A Beginner’s Guide to MMT

So let's say that Joe Sixpack can't get a "real" job. Then society's choices for him are

1. Let him starve to death. Hope that if his alternative is starving then he will reform himself enough to get a job.

2. Give him money with no strings attached (currently various welfare programs, possibly UBI in the future)

3. Give him money but make him work a gov't job where he subtracts value (e.g. he is actively making things worse than if he was just not there)

4. Find some kind of gov't job where he creates less value than he is getting paid but is still creating positive value

If we ignore #1 (because if you believe #1 is always the answer then the rest of the conversation is pointless) then the question is who falls into bucket 3?

My guess is that you have two types of people, people who are not capable of doing productive work (which I'd argue are very, very few) and people who will choose to be unproductive because of the jobs guarantee (they know that they have a job no matter how badly they do it).

So maybe the jobs guarantee should be combined with a UBI with differing levels of support. Provide a UBI which covers basic needs and a jobs guarantee which provides a little more money. There will always be people who want to work just for something to do and there will be people who want to earn the extra money to improve their lifestyle. Then you don't force people into jobs where they create negative value.

The conventionals recognize this too:

> With everything else going on, I really don’t want to spend time arguing with the Modern Monetary Theory people; after all, we agree on basic policy issues right now, and they are never likely to have as much destructive influence as the deficit scolds. But the MMT people think they have an argument with conventional Keynesians like me, and as long as they’re out there claiming that standard macroeconomics is all wrong, I guess we need to respond.

* https://www.nytimes.com/2019/02/25/opinion/running-on-mmt-wo...

Ok, I have to agree with this to a certain point as it’s an argument I find myself making in change resisting organizations. But the implication here is that there will always be no shortage of low end minimum wage work and that the best way to discover and assign that work is via a centralized means. So with a jobs guarantee we have to invent a government system that identifies and assigns jobs that need doing in an efficient manner. No one has done that yet.

> which doesn't follow if your first point fails.

I’m not sure it’s entirely failed. Because although the ideal is “there is always more work you can shift to once this job is done” that is simply not what happens in practice. People and organizations don’t behave that way. Try working in an organization facing disruption, or an old developing world government department where people rely on it for their job, etc. It is full of resistence to anything that might put at threat peoples jobs. I’ve worked at places as recently as 2010 that still had telex operators who came to work and sat their doing nothing all day because the telex systems had been decommissioned. This is what you get with jobs guarantees.

I share this worry too, but it's not like there's currently any political appetite for fiscal responsibility. I wonder if the threat of inflation and currency volatility would actually serve as better stick, than what we currently have which is continuing to run up a massive debt which will be terrible for our children?

In theory there might be viable ways to control inflation via taxes and other ways of soaking up extra money supply that's created by printing/spending. The implementation will be difficult though, especially if it's driven by a political process. Even if you initially start with something that has all the correct automatic adjustments built in (assume this is possible), there's always the risk that a new gov't breaks it.

I think that for a change in paradigm like this to be successful you'd need stronger guarantees that things would stay in place long term (similar to UBI actually).