Jobs, Jobs, Jobs — GUARANTEED!
The current mania for “job guarantee” policies is making the Sandwichman anxious. I’ve been on the full employment beat for over 20 years so I think I have a pretty good grasp of the terrain. First principle is that there are no panaceas. My favorite policy option — reduction of working time — is not a panacea. Neither is yours.
Like my learned friend Max B. Sawicky, I am in favor of a job guarantee — provided it meets MY criteria. The proposals currently being shopped around don’t. That should not be a fatal flaw. Inadequate policy proposals can serve as the starting point for dialog that can lead to better proposals. From the left, Matt Brunig, and from the center?, Timothy Taylor have offered constructive critiques of the current proposals. I would like to offer a bit of critique from history.
Much of what I would like to say about job guarantees (and full employment), I have already said in one way or another so most of this post will consist of links with brief introductions. They deal with the Political Aspects of Full Employment (Michel Kalecki) and with how those political aspects have played out historically. As I wrote nine years ago, the economics of full employment are not rocket science. It’s the politics that are stupid. Kalecki’s essay was published in The Political Quarterly in 1943 and was based on a lecture delivered at Cambridge in the spring of 1942. I posted it in 14 installments at EconoSpeak in May 2009.
Around the time that Kalecki published his essay, John Maynard Keynes wrote a Treasury Department memorandum spelling out his thoughts on The Long Term Problem of Full Employment. Keynes summed up his hypothesis briefly as
The problem of maintaining full employment is, therefore, the problem of ensuring that the scale of investment should be equal to the savings which may be expected to emerge under the above various influences when employment, and therefore incomes, are at the desired level.
Stately simply, the concept has three moving parts: the scale of investment, expected savings and the desired level of employment. Recognizing that there is both a numerator and a denominator to a ratio, Keynes maintained that ultimately full employment could be maintained by redefining employment. Shorter hours were thus inherently part of the equation:
10. As the third phase comes into sight; the problem stressed by Sir H. Henderson begins to be pressing. It becomes necessary to encourage wise consumption and discourage saving,-and to absorb some part of the unwanted surplus by increased leisure, more holidays (which are a wonderfully good way of getting rid of money) and shorter hours.
Falling somewhere between Kalecki’s political pessimism and Keynes’s policy optimism was William Beveridge’s bureaucratic pragmatism. In Full Employment in a Free Society, he raised the question several times of the implications of full employment policy for collective bargaining:
Under conditions of full employment, can a rising spiral of wages and prices be prevented if collective bargaining, with the right to strike, remains absolutely free? Can the right to strike be limited generally in a free society in peace-time?
Beveridge’s “solution” to this dilemma was to urge a more statesmanlike attitude from union leaders and possibly compulsory arbitration of wages.
Collective bargaining was not an issue for the public works projects of the New Deal because both major political parties in the U.S. — and the courts — rejected public sector collective bargaining as “unthinkable and intolerable.”
At the opposite end of the spectrum, segregationist Charles Wallace Collins denounced full employment — and Beveridge’s book specifically — as part of a nefarious “road to serfdom” that would ultimately establish a Stalinist-type reign of terror in the U.S.A. As paranoid as that vision may sound, Collins wrote the blueprint for the alliance of white supremacy and economic revanchism that has infested U.S. electoral politics since Richard Nixon’s “southern strategy” in 1968. These are, incidentally, the political forces that control the executive and the legislative branch of the U.S. federal government today and seek to entrench their dominance permanently in the judicial branch.
The right-wing road to Trumpdom did not follow a direct path. One of its early and seemingly innocuous, technocratic turns was the sequestering of “secondary benefits” in the cost-benefit analysis of public works projects. Who would have thought that such an arcane application of the unacceptable nonsense of the Kaldor-Hicks compensation criterion would have such far-reaching consequences? At the time, in the early 1950s, the macro-economic impacts of the new public works austerity regime were drowned out by a massive arms build-up (financed by “siphoning off” some of the growth in GNP that would result from the build-up) and, subsequently the build out of the interstate highway system, rationalized on national security grounds.
The public works projects of the New Deal are pertinent to the job guarantee debate for two major reasons. One is the eclipse of their rationale by defense spending and containment of so-called secondary benefits noted above. The current crop of policy proposals finesses the secondary benefit issue by envisioning job creation as the primary objective. This invites comparison to Keynes’s fable about filling up bottles with bank notes and burying them in abandoned coal mines. Much of the current criticism of JG proposals dwells on that issue of the social utility of JG work, so I won’t bother to elaborate here.
But the second reason has to do with the political circumstances that led to the New Deal adoption of a public works program and that crucially defined its parameters. In 1932, a major public works spending initiative was the second priority of organized labor. Their first priority was a 30-hour work week and that goal came close to Congressional adoption.
Ben Hunnicutt told the story of the Black-Connery 30-hour bill in Work Without End: Abandoning Shorter Hours for the Right to Work. An earlier account of the political horse trading that led from Black-Connery to the N.I.R.A. was given by Irving Bernstein in a 1946 article, “Labor and the Recovery Program” I posted a version of the story with some supplementary information in The Black bill, Green and the Blue Eagle.
There are two aspects of that political wrangle over the 30-hour bill that I overlooked previously. The first is that the American Federation of Labor had adopted a resolution in 1932 authorizing a general strike strategy in support of the proposal and that federation president William Green articulated that strike threat in his Senate committee hearing testimony:
“Which would be class war, practically,” interjected Senator Black. To which president Green replied, “Whatever it would be, it would be that.” The Sandwichman is rather pleased that this turn of events reinforces his view about the connection between shorter hours, full employment and the myth of the general strike. What I also hadn’t realized was that, on the advise of Green, the 30-hour work week objective was built-in to the public works portion of the N.I.R.A. in section 206 of H.R. 5755, which reads, in part:
(2) that (except in executive, administrative, and supervisory positions), so far as practicable and feasible, no individual directly employed on any such project shall be permitted to work more than thirty hours in any one week; (3) that all employees shall be paid just and reasonable wages which shall be compensation sufficient to provide, for the hours of labor as limited, a standard of living in decency and comfort…
The recovery act was passed on May 26, 1933, eighty-five years later, job guarantee proposals from the Levy Institute, the Center on Budget and Policy Priorities and the Russell Sage Foundation assume a 40-hour work week as the expected full-time standard. This doesn’t mean that they are opposed to a shorter work week — only that they failed to factor it in to their policy analysis. My impression is that the reason for such neglect is that job guarantee proponents view the reduction of working time as a rival and consequently hostile policy option rather than as a complementary one.
Although regrettable, such rivalrous framing of policy alternatives is understandable and not exclusive to the job guarantee camp. For example, Robert Lajeunesse titled his comparison of the two as “Job guarantees versus work time regulation.” By contrast, Andre Gorz incorporated a “right to work” component into his work time reduction proposal. I have been unable to find any response from job guarantee proponents to either Lajeunesse’s analysis or to Gorz’s proposal.
My anxiety about the job guarantee proposals arises, I suppose, from my suspicion that the seemingly technical issues that advocates neglect — or avoid — in their proposals are those that are especially implicated in what Kalecki described as the political aspects of full employment. In other words, to rephrase Senator Black’s question to president Green, “Which would be denial of class war, practically?”
Whatever it would be, it would be that.
Thanks for your contribution to this discussion. I find it very fascinating. The focus on this one issue could be viewed as a crystalization of how the Left moves forward if or when it gains power. It also illuminates the issues involved when the Left was at high tide in the past.
The proposals put forward by think tanks and politicians don’t match the ambitiousness of the rhetoric I’m hearing from JG advocates.
In replying to Dean Baker’s take down of the Levy Institute plans, supporter James Galbraith suggests the JG will not be much better than low wage work:
“It’s true that $15 is better than current wages for many low-wage workers. But there is also the question of what the work is and where it leads. Would my son quit his cooking job to serve as a teacher’s aide or park monitor? I doubt it. Those public jobs are a stop-gap; they would not lead toward promotions, raises, and careers. To get those things, you’d mostly have to find your way back to the private sector. Yes, some workers would quit bad jobs to take advantage of the guarantee. Many would take stock, think it through, and stay where they are.”
This system will be better for the long-term unemployed who can build their resume and get an income. It will help with the social safety net a little depending on where the floor is set.
But they’re not ambitious enough to engage the class war aspects, as you say, of full employment. JG advocates assure me that they are and that the Dept of Labor will be able to overrule the Federal Reserve. I’m skeptical unless it’s there specifically in the legislation. The JG advocates don’t assuage my fears b/c their models appear to underplay the effect and cost in order to better sell it, I would guess.
I mean I doubt whether Gillibrand, Booker or CAP have really carefully considered the class war aspects. They probably view it more like raising the minimum wage and providing paid training to the long term unemployed. Whereas the advocates suggest you’ll have a “right” to a job and all that entails and you can’t be fired (or you can be but you’ll be given a different job, maybe a worse job which you can always quit, but still above a floor level).
Gillibrand and Booker are shallow.
Done the right way a jobs program could help some people — sort of like EITC and the minimum wage. It would help some people but represents no comprehensive solution to anything.
What we need is guaranteed labor union certification elections at every private workplace (cycle one, three or five years; local plurality rules).
NLRB our most important and mostly ignored law (94% non union US). I read somewhere that France has 2% union workforce and 98% negotiated contracts. Don’t know how they do it (if they do) – but that sure isn’t us.
And what then, oh gurus, do you think of Ms. Paulina Tcherneva and her advocacy of federal job guarantees supported by MMT (modern monetary theory)?
I see no increase in the percentage of labor in manufacturing or services.
I think she’s talking of all sorts of desirable projects be they infra structure or otherwise on the theory that there is always something useful to society to do and that the government can simply print money to cover the costs. Kind of like a super New Deal era WPA covering construction, services, the arts, and what have you.
…and a pony!
“. . . and a pony”: go to next thread.
None of this gets to the issue of income inequality. Sure, set the minimum to $15. Does not mean that over all the share of income is shifting back down the line. Just sets a minimum.
Give a JG, you get a job from the government but without moving the tax burden to where the income has shifted, you are not addressing the income inequality.
All of this policy is discussed with out addressing the fact that we have move a huge portion of this economy into making money from money. If you don’t have money, you don’t get to make much.
Income has to move back down the line from the top so that their is a greater number of levels than our current tax system would suggest.
Have you noticed how our income tax has gone from 28/30 brackets to 7. Have you noticed that in those 7 you really only have 2. 15% and under and 25% and above. Have you noticed we’re getting income distribution that reflects these 2 brackets?
It is not a chicken of the egg. It is that the chicken and egg are all part of the same perpetual biological process.