11 responses to “MMT – Economics for the Political Right?

  1. Peter,

    You’ve not mentioned MMT’s Job Guarantee in this post. In fact, you haven’t mentioned it at all in any previous posting. Is this something that can be left out of MMT in your opinion?

    The idea of a Job Guarantee could be attractive to those on the right who would rather the unemployed be required to do useful work rather than do nothing at all. Maybe just at a slightly higher rate? Would this be acceptable and what is the difference between that and workfare?

    • Yes you are right. The JG is something about which I do have some reservations. The alternative approach is known as a Basic Income Guarantee. (BIG). With both these options the devil is in the detail.

      In practice we’d still need an element of BIG even if a JG were introduced. A true job has to pay a wage and that wage is not dependent on the personal circumstances of the worker. If it only pays a minimum wage, that would not be enough for someone with a number of dependents.

      I’d support a move towards a JG if it were voluntary. An optional extra. However, in practice I would think we would get this:

      I’ll come back to this in a future posting.

  2. As “stuey” above notes, the Job Guarantee would be attractive to at some strains of conservatism. (Note that what passes these days as “conservatism” is right wing anarchism, which earlier generations of conservatives viewed as crazy.) Putting people on welfare is viewed as socially problematic, yet realistic analysis of the system shows that some form of counter-cyclical policy is needed, as having large bands of unemployed males is not conducive to social stability.

    As for the size of the government, MMT is fairly neutral on that topic. (Warren Mosler mentions that every so often.) A Job Guarantee could theoretically replace a good portion of the Welfare State (there would always be a need for emergency support), and it could largely be administered outside the government, such as by charities. It could actually shrink the overall size of the government.

    Other areas of government intervention (education, health) can be structured as either being done by government or the private sector, with similar outcomes. This is largely a question of how the activity is packaged and defined for the purposes of national accounting. This is why I tend to not look at the government as a percentage of the economy, as I think that the percentage is actually somewhat arbitrary,.

    • Thanks for the comment. Yes I’d largely agree. On the question of the JG, I’d say it only needs to be included in MMT as and when the JG becomes economic reality.

      A scientific theory, and economics has to become more scientific in its approach, is a description of what is rather than what should be. I’ll develop on this theme in my next posting.

  3. Let’s not forget that the really innovative thing about the JG is that it turns the NAIRU on its head: instead of the central bank using the unemployed as involuntary tools to protect the savings and profits of the wealthy, a JG uses the bufferstock of unemployment to help price stability in addition to undertaking socially useful work.

    If the JG was promoted as some kind of “briar patch” for the indolent, I’m sure it would engage the inherent cruelty of the Right and get their enthusiastic support. That after all, is the politics behind “work-for-the-dole” schemes.

  4. ” a JG uses the bufferstock of unemployment to help price stability”

    Yes, that’s the rationale. I think Bill Mitchell has likened the JG to the Australian government’s wool buying scheme.

    Human beings are more complex than bales of wool though. Inevitably, if they end up on a JG scheme they’ll find themselves doing pretty much the same work, and putting in the same amount of effort as other workers who’ll be paid better. Those other workers will likely be in a union. The JG workers will want to be in the union too. They’ll want union rates for the job.

    I, personally, couldn’t help but support their entitlement to equal pay for equal work. So, as I see it, the JG is an element of MMT than is of more appeal to the political right. At least until these qestions are answered.

  5. The JG wage is fixed. They could be in a union but it would only negotiate conditions.

    • Would it be? That’s something we can all have an opinion on, but I personally would be unhappy for any group of workers to be told that.
      Either the JG provides real jobs, in which case JG workers should have the same rights as all other workers, or they’re just made-up jobs and so we say they haven’t.
      I’d like them to be real jobs.

  6. If they don’t like the JG they can quit it and get a job in the private sector. Because if there is stimulus and inflation then the JG faces real wage cuts and prevents inflation.
    Similarly, with deflation the JG fixed wage is attractive.

  7. reallyniceguy2014

    Reblogged this on My WordPress blog.

  8. Pingback: Modern Monetary Theory: The Clockwork Orange of Economics - Penserra

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