The Job Guarantee and Modern Money Theory

Many Job Guarantee programs argue that the financing of the program is not a fundamental problem. The program’s funding depends upon a recognition that the government is able to spend the financial resources required to implement a job guarantee because there are no fundamental constraints to government spending, as in a gold-standard world. The value of the currency is not strictly determined by the scarcity of money and there is not an operational constraint on the amount of money that can be issued. Rather, the value is driven by the fact that the issuer of the currency will accept the currency in payments to itself. One can always use the money of a sovereign nation to pay taxes, so the money will have value. Since establishing a strong taxation system is one of the ways that a government may “drive” the value of its currency, the scheme of taxation becomes of interest to this line of research. Various taxation schemes may be explored to determine a more “effective” tax base. Common taxes are income and sales taxes, where the production and consumption of goods is taxed. As the concern over both environmental waste and resource use become policy concerns, a carbon tax might be a useful tax to consider. These taxes are not necessary to “finance” government spending, but rather are a necessary means by which a significant portion of the population will demand the currency so that they may pay their taxes, driving the value of the currency. This chapter will consider these issues and offer an alternative tax that will both drive the value of the currency while pursuing alternative environmental pollution and resource use goals.

Given the ineffectiveness of contemporary monetary and fiscal policy, this chapter begs the question, is there a better alternative? The chapter opens with New Keynesian fallacies and the need for public policy centered on workers. The hope is that this chapter can provide further justification for the Employer of Last Resort (ELR) approach to full employment, by rooting it in the theoretical framework of Classical Keynesian Political Economy. Further, while modeling the ELR within a CKPE production model, this chapter deviates slightly from the existing literature on the ELR by modeling a fully funded, budget-neutral ELR program; but (hopefully) with good reason. Elsewhere, Wray (1998) and others have discussed the macroeconomic outcomes of an ELR program operating under the principles of Modern Money Theory (MMT). Wray, and proponents of MMT, more or less, articulate the outcomes of a fully deficit-financed ELR. Here the opposite extreme is analyzed, and the simulation asks … what are the macroeconomic outcomes of a budget-neutral ELR? These results are important for governments operating non-sovereign currencies to understand. But the result may also be interesting for countries wishing to operate an ELR with a sovereign currency. In practice, even with a sovereign currency, a government would most likely not operate an ELR at either extreme; rather the government would partially fund an ELR (perhaps for political reasons if anything else). Thus by countering the MMT model with a balanced budget model, public policy officials can understand the effects at each extreme and get a better idea of what the macroeconomic outcomes would be if an ELR were operating some place in the middle.

Governments have two broad buffer stock options when it comes to price stabilisation:In this paper, we juxtapose the two buffer stock options from the point of inflation control with a discussion of where they fit into the literature on the Phillips curve and consider the macroeconomic efficiency implications of each. The discussion will consider the implications for the fiscal position of the government arising from each option.

‘Capital-rich’ economies typically experience Keynesian unemployment, which an ELR program can offset with expenditure that has a multiplier effect. ‘Capital-poor’ economies normally suffer from Marxian unemployment, which an ELR can counter-act with expenditure, first having a multiplier impact, but subsequently developing an accelerator effect, and building up productive capacity.

Long-term unemployment became a severe social problem in Finland after the early 1990s’ depression. Even though Finland experienced a period of robust export-led growth in the late 1990s and early 2000s, Finnish economy never returned to low unemployment rates of the 1980s, and in peripheral areas unemployment rates of 15–20 percent were not unusual. In the late 1990s, a new debate started to emerge in the Northeastern Kainuu regional council on how to respond to high economic and social costs of peripheral long-term unemployment. This debate initially led to a new kind of full employment experiment that took place in the small municipality of Paltamo in 2009–2013.

In practice, the Paltamo municipality operated a public employment program that aimed at providing a suitable job for all unemployed jobseekers, improving the health, well-being and employability of the participants, and replacing various social and unemployment benefits with a single wage income. The experiment was made possible in the first place, because it had found political and financial support from the Finnish Ministry of Finance. It brought unprecedented visibility to the small municipality of Paltamo, and it started a national debate about alternatives in the Finnish employment and social policy.

The experiment was a real success in terms of decreasing the rate of unemployment in Paltamo, and it had a positive impact on the well-being and employability of the participants. A popular view about the experiment in Finland, however, is that it is too expensive to be implemented at the national level. The proponents of the Paltamo model have pointed out that current estimates on the costs of the experiment have not taken into consideration the long-term effects on well-being, employability and social inclusion.

This chapter presents estimates for the economic cost of unemployment and the financial cost of a Job Guarantee program in Saudi Arabia. The analysis demonstrates that while the Job Guarantee option is a cheaper and far more effective choice, one has to carefully address the institutional features of the Saudi economy, workforce readiness, and labor market regulations. The paper also presents a set of financing mechanisms ranging from a full-scale MMT-style financing to more hybrid versions of private–public partnerships, social venture partnerships, and social impact bonds. The paper will close with a set of strategic industries that should be prioritized in the process of diversifying the structure of the Saudi economy and ensuring not only full employment and price stability, but also sustainable prosperity.

This chapter explores the relationship between intellectual property law and the job guarantee ("JG") in the context of the twenty-first-century economy.

Today, any information capable of digital expression—manuals, books, songs, poems, pictures, software—can be infinitely reproduced and shared at near-zero marginal cost. Moreover, with the rise of big data analytics and remix culture, it is becoming clear that there is no intrinsic correlation between the short-term demands of "the market" and the long-term social value of information, knowledge and cultural production. These developments have profound implications for the ongoing debate over the productive and price-stabilizing potential of a job guarantee-based approach to macroeconomic policy. At the same time, a data-driven, open knowledge-oriented approach to JG implementation raises a number of legal and economic questions of its own.

This article explores one such question of topical relevance: who owns the intellectual output produced by JG labor? It begins by introducing the arguments for and against the establishment and granting of intellectual property rights, before critiquing the present state of the copyright and patent debates based on the insights of the school of macroeconomic thought known as "Modern Monetary Theory," or "MMT." It then articulates a proposal for a copyleft-inspired, knowledge-oriented JG model, drawing inspiration from previously enacted cultural, educational and scientific job creation programs, as well as recent policy proposals for encouraging open-access scientific research and cultural production. Finally, it concludes by emphasizing the importance of further exploration of the relationship between law, modern money and the digital economy.