The “Bite-Sized” Explanation of The Phillips Curve and the Job Guarantee

The Phillips Curve: The private sector is nearing actual full employment. Wage price pressures are threatening an inflationary episode. The national government manipulates its fiscal or monetary policy, reducing aggregate demand and thus, reducing inflationary pressures, throwing workers into a state of involuntary unemployment.

The Job Guarantee: The private sector is nearing actual full employment. Wage price pressures are threatening an inflationary episode. The national government manipulates its fiscal or monetary policy, reducing aggregate demand and thus, reducing inflationary pressures whilst transferring workers from private sector employment into Job Guarantee employment.

The Job Guarantee eliminates the Phillips Curve. Let me put it this way: mainstream economists do not realize that a freeway has both an entrance ramp and an exit ramp.

When discussing the Phillips Curve, they see it as a giant interstate with entrance ramps only. Then they tell us if we are not careful, the freeway can become easily overcrowded. So, we must keep a certain number of cars off of the freeway at any given time to avoid congestion.

But a freeway has exit ramps.

The Job Guarantee is the exit ramp.

Instead of workers staying on the curve, they take the exit ramp and vacate the curve entirely.

The Job Guarantee vacates the Phillips Curve.

There is no trade-off between unemployment and inflation.