Every now and again the Guardian slips through a Modern Monetary Theory editorial. Today is one of those days. It begins:
A great deal of poverty in Britain can be blamed on joblessness, insufficient hours of work, and low pay. The pandemic has emphasised that the penury that too many suffer in this country is nothing to do with the shortcomings of workers. It is do with a shortage of work.
It ends by saying:
In the UK there will be an estimated million under-25s looking for work in the next year. Mr Sunak's Kickstart job-creation scheme is too small and too reliant on private companies to help much. The government should make the public sector the employer of last resort, offering a job guarantee scheme — like that proposed by the economist Bill Mitchell — with a buffer stock of state-supported employment that expands or contracts with the business cycle. New Covid-19 vaccines will, hopefully, end the public health crisis. But the unemployment crisis will remain. Time is running out for Mr Sunak to act and ensure that a generation is not sacrificed on the altar of ideology.
In between it makes the point that universal credit must be in creased in the short term but that more fundamental reforms are also required:
Covid-19 has revealed that nobody but the government can take responsibility for maintaining the total level of spending in the economy at a level that keeps the country as close to full employment as possible, where a working week is at a reasonable length and paid at a reasonable wage. The Bank of England has injected £350bn into the banking system this year and has had little effect on the real economy. That is why the Bank, along with the US Federal Reserve and the European Central Bank, has called for governments to spend.
This is right, of course. But is anyone in Downing Street listening? There is no sign of it.
In which case the message has to be repeated time and again.
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I do have some difficulties with a job guarantee scheme that expands and contracts with the business cycle. The implication is that there are jobs that are needed when the economy is contracting that are not needed when it is expanding.Why are they not needed and what jobs are they? I do believe the state can create permanent and sustainable jobs in sectors such as education, health, energy, infrastructure and research all of which are seriously and unnecessarily under funded due to Governments misunderstanding of debt.
The question is how do we replace those jobs that we are losing now such as retail, heavy industry, factory and to some extent office jobs that will be overtaken by technology. Part of Governments job is to look at how our society may change over time and create policy in the light of those changes rather than simply react after the event and to assess the impact of state intervention in the light of what needs to be done. The default of the Tory Party is that the market will provide all the changes and stimulus required without any state intervention which absolves them of any need to take action. And this is why those in Downing Street are not listening. I wonder why the Tories need a manifesto when they could quite easily say if we are elected we will do nothing since the market will achieve everything that is needed. But for those of us who know that markets will not do that then something more is required from the state.
Many worry that state intervention will give rise to inflation and in certain circumstances it could but it doesn’t have to. Inflation doesn’t simply arise because of an increase in money as many fear. It only arises if that increase in money, which obviously stimulates demand, is not matched by an increase in supply.
Government needs to think far more deeply about how to address issues in our society. Unfortunately if we as a nation elect a Party that believes the state shouldn’t and does not need to intervene then we are destined to get the negative policies we have,
Hello Richard.
It’s not just in Downing Street that no one is listening. There’s no vision of a government job guarantee for an independent Scotland, from the SNP or the Green Party.
I don’t understand why not. To me it is a clearly progressive policy, that would offer a distinct difference from remaining in the U.K.
Possibly the reasoning ties in with your other blog today on a Scottish currency. To commit to a Government Job Guarantee requires commitment to a country’s own currency. I still feel the political reasoning for not committing to this is because politicians think there’s still too many people that see GBP, US$ and the Euro as safe currencies and everything else as potentially ‘Zimbabwean’ in nature. I know this isn’t the way currencies work.
I wonder what the people of Wales think about having their own currency. Maybe a push for a fiat currency for an independent Wales could show that it’s a normal situation for countries.
There remains the euro though which muddies the waters. I’d abandon it.
On the subject of the WM government not having a U.K. Government Job Guarantee, well that’s just callous and inhumane. Just like their cutting aid. Callous and inhumane. There’s no other reason to explain the situation.
That’s about right.
Please can you define ‘full employment’?
Everyone who wants gainful employment at a living wage has it
I am afraid Guardian leader writers aren’t consistent on this. Have you seen today’s?
“But increases have to be paid for, either by cuts to other programmes, by greater borrowing, or by tax increases”.
I am not sure they really have got your message.
I can imagine who wrote that