Dazed and Confused: Matt Yglesias on the Job Guarantee
Dazed and Confused: Matt Yglesias on the Job Guarantee
By Pavlina Tcherneva / neweconomicperspectives.org
Jan 23, 2014

Matt Yglesias has written a post that has the words ‘Job Guarantee’ (JG) in the title but has nothing to do with the actual JG proposal.

He begins by asking readers to imagine that:

“…instead of handing out welfare checks and food stamps to these bums, we should make everyone who wants public assistance show up daily at a rally-point to be contracted out to do street-cleaning work. Think parolees sentenced to community service…”

Unfortunately for him, that’s not the Job Guarantee and we have debunked such silly caricatures many times (e.g.,herehere and here). Unfortunately for his readers, he is either unfamiliar with the most basic literature on the JG, or is deliberately misleading them. Let’s give him the benefit of the doubt and assume it’s the former.

Yglesias proceeds to tell us that solving the unemployment problem for these “bums” this way is undesirable, because that would empower the Fed too much to focus on avoiding stock market crashes! With unemployment, however, the Fed will just have to keep pushing hard on that string, and sooner or later unemployment would magically disappear. You don’t even need to read Keynes to know that such a thing does not happen.  Just readBernanke (also here). The Fed cannot do it. We need fiscal policy. Even stranger is his implication that the Fed should not primarily focus its attention on regulations and financial instability!

But back to the Job Guarantee. Lest there is any doubt about our claims, let me reiterate some of them here:

  • The Job Guarantee is not workfare. It is a voluntary program. It is a guarantee of a job opportunity at a base wage, not a requirement to work for one’s current benefits.
  • The JG does not eliminate current programs or take away anyone’s benefits–unemployment insurance, food stamps, etc., all remain. Expenditures on these decline automatically.
  • The JG is not a replacement or substitute for much needed conventional public sector work. Our position has always been that they should be adequately funded. The JG is a buffer stock employment program.
  • It is not run by the federal government (only funder by it). States, localities, non-profits, and nonprofit social entrepreneurial ventures propose, organize, run, and manage the projects.
  • The JG is perfectly compatible with some forms of unconditional basic income—e.g., more generous social security and veteran benefits. I would add universal child allowance.   
  • The JG fluctuates with private sector activity. The JG wage becomes the effective minimum wage. The program maintains and enhances human capital and produces useful output (no ditch digging). It is not a panacea for all labor market problems.
  • No matter how generous the welfare policy, it does little for the person who wants a job and cannot find it.  As I recently explained, the mark of ‘unemployment’ is devastating to the jobless. It’s their scarlet letter.
  • The unemployed are already ‘part of the government sector’.  The public and private sectors, and society at large already bear the enormous real costs of unemployment. 
  • And while the unemployed want to work, the government has chosen to focus on policies that support unemployment. The JG is a policy that supports employment.
  • And as we have long emphasized, there is an important difference between using the unemployed as a buffer stock and having an employment buffer stock policy.  There is a vast body of literature explaining why the JG offers a superior macroeconomic stabilizer to the economy, the currency, and inflationary/deflationary tendencies.

What exactly is novel or progressive about the proposals by Yglesias? He prefers the following: 1) some income support for the needy, 2) some in-kind support; 3) balanced monetary policy; and 4) wage subsidies. All four are policies of the status quo (though I would debate the meaning of #3). All four have been in place for a long time without ever securing true full employment.  They are not enough. The missing piece is the JG.

A new progressive movement is shaping precisely around the idea of the Job Guarantee.  MMT had advocated for a JG even during the Clinton goldilocks economy (e.g., here and here). Sandy Darity has also developed a similarproposal. Bernstein and Baker have recently called for the government to act as an employer of last resort.  Robert Reich has been advocating for WPA renewal for years.

The JG proposal is also not new: Dr. Martin Luther King Jr. called for it in his March on Washington speech;  long-time U.S. Department of Labor economist John H.G. Pierson, who helped draft the Employment Act of 1946, had articulated a Job Guarantee proposal as early as 1941 (Full Employment: Why we need it; How to Guarantee it). Starting in the late 60s, Minsky worked to demonstrate why welfare cannot fully succeed in eradicating poverty (Ending poverty: Jobs not Welfare). And as Matt Bruenig from Demos reported this week, the 1967 report by the Presidential National Advisory Commission on Rural Poverty had proposed a Job Guarantee as a center-stage strategy for the eradication of poverty and unemployment.

In truth, there is nothing of substance in the Yglesias piece that represents an actual critique of the JG. The only thing one could surmise is that he objects to it because it’s “messy”.

He’s essentially echoing the oft-heard objection to the JG that “It’s a good idea; until you start thinking about implementation”.

Let me put it another way:

“Securing the right to food for every person in the world is a good idea, until you start thinking about implementation”
“Securing the right to vote is a good idea until you start thinking about implementation”
“Securing clean water for all is a good idea until…
“Guaranteeing access to public education to all is a good idea until…

You get the idea.  Yes, securing a basic human right is ‘messy’.  Implementing good macroeconomic policies is also ‘messy’:

“Regulating Wall Street is a good idea until…
“Protecting the consumers is a good idea until…
“Building modern infrastructure is a good idea until…

If “problems with implementation” is the pundits’ core objection to a program that provides voluntary employment to those who want to work, secures a basic human right, and provides a better and stronger stabilizer to the economy than anything we have had so far, they cannot be taken seriously. Before speaking from a position of authority, it’s best to become familiar with the literature on the JG. Until then, posts like that by Yglesias would seem like a thinly-veiled strategy to sling mud before the idea gets a fair hearing.

The HuffPo results are loud and clear: the Job Guarantee is by far the most popular program among Americans of all 5 reforms discussed in Myerson’s Rolling Stone piece. Imagine the support the JG would receive, if it got that fair hearing. Until then, cynics uninterested in examining the basic merits of the JG should be ignored.

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Dazed and Confused: Matt Yglesias on the Job Guarantee