I am not telling you that were we to initiate a Job Guarantee and a Basic Income Guarantee that there will be no prosperity for 40 years. What I am telling you is that a complete recovery will not happen overnight. Good things, sometimes take time.
From the point of initiation, it will take roughly 12 months for the Job Guarantee to be completely in place and functioning. The beneficial effects will become quite obvious in that short period of time. At the onset of a basic income guarantee, the positive effects for those struggling will be immediate. So, relief begins quickly. A complete reversal of the damage, however, will take time. And again, I would encourage interested laypersons and the public itself not to focus on the humanitarian side of the Job Guarantee or a basic income guarantee. Keep a level head and stick to the macroeconomic functions. Why? I will reiterate my point.
The purpose of welfare and food stamps is not to help the poor. The purpose of unemployment insurance is not to help the unemployed. I do not care what you’ve heard Bill Clinton, Hillary Clinton, Bob Dole, George W. Bush, Barack Obama, Paul Ryan, Nancy Pelosi, your high school English teacher, or gullible people on Facebook say – they don’t know what the hell they’re talking about.
The purpose of these initiatives are to act as automatic stabilizers for the economy. In order for welfare and food stamps to achieve their stabilization effects, these programs must utilize poor people. In order for unemployment insurance to achieve its stabilization effect, it must utilize the unemployed.
Federal deficits take pressure off of consumer savings which then allows consumers to increase their spending. Consumer spending drives jobs. As spending increases, production demands on business increase, and more workers are hired to help meet that demand. So, as consumer spending rises, the unemployment rate falls. As consumer spending collapses, the unemployment rate rises. As the unemployment rate rises, more people turn to welfare, food stamps and unemployment insurance for assistance, and the federal deficit automatically rises.
Welfare, food stamps and unemployment insurance set a floor in the economy that limit how far consumer spending can fall in a downturn – nothing else. That is it. If you cut these programs, you then reset the floor to a lower level. So, if you slash welfare, food stamps and unemployment insurance in a downturn, consumer spending will fall further, and the effects will reverberate through the economy.
First, businesses will experience a drop in income and unskilled workers at places like Walmart will lose their jobs. Those workers who would have spent their income at gas stations, clothing stores, etc., can no longer do so. As more and more people slow their spending, the effects of business income loss works its way into upper level jobs like management and general merchandise buyers. These people will lose their jobs. If you cut these programs in a downturn, you will only make the downturn worse.
The problem occurs when people claim that the purpose of these programs is to help the poor and the unemployed. When people do this, they open the door to all sorts of political bullshit. On the incorrect humanitarian view, there can be no argument to persuade a Paul Ryan. It is simply impossible to prevent cuts to these programs by calling Paul Ryan a mean-spirited, inhuman jackwagon.
But, from the correct view – the macroeconomic view – Paul Ryan has no hope of winning an automatic stabilizer argument, and he would know that. “Screw with these programs, Mr. Ryan, and this economy comes crashing down, right along with your career as a Congressman.”
Just like welfare, food stamps and unemployment insurance, the purpose of the Job Guarantee is to act as an automatic stabilizer. The main purpose is not to help the poor and downtrodden, nor to act as a safety net. The other macroeconomic functions of the Job Guarantee are to act as a buffer stock of employed persons which results in a positive impact on output and shorter downturns, creating a demand for highly skilled/highly educated jobs, and also to act as an inflation anchor, and to attenuate wage-price pressures should they occur. That’s it. Make the Job Guarantee out to be a humanitarian “help the poor” welfare train and you will invite disaster. But, if you take the correct view and assert that view in public, Paul Ryan has absolutely no hope of winning an argument concerning the Job Guarantee, and he would know that. “Screw with the working man, Mr. Ryan, when the currency is anchored to labor, and this economy comes crashing down, right along with your career as a Congressman.”
So, let’s keep our heads above water here and forego the focus on any humanitarian aspects of the Job Guarantee. When we design appropriate macroeconomic policy, we are addressing a malfunctioning economy. When we implement that policy, the economy stabilizes and then functions properly. The poor and the unemployed simply benefit because of the process itself.
Now then, the Job Guarantee and a Basic Income clearly are not enough to completely reverse 40 years of neo-liberalism. Our infrastructure is collapsing, the populace is floundering from a build up of years of private debt, banks and the financial sector need new, hard regulations. Much needs to be done. The federal government needs to eliminate student loan debt. It needs to expand its deficit for universal healthcare and tuition-free education. And again, both of these initiatives serve a vital function for the economy. Free healthcare and major reforms to allow long-term leave of absence for medical reasons at full pay without fear of job loss should be obvious here. A healthy workforce is a happy, productive workforce. This does not mean the workforce should be considered as slaves, but rather, when the populace is healthy, free of financial worry about being sick; when it can take as much time off of work as required to recover, and be paid in full without fear of job loss; when mothers who just gave birth can choose to take up to 12 months of 100% paid leave, the economy is strengthened.
Education should also be obvious, but it is not. Education is the key that will allow our children to participate completely and fully in their future economy. A poorly educated populace today, means a poorly performing future economy. That is the real burden on our children – not the non-existent national debt, but a lack of education. So, when young people have free access to a primary and college education, we are laying the foundations today for their future prosperity.
So, again, there’s much to be done. By initiating a Job Guarantee and a basic income guarantee, and by engaging in full infrastructure repair and modernization, there will be immediate positive effects. Other items on the agenda must also be implemented as well. It’s not an overnight repair job. It will take some time to fully recover. But in order to do that, we have to begin work, and we begin by initiating a federal Job Guarantee at a living minimum wage for all who are willing and able to work.