cure the disease of unemployment. It is like providing antibiotics instead of vaccinations to fight Polio. They then try to justify this on the argument that if we give people BIG, they can still choose to work if they want to. No, they cannot. There must be jobs. Certainly it is true that giving everyone antibiotics does not prevent them from seeking vaccinations. But the vaccinations need to be available. I’m not going to argue more about this—the argument is just too silly. Yes we can give people BIG but that does not give them jobs. If someone is involuntarily unemployed, she wants a job. BIG will not cure the unemployment disease.

After my comments about the recession being the disease and unemployment being the symptom, rather than the other way around, a reader treated me to a medical lesson on the definition of “disease.” That shows the problem with analogies. People start to argue about the analogies rather than about the case.

Anyway, a reader named Tom Hickey wrote this:

RMM, do you really think that economic policy is capable of permanently achieving full employment in the sense of (no involuntary unemployment) and price stability (no more than modest inflation that the central bank can live with) solely with stimulus, Rodger, i.e., exactly offsetting saving desire all the time?

To which I responded:
“Tom, I believe you’re missing the point — the same point MMT misses — when you ask whether monetary policy could achieve “no involuntary unemployment.”

“The goal of an economics program is not just to employ everyone who wants a job. All communist nations do that quite well. The goal is to solve the many problems in an economy, of which unemployment is but one.

“Randy asks, “If you knew that a vaccination can prevent smallpox, would you oppose providing vaccinations?” His analogy assumes unemployment is the disease.

“It is not. The disease is a weak economy, and one of the several symptoms is unemployment. Using Randy’s analogy, treating smallpox would involve giving aspirin for fever and aloe for the rash.

“I suggest that MMT makes a fatal error when it bases its cure on treating a symptom.

“There are other symptoms of a bad economy. Shall we treat those directly, too? How about homelessness? Shall we have HG (Homes Guarantee).

“How about the income gap between the 1% and the 99%? Isn’t that a big problem the JG doesn’t even approach? Shall we have a SITNTG (Sufficient Income To Narrow The Gap) guarantee?

“I say, treat the disease, which currently is a poor economy. Then, if there remains some unemployment, as well as other symptoms, determine what disease causes them, and treat those diseases, too.”

A reader named “Tyler” then wrote:

James Galbraith believes the disease is “unsupervised bankers and ambitious economists,” which he wrote in his letter to the Financial Times published May 2, 2012 as “Dr Summers performs a medical miracle.”

This made me recall Rodger’s blog post, “At long last, are we ready to end private banking?”

I wrote: “Given the question of whether unemployment caused the recession or whether the recession caused the unemployment, I think any honest person would agree on the later. Cure the recession and you cure the vast majority (but not all) the unemployment.

There still will remain some unemployment caused by other problems: A bad educational system? Young people needing to leave school to support their families? Previous history of incarceration? Different skill set needed? You name the cause, and that is what needs attention.

As for curing “accounting control fraud,” that might prevent some future recessions, but it probably will not cure this recession.

The very heart of communism was JG, and I believe that was one of its main weaknesses, too. The notion of solving a problem directly, rather than focusing on the underlying causes of the problem, is a naive strategy. If the causes remain, the problem will remain.

A reader named “Marley” asked:

What say you of an economy like Germany then, where you have very low unemployment but 20% of the jobs are these mini/midi jobs that pay extremely depressed wages since Germany has no minimum wage?

I responded: “Sounds like Germany has a form of JG. So tell me, exactly what wage will JG pay? Will it be minimum wage, which today is poverty level for most people? Will it be above minimum wage, so people will quit their minimum wage jobs and go to JG? Or will it be below minimum wage — really poverty level.

“The question of what wage JG will pay is nontrivial, and I know there has been much argument about this. But without an answer, what is left of JG?”

In the interest of space, I’ve left a great many of the arguments out. I suggest you go to the site, and read them. Interesting discussion. I’ll conclude my post with this. Tom Hickey said, in response to another commeter:

“Arguing the details prior to agreement on general principles is a waste of time.”

It’s a distraction. The argument is about macro theory and policy options that follow from it. After that policy formulations need to be developed for specific cases, such as the US and UK, where political systems and economic conditions are somewhat different, and strategies and tactics developed for implementation.

Arguing about tactics while the debate is at the theoretical and general policy level is silly.

To which I responded: “The general principle of addressing a symptom rather than the underlying problem is wrong. And the details (i.e., exactly what salary, exactly what jobs, exactly what locations, who supervises, etc., etc., etc.) are weak.

“I’ll be interested to see how all that is resolved. My concern however, is that JG has evolved from a solution to a problem, and now has a life of its own, to be defended, fixed, defended again, fixed again — rather than starting from the real problem: How to make the economy better for everyone.

“In this, JG reminds me of the euro, another “solution” that is defended, fixed, defended again and fixed again, that also has acquired a life of its own.”

Sad to say, some proponents of MMT have become so enamored with JG, they react quite badly to anyone who questions their beloved solution. It’s a shame, because I believe JG, and MMT’s refusal to see it clearly, detracts from MMT’s credibility.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

==========================================================================================================================================
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports

#MONETARY SOVEREIGNTY