tag:blogger.com,1999:blog-6948982521501107752.post7987970543494793748..comments2023-10-21T09:03:15.270-04:00Comments on Rogue Economist Rants: Keeping the JG during a boom and private sector business formationRogue Economisthttp://www.blogger.com/profile/03439817966760459091noreply@blogger.comBlogger31125tag:blogger.com,1999:blog-6948982521501107752.post-61767553956289193942012-01-02T17:46:03.719-05:002012-01-02T17:46:03.719-05:00Hugo: "I think your position is that it would...Hugo: "I think your position is that it would be beneficial to abandon JG -- or at least decrease the JG wages -- in an economic upturn? If so, would it also be beneficial to abandon -- or at least decrease -- legislated minimum wages (in today's system) in economic upturns -- for the same reason?"<br /><br />Yes, it's my position to cut JG, or at least decrease JG wages in an upturn. No, i'm not saying anything about cutting minimum wages. It's a completely different animal, but anyway, I'm of the position that it should be set at the livable standard level.<br /><br />"You are still arguing that JG leads to cost-push inflation (as compared to a system with non-JG), if I understand you correctly? The same arguments could be made regarding minimum wage legislation, couldn't they?"<br /><br />No, I'm arguing JG during a boom leads to demand-pull inflation. Minimum wage legislation pertains to a floor price. JG pertains to an open demand for any and all labour willing to work. As I said to Mario earlier, having the JG adds to worker demand. That's precisely why we are all advocating for a government jobs program RIGHT NOW, because it adds to demand for workers when private sector demand is lacking. When private sector is already demanding them, the JG distorts the wage price upwards. In short, a JG will ensure that no private sector will be able to get workers at the minimum wage level, but at minimum plus a negotiated premium (depending on how desperate for workers each business is). During a boom, a JG ensures that ALL workers are working at ABOVE minimum wage, and ALL businesses have cost structures HIGHER than what it would be without a JG. If minimum wage is already set at a livable standard, during a boom, ALL workers earn a premium above that level.<br /><br />"So aggregate demand should increase a bit more. And after a while, businesses should start noticing increasing aggregate demand"<br /><br />Yes, this should be good for businesses selling higher end goods. It would be bad though for businesses with very low margins, ex. small farms, mom and pop retailers, restaurants, cottage industries.<br /><br />"And as long as there are "too many" workers in the JG pool, the government deficits continue -- and businesses will meet yet increasing demand. And finally they'll be able to hire. Higher labor costs -- but higher sales."<br /><br />But with higher labour costs, they will have sell at higher prices, or go out of business.<br /><br />"Why would you want to putdownward pressure on wages in economic upturns?"<br /><br />I'm not advocating downward pressure in economic upturns. I'm arguing against unnecessarily too much upward pressure on costs during economic upturns.<br /><br />"MMT, however, typically prefers wage- and price stabilityrather than increasing or decreasing wages and prices. A constant JG wage would constitute a stable nominal price anchor over the whole business cycle."<br /><br />But the way they propose the JG, which is supposed to be similarly offered irrespective of whether we're in an upturn or downturn, means that labor costs increase too much during upturns, and likely pricing out many small and new businesses.Rogue Economisthttps://www.blogger.com/profile/03439817966760459091noreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-16249823699277433422012-01-02T17:00:17.049-05:002012-01-02T17:00:17.049-05:00MMT, however, typically prefers wage- and price st...<i>MMT, however, typically prefers wage- and price stability rather than increasing or decreasing wages and prices. A constant JG wage would constitute a stable nominal price anchor over the whole business cycle. </i><br /><br />very well put Hugo.Mariohttps://www.blogger.com/profile/00905402431684735610noreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-9373629724631896142012-01-02T16:24:03.949-05:002012-01-02T16:24:03.949-05:00> "But given that MMTers have indicated th...> "But given that MMTers have indicated the JG is meant to provide 'transition jobs' only, I don't get the insistence to continue it when the economy has jump-started and the private sector is already willing to hire."<br /><br />You'll typically have a few percentages in involuntary unemployment even in economic upturns unfortunately. <br /><br /><br />> "Continuing it will make it more costly to hire the people back into the private sector." <br /><br />The JG wage will functionally become something akin to a legislated minimum wage. So yes, a firm in the private sector will have to compete with the JG wage package, much like it will have to compete with a legislated minimum wage in today's system.<br /><br />I think your position is that it would be beneficial to abandon JG -- or at least decrease the JG wages -- in an economic upturn? <br /><br />If so, would it also be beneficial to abandon -- or at least decrease -- legislated minimum wages (in today's system) in economic upturns -- for the same reason? <br /><br /><br />> "If the JG is still there, with its catch-all aim of providing a job to anyone willing and able to work, then it's providing an additional demand for labour that raises the overall cost of labour for those who want to hire them away from the JG."<br /><br />You are still arguing that JG leads to cost-push inflation (as compared to a system with non-JG), if I understand you correctly?<br /><br />The same arguments could be made regarding minimum wage legislation, couldn't they?<br /><br />I do understand your point (I think!). However, there are other points to be made that may compensate for it. <br /><br />If the JG remains in place there will be a bit more government deficit spending. Right? So aggregate demand should increase a bit more. And after a while, businesses should start noticing increasing aggregate demand. <br /><br />So the resulting effect with JG in place is a bit higher labor costs (due to the "minimum wage limit" resulting from JG) and a bit higher aggregate demand. And as long as there are "too many" workers in the JG pool, the government deficits continue -- and businesses will meet yet increasing demand. And finally they'll be able to hire. Higher labor costs -- but higher sales.<br /><br />So the private sector will hire in times of higher aggregate demand, and let people go in slumps. The JG wage level constitutes a constant wage level that the private sector has to compete with. The <i>size</i> of the JG pool will fluctuate with the business cycles. At times of higher aggregate demand businesses will hire people from the JG pool, and vice versa.<br /><br />Now, your idea would be to abandon JG in economic upturns (or at least decrease the wage level). This would be akin to abandon minimum wage legislation (or decrease the legislated level) in economic upturns. <br /><br />Agreed, this would lower the costs of business to hire. But it would also lead to some downward pressure on wages. Usually, you would hear neoclassicals arguing that wages should be decreased in economic <i>slumps</i> rather than <i>upturns</i> -- so this is an interesting argument! Why would you want to put <i>downward</i> pressure on wages in economic <i>upturns</i>? Lower wages could also cause lower spending out of workers' income, in turn causing aggregate demand to decrease. The resulting effect is unclear -- lower costs of labor but lower sales?<br /><br />MMT, however, typically prefers wage- and price <i>stability</i> rather than increasing or decreasing wages and prices. A constant JG wage would constitute a stable nominal price anchor over the whole business cycle.Hugo Hedennoreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-43208940756282920672012-01-02T14:32:01.188-05:002012-01-02T14:32:01.188-05:00But given that MMTers have indicated the JG is mea...<i>But given that MMTers have indicated the JG is meant to provide 'transition jobs' only, I don't get the insistence to continue it when the economy has jump-started and the private sector is already willing to hire. </i><br /><br />B/c there is always an involuntary UE population that does not have to exist in our current monetary system, and b/c full employment with price stability is essentially the holy grail for all economists, and b/c starting and stopping the program would be a legislative nightmare to say the least (something akin to raising taxes when necessary, etc., etc.).Mariohttps://www.blogger.com/profile/00905402431684735610noreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-41386305903027294872012-01-02T12:35:07.105-05:002012-01-02T12:35:07.105-05:00Senexx, I agree that the JG is an automatic stabil...Senexx, I agree that the JG is an automatic stabilizer during a downturn. So what is it during an upturn? <br /><br />I want to stress that I agree that we need some sort of jobs program to get people working when the private sector is not hiring.<br /><br />But given that MMTers have indicated the JG is meant to provide 'transition jobs' only, I don't get the insistence to continue it when the economy has jump-started and the private sector is already willing to hire. <br /><br />Continuing it will make it more costly to hire the people back into the private sector. If the JG is still there, with its catch-all aim of providing a job to anyone willing and able to work, then it's providing an additional demand for labour that raises the overall cost of labour for those who want to hire them away from the JG.Rogue Economisthttps://www.blogger.com/profile/03439817966760459091noreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-34089797111346142652012-01-02T04:27:45.852-05:002012-01-02T04:27:45.852-05:00I really don't understand your economic argume...I really don't understand your economic argument - given the nominal wage of the JG is nominal right across the JG - so everything else comes out in the wash.<br /><br />Are you overlooking the fact that the JG is an automatic stabilizer in the same way tax & welfare payments are?Senexxhttp://modernmoney.wordpress.comnoreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-89558397136343975572012-01-02T00:17:51.597-05:002012-01-02T00:17:51.597-05:00right and like sennexx pointed out and to which I ...right and like sennexx pointed out and to which I agree...a small business will be able to find someone either in the JG or not that will accept the wage offered by the small business...even if it is equal to the JG wage. It's just a matter of "managing the spread" and ever good businessman knows how to do that. ;) <br /><br />Plus like I've been saying...higher wages and greater opportunities are always "baked in" with any private sector job; and everyone (employees and employers) would know that and apply and hire accordingly. Perhaps the only possible exception would be if people could get promotions within the JG itself and thereby boost their resume without the need of the private sector at all. However that can easily be thwarted by simply not allowing for JG "promotions" from within. Problem solved as far as I can tell.Mariohttps://www.blogger.com/profile/00905402431684735610noreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-58421740379365632492012-01-01T21:35:35.292-05:002012-01-01T21:35:35.292-05:00But Mario, n one has to negotiate a JG wage. Al; t...But Mario, n one has to negotiate a JG wage. Al; they have to do is parlay a JG offer to get higher private sector wage.Rogue Economisthttps://www.blogger.com/profile/03439817966760459091noreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-9559375281078806652012-01-01T21:31:20.150-05:002012-01-01T21:31:20.150-05:00yes but rogue there's no negotiating the wage ...yes but rogue there's no negotiating the wage of the JG...and that's the difference between worker demand with a JG and in the private sector.Mariohttps://www.blogger.com/profile/00905402431684735610noreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-91767120814610355912012-01-01T21:08:39.889-05:002012-01-01T21:08:39.889-05:00Senexx, not everyone will negotiate a higher price...Senexx, not everyone will negotiate a higher price, yes. But a few doing so is enough to distort the market, and discourage some private sector hiring.<br /><br />It will be hard for businesses to shop around for willing workers when the government is adding an open and unlimited demand for everyone willing to take a JG job. As I said to Mario earlier, having the JG adds to worker demand. That's precisely why we are all advocating for a government jobs program RIGHT NOW, because it adds to demand for workers when private sector demand is lacking. When private sector is already demanding them, the JG distorts the wage price upwards.Rogue Economisthttps://www.blogger.com/profile/03439817966760459091noreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-39645019763021353942012-01-01T20:03:26.016-05:002012-01-01T20:03:26.016-05:00agreed Sennex. great points.agreed Sennex. great points.Mariohttps://www.blogger.com/profile/00905402431684735610noreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-59881157753838491812012-01-01T19:29:44.904-05:002012-01-01T19:29:44.904-05:00I think Warren's posts answers your question a...I think Warren's posts answers your question about a JG in a boom - as for the possibility of a wage-price spiral - that assumes in aggregate everyone in the JG takes that position of negotiating a higher price.<br /><br />The private sector does have the possibility to shop around within the JG - if one person wants a higher wage than what the private sector is offering then the private sector can offer it to someone else.<br /><br />Peter Cooper at Heteconomist has a good post up on this today.Senexxhttp://modernmoney.wordpress.comnoreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-61808472604008100912012-01-01T16:05:59.418-05:002012-01-01T16:05:59.418-05:00Agreed. In fact funnily enough that's both my ...Agreed. In fact funnily enough that's both my main concern and my main interest with the JG. <br /><br />Figuring out "what" the JG really is and a more rigorous detailing of its operations is in dire need I must admit.Mariohttps://www.blogger.com/profile/00905402431684735610noreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-61833692377756834662012-01-01T15:44:14.516-05:002012-01-01T15:44:14.516-05:00Mario, the community-building activities you menti...Mario, the community-building activities you mention are noble activities, and indeed SOME people should be doing them on a permanent basis. But the government shouldn't promise anyone and everyone who wants to break from the private sector to just do the community activities jobs for as long as they wish. Otherwise, we leave the door open to the JG swallowing up the entire labour pool (possibility only, but the probability of it eating a sizeable part of the labour pie is there)Rogue Economisthttps://www.blogger.com/profile/03439817966760459091noreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-14348281020077141652012-01-01T15:10:48.214-05:002012-01-01T15:10:48.214-05:00It's definitely good to gauge the risks so I c...It's definitely good to gauge the risks so I completely agree and applaud the critical discussion.<br /><br />I'm actually more concerned about getting people "entrenched" into JG jobs than I am about price levels. I am not sure how good or bad it would be if the JG program snowballed with job promotions, increased hiring of "teams," grant writing, and further long-run projects and initiatives getting activated in and around the community (then again is that a bad thing? I don't know). The thing could become one more "sector" in the economy instead of what it is intended to be which is a transitional program. <br /><br />The positive side of a more permanent and long-term JG program is that some things like building communities (rec centers, gardens, buildings, trainings, events, classes, youth activities, etc., etc.) that just are NOT a part of the capitalist model as there is not "profit motive" in the ventures. And very genuinely this to me is a MAJOR risk of capitalism from a long-term race survival perspective. What we are seeing today in our balance sheet recession is a crying out for more community support...and I expect that to only increase in pitch simply out of survival and human necessity. Building community is not "socialist" either however...it's a human need and instinct, and therefore a JG program that both accomplished hiring people and providing "buffer stock" as well as supported a more unified and participatory community to me could be (perhaps) a very vital aspect to our society in the 21st century. Something akin to the Italian medieval city-states that sparked INCREDIBLE art, science, and technology in the Renaissance. I think this could be a very strong element and case for a JG program. <br /><br />I suppose an impermanent JG program could work so long as it was implemented effectively and in some semblance of timeliness. However with the way Congress is, the entire JG Program could easily be destroyed by legislative bottle-necking, and then we're right back to where we are now. :( <br /><br />Does anyone know if Argentina still offers their JG program?Mariohttps://www.blogger.com/profile/00905402431684735610noreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-40320032707621481512012-01-01T14:49:43.688-05:002012-01-01T14:49:43.688-05:00Mario, happy new year too. It's hard to know ...Mario, happy new year too. It's hard to know for sure if I'm exaggerating the point or not, only actual experimentation will confirm my suspicions. However, such an experiment, if it turns out I'm correct, would result in higher success hurdles for smaller businesses, and hence, may completely alter the economy for good, unless we are open from the very start that such a program will not continue in similar fashion once the economy starts to have legs.<br /><br />Hans, history seems to confirm your point, that's why I'm thinking the proper parameters to such a jobs program should be debated from the very start, including knowing when and how to wind it down.Rogue Economisthttps://www.blogger.com/profile/03439817966760459091noreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-62928119870446907552012-01-01T13:42:21.304-05:002012-01-01T13:42:21.304-05:00Sorry, but there is nothing temporary about any go...Sorry, but there is nothing temporary about any government program and hence the d-anger...<br /><br />Furthermore, it does not go out of business as is the normal cycle of free enterprise...Hanshttps://www.blogger.com/profile/05183141792723754273noreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-64801161866732595872012-01-01T12:31:29.198-05:002012-01-01T12:31:29.198-05:00Yes it does have a price effect, because having th...<i>Yes it does have a price effect, because having the JG adds to worker demand.</i><br /><br />yes that type of a price effect would likely occur to some degree. But that is a rise in wages due to demand-pull inflation and that is not the concern you are expressing. You're concern is that wages will rise simply b/c the JG is implemented and not only that but they will rise to such an extent that certain industries and sectors of small business in particular will be dis-enfranchised and perhaps go out of business, etc. I am saying that it won't happen to that extent and that you're over-exaggerating the perhaps ever-so-slight rise in wages from a JG set at or around min. wage. <br /><br />Regardless, this is a great convo and of course happy new year!!!<br /><br />The main battle however is already won in that we both agree to start one up at least now (in a bust) and so that is a great thing and should perhaps be the larger focus and gain greater attention and discussion, etc. <br /><br />None-the-less as always (and much appreciated)...it has been truly a rogue experience. ;) <br /><br />Cheers!Mariohttps://www.blogger.com/profile/00905402431684735610noreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-47201378556913087262012-01-01T10:19:47.000-05:002012-01-01T10:19:47.000-05:00Senexx, but if you set up a JG in a boom, who woul...Senexx, but if you set up a JG in a boom, who would join? Unless the JG is set up with a higher wage than minimum?<br /><br />Hugo, and thanks also for engaging in the discussion. Ok, the wag spiral term is sloppy on my part. What I pertained to was the initial price distortion at introduction, where wages from the bottom all the way up increase more vs in the absence of the JG as a result, when the boom starts.<br /><br />Warren, thanks for chiming in. I see the point about the private sector not hiring the unemployed. But I'm coming here from the understanding that when the JG was implemented during the recession, people are not unemployed s]anymore (and therefore more employable) during the subsequent boom. My concern is that those who have an existing job (the JG) wlll use it to parlay a larger entry wage in the private sector, resulting the price distortion I am discussing about withHugo.Rogue Economisthttps://www.blogger.com/profile/03439817966760459091noreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-1632042087316511322012-01-01T07:37:19.824-05:002012-01-01T07:37:19.824-05:00Don't forget the jg is a transition job to fac...Don't forget the jg is a transition job to facilitate the transition from unemployment to private sector employment.<br /><br />problem is, in a boom, business doesn't like to hire the unemployed, so labor shortages and wage hike develop even as unemployment remains high. This was demo'd in argentina in 2001 with the jefes program facilitating the transition of over 1 million previously unemployed considered unemployable into private sector employment. <br /><br />the formal way to say this is the jg is a more liquid buffer stock than unemployment, and therefore a better price anchor in a boom<br /><br />www.moslereconomics.comWarren Moslerhttps://www.blogger.com/profile/10482768786644478587noreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-36915253891277842822012-01-01T06:39:56.844-05:002012-01-01T06:39:56.844-05:00In an economic up-turn, there may still be say a f...In an economic up-turn, there may still be say a few percentages that are not being hired by the private sector. <br /><br />The private sector economy does *not* have a tendency to full employment by itself -- not even in economic upturns.<br /><br />That seems to be a major point of disagreement here.<br /><br />If you truly believe that the private sector tends towards hiring all workers in economic upturns, then sure.. But that wouldn't change even if there was a JG program in place. <br /><br />If there are too many people in the JG pool, it means that the economy is still over-taxed. So the JG spending continues. Eventually however -- at some point -- businesses will start meeting increasing demand be able to hire from the JG pool. There is just no problem there.<br /><br />> "Yes, I believe JG wages should be cut when private sector is already hiring, otherwise many people will use the JG to cause an upward wage spiral in the private sector."<br /><br />Here you flat out disagree with the MMT heavy weighters, I think. You're suggesting that JG would cause cost-push inflation in economic upturns (I think?). This is a disagreement in economic theory. I think they've mad it clear that a constant wage floor for those out of private sector work can not possibly cause upwards wage spirals -- no matter if economic upturn or downturn. (There is a possibility of distortionary effects at the point when a JG program is <i>introduced</i> however.)<br /><br />So, this is a point they've been repeating over and over again -- JG does not cause cost-push inflation. (And neither does it cause demand-pull inflation). I should find a good reference and add some stuff on the Wiki. Perhaps Google "MMT Job Guarantee cost-push inflation"... I think Wray wrote about this in Understanding Modern Money, for instance.<br /><br />This is really complicated stuff.. Difficult to discuss without ending up in frustration -- easy to miss eachother's points. Thanks for your patience.Hugo Hedennoreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-73855356391054750972012-01-01T05:09:05.816-05:002012-01-01T05:09:05.816-05:00It strikes me that this more about the politics of...It strikes me that this more about the politics of the implementation of the JG.<br /><br />It is more about the saleability of the JG to the public and in that vein, initially I'm sympathetic to having a JG set up just below the minimum wage for that reason.<br /><br />And in a boom, I think there is a misunderstanding of aggregation and its effect on a small business - ultimately it all comes out in the wash. <br /><br />I would add in a boom is a better time to set up a JG given the enormous undertaking it would be to do so in a bust. The boom gives a chance for adjustments when the bust comes.Senexxhttp://modernmoney.wordpress.comnoreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-12868932386588929582012-01-01T01:46:26.502-05:002012-01-01T01:46:26.502-05:00Mario:"that would only happen if non-governme...Mario:"that would only happen if non-government agencies could qualify for JG subsidy funding."<br /><br />Ok then, that just means many small scale businesses may just not get started then.<br /><br />"First you claim rising wages will crowd out small businesses. And then you say here that the JG (with fixed wages mind you) offers "additional benefits."<br /><br />Yes, I said that rising wages will crowd out small businesses. No, i did not say JG offers 'additional benefits'. I'm actually saying it should start offering less than private sector wages once it has been established that businesses are hiring already.<br /><br />"In a boom economy small business will HAVE TO raise their wages anyway regardless if a JG exists or not. And so if the JG is set at or near min. wage there is NO PRICE EFFECT on small businesses.Zero. None. Zip. Zilch."<br /><br />Yes it does have a price effect, because having the JG adds to worker demand. That's precisely why we are all advocating for a government jobs program RIGHT NOW, because it adds to demand for workers when private sector demand is lacking. When private sector is already demanding them, the JG distorts the wage price upwards.Rogue Economisthttps://www.blogger.com/profile/03439817966760459091noreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-21151419557380688142012-01-01T01:46:01.080-05:002012-01-01T01:46:01.080-05:00Hugo: "I'm not getting it. I think we dif...Hugo: "I'm not getting it. I think we differ in the theoretical understanding of how the JG-as-a-price-anchor works"<br /><br />You're still not getting it because what I'm talking about here is whether we should keep the JG when the private sector is already hiring. I'm sorry but I don't know how else to explain to make you understand( I have been repeating the same in point in all my replies)… I'm not opposed to the JG now, I think it's the solution to the current economic predicament. I'm opposed to continuing the JG when private sector is already hiring.<br /><br />"Do you think a JG program should go substantially lower than that? Some kind of "work-and-starve" offer?"<br /><br />Why would workers starve when private sector is already willing to hire them?<br /><br />"If business can't afford to attract workers from the JG pool, then either: - we're in an economic downturn -- or the individual business in question is not profitable,"<br /><br />Or the JG keeps hiring the workers at the wages the private sector would otherwise have hired them. This would definitely keep more individual businesses from being profitable if they were forced to up the minimum wage to get workers, which adjusts all wages across the spectrum upwards, all the way up to CEO whose salary will also adjust upwards.<br /><br />"The JG pool is large. The JG wage payments then constitute government deficit spending. This increases aggregate demand. Eventually businesses will necessarily meet higher demand. Sales will increase. Profitable businesses will ultimately hire new workers."<br /><br />That's been my point about the need for government hiring all these past months in previous posts. But my point in this post is what do we do when demand has increased? Does JG still keep hiring people? Sorry, but your argument seems to assume a permanent recession by default.<br /><br />"Are you opposed to this? Should minimum wages be cut? That would be more of a neo-classical or Austrian stand then."<br /><br />Yes, I believe JG wages should be cut when private sector is already hiring, otherwise many people will use the JG to cause an upward wage spiral in the private sector.<br /><br />"Basically: JG is just a better alternative to unemployment benefits. Not something that should compete with private sector activity."<br /><br />Why would workers still opt to get unemployment benefits when the private sector is already offering them jobs?<br /><br />"What JG opponents need to explain is this: Why is it better to keep people in unemployment than in employment? Why is mass unemployment better than full employment?"<br /><br />Again, why would anyone remain unemployed during an upturn? Who are these completely unemployable people, who would remain unemployed if not for a government job guarantee? Are there so many of these undesirables that there would still be mass unemployment once animal spirits have taken hold of the economy again? Did'nt we have a low unemployment rate in 90's? Don't you think we can go back to such conditions ever again? Don't you think having a JG now would bring the economy back to life eventually?<br /><br />"There is no difference from JG in that regard. In the current system (with no JG), would you suggest that unemployment benefits should be cut down substantially? It sounds like that would logically follow from your argumentation."<br /><br />Where in the post did I mention anything about cutting unemployment benefits? The whole post was about a time when employment is going strong again. Why is it important for the JG to stay when the economy is going strong already? I thought its aim is to employ people when the private sector is not hiring. Is there any other aim not being clarified for it?Rogue Economisthttps://www.blogger.com/profile/03439817966760459091noreply@blogger.comtag:blogger.com,1999:blog-6948982521501107752.post-9799160376072890312011-12-31T21:53:21.155-05:002011-12-31T21:53:21.155-05:00Wouldn't this be some sort of permanent subsid...<i>Wouldn't this be some sort of permanent subsidy to capitalists, a sort of crony assistance to the biggest employers of minimum wage jobs?</i><br /><br />that would only happen if non-government agencies could qualify for JG subsidy funding. Unless the nga was a "neutral" non-profit (like red cross, health care, homelessness, etc.) it just wouldn't qualify as a JG sponsor. So you're concern here is legislative and easily avoided. <br /><br /><i>During a boom, a continuing JG delivers zero sum benefits, whose additional benefits to workers starts penalizing the smallest employers.</i><br /><br />it sounds like you are attempting to have your cake and eat it too Rogue. First you claim rising wages will crowd out small businesses. And then you say here that the JG (with fixed wages mind you) offers "additional benefits." It can't work like that Rogue. <br /><br />The JG wages are fixed at 8, 10/hr whatever. In a boom economy small business will HAVE TO raise their wages anyway regardless if a JG exists or not. And so if the JG is set at or near min. wage there is NO PRICE EFFECT on small businesses. Zero. None. Zip. Zilch. What "additional benefits" are there for a person working under a static JG wage in a booming economy where there's more wage differentials in the private sector? As far as I can tell there just isn't any.Mariohttps://www.blogger.com/profile/00905402431684735610noreply@blogger.com