Monday, June 12, 2017

David M. Fields — New Book: The Job Guarantee and Modern Money Theory Edited by Michael J. Murray & Mathew Forstater


The Job Guarantee and Modern Money Theory, Edited by Michael J. Murray & Mathew Forstater, Palgrave.

Radical Political Economy
New Book: The Job Guarantee and Modern Money Theory
David M. Fields

22 comments:

Matt Franko said...

"During economic downturns, the program would expand"

Bad policy is what causes the "economic downturn " in the first place....

This implies the authors think in terms of some sort of stochastic occurring cycle...

Matt Franko said...

"Stability creates instability " type thing....

Neil Wilson said...

"Bad policy is what causes the "economic downturn " in the first place"


It's the natural way that animal spirits run in a chaotic system. You get an overrun and a pull back. The Job Guarantee acts to dampen the swings of that cycle automatically.

Stability is destabilising.

Innovation always runs the risk of failure. If you have a lot of innovation you'll get a lot of failure.

Matt Franko said...

Would be reduced/ eliminated with better policy....

Matt Franko said...

E.g. With a ubi no one would save (eliminate domestic deficit)...

Six said...

"E.g. With a ubi no one would save (eliminate domestic deficit)..."

Nonsense. People would still save. If I retired tomorrow, I'd have a UBI (government pension + annuity + eventual social security), yet I still save about 15-20% of my income.

Tom Hickey said...

"During economic downturns, the program would expand"

Bad policy is what causes the "economic downturn " in the first place....

This implies the authors think in terms of some sort of stochastic occurring cycle...


Business and financial cycles have been endemic to capitalism and so far no one has figured out how to elude them. TPTB thought they had finally figured it out but were countered by the financial crisis, which "no one saw coming."

Tom Hickey said...

"Stability creates instability " type thing....

"Animal spirits." No one has figured out how to remove the non-rational from finance and business affairs. Human will be humans, it seems, and rationality is "bounded."

Tom Hickey said...

The way to reduce the need for personal saving is to provide free education from daycare to PHD, free health care, a realistic pension that is ironclad, and a job guarantee. Then saving would be for future purchases like down payments on big ticket items.

There is no need to save when it is recognized that saving doesn't cause investment and is not needed to fund investment.

Saving (thrift) is a left over of the Protestant ethic that was a major factor in the development of capitalism, if one accepts Max Weber's argument in The Protestant Ethic and the Spirit of Capitalism.

Tawney, too.

Religion and the Rise of Capitalism (1926) was his classic work[28] and made his reputation as an historian.[29] It explored the relationship between Protestantism and economic development in the 16th and 17th centuries. Tawney "bemoaned the division between commerce and social morality brought about by the Protestant Reformation, leading as it did to the subordination of Christian teaching to the pursuit of material wealth".[30]

The Oxford historian Valerie Pearl once described Tawney as having appeared to those in his presence as having an "aura of sanctity". He lent his name to the Tawney Society at Rugby School, the R. H. Tawney Economic History Society at the London School of Economics, the annual Tawney Memorial Lectures (Christian Socialist Movement), the R. H. Tawney Building at Keele University[citation needed] and the Tawney Tower Hall of Residence at Essex University.

Adrian Hastings wrote: "Behind the list of major publications was the mind of a man tirelessly guiding government, Labour movement, Church and academic community towards a new society, at once fully democratic, consciously socialistic and fully in accord with Christian belief. In effective intellectual terms it is doubtful whether anyone else had remotely comparable influence in the evolution of British society in his generation".[12]
— WikipediaWikipedia

Matt Franko said...

It comes from a lack of technical understanding...

Tom Hickey said...

It comes from a lack of technical understanding...

Is that simply an assertion of opinion, like "everything has a technical solution," or is there substantiation that justifies it?

Substantiation would have to in terms of a theory since there is no evidence that cycles can be moderated or eliminated, and the entire history of capitalism belies it.

This is considered to be one of the knottiest problems in capitalism and the economic theories that deal with it. To say that anyone who solves it would be awarded the "Nobel" would be an understatement. That person would go down in history as the most important person in the history of economics.

Neil Wilson said...

Social security has been in place in the UK for several generations. We've had reasonable state pensions and half decent unemployment benefit for a very long time.

At no point did it ever change the savings ratio substantially. Savings is rather more than 'rainy day' money. It is also an expression of virtue, and something to hand on to your children.

It is a total nonsense to say 'UBI' would eliminate savings, any more than a Job Guarantee would eliminate savings. And that's despite the Job Guarantee wage being 3 to 5 times the income of an proposed UBI.

Matt Franko said...

If the pensions are looked at as inadequate then yes people would probably still save...

Matt Franko said...

Tom,

They all think "were out of money !" ... I don't see how you guys can claim they have it all figured out when they are still saying these types of things...

Matt Franko said...

Here's Warren from recent:

"@StephanieKelton @federalreserve @USTreasury He also said that when investment picked up and used up the available funds it would drive up rates. :( "

So they guy running it is thinking banks lend out the reserves and gives the order to flood the system with reserve assets that "banks can lend out" thus causing a collapse of the price being set for all other bank assets...

This is not a random outcome ...

Matt Franko said...

And it's not going to be a random outcome when they reverse all of this and create a moonshot...

Tom Hickey said...

Savings is rather more than 'rainy day' money. It is also an expression of virtue, and something to hand on to your children.

Agree. Even if the need for saving were eliminated, people would still save, because thrift is moral issue rather than an economic one.

Saving to pass on to future generations can be discouraged by taxation, and in an equal opportunity society it would be.

Tom Hickey said...

BTW, I recall one very wealthy person saying he was not leaving his children "a dime," since he regarded inheritance as sabotage. He provided them with good genes, good example, and a good education, and the knowledge that their success would be up to them.

MRW said...

BTW, I recall one very wealthy person saying he was not leaving his children "a dime," since he regarded inheritance as sabotage. He provided them with good genes, good example, and a good education, and the knowledge that their success would be up to them.

You would never hear a poor family man who made good and made a lot of money say that.

I have a Latino friend with three kids who would tell me that his greatest joy was to be with his wife and kids on the weekend, just hanging out with them. There were years when all they could afford to do was window-shop in malls so they could save on A/C or heating. He talked to me one night about how he was going to help them as his fortunes improved (which they were doing).

I don’t remember how we got into this conversation but he told me that his wife and kids deserved as much to participate in his wealth as he did. He sneered at the kind of ‘good genes, good example, and a good education is all you need’ attitude you cite above.

He told me his family sacrificed along with him too. He told me they went without a lot of things over the years as I busted my ass, weeks when we didn’t know how to make the rent, never being around because I was working 18 hours a day, half a sandwich for the kids’ school lunch, and real fear about how we were going to make it when I lost my job a couple of times. My wife needed medicine for years to control her epilepsy and we didn’t know how to pay for it.

He viewed his life as inextricably wound up with that of his family. He wasn’t a lone wolf out to prove his business or success prowess as the wealthy guy you quote is obviously proud of having proven to the outside world.

His conversation struck me deeply because I come from a family line where the perspective of that “very wealthy person” you cite is considered the correct one and the high moral ground. And I also realized he took seriously his 100% responsibility for that which he spawned.

The good genes are fortuitous. The good example is vanity. The good education was not only a minimum responsibility, but polished his standing in the community as well.

Not Impressed. (I think I heard Elon Musk utter similar views recently—but don’t hold me to it.)

Neil Wilson said...

"Saving to pass on to future generations can be discouraged by taxation"

Only if you get the votes to pass such legislation.

Here we just rejected that approach. Inheritance tax has been watered down to next to nothing, and proposals to get people to pay for their own elderly care out of savings rejected. The 'something in the will' is very much a thing people want - possibly as a way of influencing the behaviour of their offspring and grandchildren.

That makes sense when you could be retired for 35 years and your children will be in their 60s or 70s themselves by the time you get old.

Bob said...

...not leaving his children "a dime"...

I'll provide the rat poison, you provide the meal.

Greg said...

I dont think there is anything that will curb saving altogether but there is something wrong with thinking your dollar saved today should still buy a dollars worth of goods 5-10 yrs from now. Its the whole concept of inflation and currency depreciation that drives all the insane chasing of value and causes the booms/busts in my view.

If I want to take a 3 week vacation to Spain I need to "save" the time off and I have to spend less on other entertainment for a while if I want to have the funds to buy a plane fare and hotel rooms. Or I put it on credit and pay it off over time when I get back but I still need to have some unspent income to make the new payment