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Bernie Sanders proposes Job Guarantee
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Join Date:Posts: 13628
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KyussB, I'm going to send you a PM, but please engage with other posters and don't shift the goalposts.0 -
My previous response to this, dismissed this as conflating public debt with private debt, without explaining why that difference is important - attracting mod sanction - so I'm explaining that here.So if you keep borrowing money and investing it in jobs it will solve all economic problems.
Ireland tried that in the mid 00s. Large amounts of money was borrowed and put into building houses and increasing public sector way and government welfare programs. We had a massive crash. And grand you can in the long run there was no problems (current numbers employed are reaching/are near precrash levels. But for anyone who suffered in the intervening period it's of little consolidation. Remember in the long run we are all dead.
It's well accepted that the crisis in the 00's was driven by Private Debt being directed into housing - with Public Debt playing a minor role, in the form of Stamp Duty tax relief for First Time Buyers or such.
Due to the minor role played by Public Debt, Private Debt can be seen as the major role in the 00's crisis.
The difference with this, is that Private Debt is incomparable to Public Debt - and there are many reasons for this, e.g. Governments are not expected to fully pay off Public Debt (to roll-it-over in perpetuity, instead), and to instead erode-away Public Debt vs GDP, by boosting GDP, which may itself entail increased Public Debt in the short-term (to promote spending that boosts GDP), for a Public Debt vs GDP reduction in the medium/long-term - these dynamics are not possible with Private Debt, as individually taking out greater amounts of Private Debt can not create the macroeconomic effects that greater amounts of Public Debt can exert, on GDP and such.
I don't want to get into the details of this more right now (as it tends to attract sanction), but it highlights some of the significant differences in funding between Public vs Private Debt - and reasons why they should not be conflated or treated as the same, in discussion here.0 -
KyussB wrote:It's well accepted that the crisis in the 00's was driven by Private Debt being directed into housing - with Public Debt playing a minor role, in the form of Stamp Duty tax relief for First Time Buyers or such.
The problem is while it started off as private debt it became nearly all public debt when the government guaranteed the banks and nationalised nearly all the banks BOI just about staying full government control. Even alot of the private debt still outside government control was through the government owned banks. The government had direct or indirect control and or responsiblity for a large component of the debt in Ireland.
Also the crisis did not get resolved the minute the government started borrowing money. It got worse.
The governments decision to guarantee the banks on the basis they had a liquidity problem and not a solvency problem is up there with the biggest mistakes an Irish government has ever made. Resulting in Ireland having to use the Troika as a lender of last resort. The majority of the money that has been borrowed since the crash has been to fund day to day spending. Even this large stimulus from borrowing has been dismissed as austerity. The recession would have been far worse without this money.
Wether public or private debt there is a limit to the amount that can be borrowed. You can start printing money but even that has its limits, as Zimbabwe, Venezuela and currently Argentina are finding out.
Is there a difference between public and private debt, yes but for the purposes of your theory it's irrelevant because there is a limit to how much both can borrow. That means if you bring in a jobs guarantee scheme you are restricted in how many jobs are socially productive but don't give an economic return(increase/maintain the government's ability to repay the increased level of debt). It's not a pancea for all our problems and from a practical point of view will run into all the problems our current social welfare system faces as others have detailed.0 -
Yes the banks were bailed out with public money, funded using Public Debt - it's a very different situation to government funding job programs with Public Debt.
For starters, the government was pumping Public Debt into a black hole in the banks balance sheets - which contributed nothing to GDP, it was done at a time that GDP was about to encounter a precipitous drop - a jobs program pumps money almost directly into boosting GDP, as it takes up idle workers and gets them doing useful work.
Part of the principle behind the jobs program, at a macroeconomic level, is it aims to keep GDP at or close to its maximum potential - even in the depths of an economic crisis - and if it's funded through Public Debt, then slack is allowed to build up this debt during economic bad times, with it returning to normal in economic good times.
Public Debt is not a bad thing. The limit to borrowing and spending, is determined by reaching full economic output - you have to stop spending when you reach maximum output (i.e. full employment), as otherwise inflation will become excessive - it is not determined by an arbitrary numeric amount of Public Debt, that is not where the limit is defined.0 -
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KyussB wrote:For starters, the government was pumping Public Debt into a black hole in the banks balance sheets - which contributed nothing to GDP, it was done at a time that GDP was about to encounter a precipitous drop - a jobs program pumps money almost directly into boosting GDP, as it takes up idle workers and gets them doing useful work.
It did contribute a lot to GDP and jobs. Anglo aside if the banks had not been bailed out any business and associated jobs that relied on the relevant banks to provide credit such as bank overdrafts as part of their standard working capital requirements would have gone bust overnight. That's not to mention deposits that are required to enable banks and governments to lend in the first place. Or put simply if the government hadn't did what they did(feel free to argue over the exact mechanisms) unemployment would have far far higher than the already high level it ended up reaching.
You have also ignored that the majority of government borrowings was to keep the government apparatus and associated jobs and welfare supports going. If the government had not done that the recession would have been far worse. What's also clear is that there is a limit to how much a government can borrow. Its nothing new if you look down the centuries government's have gone bust.
Governments cannot borrow or print an infinite amount of money in the short to medium term. Look at the Eurozone crisis. Look at Zimbabwe, look at Argentina and Venezuela currently.
Yes you can argue in the long run but in the long run we are all dead. Could you give any actual example of your idea actually working. The idea of borrowing money and then giving people jobs isn't exactly new.0 -
I would just prefer for like to be compared with like. This is branching from me pointing out how Private Debt and Public Debt operate differently, and should not be compared - and I've explained the details of this a few times now - and its getting sidetracked into the bank bailouts.
If you look at recent history, limits placed on government borrowing were political limits (such as by EU treaties) - not economic limits (as in, unsustainability, economically).
Nobody argues there are no limits - proponents of the Job Guarantee argue that the limits are different to what people traditionally are fixated on - which is, the total level of Public Debt vs GDP - when all you need to point out to discredit that view, is that the economic sustainability of that, is (for example, among other things) more greatly determined by the interest rates on that debt, not the overall debt level.
So the question is: What exactly IS the limit? I've given a fair argument as to what I think defines the limit (needing to avoid inflation concerns, from an economy reaching full employment and maximum GDP output) - what mechanism do you think defines the limit, for Public Debt?
An example of the Job Guarantee elsewhere, is the Indian Rural Job Guarantee - it's only a partial Job Guarantee, for rural areas only, but it provides something to look at.0 -
KyussB wrote:So the question is: What exactly IS the limit? I've given a fair argument as to what I think defines the limit (needing to avoid inflation concerns, from an economy reaching full employment and maximum GDP output) - what mechanism do you think defines the limit, for Public Debt?
Simple the point at which a country can no longer afford the interest payments on it's debt and the point at which a government can no longer roll over debt or and or borrow more at affordable rates of interest. Both of which will change over time and are moving target/limit.
If the jobs the job guarantee do not maintain or increase the governments ability to repay the interest the idea falls apart. Feel free to correct me but the central idea that separates your idea from standard job supports and the public sector is that it requires a government to borrow until you have full employment? Governments have limits to how much they can borrow. As far the rest of your idea you have been very light on details but I struggle to see the difference between it and stuff like jobs Bridge and standard government retraining programmes. Something pretty much every first world country does.0 -
The method of funding differs depending on the country - for the US the people who came up with the concept would want it funded through direct money creation, with spending limited by e.g. an inflation target - if we were to implement it here, Public Debt is the most likely funding option - but there are other more complicated methods too, which are a bridge between both.
I've kept it to discussing Public Debt for the moment, to keep the discussion simple and primarily about the Job Guarantee itself - and I think I will keep it to that, for the moment.
Presently interest rates are at or around their lowest levels in modern history - around 1% for Ireland - such that it is easy to sustainably spend as much as we like on public funding, until rising inflation would force us to constrain our spending - only politics prevents this, it's entirely sustainable economically.
Right now today we could easily afford to implement a Job Guarantee, eliminate the remaining unemployment, and pursue a whole host of badly needed infrastructural/housing projects - the time at which we would experience a challenge, would be in the future when an economic crisis happens, and creates a loss of employment in the Private Sector, shifting more workers into the Job Guarantee.0 -
Surely a long term affect of this would be to saturate the building industry with too much labor leading to lower wages.0
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KyussB wrote:Right now today we could easily afford to implement a Job Guarantee, eliminate the remaining unemployment, and pursue a whole host of badly needed infrastructural/housing projects - the time at which we would experience a challenge, would be in the future when an economic crisis happens, and creates a loss of employment in the Private Sector, shifting more workers into the Job Guarantee.
We are near full employment as it is so its not really needed at the moment. As you still haven't explained how your idea works.0 -
KyussB wrote:Presently interest rates are at or around their lowest levels in modern history - around 1% for Ireland - such that it is easy to sustainably spend as much as we like on public funding, until rising inflation would force us to constrain our spending - only politics prevents this, it's entirely sustainable economically.
You have summed up the problem how long do you think interest rates will remain so low. Look at the Euro zone crisis interest rates can increase rapidly due to economic shocks and Ireland has an economic shock on the way called Brexit. If you load up with debt has happened in the 00s you put yourself at risk of economic shocks. Whether that's private or public its irrelevant. Ireland as a small open economy is very vulnerable to economic shocks. So you are proposing this job guarantee(which you still have not described in any detail) is to be funded by large amounts of debt which given Irelands small size will come from abroad.
Look at Venezuela which used its oil wealth to provide large subsidies to its population. You will notice despite loading up on public debt and pumping into the economy through jobs and price subsides it hasn't prevented a humanitarian disaster.0 -
Our unemployment rate is still rather high, at 6% - nowhere near the highs in the worst of the recession, but still high enough.We are near full employment as it is so its not really needed at the moment. As you still haven't explained how your idea works.
The advocates of the Job Guarantee (JG) tend to disagree with traditional ideas of what constitutes Full Employment (claims that it lays around 2-4%), and argue that it can be driven much lower.
JG advocates actually argue, that in current economies, a certain level of unemployment is deliberately kept, in order to manage inflation - keeping some amount of workers unemployed, in order to keep wage expectations down - and want to replace this with the JG, paying workers at a minimum living wage below what the Private Sector would pay, in order to keep wage expectations down that way instead (yet without wasting economic potential, by keeping workers idle/unemployed).0 -
Interest rates are partly a reflection of perceived risk of default - I argue that in an economy with a Job Guarantee, recessions would be much shorter, and economies would quickly recover - and I believe investors would realize this, and that government bonds would not require a high yield in order to successfully issue them.You have summed up the problem how long do you think interest rates will remain so low. Look at the Euro zone crisis interest rates can increase rapidly due to economic shocks and Ireland has an economic shock on the way called Brexit. If you load up with debt has happened in the 00s you put yourself at risk of economic shocks. Whether that's private or public its irrelevant. Ireland as a small open economy is very vulnerable to economic shocks. So you are proposing this job guarantee(which you still have not described in any detail) is to be funded by large amounts of debt which given Irelands small size will come from abroad.
Look at Venezuela which used its oil wealth to provide large subsidies to its population. You will notice despite loading up on public debt and pumping into the economy through jobs and price subsides it hasn't prevented a humanitarian disaster.
The problem with this argument is that it depends on investor sentiment and guesses about their psychology - yet I still believe political barriers (fiscal treaty etc.) are a bigger barrier than the economic ones, here.
The difference between Private and Public debt is very relevant - as I've discussed in previous posts - so can we please separate them in discussion here? I think I've given very good arguments as to why they are different, but you aren't engaging with those - just asserting they are the same.
I agree that over-reliance on Private Debt is disastrous - the way that Public Debt works though (as I described many times), make it work in a very different way, not subject to the same risks.
I mean, straight-off the interest rate on a lot of Private Debt is determined partly by the ECB and is subject to rate rises during the term of the loan etc. - this is not true of Public Debt, the rate is fixed based on the bond yield when it is issued, usually - so there are many, many reasons not to conflate the two.
The problem you describe with Venezuela, is a problem with a trade balance that is over-reliant on a commodity with a highly volatile value - so that when the value changes significantly, it undercuts their economy and public spending.
That's not a problem of public spending or public debt. That's a problem with the fundamentals of their international trade and overreliance on a volatile commodity.0 -
KyussB wrote:That's not a problem of public spending or public debt. That's a problem with the fundamentals of their international trade and overreliance on a volatile commodity.
Why are you so focused on public debt? It's a side note. You have admitted already there is a limit to how much a country can borrow, which was my point on debt. You can't borrow limitless amounts of money. If you can't do that what's the fundamental difference between your idea and current government programmes and alternatives to such as investment in housing that don't require the government to borrow unlimitlessly
Venezuela is very relevant because its shows borrowing isn't a panacea. It did rely on high oil prices. But Irelands economy is also very volatile. Look at the swings in GDP movements over the last decade. The country is a small open economy that is heavily reliant on international trade.
We know there will be an economic shock coming down the line in the form of Brexit, how big will largely be decided by UK politics. We also have a Trump administration in the US which is the most protectionist in decades. Neither of which we have any real control over.0 -
KyussB wrote:JG advocates actually argue, that in current economies, a certain level of unemployment is deliberately kept, in order to manage inflation - keeping some amount of workers unemployed, in order to keep wage expectations down - and want to replace this with the JG, paying workers at a minimum living wage below what the Private Sector would pay, in order to keep wage expectations down that way instead (yet without wasting economic potential, by keeping workers idle/unemployed).
So how does it work in practice? If you were to implement it tomorrow how would you go about it?0 -
PeadarCo wrote:Why are you so focused on public debt? It's a side note. You have admitted already there is a limit to how much a country can borrow, which was my point on debt. You can't borrow limitless amounts of money. If you can't do that what's the fundamental difference between your idea and current government programmes and alternatives to such as investment in housing that don't require the government to borrow unlimitlessly
We really need to get on top of our real debt burden, private debt. The creation of money is easier than you d think, the problem is, in the modern age, we ve decided this is best left to an industry that behaves in potentially unethical and immoral ways, our banking and financial sector. We need to reignite our government money creation systems, or we re probably gonna end up in big trouble0 -
Right now today we could easily afford to implement a Job Guarantee, eliminate the remaining unemployment, and pursue a whole host of badly needed infrastructural/housing projects
The people left on the dole at this stage are not trained trades people, bricklayers, carpenters and the like.
They are people who are either between jobs or plain work shy. So good luck in using them to try and build houses and roads.
What if someone refuses to co-operate, do you advocate cutting off their dole if they don't show up for work on the building site at 8 in the morning?0 -
Also, we have not touched the elephant in the room. There is an almost unlimited amount of labour in Eastern and Southern Europe that would lick their lips at the thought of a Job Guarantee, paid to do **** all in reality and because of Ireland's membership of the EU, very little could be done to stop hundreds and thousands arriving on shore to avail of it.
Would this be an 'Irish only' Job Guarantee ?0 -
The people left on the dole at this stage are not trained trades people, bricklayers, carpenters and the like.
They are people who are either between jobs or plain work shy. So good luck in using them to try and build houses and roads.
What if someone refuses to co-operate, do you advocate cutting off their dole if they don't show up for work on the building site at 8 in the morning?
once again, some of the most common causes of unemployment, in particular long term unemployment, mental health issues, addiction problems, behavioral problems, personality disorders, developmental disorders such as autism, learning disabilities such as dyslexia etc etc etc, many of which are in fact undiagnosed, which can and are exasperated by our existing social institutions0 -
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Wanderer78 wrote: »once again, some of the most common causes of unemployment, in particular long term unemployment, mental health issues, addiction problems, behavioral problems, personality disorders, developmental disorders such as autism, learning disabilities such as dyslexia etc etc etc, many of which are in fact undiagnosed, which can and are exasperated by our existing social institutions
That is all well and good (I do not agree with your claim but that is for another thread), but will these people ever be able to productive members of society and contribute under a Job Guarantee scheme or whatever they will call it?
Are we going to 'mend' these people and make them into brick-layers?0 -
That is all well and good (I do not agree with your claim but that is for another thread), but will these people ever be able to productive members of society and contribute under a Job Guarantee scheme or whatever they will call it?
Are we going to 'mend' these people and make them into brick-layers?
my own point being, unemployment will always exist, no matter what we think do or say, but we actually must try understand why it exists. the questions which are commonly posed in these debates is wrong to a degree, what do we actually mean by 'productive members of society'? we have been developing incredible technologies over centuries, thats been reducing the need for humans to actually work, but we havent figured out how to spread the wealth thats been created from these processes and systems.
'mend', what does that even mean? im actually autistic, dyslexic and have suffered with mental health issues the majority of my life, strangely enough, i ll actually never be 'mended'! i was born to some degree with these issues, and in fact will never be mended, but providing work and working conditions that helps individuals with the before mentioned issues, would help them and society as a whole, and in a round about way, help them to become 'productive members of society'.0 -
The people left on the dole at this stage are not trained trades people, bricklayers, carpenters and the like.
The plan would be to train them, so we would be left with a load of trades men trained by the state, then lots of them would probably start working on commercial sites with the result that trained professionals will start having their pay undercut by the glut of ex dole receivers suddenly getting qualifications in an industry they never had any interest in and were forced to join.
That even ignores that training uninterested people is probably not going to turn out quality workmanship.0 -
The plan would be to train them, so we would be left with a load of trades men trained by the state, then lots of them would probably start working on commercial sites with the result that trained professionals will start having their pay undercut by the glut of ex dole receivers suddenly getting qualifications in an industry they never had any interest in and were forced to join.
That even ignores that training uninterested people is probably not going to turn out quality workmanship.
Maybe we can train them to be DART train drivers and we can get that 10 minute frequency so long promised to us?
I am sure SIPTU and the NRBU would have no issue whats soever about that plan!0 -
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Wanderer78 wrote: »my own point being, unemployment will always exist, no matter what we think do or say
Yea, that is true for a variety of reasons. Some you outlined some you did not, like having the will and drive to do it. People can also be lazy and bone idle.0 -
Yea, that is true for a variety of reasons. Some you outlined some you did not, like having the will and drive to do it. People can also be lazy and bone idle.
'laziness' is used a lot in regards defining these outcomes, you will actually find many of those that have some of the condition's i mentioned earlier will be regularly called this, for example, dyslexia is commonly misinterpreted as laziness in society, i have personal experience of this in both my educational and working history, ive also had this confirmed by professionals such as counseling psychologists, educational psychologists and clinical psychologists etc0 -
Wanderer78 wrote: »'laziness' is used a lot in regards defining these outcomes, you will actually find many of those that have some of the condition's i mentioned earlier will be regularly called this, for example, dyslexia is commonly misinterpreted as laziness in society, i have personal experience of this in both my educational and working history, ive also had this confirmed by professionals such as counseling psychologists, educational psychologists and clinical psychologists etc
You are repeating yourself now. I acknowledged what you said previously but also stated that laziness and idleness could also be other factors for other people.
Unless you think there are no lazy people and there is some medical prognosis to blame?0 -
You are repeating yourself now. I acknowledged what you said previously but also stated that laziness and idleness could also be other factors for other people.
Unless you think there are no lazy people and there is some medical prognosis to blame?
again, this somewhat links back to the idea of, 'productive members of society', what the hell does this actually mean? does all this 'production' actually benefit the majority in society, as theres mounting evidence to show, it does not, particularly financially.
another spin on things, you will actually find a lot of workers are in fact bored out of their tree working, i.e. doing an activity for the majority of their time which has no significance to their lives, we are being lead to believe that by being 'productive members of society' we all win, but this isnt necessarily true.0 -
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Wanderer78 wrote: »again, this somewhat links back to the idea of, 'productive members of society', what the hell does this actually mean? does all this 'production' actually benefit the majority in society, as theres mounting evidence to show, it does not, particularly financially.
another spin on things, you will actually find a lot of workers are in fact bored out of their tree working, i.e. doing an activity for the majority of their time which has no significance to their lives, we are being lead to believe that by being 'productive members of society' we all win, but this isnt necessarily true.
Is sitting at home or the pub everyday being productive? People can take a Utopian view on things but often they are wrong in their theory and conclusions.0
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