Saturday, May 19, 2018

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.

11 comments:

Calgacus said...

(1/2)

I am in favor of a job guarantee -- provided it meets MY criteria. The proposals currently being shopped around don't.
What exactly are your criteria? How do the current ones not meet them? Again, I argue that such criteria are like complaining about the Emancipation Proclamation because we haven't planned sites for the Freedmen's Bureau yet.

On Kalecki's paper - that paper is strongly emphasized by Bill Mitchell, who has written about it in many blogs. And only pushed a bit less by the other MMTers. Personally, I found their modern expositions of the financial mechanics unintelligible until I read that paper, after that I felt I began to really understand.

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.

I would say that is not a rival, but a subsidiary proposal. Work time reduction - in some ways, but only in some ways, is a goal, but as a proposal for immediate change, it is too little. It just doesn't do the job. On the other hand, guaranteed jobs change everything and permanently entail work time reduction, in the beneficial, but not the detrimental way. The MMTers have treated such questions. Their "40" is there simply because that is the US standard and could be replaced by "your country's current standard"- they certainly wouldn't advocate it in France! Dean Baker has written about work sharing and the like, and they have commented on this and on work time reduction IIRC.

Collective bargaining, strikes - whatever, have it or not, imho it doesn't matter too much. On work conditions, yes, perhaps, but the basis of the JG is one universal fixed wage. So the JG essentially puts the economy on a labor standard. If people want to strike for pay of more than one hour of work in return for one hour of work, they're welcome, but there is a rather obvious logical consistency problem.

The public works projects of the New Deal are pertinent to the job guarantee debate for two major reasons.
Those reasons are not at all major in comparison to the obvious pertinence of the New Deal programs: They are the basic model of the Job Guarantee, a very successful large scale test.

As for recent critics- not all his comments are as bad, but Taylor's "geographical mismatch problem" is what I called the "prizewinner", here. I mean, Sheeesh!.

Calgacus said...

(2/2)

Gorz is great! Had the book, but thank you for pointing out that chapter! Here is a link to the whole book Andre Gorz- Critique of Economic Reason- Verso (1989)

"This is why the debate on the amount of the guaranteed minimum, however important it may be in the short term for the victims of 'rationalization', masks the deep significance of the very principle of this form of guarantee. It is not, in fact, paid out of solidarity, but as an act of institutional charity. And like every charitable institution, it is conservative in intention: instead of combating the segmentation and South Africanisation of society, it tends to make these things more acceptable. The guaranteed minimum functions as the wages of marginality and social exclusion. Unless it is explicitly presented as a transitional measure (and the end situation to which the transition was directed would have to be clearly specified), the guaranteed minimum is a Right-wing idea. From this we may discern what the Left's alternative must consist of. It will not accept the growth of unemployment as something inevitable and will not accept that its goal must be to make this unemployment and the forms of marginalization it entails tolerable. It must be based on the rejection of a splitting of society into one section who are by rights permanent workers and another which is excluded. It is not therefore the guarantee of an income independent of work that will be at the centre of a Left project, but the indissoluble bond between the right to an income and the right to work. Each citizen must have the right to a normal standard of living; but every man and woman must also be granted the possibility (the right and the duty) to perform for society the labour-equivalent of what she or he consumes: the right, in short, to 'earn their living'; the right not to be dependent for their subsistence on the goodwill of the economic decision-makers. This indissoluble unity of the right to an income and the right to work is the basis of citizenship for every man and woman."

The MMTers don't say it any better, though they say such things all the time. The JG is at "the centre of a Left project". "The guaranteed minimum functions as the wages of marginality and social exclusion." I wouldn't be surprised if Gorz is in their bibliographies already.
In a very quick look, I don't really see any major difference between Gorz & MMT - their criticizing him, particularly in the above, would be like criticizing themselves! What difference do you have in mind? Except maybe for stuff like "Balance of payments pressures" & the like as being an omnipotent bogy, or perhaps the necessity of taxing or paying for a JG ((smaller) sheesh again!), Big Lies which Gorz maybe quarter-fell for.
As for Max Sawicky, it is pretty good, not as good as Gorz, but what is annoying is "the devil is in the details". No, it isn't. Can't there every be anything where the devil is NOT in the details? No, here, the devil is in doing it. Just deciding and doing it. Harry Hopkins got it going in a few months with a few hundred people. The business community understands the devil just ain't in the details. That's why they hates anybody touching their precious, their unemployment.

Sandwichman said...

Calgacus,

"Their '40' is there simply because that is the US standard..."

That is exactly what I was talking about. Their "$15 an hour" is not there because it is the U.S. standard. Their "right" to a job is not there because it is the U.S. standard. But oddly somehow, hours are uniquely exempt from shifting the paradigm. My hypothesis about this selective lacuna is that Wray & Co. accept uncritically the post H. Gregg Lewis neoclassical retreat to a presumed free-market optimization of hours. If you have a better explanation, bring it on -- "because it is the standard" does not pass the laugh test.

What exactly are my criteria? As I indicated in the OP, my minimal criteria would be that a job guarantee at least start from the standards adopted in the 1933 legislation. Ideally, I would like to see acknowledgement of labor power as a common pool resource and wealth as disposable time -- these "Copernican" shifts in perspective, in my view, also would favor a collective action approach rather than a top-down think-tank policy lottery.

Egmont: I am deleting your spam and will delete any further spam that you post in my comments.

Bruce Wilder said...

Humans are story-telling animals, but we want our stories to end and therein lies a fault of human nature: we want an end to history but not to ourselves, but we end and history goes on, one damn thing after another. Most people find open-ended problems distressing to hear about, which is why I suppose so many magazine articles have titles of the form, "Here's how we can . . ." (Google "how we can " and marvel at how many chronic and complex problems have ready-made solutions known to journalists.)

The only objectively right answer you can get from economics about any problem is, "it depends" followed by some account of what "it" depends on, in the context of the emergent, self-reflexive, putative system of the political economy. The reactionary claims the system ain't broke, perhaps because it serves vested interests well enough; the radical left claims it is fundamentally broken and our only hope is for something completely different (but largely and uncritically unspecified).

I suppose I belong to some middle group that thinks the system as it exists is importantly broken because it serves a few too well and many so badly -- and I would even venture the hypothesis that the system serves all badly in the very long-run on its apparent trajectory. I share this middle ground with a lot of non-reactionaries and non-radicals who seem to be lost in a muddle where they do not feel confident they understand anything about how the economy works as a system, but would prefer not to be buffeted by a recession, a falling stock market or rising gas prices.

I feel like the JG (and the UBI) resonate with that muddled middle precisely because that muddled middle have little confidence that they understand anything of the political economy as a social system and yet they have witnessed the erosion of that system for some large numbers and they hear about more change on the horizon, from robots and the like.

I do think the muddled middle lack confidence in their understanding of the political economy as a system as opposed to a personal experience in part because the neoclassical economics taught relentlessly in colleges, business schools and assumed in the conventional rhetoric of the news media is such a rubbish heap. That journalists have transformed political news into an entertainment product analogous to pro wrestling compounds the problem.

You cannot manage a politics of mass mobilization against the oligarchs without some realistic paranoia and I see the interest in the JG as reflecting at least some glimmer of that entering the consciousness of the muddled. It won't be enough to ask for a show of hands to usher in the millennium.

Sandwichman said...

"we want our stories to end and therein lies a fault of human nature"

Kenneth Burke referred to this as being "rotten with perfection." Frank Kermode wrote about the apocalypticism of The Sense of an Ending. "Realism" repudiates the apocalypticism and then recuperates it in the idea of perpetual crisis -- the immInent end of the world becomes immAnent.

Peggy said...

Word the call as "guarantee 20 hours of labor to earn a rising standard of living". Incorporate the reduced hours in the initial campaign and Indicate willingness to negotiate how many. I inject "earn" because it appeals emotionally to my and my many fellow believers that labor is good for the soul and essential for civilization, and emotional appeal Is now currently recognized as an economic variable. I add standard of living because I, at least, don't trust The commodity 'money' as honestly pegged to the world average labor time in the other commodities we presume it exists to exchange fairly. A lot of good people currently employed at a fine standard of living doing wasteful data gathering and consumer measuring can be redeployed arguing til they agree on the kind of lists I remember from the '50s that included things like indoor plumbing, and later air conditioning, and now high speed internet access. "Rising" rather than "prevailing" because we do want life to be better for the next generation.

I strongly support Sandwichman's warning. The NYT has an article on JG today. It is definitely getting traction. But in the long run and material reality, increasing productivity dehumanizes rather than further humanizing, us if it does not increase real freedom FROM the fears and sufferings and endless list of name-able evils correlated with unemployment by simultaneously Increasing freedom TO do the work we want to do. Decreasing labor time without increasing the real free time of labor-ers makes science and technology a cruel joke and turns the inevitably growing masses against progress.

Distinguishing labor, bossed and paid, from work, which may look the same but be unbossed and unpaid, i.e. Free, may be part of "grokking" the above. More and more, we labor in order to work.

Sandwichman said...

Peggy,

In a nutshell, what you are advocated is what Andre Gorz proposed -- 1000 hours per year guaranteed with adequate income decoupled from the number of hours worked. In my opinion, Gorz's proposal is a much better starting point for the conversation about a right to work and income than are the ones from the Levy Institute and UMKC, which are in the tradition of Leon Keyserling's cold-war corporatism.

Calgacus said...

Bruce Wilder:The only objectively right answer you can get from economics about any problem is, "it depends" followed by some account of what "it" depends on, in the context of the emergent, self-reflexive, putative system of the political economy.

Nope. The "objectively" - rather "absolutely", right answer to slavery is:
Kill it. Now. Only abolition does that.
The right answer to unemployment is:
Kill it. Now. Only a Job Guarantee does that.

I feel like the JG (and the UBI) resonate with that muddled middle precisely because that muddled middle have little confidence that they understand anything of the political economy as a social system and yet they have witnessed the erosion of that system for some large numbers and they hear about more change on the horizon, from robots and the like.
Right about the UBI. Yes, they're muddled, and how.
Wrong about the JG. The opponents and doubters are muddled. The supporters, through the ages, support it because they are quite confident they "understand political economy as a social system", with good reason. They do understand it, in this central respect.

Sandwichman said...

Calgacus, For some reason, I don't find zealotry 100% persuasive. What is the MMT plan for dealing with dissenters and heretics?

Calgacus said...

Fine, I don't mind being called a zealot, I pretty much try to be the most extreme MMTer out there, more extreme than the developers of the theory, if that makes sense. It seems everybody else pushes them to water things down, and make things more complicated than they really are, while I'm a fan of Tom Petty "Don't back down" & KISS (the acronym). Is there nothing, for instance slavery, that is worth a bit of zealotry? And thinking in terms of slavery is imho an invaluable guide to understanding economics.

All I am saying is that a new & better WPA would change things beyond recognition. IMHO, the MMTers throughout the ages have ironclad arguments for most of their positions.

I have no plan to deal with dissenters and heretics except to defend them, I guess. Just want laws to put one part of the Universal Declaration of Human Rights in action, and to eliminate, through rational argument, the weird idea that there is any cost in doing so.

Sandwichman said...

"It seems everybody else pushes them to water things down..."

"IMHO, the MMTers throughout the ages have ironclad arguments..."

Rust never sleeps.