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MMT’s Job Guarantee: Oasis or Mirage?

MMT’s job guarantee: oasis or mirage?

I’ve gotten some pushback from Monday’s piece on MMT and plan to address the criticisms in some upcoming posts. Next week I hope to get to inflation and taxes. For now I’d like to cover something I didn’t even mention in the post but that popped up almost immediately in the comments: a job guarantee.

MMT, at least as advertised to liberals, postulates a job guarantee. One of my problems with MMT is the way various proponents’ wish lists get conflated with the theory. Stripped to its barest essence, MMT is the theory that:1

governments with the power to issue their own currency are always solvent, and can afford to buy anything for sale in their domestic unit of account even though they may face inflationary and political constraints

There are no policy prescriptions contained in that, or even implied. One may apply that theory in different ways, but the thing itself requires nothing. The case for the job guarantee is a moral one, not something intrinsic to the theory itself.

Randy Wray makes the moral case with his analogy between disease and unemployment. He spends an entire post describing how MMT can accommodate a job guarantee. Yet he also concedes that “some other advocates of MMT do not accept the human rights angle” (oof), and concludes:

Can you separate the MMT explanation of the cause of unemployment from the policy to cure it? Yes.

Should you? Of course not.

In other words, MMT does not require a job guarantee, but it would be unjust to omit one. Of course, that also means that the prospect for one under MMT would be contingent on the policymakers charged with implementation sharing Wray’s sense of justice. That’s hardly an economic imperative demanded by the theory.

The problem right now is not that we lack the tools or economic model to address unemployment. The Federal Reserve ought to be terribly concerned. The problem is that no one in Washington actually is – not enough to act decisively, anyway.

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MMT’s job guarantee: oasis or mirage?

Cross posted from Pruning Shears.

MMT’s job guarantee: oasis or mirage?

I’ve gotten some pushback from Monday’s piece on MMT and plan to address the criticisms in some upcoming posts. Next week I hope to get to inflation and taxes. For now I’d like to cover something I didn’t even mention in the post but that popped up almost immediately in the comments: a job guarantee.

MMT, at least as advertised to liberals, postulates a job guarantee. One of my problems with MMT is the way various proponents’ wish lists get conflated with the theory. Stripped to its barest essence, MMT is the theory that:1

governments with the power to issue their own currency are always solvent, and can afford to buy anything for sale in their domestic unit of account even though they may face inflationary and political constraints

There are no policy prescriptions contained in that, or even implied. One may apply that theory in different ways, but the thing itself requires nothing. The case for the job guarantee is a moral one, not something intrinsic to the theory itself.

Randy Wray makes the moral case with his analogy between disease and unemployment. He spends an entire post describing how MMT can accommodate a job guarantee. Yet he also concedes that “some other advocates of MMT do not accept the human rights angle” (oof), and concludes:

Can you separate the MMT explanation of the cause of unemployment from the policy to cure it? Yes.

Should you? Of course not.

In other words, MMT does not require a job guarantee, but it would be unjust to omit one. Of course, that also means that the prospect for one under MMT would be contingent on the policymakers charged with implementation sharing Wray’s sense of justice. That’s hardly an economic imperative demanded by the theory.

The problem right now is not that we lack the tools or economic model to address unemployment. The Federal Reserve ought to be terribly concerned. The problem is that no one in Washington actually is – not enough to act decisively, anyway.

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