ECONOMICS 101• Sales Create Jobs• Income Creates Sales• Spending Creates Income• Cutting the Deficit Will: o Reduce Income o Reduce Sales o Destroy Jobs
The Price of Unemployment• Direct Costs o Loss of Output/Income• Indirect Costs o Social exclusion & loss of freedom o Skill degradation o Psychological Harm, including suicide rates o Poor health & reduced life expectancy o The loss of motivation o Undermining of human relations and family life o Loss of social values & responsibility
Every Government must Choose which One to Accept• Pure Unemployment – Labour Buffer Stock with zero wage and no tasks• Unemployment Compensation – Labour Buffer Stock with a wage and no tasks• Transition Job Job Guarantee – Labour Buffer Stock with a wage and a task
MMT Favours the Job Guarantee• JG provides a transition job, something useful to do until the private sector is ready to reemploy people• Performs the job of a true automatic stabilizer• Absorbs workers in the JG pool when the economy turns down.• Releases workers from the pool when the economy improves.• Reduces losses borne by the private sector (indirect costs)
Job Guarantee is NOT Work-for-Dole• The JG is, categorically, not a more elaborate form of Workfare.• Workfare does not provide secure employment with conditions consistent with norms established in the community with respect to non-wage benefits and the like.• Workfare does not ensure stable living incomes are provided to the workers. Workfare is a program, where the State extracts a contribution from the unemployed for their welfare payments. The State, however, takes no responsibility for the failure of the economy to generate enough jobs.
What the Job Guarantee is• In the JG, the state assumes this responsibility and pays workers award conditions (a living wage, likely minimum wage) for their work.• Under the JG workers could remain employed for as long as they wanted the work. There would be no compulsion on them to seek private work.• They could also choose full-time hours or any fraction thereof which can include any benefits that would be provided by the private sector.