In our present-day societies, which neglect to guarantee either full employment or an unconditional income, unemployment benefits are a necessary safety net. Having evolved an economic system in which most of us must offer to work for a wage or salary to get by, majorities routinely vote for politicians who promise to make this impossible for a sizable portion of the workforce at any given time. Despite the current necessity for unemployment benefits, prevailing attitudes toward the policy seem largely hostile. Opposition does not solely – or even mainly – come from the powerful and wealthy. Many members of the working class (who, at least until recently, have deluded themselves into imagining they are "middle class") appear to be hostile to benefit payments as well. They are hostile, that is, until they themselves need them, in which case their new-found altruism lasts for about as long as their jobless episode. A recent study* indicating that winning the lottery significantly influences winners' political views, with one-fifth converting to conservatism pronto, may partly explain the prevalence of what is clearly intended to be self-interested behavior. The operative word is "intended". Such people are trying to look out for number one, yet are mostly too clueless even to pull that off.
Two policy proposals receiving increasing attention are the job guarantee (JG) and basic income guarantee (BIG). The first would provide everyone of working age with the option of a guaranteed job. The second would introduce an unconditional income payment. To be clear, I would support either of these as standalone programs, whichever happened to be on the policy agenda. Nevertheless, I think there are a few reasons to prefer a combined policy that integrates elements (perhaps all positive elements) of both programs. In its leanest form, a 'job or income guarantee' (JIG) could provide everyone with the option of accepting a job-guarantee position or, by opting out of the labor force, a means-tested but otherwise unconditional income payment. In expansive form, a JIG could provide a universal and unconditional basic income as well as the option of a guaranteed job for anyone who wanted one. Other intermediate variations on the theme would, of course, also be possible. The expansive form would be ideal, but even the lean version seems to offer some advantages over a standalone JG or BIG.
Donna D'Souza (Trixie) has created another cool video, this one based on J.D. Alt's excellent E-book of the same title. Enjoy.
A recent post introduced the income-expenditure model, a staple of introductory courses in macroeconomics. In this post, a closely related model of the sectoral financial balances is considered at a similarly introductory level. The 'sectoral financial balances model', or 'SFB model' for short, has been discussed in the blogosphere by a number of Modern Monetary Theorists, including Bill Mitchell, Robert Parenteau, Eric Tymoigne, Daniel Conceicao and Scott Fullwiler, prompted by a post of Paul Krugman's which contained a useful diagram. Analysis of the sectoral financial balances proved insightful in understanding both the lead up to the global financial crisis and its aftermath. This claim will be substantiated once the basic model has been outlined.
In any society, there will be real output (real income) and real wealth that is not produced solely by humans. Some real income is due to the contribution of nature – land, natural resources, beneficial weather patterns, animals and so on. Some real income is produced by machines, robots and other means of production that were created by prior applications of labor in combination with nature. In any given accounting period, this real income is 'unearned' in the sense that it is not due to human effort exerted within the period. Much of it currently flows to industrial capitalists and rentiers on the basis of property ownership rather than productive contribution. Over time, the real productive contribution of means of production can be expected to rise, due to technical progress. In this post, a framework is tentatively suggested for thinking about the distribution of unearned income, both at a point in time and as it grows over time.
Technology has reached the point where nobody should be compelled to spend most of their waking hours working in dangerous, menial or otherwise unpleasant jobs ('bad jobs', for short). It is increasingly possible to mechanize most menial and repetitive tasks. But of the bad jobs that continue for a time, there remains the question of how best to share the burden they impose. Even with better jobs, there is the potential to reduce standard working hours and create more free time for those who want it. Here, too, there is the question of how to manage such an overall reduction in working hours. Since some people will desire to maintain or increase their current working hours, ideally there should be latitude for them to do so, just as there should be latitude for others, so inclined, to shorten their labor-time commitment. In this post, three alternative approaches to the problem are briefly considered. They can be labeled 'universal job sharing', 'optional job sharing' and 'job or income guarantee'.
Infamous footage of Paul Samuelson, posted by Mike Norman, explaining why we can't be trusted with the truth. Just believe the scary bedtime story about the big bad Budget Deficit and stay asleep now. There's a good child.
Yes, you read that correctly. Resolution, singular. The truth is it's very difficult to get much work done when the rest of you are on holiday. It's lazy of me, admittedly, but your leisurely high spirits permeate the atmosphere, afflicting even the most industrious of economics bloggers. So, be warned, if it wasn't already obvious, that the economic content of this post will be near zero. Step off now if frivolity is not your thing.
Casting a wary eye over old posts, it became clear that this time last year a tradition in the form of an annual holiday message was launched. For bloggers especially taken with the Christmas/New Year spirit, a launch of this kind might make sense. Otherwise, it is surely unwise. It requires coming up with a message that is more or less the same as last year yet different enough to justify its existence.
It is well known that for Keynes the demand for investment goods, as for labor services, is a derived demand. The demand for investment goods ultimately depends on the extent to which they are needed to produce items of consumption. Certainly, one investment good may be required in the production of a second investment good which, in turn, is needed to produce the first investment good. Iron gets sold to steelmakers who sell some steel to iron makers in a circle that never makes direct contact with the production of consumption goods. But this occurs because such maintenance of iron and steel works enables, indirectly, the supply of investment goods for the production of items of consumption.