ABC goes gaga for Modern Monetary Theory

Trust the ABC to  like this idea:

The radical idea of offering every person a government-funded job is finding new supporters in Australia as proponents claim it could eliminate unemployment overnight.

US economist Stephanie Kelton, who served as Bernie Sanders’ economic adviser during the 2016 presidential campaign, is currently touring Australia to promote the concept she says isn’t too good to be true.

“There is nothing to prevent the Australian government, if it chose to do so, from funding a large-scale government job program that would offer employment to anybody who wanted work and couldn’t find it anywhere else in the Australian economy,” she said.

“Let the private sector create as many good jobs as it is willing to create, but the problem is there is always a segment of the population that doesn’t get invited to the table.

“And so this program is there as a backstop to just soak up the people who are left behind.”

The plan — commonly referred to as a “jobs guarantee” — works like this: every one of the 700,000-odd unemployed Australians would be offered a job that would be funded by the government but managed by local communities.

“We want the local communities being the ones to imagine the kind of work that is going to provide the most value,” Professor Kelton said.

“So it’s not a top-down government, bureaucratic [model] … they just provide the funding and the community decides what needs to be done.”

The idea is part of the modern monetary theory (MMT) school of thought that has been developing since the early 1990s.

What was once discussed only among economic outsiders is said to have piqued the interest of sections of the Labor Party and the Greens.

University of Adelaide economics lecturer Steven Hail is an expert in MMT and regularly speaks on the topic.

“Interest in MMT is spreading like wildfire, in Australia and elsewhere, and it is being widely discussed in branches of both the ALP and the Greens,” he said.

“I myself did a presentation to the economic policy committee of the ACT ALP in Canberra in June.”

Professor Kelton has been invited to Australia by organisation GetUp and is speaking as part of its Rethinking Our Economy roadshow.

A core belief of MMT is that countries that control their own money (like Australia) face no purely financial budget constraints because they can always print more cash.

Want more funding for schools and hospitals? Simply start the printing presses.

There is no shortage of critics of the concept, including UNSW economics professor Richard Holden, who wrote in The Conversation:

Suppose a government wants to pay for some “stuff”.

If the government prints money and doesn’t back that by issuing bonds, then there is inflation.

That inflation leads to the government needing to print more money to pay for the stuff. Which leads to more inflation.

And pretty soon that leads to wheelbarrows of cash being pushed around, hyperinflation, the destruction of all savings in the economy, and (in some notable cases) world war.

Professor Kelton doesn’t ignore the inflation issue, but said it was simply a factor that would have to be managed if the jobs guarantee concept was implemented.

“The trick really is, can you strike an appropriate balance where the government is hiring enough people to give everybody an opportunity … without creating the inflation problem,” she said.

“So that’s the challenge. It is not about running out of money, it’s not about the affordability or the cost of the program, it is about the real resource constraints and whether you can safely and responsibly create employment for everyone without causing other problems in the economy.”

I’m sure the ABC would love the RBA to fund it directly. Snowflake Nirvana!

There are three main problems. The first is that the world is not based upon MMT principles. Markets are still driven by Monetarist ideals so to go all-in on MMT would collapse the currency.

Second, it destroys the principle of meritocracy which underpins capitalism.

Third, the opportunity for corruption is beyond belief, especially in a dodgy political economy like Australia’s.

That is not so say it is all bad. It’s not. At base it is right and it is likely to get greater currency as the world struggles to deleverage its immense debt stock.

But unless you want to live in a quasi-communist, clepto-state then it would need to be very carefully managed. One idea that makes sense is that the printed dough is put into an huge research and development fund that employs folks to do all sorts of stuff out of which will come public goods. Sure it’ll mostly be wasted but at least then it’s  contained and has some social utility beyond pulling free cones on the couch.

Comments

  1. Government job for everyone.. people now have such short memories that they can’t remember communism?

    • Most jobs are government jobs right now – especially in places like America….so….this is awkward.

      • Especially if one takes the view that government jobs include a bunch of jobs that are the result of the state/private bank cartel goosing Banker Pseudo fiat at the residential housing market.

    • So “Jobs for everybody” is communism, no jobs for everybody and people is on the dole is “Communism”. Cheaper services is “Communism”, cheaper houses is “Communism”, Cheaper power prices is “Communism”, sustainable living is “communism”….you know if everything that makes sense is starting to be labeled the C word….so what is the heck is wrong with it then 🙂

      Only crony systems and stock market crashes and homelessness are the only things that is associated with this un-ethical “Capitalism” we living under these days.

      China lifted millions from poverty to middle class and they are the “Communists”, while the west did exactly the opposite and they are the “Capitalists”

      Capitalism without ethics is becoming a “Religion” more than a sensible discussion for the common good.

      Step back and look at the bigger picture of the ethics window you are looking out from

      • Go live in China commie smarter bigger faster stronger open slather competition this how we live the
        weak must be left to perish this is how it has always been Darwinism to the death

      • Cronyism is cronyism

        Cronyism is not capitalism

        Bank bailouts are not capitalism

        Bailouts of any description are either cronyism or socialism

        Capitalism has more in common with Darwinism i.e. sick, poorly managed companies go to the wall. No exceptions.

        Holden Motors – recipient of $2bn of taxpayer money. Crony socialism writ large.

  2. Your first reason is sound and is all that is required – the second two are personal ideologies which have no basis in fact or this conversation.

    In absolutely no way does it destroy meritocracy – its an utterly absurd comment. It really is without any foundation at all and has all the hall marks of Ayn Rand dripping all over it – something anyone would be ashamed to be associated with in any remotely intellectual capacity. Its just completely false.

    Thirdly, simply having money is a temptation for corruption – although I do note your avid regard for doing away with paper currency as though it would pose no danger to society during a an environmental disaster, power disaster, virus, computer malfunction etc…..the main reason all sensible folk disregard it at stage one.

    But – yes – the devaluation of the currency is all that matters, but that said there are indeed ways around it and MMT theory on debt is absurdist clap trap however as a keynsian tool it holds some water – worth a more open mind and more consideration – certainly not the regurgitation of conservative bias as seen in points two and three.

    • Did the Roman’s issue bonds to ‘borrow’ to cover the gap between fiscal spending and taxes during times of war? Me thinks not. They just took the loot. The Gold Standard was suspended during WW2 to allow governments to put the economy on a war footing. Jobs for all, with deficits at 20-25% not a merger 3-5%. War bonds were issued to ‘remove’ money from the economy to prevent inflation in goods and services necessary for basic needs. Financial history shows we have become uncritical servants to mega myth machine that promotes money as zero sum game.

  3. “”Markets are still driven by Monetarist ideals so to go all-in on MMT would collapse the currency.

    Note that, while the rule of Monetarist ideals” might indeed immediately collapse the currency, this is not so much a matter a matter of ‘Monetarist ideals’ as it is simple practical reality. The lunacy would result in a CAD that got blown to hell. The result is some combination of, firstly, a collapsing currency as nobody wants to hold your currency anymore and, in the margin, have nothing they want to buy with it
    Secondly we would be trying to ease the rate of collapse by selling as many of whatever assets, mines farms and industries, we have left to ANY foreigner, especially China, who wanted to buy them. The assets we would be trying to sell would also include Real Estate. This is a significant factor in our current situation where our young people can’t afford to buy houses.
    Thirdly our cost of funds would skyrocket as foreign lenders virtually boycotted the A$.

    It’s hard to imagine anything more nuts than MMT. It’s just myopic insanity from a mob who can’t think more deeply than the slime on the surface of a very deep pond.
    That said, it is typical of the sort of unreasoned thoughtless analysis of everything by the ABC

    • It has its merits – it just needs to be kept a billion miles away from the currency, debt, trade and international finance in general – there are ways to achieve what is being proposed and this has indeed been done in some countries.

      I was in China prior to them turning capitalist and they engaged in Foreign Exchange Certificates as a parallel currency, there was even a third stream of currency beyond the Renminbi.

      • I was there in those days also! I remember being offered 40 yuan for 1 FEC yuan:)
        The unlimited printing idea in the environment where it cannot be spent on imports WILL result in inflation.

      • MMT is supported by quacks and the terminally stupid. There are no exceptions, caveats or workarounds.

  4. Inflation is the rich person’s tool of stealing wealth from people who work and save. The Progressive’s grand plan is for even higher levels of inflation.

  5. But, but but the AUD is a reserve currency….oh wait….

    Don’t cry for us Argentina, we’re on our way, and we’ll be there sooner than we thought.

  6. This is a relatively attractive compared to UBI. Relatively. Hyman Minsky loathed UBI as it added to demand without adding to supply and was totally inflationary. At least a government job guarantee at the minimum wage would introduce some price and supply tension to labour.

    And the cone-pulling would happen in the healthy fresh air while planting trees or landscaping rocks.

    The quantum of work is not fixed.

    • “..cone-pulling would happen in the healthy fresh air while planting trees or landscaping rocks…”

      Gold.

      • H&H Rather than just do a hatchet job why not actually pose the questions raised about CAD and currency deflation to those that have done the research like Steven Hail or Prof Bill Mitchell, or would that be too progressive, better to just shoot from the hip and continue with the right wing Neo Liberal clap trap. Seriously there are issues with MMT, but how about a more considered question and response from those that actually propose MMT. Have you actually even read anything like the MMT text book ???? (did hear crickets H&H). Don’t get me wrong there are issues with MMT but it has serious merits that should in a serious blog actually be critiqued otherwise Macrobusiness is as bad as the other MSM propaganda agencies just regurgitating shi-ite.

    • Neither can be sensibly achieved without wholesale reform of the tax system, so whether they add to demand or not depends on all the other changes made concurrently, as far as I can see.

  7. Why doesnt this article have a trigger warning for the pouched crusader?

    Time to get down deep in the fox hole and have a cuppa.

  8. “Second, it destroys the principle of meritocracy which underpins capitalism.”
    Which is why ABC staff support it.

    • This blog is undermining meritocracy.
      Clearly buying real estate and reinvesting the proceeds in more is a meritorious process encouraged by our leadership and institutions. Calling for these people to be torn down with a housing crash is simply anti meritocracy.

      Of course merit is purely in the eye of the beholder, but capitalism says those with the money have merit -> Real estate.

      • Jokes aside, you’ll find that most real estate rises are due to government distortions (migration policy, tax benefits) rather than the workings of capitalism.

      • How can you separate the workings of capitalism from government distortions?
        And even more basically, how can capitalism be called a meritocracy when clear advantage is provided to those already having capital? Unless the mere ownership of capital is meritorious.

      • “How can you separate the workings of capitalism from government distortions?”

        WTF does capitalism have to do with Govt? I think you’re seriously confused.

        Capitalism has ‘free markets’ and ‘limited Govt’ as bed-fellows.

        Socialism and Cronyism, however, love LOTS of Govt and plenty of intervention — and definitely hate free markets.

      • WTF does capitalism have to do with Govt?

        How does capitalism work without property rights and contracts ?

    • The acquisition of capital is meritorious when earned and productively invested. Not in all cases, but more so than with other systems.

      Most self-made wealthy people I know are hard working and clever. The main exceptions are those that got lucky with real estate, those that work for government agencies, and those that inherited wealth. I’m sure there are other exceptions. No one is claiming that capitalism is a perfect meritocracy (not even Milton Friedman claimed that).

      • If all hard working and clever people you knew were wealthy, that would be a meritocracy.
        I notice that isn’t actually how you framed it though.

      • Nowhere did I (or sensible others) claim that capitalism is a 100% meritocracy. Further, even attributes that contribute to merit (eg intelligence, discipline, energy level) are partially innate in personality and so could be considered subject to luck. Of course not all smart, hard working people are successful, and no one claimed that they are. They certainly have a lot stronger chance of being successful in a market economy as opposed to a state run one.

      • Not really,
        the smart people simply move through the party heirarchy instead in a communist or similar system rather than private enterprise in a capitalist one..
        Is that a meritocracy? Again it all comes down to what you consider merit.

      • Let me fix this for you: rising house prices have nothing to do with luck and they have nothing to do with hard work either (as you say). They are solely the product of an inflationary monetary system. Nothing else. If we had a sound money system, there would be little or no house price inflation at all, houses would be a consumption item and not a financial asset.

        That’s it.

  9. ChristopherJMEMBER

    Cannot be implemented in our current political system. The Fed Govt exists purely to decide how the money it has available to spend is divvied up (and to hoover up as many crumbs while they’re in office). Available money is determined by the tax receipts in a period, plus or minus any net debt.

    It doesn’t matter how cleverly we prove that taxes cannot be respent, and that ‘taxpayer dollars’ are simply a construct to constrain governments’ profligacy, MMT is seen as unproven, a conspiracy and is easy to dismiss with the word inflation.

    Still, there’s going to be a lot more people needing government assistance soon, so who knows what might happen, eh?

    • “Cannot be implemented in our current political system”

      That’s what I said to Bill Mitchell a decade ago – but I’ve noticed a wind of change.

      • ChristopherJMEMBER

        thanks Bro, yes Bill just plods along, making headway here and there… Stephanie Kelton is certainly someone who has been getting attention. And people everywhere are just a little bit more inclined to at least look at how MMT might work – given what we might face re employment. Who will buy stuff when no one has an income, eh?

  10. Letters to the Guardian on October 22, 2018 on the myth of meritocracy

    While Kwame Anthony Appiah’s celebration of Michael Young’s life (The myth of meritocracy, The long read, 19 October) is long overdue, it fails to place the idea of meritocracy in the contexts either of neoliberalism or of recent British history. Michael Young’s The Rise of the Meritocracy was a warning against a system of political rule, not a plea for opportunities for all. Humans were reduced to units of merit. Neoliberalism has since appropriated merit to mean the ability to be a profit-generating worker, where human beings only have worth as units of labour. Anything that interferes, like the welfare state, is to be dismantled. Appiah also ignores the complexity of Young’s political and sociological interactions in the 1950s debates over Labour policies, not least over the evils of selective secondary education.
    Professor Geoff Payne
    Newcastle upon Tyne

    • So they are cool with gov debt because they assume inflation will erode it, yet where is that inflation..? I know it’s coming in a tsunami, and what then for MMT and the welfare state. It’s our debt and we will be punished for their holy socialist ideals.

      • Agreeing with your post, and adding another thought the ABC seems not to get. It easy for them as they just get given the funds they need with little problem, and now I read they want no limits on their funding as it’s a inconvenient imposition on their independence. Would be nice to live in a land like that.

      • Thanks for clarifying. The ABC not being subject to commercial pressures brings its own advantages and disadvantages. I happen to know some leading figures in MMT in Australia. I have tried to be open to their ideas but have never been able to get past the wheelbarrows of money photos from the Weimar Republic, a most notable example of money printing. Don’t know how they can ever get past the presentational aspects of that.

      • I have tried to be open to their ideas but have never been able to get past the wheelbarrows of money photos from the Weimar Republic, a most notable example of money printing. Don’t know how they can ever get past the presentational aspects of that.

        Maybe they need to talk to the people who get capitalism past the presentational problems of sending children down coal mines ?

  11. isn’t this idea basically a re-worked form of work for the dole, just done “better” in that:
    – it’s at minimum wage, not dole (below the poverty line); &
    – individual communities assign work, rather than Cmwlth department
    – the income is guaranteed, rather than eligibility that must be re-validated (by same Cmwlth department)

    • Work for the dole is compulsory, a JG is not.

      You could also argue the motivation behind WFD is to punish the unemployed whereas the motivation behind a JG is to give people who want to work, something useful to do.

      • Work for the dole is not compulsory. It’s only compulsory if you want the dole. JG is no different.

    • It is indeed a better work-for-the-dole program.

      The dole can be cut to $0 if the voter does not jump through enough hoops – leaving them homeless and actually costing more money ($25k/year per homeless person) as research shows, but right wing shock jocks such as Tom Elliott say “maybe, but I just do not like the idea of paying someone to not work”. That is all it is. Rotten ideology. No evidence. No study.

      Iran has UBI and Iranians did not quit their jobs and the economy is still functioning – probably better than neighbouring economies that lack UBI.

  12. I don’t agree with this idea. However,

    “Second, it destroys the principle of meritocracy which underpins capitalism.”

    Hahahahaha! It is just the wolves and the sheep. Don’t confuse the kids with any other bed time stories like this please. Bad as guff from the other side.

  13. Oh dear, here we go

    What an absurd diatribe

    “The first is that the world is not based upon MMT principles. .”

    Wrong. MMT is simply a description of the reality of the way government spending works
    Denying that is like denying reality
    How you choose to apply MMT is ideological and radical excursions may have unexpected consequences

    “to go all-in on MMT would collapse the currency”
    Japan and the USA have been running “MMT experiments” for 30 and 10 years respectively, with no apparent ill-effects
    I thought you wanted to see the AUD lower, without having to lower interest rates and inflate asset bubbles?
    Wouldn’t this achieve exactly that?

    “Second, it destroys the principle of meritocracy which underpins capitalism.”
    This one is just laughable.
    The principle of meritocracy got destroyed about 20-30 years ago, mate
    Would you prefer the government picks the winners, or the banks/real estate industry?

    “Third, the opportunity for corruption is beyond belief, especially in a dodgy political economy like Australia’s.”

    Now you’re getting closer to a legitimate criticism
    The problem is by artificially constraining the government’s ability to spend, you have simply created fiscal space for money creation by private banks
    Surprise, surprise they have just used that fiscal space to blow asset (read: property) bubbles
    You are shockingly silent on that of course

    “That is not so say it is all bad. It’s not. At base it is right and it is likely to get greater currency as the world struggles to deleverage its immense debt stock.”
    How generous of you.

    “But unless you want to live in a quasi-communist, clepto-state then it would need to be very carefully managed. One idea that makes sense is that the printed dough is put into an huge research and development fund that employs folks to do all sorts of stuff out of which will come public goods. Sure it’ll mostly be wasted but at least then it’s contained and has some social utility beyond pulling free cones on the couch.”

    That is exactly what is being suggested
    The GJG can be used for the CSIRO, or universities, or TAFEs or to nationalise Holden, or whatever

    • @ Coming

      I like the idea too but the one Achilles Heel that I haven’t found a satisfactory answer to is how do we pay for all the imports that will be bought with all the cash the government hands out? The government pays the JG with AUD and as long as it’s spent in oz, no problem. But people will buy imports with it which need to be funded with USD. Where do we get the greenbacks? It’s going to blow out the CAD – that’s where the ‘crash the currency’ comment comes from – and we will very likely face a sovereign debt crisis.

      I’d love to be persuaded otherwise.

      • Babunda, Not sure how this is any different from what we have now?

        Bank creates AUD to allow some flog to compete against other flogs to buy a house
        New AUD in the pocket of the vendor now goes looking for foreign goods

        What is the difference?

        As I’ve said multiple times in this thread, limiting government spending simply allows more room for private money creation.
        We know that private money creation is not used for anything productive (just blowing asset bubbles), so I don’t see how expanding government spending could make things any worse. It could only potentially make things better if the spending was directed at something even slightly more productive than bidding up the price of existing land

      • Coming
        The modern theory is that government spending does not ‘crowd out’ private sector spending and investment. As long as you (the general you – not personal)totally ignore the external account and the difficulties we already have there then that particular piece of idiocy is ‘true’ I believe that you are absolutely right – there is nothing much new about MMT MMT just takes the current theories to a whole new level of ‘nuts!’
        Coming at least you do try to argue the point rather than just hurl shallow abuse!!!
        Cheers

      • @Coming – for one thing there’d be a helluva lot more AUD floating around. I don’t think this needs to be inflationary but it does need to materially affect the BoP.

        The other point that is probably relevant is that global finance seems to be quite happy to fund our CAD when it’s driven by lending for non-productive asset bubbles (as nuts as that is). I don’t think they’d be quite so happy to fund a CAD blown by a JG. I think that’s HnH point that the system just doesn’t work that way.

      • Flawse: the situation you and Babunda are positing is that excessive government spending will result in inflation
        This will cause interest rates to rise (voluntarily by the RBA or otherwise), which will limit private debt

        Not really sure what you consider “abuse” here. Could you point it out?

        Babunda – i’d rather have the amount of AUD created in the hands of the government, than in the hands of private banks. Of course every system can be exploited, and every system has its flaws

        Global funding is happy to fund our CAD because they are acquiring AUD assets as flawse points out
        We could allow that to continue, or we could impose capital controls.
        That decision is independent of a GJG and increased government spending

      • What’s right about it????? That we can print money pretty much ad infinitum as long as we have access to cheap imports so the printing doesn’t induce inflation????
        What’s right? What’s ‘Modern’ about it? The notion of just printing money is thousands of years old.

      • No you didn’t

        you posted a whole bunch of clickbait, then buried one line grudgingly at the end

        Congratulations though, because it worked

        Also, it IS the way that markets actually work
        Can you point out what theses of MMT are incorrect? It describes the way government spending and bond issuance work. Not the policy applications of that understanding

      • @flawse what’s right about is its description and explanation of how currencies work in practice, which is quite different to the textbooks. This opens policy space that was not possible under conventional theories. Whether you can pursue those policies without some unintended consequences is an open question. Its description of the system is not.

      • Its even simpler than that

        Its about removing the layers of obfuscation and deception

        The government spends first ex-nihilo.
        Bond sales and “funding” are partly a shell game to hide that, and partly an artificial constraint on that spending.

        Once we realize which part is the shell game, we see that the only real constraint on spending is availability of labour and resources.

      • Coming,

        “..Bond sales and “funding” are partly a shell game to hide that, and partly an artificial constraint on that spending…”

        Yes – that nonsense about bond sales and ‘funding’ is not an accident. It is critical to preserving the privatisation of public money creation and the dominant role of private banks in the public monetary system.

        Without it there are no ‘risk free assets’ for the private banks to get their paws on and use to hold the public hostage.

        Furthermore it would only be a matter of time before people realise that for most of their financial needs the key account is a deposit account at the Central Bank and not making short term unsecured loans to private banks.

        The only reason that gets trundled out now and again is that having the government fund itself via the charade of bond sales rather than direct monetisation by the central banks is “discipline”. Apparently selling bonds to finance a deficit involves such valuable discipline to make the costs of the privatisation worth it.

        Which is a lot of twaddle.

        If anyone is serious about governments and monetary discipline they would:

        1. Get the banks out of the public monetary system.

        2. Facilitate the use of private and foreign monetary systems to allow the public to keep the public system on its toes.

        Then if a government is not running the monetary system properly people can abandon it just as they do in tin pot countries when they ditch fiat and go with something else like $US.

      • MMT is fundamentally wrong because it’s theory of interest rates makes no sense. They’ve got a liquidity (money) theory of interest rates and no credit theory of interest rates.

        And who cares what the “markets” think. Most of them are libertarians who have been predicting hyperinflation for the past 10 years.
        Markets usually do the opposite to what market players think.
        For example: if every market player believed bitcoin will replace fiat, will it? No, because it is worthless.

        My description of MMT: fundamentally wrong in theory and practice. Will always be wrong and will never work regardless of what markets think.

    • MMT is quackery, plain and simple. It has been proposed by quacks (i.e. a way to conjure a ‘free lunch’). MMT-ers are modern day alchemists.

      MMT has been roundly debunked so it beats me why people still twat on about it

  14. H&H triggered.

    I’ve spruiked this for years. It’s far more desirable than UBI. Any person who wants a job gets one @ min wage. Uptake would be a few % of the working population.
    At 2% uptake: 250000(people) * 700(min wage) * 52 = $9.1B
    The total welfare budget is $191 billion, a portion of which is already spent on newstart with no return.

    Now there’s an army of workers which can be utilised for infrastructure, environmental projects, mundane public service office work, cleaning cities, etc. Also the government can lease them to private enterprise for contract work and reclaim some costs. The unemployed get an actual option in life, the employed have a solid fallback, entrepreneurs are enabled to take real risks knowing they can have work if it fails.

    Full employment is the claimed goal of every side of government. I don’t see why they don’t make it a reality. It can only benefit existing workers.

    • At 2% uptake: 250000(people) * 700(min wage) * 52 = $9.1B
      That is NOT the proposal.

      Basically every extra cent the government spends, as it flows through the economy, will go into the Current Account Deficit. Soo it’s easy to print the money but how do you handle the CAD and all the issues that go with it.

    • There’s a much easier way to get to full employment: shut down the welfare system and rescind the minimum wage.

      • I think the word you’re after there is “slavery”, or maybe “serfdom”, not “employment”.

  15. If we have an oversupply of labour, ignoring other concerns, we should look to the 1850s through to 1980s.

    There’s a big monument in Melbourne to the 888 movement.

    Hawke even managed to push through a reform that’s still around.

    Yep. Cut working hours.

    It’s a win for everyone – and presumably we’d all be doing actual useful work.

    • In case you haven’t noticed this is well under way.
      See the gig economy, rise of part time employment and underemployment.
      It isn’t actually working out all that great for the workers though.

      • Ok, I should have specified: “Full time” hours.

        Drop them to 36 for example and you end up with, assuming about 4-5m “full timers” about 8m hours a week to fill.
        Initially it’ll be overtime, but a year or so down the line it’ll be new employees.

      • Without a change to hourly pay it’s a lose for current full time workers.
        With a change to maintain full time wages I wouldn’t expect business to increase their costs with new employment, just likely to expect “Productivity gains” from existing employees, or shift even further to part time, unless Part time hourly rates are increased as well.

    • At what point do we actually employ people to make stuff so that we aren’t continually selling off our kids’ heritage to pay for our profligacy? The solution is less office hours for government workers at the same rate of pay??? Sure that will work!

      • What a stupid non-sensical comment that argued absolutely nothing and required no effort to actually look at facts and think!!! Pretty typical!!
        So read the post above re the effects and answer the whole lot.
        Abuse seems to pass for comment in MB these days. You\’re really good at it.

      • Are you having a stroke, flawse?

        Things I didn’t mention that you replied to:
        * Type of work
        * Heritage
        * Offices
        * Government workers
        * Pay rates

        Things I didn’t do that you saw:
        * Abuse you

      • Your reply was just abuse. You didn’t read! You didn’t think! You didn’t read the above post and I note you still haven’t despite my asking you to do so before you replied. I asked you to sensibly answer that post. Just hauling off and saying that what I’ve said is irrelevant is dismissive abuse.

        If not please explain how the external account is not relevant to the debate?

  16. We already have a jobs scheme for people who don’t have job alternatives. It’s called “work for the dole”. The only difference between that and what’s been proposed is the rate of pay.

    • Wrong

      Work-for-the-dole is basically set up as punishment, or menial.
      This is to allow space for private business to provide actual useful services, and therefore maintain large profits

      A GJG would be set up to allow nation-building and state run industry, competing with private industry and reducing their scope for unearned profit.

      A GJG for instance, could have allowed us to buy up the holden plant cheap, and start manufacture with government employed workers.
      Or build a national broadband network instead of outsourcing to contractors and “consultants”
      etc etc

      • You don’t need a jobs guarantee to provide state run enterprise. We did it for ages before it all got dismantled since the 80’s. The problem is that the people taking advantage of the job guarantee are likely to be predominantly unsuited to or simply lack the skills and abilities to compete with the private sector, otherwise they would already have the higher paying job in that sector.

      • How skilled do you need to be to dig holes and lay cables?
        To machine one particular part of a Barina?

        The government would be providing on the job training (while the person draws a wage), and then putting them to use

      • So…the government is going to run factories to employ people? The money is unlimited? I’m sure it will end well for everyone. It always has before!!!

      • “or simply lack the skills and abilities to compete with the private sector, ”

        The whole idea is that the JG does NOT compete with the private sector, that would become inflationary. That’s why renumeration is set at – and ONLY at – the minimum allowable by law in this country. Employers need only offer a little better than the lawful minimum in order to bid workers out of the JG.

        MMT and the propositions often put forward by it’s proponents have not been recently whipped up on the back of a beer coaster – that claim is absolute garbage. This is a solid, empirical body of research, carried out over the past several decades in many countries. It is now at the verge of becoming mainstream and many who cling to old, innacurate notions and falsehoods feel threatened.

      • Leftee
        Please!!!!! The ‘research’ is tripe originating out of the USA based ont eh US being the Reserve currency and, with that status, it can therefore print unlimited money without any negative effects – either short or long term. The essential idea being that the US can run up infinite debt without ill effect. At some point in time that will prove catastrophically wrong and that time might be closer than many think. I will say that it is my experience that monumental economic stupidity can go on much longer than I ever thought possible. For me that is 54 years of economically conscious years….so far!

      • I’d be curious to know how the Govt would create a vast horde of ‘non-menial’ jobs? More than half the existing Govt jobs are menial to worthless, as it is. Perhaps the solution is to give everybody the job title ‘Managing Director’? That way, despite being little more than a ditch digger or paper shuffler they can at least ‘feel’ important. People are stupid after all — they won’t know the difference! Lol.

        Fvck me, the country is truly doomed when your educated population is supporting lunatic ideas like MMT.

  17. Jumping jack flash

    Welcome, Comrades, to the Australian Socialist States and [Happy] Australian Territories! Forget USSR or CCCP, we have ASSHAT. I think that’s just grand.

    Everyone please form an orderly queue to get your government issued clothes, houses, food, cars and jobs.
    No need for wages, the government provides all while you work for the advancement of the glorious ASSHAT. All power to the ASSHAT!

    “Second, it destroys the principle of meritocracy which underpins capitalism.”
    Well, yes. Isn’t that the idea?

    Not saying it is a good idea, or a bad idea, but Capitalism, like Thatcherism, is for the good times where money is abundant and the private sector is flourishing under their own merit. In the bad times it makes sense to recover a strong, centralised leadership and, dare I say it, some micromanagement of the economy.

    • I know right. Sorry to say it but there are some fvcking dense people commenting on this particular thread.

  18. Its so bizarre to me that there are so many MB members (or free loaders) who are against MMT/GJG

    Even if (or especially if) severely abused by the government, it would facilitate the shared goals of the site’s readership

    1. Fall in value of the AUD
    2. Elevation of interest rates
    3. Popping of asset bubbles
    4. Insolvency of heavily indebted

    Government spending would “crowd out” private money creation , as inflation would lift interest rates.

    Everyone is so upset about the bubble the banks have blown, but refuse to allow the government to create money instead
    What’s the third option? No new money is created is by anyone?
    The economy just stops, as no one buys anything because every day their remaining dollars increase in value
    This goes on until GDP reaches 0

    • Carts and horses!
      A falling A$ will do absolutely zip good unless the fundamentals of the economy are reformed. This requires a fundamental change in entitlement mentality for the greater part of the population. It also requires that those in a position to squeeze the life out of the economy and everyone else give up that privileged position. The social and demographic dislocation would be just plain enormous.
      If your falling A$ is simply because you have over-printed and over-spent – there will be nothing gained from it and plenty lost. Think Venezuela.
      If your falling A$ was from policies that fundamentally reformed the economy in the face of all the difficulties then it would be a good thing. That ain’t gunna happen!

      • Flawse, we ain’t REMOTELY like Venezuela. We are a nation with a remarkably rich primary resource endowment (which the current ideology is happy to have us give away to trans-nationals and have them sell it back to us) and very long-term socio-polical stability.

        Would you FOR THE LOVE OF GOD cease trying to compare us to places that we are absolutely nothing like and will not become like any time soon! Unless we are invaded and occupied, turn on each other in civil wars and sectarian strife or somehow lose all ability to access our own real resources (see p[revious two reasons) and then suffer targetted economic punishment from a giant global thug bent on forcing regime change (aka Venezuela copping it from the US) then there is absolutely no reason that we cannot pursue the MMT agenda with success.

      • Leftee – please READ what I said!!!!
        Also please note Venezuela was prosperous with great oil revenues.
        “very long-term socio-polical stability.” Our social divisions are starting to run very deep. Societies crack under poressure.
        Now you have run off at the mouth at me without attempting to answer the central difficulties that are at the core of MMT – i.e. the external account – will you please outline how those difficulties can be avoided. If you can you will immediately become the world renowned expert on MMT and your consulting fees to central banks will earn you bazillions!
        You lanbast that current leaders and economists for selling the country off – then you advocate the extreme ramping up of the very policies that necessitate that we flog our assets to every foreign entity who is willing to buy them.

        Personal abuse no longer impresses me at all – I don’t give a RA! So START, FFS, with some reasoned response.

      • Flawse, you are wasting your time jousting with some of these guys.

        It is a serious credibility check when people announce publicly that MMT is a great idea. Best walk away and smile politely. People either understand the monetary system or they don’t and if they genuinely want to understand it they will go away and find out for themselves.

  19. How would they stop foreigners from taking these jobs?

    And if they decide to ban foreign “students” from taking these jobs, why not ban foreigners from driving trucks on public roads now?

    Why not ban foreigners from taking sub $100k/year jobs in the NBN now?

    Given that the fake Greens refused to build enough public housing, there is no way they will add enough jobs and stop foreigners from taking the jobs.

    Mothers should not have to beg their husbands for money:

    beg him each time she needed cash

    https://www.smh.com.au/business/the-economy/the-super-wealthy-wives-trapped-in-a-gilded-cage-20181107-p50eg3.html

    Stay at home mothers need an income and UBI gives it to them. If UBI is so bad, why not do a trail and publish the results of the trial?

    Australia Needs A Universal Basic Income, And We Should Start With Mothers

    https://www.huffingtonpost.com.au/petra-bueskens/australia-needs-a-universal-basic-income-and-we-should-start-wi_a_21720598/

  20. A disaster in the making.
    How long would it be before the people doing these jobs demand parity with existing local government workers?
    Holiday leave;
    Parental leave;
    Domestic violence leave;
    Stress leave;
    and the killer, security of tenure in the job.
    I can see truckloads of lawyers cheering as we settle down to another 50,000 IR laws…
    Finally, you need to ask what will happen when the army of people on the dole who do not wish to work start taking 3 sickies a week…..
    Yes, a disaster in the making. A truly socialist Nirvana. Welcome to Veneztralia. Come back Hugo, all is forgiven…

    • Hate to spoil the fun but unfortunately life is competitive because evolution is competitive. Where you offer jobs to people when they do not need to compete for them and there is in effect no penalty for not turning up for work and there is no infrastructure for selecting (or even being able to choose you preferred) applicants the law of Unintended Consequences is going to catch up with you very quickly. For example, I wouldn’t hire Ice addicts, but under this regime I would have to accept them. I’m sure the consequences for H&S at their work place will be just great….

      • Where you offer jobs to people when they do not need to compete for them and there is in effect no penalty for not turning up for work […]

        Yes there is: being poor sucks.

        Despite the fantastic stories of your local Rupertarian, neither the minimum wage, and certainly not the dole, deliver a life of luxury. They barely deliver a life of survival.

        For example, I wouldn’t hire Ice addicts, but under this regime I would have to accept them.

        No, you wouldn’t. You wouldn’t be hiring anyone under this regime, the JG scheme is run by Government, it’s not meant to be another handout to private industry.

      • Drsmithy
        You have my profound thanks
        Finally, after years of putting up with you, I’ve finally and fully nailed your virtue signalling arse. My daughter is a journalist. She was one of 200 graduates who came out of Kingston Uni in the UK as a journalist. What made her different is that she was one of about 5% who got a job. She published a series of articles about Rupert Murdoch and the effect he and his arsehole father Keith (who famously tried to destroy John Monash) had in news history. I gave her all the historical facts necessary to help her publish the article that made such a difference to her ilfe. Drsmithy you are a virtue signalling fake.
        I would welcome any response on this blog from everyone else who has had to put up with this narcissist

      • Yessiree, you certainly have. Can you just elaborate on which of these points you’ve refuted ?

        * A well paying job, rather than the dole or minimum wage is sufficient incentive to “compete”.

        * The fact that a JG is the Government employing people, not “forcing” private enterprise to ?

        Thanks for the laugh, as well. It is always entertaining to see someone arguing on a blog calling other participants narcissists.

    • Rob, you’re wasting your time — there is a utopia out there. It just requires the right people to implement it. Have faith, my friend 😉

  21. Can we stop using the term Universal Basic Income? We don’t want to be the candle attracting all the moths.

    How about Australian Natives’ Dividend. For people born here only. So first generations get all the opportunities with their amazing skills and give us a wonderful vibrancy, while their kids wait until they’ve finished the schooling (and the dividend is paid to the childcare/school/TAFE/Uni in the meantime).

    • I think a UBI is a great idea — it would instantaneously discourage potential immigrants from coming here.

      What moron wants free money after all.

  22. FiftiesFibroShack

    “Second, it destroys the principle of meritocracy which underpins capitalism.”

    LOL. That never really existed. The closest we come to actual meritocracy is sport.

    • It does, people just get the definition arse-about-face.

      The meritocracy means those who are successful, have merit.

      It does not mean those who have merit, are successful.

      • +Msny,
        and it sure helps you sleep at night if you are wealthy because you deserve it while the poor guy in the gutter is homeless because he deserves it.

    • Absolutely spot on when it comes to sport.

      It matters not how rich you are – you have to be good.

      As for occupations like IT, just give the jobs to 3rd world passport holders who are willing to work here for illegal wages.

  23. Second, it destroys the principle of meritocracy which underpins capitalism.

    Ignoring the fallacies buried in this statement for a second, how does it do that ?

  24. It surprises me that MB is happy to float the radical and innovative policies of SA and give them time of day, but when someone else proposes a similarly radical and out there idea they are quick to shut down debate rather than encourage the exploration of an idea and constructively interogate how it may work.
    MB appears to be in the game of influencing policy and resetting the arena we play in. Why not get behind such ideas as an avenue to open up new discussions, question the fundamentals of our policies in Aus and shake things up?

    • “MB appears to be in the game of influencing policy and resetting the arena we play in.”
      Of course it is. It is an avenue for the owners to further their particular viewpoint, just like every other media outlet in existence. Their views just tend to be more aligned with the populace than the larger outlets.

    • Lama – you must be new around here. This damned stupid MMT BS has been thrashed out in these pages over and over and over and…….etc etc etc for years.

    • It surprises me that MB is happy to float the radical and innovative policies of SA and give them time of day, but when someone else proposes a similarly radical and out there idea they are quick to shut down debate rather than encourage the exploration of an idea and constructively interogate how it may work.

      HTF is a JG even playing the same game in terms of “radical ideas” as randomly assigning one person’s property to another ?!

      • Doesn’t the government randomly assign peoples property to other people all the time? Or is money somehow special?

      • You seem to be attempting to make a point, but failing. Have another go.

        Is this some oblique reference to that gold old right-wing canard “taxation is theft” ?

      • No they are applied based on wealth and earnings. Seems about the same to me.
        And at what percentage does a land tax transfer from a tax to not really a tax?
        10% 20% 70% 100%? 10% with 90% mortgage forgiven?

      • No they are applied based on wealth and earnings. Seems about the same to me.

        O.o

        And at what percentage does a land tax transfer from a tax to not really a tax?
        10% 20% 70% 100%? 10% with 90% mortgage forgiven?

        What ?

  25. ‘Simply start the printing presses.’
    Pauline will love that idea. The snowflakes would love to live in a corrupt, quasi-communist, clepto-state and believe meritocracy is a myth.

    • Meritocracy is a myth.
      Being wrong constantly gets you a high income job as an economist, or head of the RBA.
      Working hard all your life building cars gets you [email protected]#$ed in the @rs3 and thrown on the scrap heap when they close the factory.
      Buying real estate 20 years ago makes you wealthy, just cause.
      Working a job sees you barely able to keep up with bills as expenses rise faster than your wages.

      Does this really sound like a meritocracy?

  26. I think I need to have a Reusa moment. That one where, years ago, the lunacy of government/RBA policy re RE sent him over the edge and he ceased rational comment in favour of his RE relations parties persona.

    I think I need to change to cheering on the insanity of macroeconomic policy. It’s the only way I’ll stay sane.

      • Oh yes!!!! Spot on! I’m not sure that this temporary downward sideways shift is the end of the story either. MMT is currently practised by the government and RBA to a degree. The idea that you can just print money and inject it into an economy without ill effect rules at all levels of Government, banking and academia. There’s not actually much new about MMT – it’s just a more extreme form of idiocy. So I doubt we have seen the last of it. These idiots (RBA) print as a solution to this today’s nominal house prices around majors like Sydney and Melbourne will look very very very cheap.

    • flawse you should know better than to be so dismissive of MMT. As an empirical description it is beyond dispute. Take it seriously and you’ll find plenty of value in it short of its more extreme policies. Granted, the one thing they don’t answer well is the BoP problem.

      • Babunda – I take it very seriously and did a whole lot of reading on it. I’ve been arguing about it since the Steve keen blog days.
        Why does anyone think I, or anyone else, don’t understand a government, conflating the Central bank and the Government, can print all the money they want. This is NOT new!
        The BoP problem means that it is not a credible train. MMT simply ignores anything that might be a bit difficult. The BoP problem is not just a problem. it renders the whole thing not viable and on-sensical.
        Note I’ve had arguments with the best of them – including a few who get quoted on here as being the óracles’ of MMT. I’ve also watched exchanges between these óracles’ and knowledgeable people of repute who questioned them. The exchange finishes as soon as the question of the external account is raised.

    • MMT = higher inflation. There has never been a better time to buy 10 or 20 houses. Reusa has been right all along.

  27. If Australians demand a minimum wage then the distortions created by that need to be accounted for, i.e those people that are unable to be productive at the minimum wage become unemployable, but instead of printing money the taxpayers ought to subsidise those peoples employment, not giving them money to sit on their backside, and hopefully over time most of these people will obtain the skills & work ethic to be productive at or above the minimum wage.

    • Good points. Also I’m not sure if the model suggested above won’t be abused by businesses refusing to employ people and demanding government funded workers.

      • The JG model would not – assuming it were properly implemented – allow JG workers to be employed by private industry.

      • Yes, maybe a time limited subsidy for private enterprise or just straight up guaranteed work for the government available at the minimum wage and only for as long as there is no work available in private enterprise.

      • Why on Earth would you want to subsidise a business that couldn’t compete against minimum-wage Government jobs ?

        A JG pretty much *is* “guaranteed work for the government available at the minimum wage”.

  28. didn’t australia used to have a job guarantee before whitlam pulled it? seems like a better idea than a UBI which, even if viable, would just be hoovered up by landlords and supermarkets.

    • Supermarkets can be bypassed thanks to online shopping:

      https://www.kogan.com/au/shop/pantry/

      Or even just offline shopping due to Aldi, IGA, and others. There is enough competition in the market to keep prices down.

      If UBI benefits landlords, why have the right wing pricks not put in a UBI yet?

      You would actually tax the landlords to fund UBI. It is not unviable, it is simply a transfer of wealth so that us plebs need not work in a horrible job to get money. So that mothers need not beg their husband for money. etc. We almost got UBI in 1970 anyway. That is when we got Medicare (which USA still lacks!).

      UBI would be like Medicare – people need healthcare and I get to see a GP for free. You and I need money too!

      • Gosh you’re obtuse Jacob

        It means that private enterprise controls the means of production. That is their goal
        You have privatised the entire productive capacity of the economy

        Who cares if their taxes are increased, when their profits are increased at the same time?
        Its similar to the stocks vs flows confusion

  29. MMT is like calories in calories out. Is technically true, but doesn’t tell you anything useful. The state can print all the currency it wants, but it can’t print the resources to back up those claims.

    • Yup! However there are few people here would connect those two things. Matter of fact there are few modern economists who could make that real connection.

      • For crying out loud, most of the professional MMT protagonists state that fact of a regular basis! Clearly few of you have ever actually read from them!

      • For crying out loud, most of the professional MMT protagonists state that fact of a regular basis!

        It’s just another straw man. Much like the frequently rolled out “MMT says you can print money indefinitely with no consequences”, which of course a) nobody actually says and b) is typically explicitly NOT said.

  30. Why would there be inflation? Money is being created by banks at much faster rate and no inflation. This kind of program would not only create money but also goods and services produced by these jobs so more money and more products to pay for so not much inflatory pressure.
    Bottom line is that to give each of 700k unemployed $35k wage would need only $25b only $20b on top of the existing welfare spending on this group. That’s juat over 1% of GDP – so nothing really

      • that’s my point. banks created $150b of new money every year and none complains about inflation. Now if government creates $20b plus some goods and services everyone will freak out.

    • If the money offsets the amount of loan repayments technically I think your right no inflation should ensure. You would have to tighten up lending in the meantime however otherwise the increased base money stock as it flows to wages and business profits would risk being used as collateral for ever more loans – that’s where the real inflation risk comes from (i.e. the fractional reserve multiplication of that or rather more money means more collateral for more demand for loans).

  31. If only we combined the writings of Adolphus Huxley and Orwell we would have known the end result of global corporate hegemony would be communistic states required to feed the hedonistic consumption beast.

  32. It’s either a “debt deflation” or a depreciation in the currency since we have had a CAD for so long and have been delaying its effects through ever increasing debt. In other words pick your poison. I think a lower dollar will be the better alternative for most people to be frank.

  33. MediocritasMEMBER

    MMT is just modernised Chartalism, that’s it. Where you stand on MMT is where you stand on Chartalism and if you don’t know what Chartalism is, then figure it out; this is not new stuff.

    Fundamentally the concept is sound and the various criticisms of it can be shot down easily enough. In the aftermath of the financial crisis, I observed so many online debates with MMT commentators like Kelton, Mosler, Roche, Sumner, Fullwiler, Wray, Galbraith, etc. I don’t believe there’s an argument that I haven’t already heard. It has been done to death.

    What it tends to boil down to (where the arguments get interesting) is this: who do you think should be primarily in control of money creation?

    MMT advocates tend to favour an increase in state-control (from current levels). Spending is expansionary (inflationary if money creation runs ahead of economic growth), taxation is the opposite (unless the drain rate fails to keep up with a contracting economy). Spending creates money, taxation destroys it. If government lends to the private sector then interest income can be added as a deflationary factor.

    This is drastically at odds with the current reality in which private banks create >95% of money as credit when they lend it into existence. Private sector lending is expansionary / inflationary, repayments are the opposite and governments borrow from the private sector in order to spend, secured against future taxation.

    ANY powerful institution can create inflation by creating money to excess, be it a public, private or mixed. Out of control inflation is not uniquely attributable to governments. As for hyperinflation, it is usually triggered by major social crises (such as civil war, famine, etc).

    Under an MMT model, private banks could still lend, but it would have to be on a 100% reserves basis, which is the way that the typical person thinks (incorrectly) that banks actually work. In that scenario, the role of private banks is to assist with money allocation, intermediating to move it from stagnant stashes into dynamic activity, without creating new money in the process.

    In a growing economy, where demand for credit exceeds available supply, an MMT government would supply new reserves to the private banks via a “citizen dividend”, paid into depositor accounts. Accounts would be clipped in the reverse scenario.

    For a time I was a card-carrying supporter of MMT, now I have a more nuanced view. I don’t believe it’s pragmatic to expect to implement a MMT model without a major crisis that fundamentally destroys support for the current system. I also don’t believe that it’s pragmatic to expect a nation to try and embrace MMT principles without triggering a damaging assault from the global financial cartel that holds enormous power over all nations within the complex spiderweb of international financial relationships that we’re entangled within.

    What is essential is that money be created with a very small time lag to service demand for it in a growing economy. Similarly, it must be destroyed with a very small time lag in a shrinking economy. The current financial system has evolved into the beast that it is because it simply did the best job (to date) of pairing the elasticity of money supply with the elasticity of economic activity.

    It’s fundamentally naive to think as a revolutionary and dream of “overthrowing the system”, whatever it is, because as history so clearly demonstrates, what inevitably happens is the revolutionaries have a very incomplete understanding of the complex system they are trying to manage. The revolutionary replacement will not understand WHY the prior system had the scars that it had, the battle-testing, patches, various quirks, undocumented weirdness, edge-case handling, all around hack-job. Throw it away at your peril.

    I’ve not found Kelton to be such a revolutionary type. She’s generally quite sensible and promotes incremental change rather than systemic overthrow. The current system does have flaws that can be worked on / patched, particularly in the case of a contracting economy for which it is not well-adapted. MMT has some pretty good suggestions.