What should Labour be talking about?

The Labour Party is a joke at the moment. The Corbyn side seems to be trying to steal the Green Party’s manifesto at the moment with it’s talk of basic income guarantees and “Democracy Days“. Meanwhile, the rest of the Parliamentary Labour Party seems focused on ensuring it performs terribly in the May elections, with a side project of campaigning to stay in the EU. Neither side seems interested in winning round voters to their way of thinking. Here’s what I would do if I were Labour.

Most people either actively despise politicians or have no interest in it whatsoever. Someone who seems different to the norm and has a fresh approach could re-capture some of those people turned off by politics. Labour politicians should have embraced this opportunity, but instead they squandered it with petty squabbling. At the same time though, you don’t want to scare people off. The media will try and do that, but helping them to do that is not smart. You have to go to where people are before you can take them to where you want to go.

With that in mind, here’s where I think most people ‘are’ on some issues:

  1. Immigration. People don’t really care about whether immigration is good or bad for the economy. They see the impact on their local area, or areas nearby and dislike the change this represents. Humans have evolved to be wary of outsiders and I don’t see this changing any time soon.
  2. It’s normal for humans to compare themselves to those around them and to feel envy and resentment to those they feel don’t deserve what they have or are getting something without working for it. This is why cuts to social security generally have the support of the majority, but why cuts to working tax credits specifically are not popular.
  3. Most people’s resentment about perceived unfairness can be quite easily channeled towards those at the bottom. Everyone can think of examples from their own communities where people seem to be getting ‘something for nothing’. People also resent those at the top seemingly taking the piss.

You may not agree with those descriptions of where people are, but assuming they are true, what policies would flow from them?

  1. No party can do anything on immigration while a member of the EU. Personally, I can’t see why a party seeking to represent working people can support our continuing membership of the EU. In an ideal world, Corbyn’s Labour Party would be campaigning to leave. They could then advocate for a points-based immigration system, while continuing to talk up the contribution skilled migrants make to our country. Realistically though, this was never going to happen. The modern Labour Party is as pro-EU as the top of the Tory Party. What can they do now they have decided to remain in the EU whatever the terms? Answers on a postcard please.
  2. Labour should adopt a position that anyone with the ability to work should work. They should scrap all welfare to work programmes and instead introduce guaranteed jobs paid at a living wage for all who find themselves unemployed and unable to find alternative work. Anyone unable to work should be give generous and unconditional support for as long as they need it, with the assurance that when they feel able to do any type of work, a job can be tailor made to suit them.
  3. Our economy is far too reliant on the finance sector and the very wealthy extracting money from the economy through unproductive investments like property. Labour should pledge to put a stop to this by increasing taxation significantly on those unproductive areas of the economy, while reducing tax on productive investments which have a positive impact on the economy.

Those are just three areas then, a fair immigration system, focus on employment guarantees rather than traditional social security, and – as Keynes might say – on euthanising the rentiers. I don’t see much prospect of any of these things becoming Labour policy, but all those 3 areas would have popular appeal in my view. What other areas could they focus on?

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Labour were too left-wing?

Yougov published some interesting polling results today which in a lot of ways seem contradictory. They asked people about Ed Miliband’s leadership of the Labour Party, and the direction Labour should take in the future. Here’s the results (click to enlarge):

Screenshot 2015-05-18 at 6.27.01 PM

Around a third of respondents think that Labour under Ed Miliband was too left wing and 40% thought the new leader should move Labour more to the centre. This should be a surprising result, as Labour’s manifesto was not remotely left-wing, promising to continue austerity and talking tough on immigration and social security. To me though it shows the power of framing, and how media presentation can feed through to public perceptions. Constant reinforcement of ‘Red Ed’ and labelling certain policies as ‘communist’ seems to have done the trick.

If we contrast this with some other results from the same poll, the picture becomes a bit less clear as Yougov’s Peter Kellner explains in this blogpost. If you ask people where they sit on the political spectrum, the most popular answer seems to be ‘right in the middle’. You get a rather nice bell shaped curve like this:

Screenshot 2015-05-18 at 6.40.00 PM

“The centre is where I am” seems to be the mantra. You hear politicians talk quite a lot about ‘reclaiming the centre ground’. For example the Lib Dem’s entire strategy seemed to be based around placing themselves slap bang in the middle between Labour and Conservative. They failed miserably of course, but not for that reason. Tony Blair was probably the master of claiming the centre ground, but the main point for politicians I guess is that to be successful you need to reframe the centre as “whatever platform we are running on”.

Words associated with left-wing and right-wing have a lot of negative baggage attached now so trying to attach a positive message to them is probably futile. They have kind of lost all meaning now. Everything to the left of whoever is in power is labelled as dangerous socialism, while the same is true to a lesser extent of the right wing.

So what does this mean for Labour? It seems clear that whoever wins the Labour leadership contest will want to present themselves as being in the centre. A moderate. A safe pair of hands. This is probably unavoidable, but being in the centre doesn’t mean your ideas need to bland and middle of the road. If you look at the public’s opinion on a range of issues, they are quite ‘leftish’ on a number of things (while still calling themselves centrist). Here is another finding from the Yougov poll linked to above:

Screenshot 2015-05-18 at 6.54.08 PM

Previous polls have also shown strong public support for nationalisation of certain industries like the railways and utilities. Unfortunately (to me) though, the British people also seem quite preoccupied with making sure those unlucky enough to not have a job are not too comfortable:

Screenshot 2015-05-18 at 6.58.19 PM

To me though, this presents an opportunity. If you can successfully frame yourself as being part of the centre, you can promote some quite radical policies while keeping a lot of voters on side. The public clearly want to see less people dependent on social security payments, so why not give them that by offering a guaranteed job to anyone willing and able to work?

It seems also that people can clearly see that capitalism is working incredibly well for those at the top, but less well for everyone else. There are some quite radical ideas that can tap into this while still being “pro-market”. I liked this recent comment from fellow blogger Neil Wilson:

It’s time to stop being ‘pro-business’ and start being ‘pro-market’.

– If you’re pro-market then you remove power and size differentials wherever they may be to ensure competition is allowed to work.

– If you’re pro-market then you ensure that everybody has an alternative job offer open to them via a Job Guarantee, ensuring there is always competition for labour resources.

– If you’re pro-market you address monopolies and rentier issues to ensure that resources are always fully utilised and available at the best prices.

‘pro-business’ people take the opposite view on these points.

Business needs to be treated as cattle not pets. They are looked after and farmed for what the output they provide, but if they stop doing that then they are culled to avoid wasting resources better used by others.

I think that’s dead right and is an attitude that should have support from across the political spectrum. The more interesting thinkers on the right like Douglas Carswell often talk of their disdain for ‘crony capitalism’, and would likely sign up to policies that were ‘pro-market’.

‘The radical centre’ is a phrase I’ve often heard (usually by people who are neither radical nor in the centre), but it does sort of capture an approach that could be successful. Convince voters you are in the centre and they’ll feel comfortable coming out to support you even if your policies offer a clear break with the status quo. It’s all about hitting the right notes by framing your ideas in the right way. It will be hard for any Labour leader to achieve this though, but hopefully one or more will at least try something new. The early signs are not great though.

Is Greece about to implement its own job guarantee?

Syriza swept to power in Greece last week, falling just 2 seats short of a majority after polling around 36%. 5 or 6 years ago, they were polling just 5%. The mainstream left party PASOC have gone the other way, polling over 40% on winning power in 2009, they polled less than 5% last week, a remarkable turnaround which shows just how fast things can change when countries are placed under severe economic stress.

Syriza now have a mandate to affect real change for the people of Greece. Whether they do, or even can within the confines of the Euro remains to be seen, but there have been some positive early signs. The appointment of ‘heterodox’ economist Yanis Varoufakis as finance minister is intriguing, and a central plank of Syriza’s platform is to do something to tackle the dire employment situation in Greece. Unemployment peak at oaround 28%, and remains at over 25%, while youth employment went as high as 60% in early 2013.

The New York Times reports on Syriza’s plan to use a direct public employment scheme to create 300,000 jobs. The program is due to be headed up by the deputy minister of Labour and Social Solidarity, Rania Antonopoulos, also a scholar at the Levy Institute of Bard College. Last year, she co-authored a paper on this issue entitled “Responding to the unemployment challenge: A job guarantee proposal for Greece”. It proposes the creation of jobs consisting of:

“…paid employment for 12 months per year on work project selected through a community-level consultative process from among the following areas: physical and informational public infrastructure; environmental interventions; social service provisioning; and educational and cultural enrichment. The positions would carry full legal labor rights, including normal time off. Eligibility would be extended to all of the unemployed,with a point system creating a rank order among applicants. Preference would be given to the long-term unemployed; those with low household income; members of households in which all adults are unemployed; and, finally, to workers according to the age composition of the unemployed, with the majority being over 30 years of age.”

The authors estimate that directly creating 300,000 jobs (at a minimum wage of 750 Euros a month) would create a further 120,000 private sector job indirectly through the multiplier effect, and although the net cost would be relatively high at around 1% of GDP, the act of creating the jobs would actually reduce the debt/GDP ratio, which is the supposed purpose of austerity, but which in fact has had the opposite effect.

If a policy like this could be implemented and successfully so, it would create a good example for the rest of Europe, and the whole continent is crying out for positive action on employment, including here. There are some who probably fear this good example, and so will try to prevent Greece’s experiment with democracy from being a success. It will be fascinating to see how the next few months play out.

Too poor to eat

I came across this audio clip today from a radio call-in on James O’Brien’s LBC show. The topic for discussion I believe was a report published today about food bank usage. The caller talks about how he is struggling to feed himself following being made redundant. It’s impossible not to be moved by his plight, and seems a world away from the stories we have been reading recently about families being able to save up enough of their social security payments to be able to afford a Christmas splurge. It’s striking though that what he wants is not charity but a chance to work and be able to provide for himself.

Much as today’s food bank report has been welcomed, as this article points out, although the report mentions things like a living wage, it’s recommendations involve a lot more charity from supermarkets and other to provide surplus food and expand food bank provision. Charity is never going to solve all the problems though. People need jobs, jobs that pay enough to live a decent life. For those that are unable to work, they also need to have enough money to get by without having to be worried about being sanctioned every few months. Expanding food banks smacks of being a sticking plaster solution. I think most people on the breadline like the LBC caller just want the simple dignity that working and earning a decent living brings. It would be relatively straightforward to make that happen.

In defense of Lord Freud (sort of)

Comments made by Welfare Minister Lord Freud have created a bit of a storm today after being raised at Prime Minister’s Questions by Labour leader Ed Miliband. Freud was recorded saying:

“You make a really good point about the disabled. There is a group where actually, as you say, they’re not worth the full wage.”

At the risk of incurring the wrath of my fellow lefties, I’m going to defend Lord Freud’s remarks while still disagreeing with the argument I think he was trying to make. I say think because what he actually said was pretty clumsy, and could easily be interpreted as offensive when viewed a certain way. So what do I think he was saying then?

It seems to me he was making a case argued by most opponents of the minimum wage. The argument uses what economists call marginal productivity of labour. This goes that firms will hire additional workers up to the point where the costs of paying the worker a wage is equal to the additional output they will achieve by hiring the worker. So if a worker can produce 5 widgets an hour, but only costs the equivalent of 4 widgets an hour, they will be hired, but a worker who costs 4 widgets but can only produce 3 won’t be. If the workers was willing to work for the monetary equivalent of 2 widgets though, the firm would hire them. If the minimum wage is set at the equivalent of 4 widgets however, this worker who can only produce 3 widgets an hour will be left unemployed.

So Freud is saying some people (in this case some disabled people) are not productive enough to produce enough to be ‘worth’ the minimum wage. This is probably true in many jobs, and I’m not just talking about seriously disabled people here, but also those who have been unemployed long term and/or are recovering from drug or alcohol problems. In economic terms this seems a rather uncontroversial thing to say and one that – despite what they may say today – most Conservative MPs  would agree with. So where I would defend Lord Freud is to the extent that he was only (rather clumsily) expressing a very commonly held belief.

But is he right though? I’ve already said that I agree there are some people who employers will view as not worth paying the minimum wage to. They could be right or wrong about this, but there is no doubt employers do not like to hire the long term unemployed, and discrimination on the grounds of disability remains a real thing. But those in agreement would argue that if there were no minimum wage restrictions, employers would hire those workers if they were willing to accept a low enough wage. This is where I disagree quite strongly. People with more business experience than me may say I’m wrong here, but I don’t believe employers make hiring decisions based on the marginal productivity of labour. I think they will always try to hire the best candidate at whatever is the prevailing wage rate. For evidence I would cite the almost total failure of Nick Clegg’s Youth Contract, which provided a wage subsidy to firms hiring an unemployed young person. Take up was atrocious.

Freud’s instinct (which he half expressed) was to favour an exemption from the minimum wage for certain groups, and to top up their wages with universal credit. To the extent that it was limited to certain groups, it would likely be ineffective as the Youth Contract demonstrated. I would also be suspicious that that was just the start, and that a complete removal of the minimum wage would be on the cards leading to a race to the bottom.

A further objection would be Freud’s implicit assumption that because the private sector won’t hire certain people at the current wage, it’s OK for them to pay those people whatever they think they are worth. But businesses are there to serve us, not the other way around. The floor on wages should be the amount at which a person is able to afford a decent standard of living. If the private sector cannot or will not hire everybody for at least that wage, then the government should act as an employer of last resort and tailor make jobs to each individuals talents.

For disabled people, previous governments have felt the need to create organisations like Remploy to create employment for those who struggle to find private sector work. This government scrapped a lot of Remploy factories, and few of those losing their jobs managed to find another one. It seems to me organisations like Remploy are more likely to be more at providing decent jobs for disabled people than scrapping the minimum wage ever would.

George Osborne’s false choice between spending on social security and spending on infrastructure

From the Telegraph:

“Britain’s welfare budget should be used to fund new transport links in the north which will bring a “real economic return” rather than “trapping people in poverty”, the Chancellor has said.”

The article goes on to quote Osborne as saying:

“I think the real choice in our country is actually spending money on this big economic infrastructure, trans-pennine rail links, Crossrail 2 in London and the like, and spending money on, for example, welfare payments which are not generating a real economic return and at the same time are trapping people in poverty.”

This creates the very strong impression that Osborne really wants to ramp up infrastructure spending, but is being prevented from doing so by people “trapped in poverty”. I’m not entirely sure what the ‘real choice’ means in policy terms, but it’s a completely false choice.

The social security bill is not preventing the Chancellor from increasing spending on roads and rail, if that’s what he wants to do. If there are enough skilled workers, spare land and building materials available, then we can afford to do it. If there aren’t, then cutting the social security budget further is not going to make much of a difference.

Osborne seems to misunderstand what social security is for. It functions  to prevent individuals from falling into penury, but it also has a macroeconomic function, in that it dampens economic shocks by stopping people’s incomes falling below a certain point meaning as people lose their jobs, they can still afford to buy things – sales which other people’s jobs rely on.

The flipside of this is that when an economy is recovering from a recession, the social security bill naturally contracts, as people find jobs and go back to work. Increasing spend on infrastructure will help aid this contraction further by creating additional jobs.

So far from needing to cut social security spending to be able to afford extra spending on infrastructure, the extra spending itself would actually contribute towards Osborne’s stated aim of reducing the social security bill.

Of course what actually traps people in poverty is low pay, which again could be partially addressed by creating decent paid construction and engineering jobs through – you’ve guessed it – additional infrastructure . Of course, this type of spending is not a solution to all problems. To really start to tackle low pay, the government should get serious about job creation and remember that governments actually can and do create jobs. A full job guarantee would be a more complete answer.

Failing youth jobs scheme championed by Nick Clegg scrapped

From the FT (subscription required):

“The coalition’s flagship programme to tackle youth unemployment is to be wound up early, amid claims that it has been an abject failure.

The £1bn youth contract wage incentive scheme was championed by Nick Clegg, the Liberal Democrat deputy prime minister, at the height of the recession as a way to help tackle youth unemployment. But with the jobs market rapidly improving and take-up of the programme falling substantially below projected levels, it is to be cut short next month.

Under the scheme employers were offered £2,275 if they provided a six-month “job start” for someone aged under 25.

But in the first year of the scheme up to May 2013 only 4,690 recruits completed their placements, against a target of 160,000 for the entire programme.

The scheme was supposed to last for three years from April 2012. But the Department for Work and Pensions has written to companies to warn that no claims will be accepted for any placements that start after August 6 this year – a month earlier than planned.”

This scheme relied on the private sector to employ unemployed young people and then claim back a wage subsidy from the government. The subsidy could be claimed on existing vacancies (not vacancies specially created) which was a flaw from the start, but despite this offer of a bung to the private sector for taking on young unemployed people, take-up has been woeful. While unemployment has fallen steadily over the last 12 months, youth unemployment remains high. There is still a need for more job opportunities for young people, and there is massive scope for being much more proactive in this sphere. Here are some other posts I’ve written on this subject:

The Youth Contract – Giving public money to private firms in return for?

The failure of the Youth Contract should be a lesson for Labour

The Future Jobs Fund: One of the most ineffective job schemes there’s been?

Achieving full employment with a job guarantee

 

The Basics of Modern Monetary Theory

I haven’t done a post specifically about Modern Monetary Theory (MMT) for a while now, although that is the perspective from which I approach a lot of the issues I blog about. With that in mind, I thought I’d go back to basics and write a beginner’s guide to MMT as I see it. Any errors that follow will be mine alone. Please let me know if you spot one!

What is MMT? Modern Monetary Theory (MMT) is a branch of the heterodox Post Keynesian school of economics. At a basic level it is comprised of the following ideas:

  1. Taxes drive money;
  2. Taxes and borrowing don’t pay for government spending;
  3. Countries like the UK cannot go bust;
  4. Functional finance;
  5. Sectoral balances;
  6. Endogenous money;
  7. Governments should pursue full employment;
  8. Focus on real resources, not money.

So what do all these things means? In turn then:

1. Taxes drive money In theory, anyone can start their own currency. You or I could just print up some notes in our garage.  The trick though is getting it accepted. MMT posits that in order for governments to get its citizens to accept and use their currency, it is sufficient for them to impose a tax in that currency. Provided they are able to enforce the payment of the tax, people will be willing to work for payment in that currency in order to pay the tax. So the necessity to pay the tax in the government’s currency drives demand for that currency and ensures it has a value.

Further reading:

MMP Blog #8: Taxes Drive Money

Tax-driven Money: Additional Evidence from the History of Thought, Economic History, and Economic Policy

2. Taxes and borrowing don’t pay for government spending While governments do need to tax, MMT says that they do not do it to pay for their spending. Indeed, MMTers argue that government spending must come first. How can anyone pay a tax denominated in the government’s currency unless the government first spends it into the economy? So what are taxes for? We have already seen one function of tax in point 1. Taxes drive the nations currency. They also act to ‘make room’ for the governments spending, preventing that spending from generating inflation. Progressive taxes are also used for re distributive purposes to help a government meet it social aims, and taxes can also be effective to incentivise or disincentivise certain behaviours (e.g. smoking, drinking, polluting). But what about government borrowing? At the moment, if the amount of tax collected is less than the amount a government spends, it ‘borrows’ the rest by issuing government bonds. The amount it borrows is repaid with interest. MMT though, argues that similar to taxation, this borrowing is not undertaken to finance its spending, but to maintain its target interest rate. Under current arrangements, if a government didn’t match its spending to taxes plus borrowing, this would create excess reserves in the banking system, and this would drive overnight interest rates down to zero. Government borrowing also acts as a risk-free source of savings to the private sector, including pension funds.

Further reading:

Taxes for revenue are obsolete

Government bonds and interest rate maintenance

3. Countries like the UK cannot go bust In the run up to the 2010 UK General Election, it was said loudly and often that the UK was on the brink of bankruptcy, about the go the same way as Greece. We had run out of money. MMT says this is nonsense. Governments like the UK who issue their own currency cannot go bust, in the sense that they cannot run out of money. In this sense the UK differs from the Eurozone countries, who, since joining the Euro, no longer issue their own currencies. They are now currency users. This point is often missed when discussing government debts. The usual story is that when ‘the markets’ see government debts rising, they start to worry about how the debt will be repaid and so demand higher rates of interest before they will lend more. This happened in some of the Eurozone counties before the European Central Bank stepped in to stabilise the markets for these countries debt. Countries like the UK though have central banks that can always intervene if interest rates start to rise, so the risk of an interest rate spike here is low to non-existent. Interest rates on government debt are a policy choice for the currency-issuing government. To maintain the maximum flexibility over an economy, MMT recommends countries maintain their own free floating currency, and to only borrow in that currency.

Further reading:

There is no solvency issue for a sovereign government

Why do politician tell us Debt/Deficit myths which they must know to be untrue?

4. Functional Finance Functional finance is an approach to fiscal policy adopted by MMTers but first espoused by economist Abba Lerner. Functional finance has three rules:

  1. The government shall maintain a reasonable level of demand at all times. If there is too little spending and, thus, excessive unemployment, the government shall reduce taxes or increase its own spending. If there is too much spending, the government shall prevent inflation by reducing its own expenditures or by increasing taxes.
  2. By borrowing money when it wishes to raise the rate of interest and by lending money or repaying debt when it wishes to lower the rate of interest, the government shall maintain that rate of interest that induces the optimum amount of investment.
  3. If either of the first two rules conflicts with principles of ‘sound finance’ or of balancing the budget, or of limiting the national debt, so much the worse for these principles. The government press shall print any money that may be needed to carry out rules 1 and 2.

Further reading:

Functional Finance

Functional finance and modern monetary theory

5. Sectoral balances Sectoral balances is an approach to viewing the financial makeup of the macro economy, popularised by economist Wynne Godley. It helps not to view things like the government deficit in isolation, but rather to see it in the context of what’s happening elsewhere in the economy. In the three sector version of Godley’s sectoral balances: Government balance = Private sector balance – Foreign sector balance If we apply this to the UK, we see a government deficit of 6%, a private sector balance (private sector sayings  – private sector investment) of 2% and a foreign balance (exports – imports) of -4%. MMTers argue that the natural state for the private sector is surplus, so for countries with trade deficits, a government deficit will also be the norm. If the government tries to reduce or eliminate its deficit, it will only succeed if the private sector is willing to reduce or eliminate its surplus.

Further reading:

What Happens When the Government Tightens its Belt?

UK Sectoral Balances and Private Debt Levels

6. Endogenous Money Endogenous money is the idea that rather than the central bank determining the amount of money in the economy – exogenously, the amount of money is instead determined by the supply and demand of loans. In shorthand, MMTers (and Post Keynesians in general) would say, “Loans create deposits”. That is to say that banks create money by extending loans to customers, while at the same time creating a corresponding deposit. This runs contrary to what is generally taught to students of economics – that savings are loaned out with banks acting purely as intermediaries, or at best leveraging an initial injection of government money by a predetermined ratio.

Further reading:

The Endogenous Money Approach

Money creation in the modern economy

7. Governments should pursue full employment In the post war period up until the early 70s, Western governments were committed to the principle of full employment, and largely achieved this, with the unemployment rate averaging around 3% in the UK throughout that period. The Conservatives famous “Labour Isn’t Working” campaign poster of 1979 was powerful because unemployment had reached previously unthinkable levels of 1 million. Today, the Government start high-fiving each other when unemployment falls below 2.5 million. MMTers argue that achieving full employment again is very much a realistic and achievable goal, but it means abandoning modern notions that “governments don’t create jobs”, and accepting that capitalism left to its own devices will never employ all those willing and able to work. A key tenet of MMT is that governments should act as the ’employer of last resort’, offering work to all those who are willing and able to work, but unable to find a job.

Further reading:

The Job Guarantee: A Government Plan for Full Employment

The job guarantee is a vehicle for progressive change

8. Focus on real resources, not money While politicians tell us there is no money left, millions are without sufficient work and resources lie idle. MMT argues that we should focus on these real things – people and resources – rather than money which is just a tool for putting those people and resources to work. Governments can and should spend money into the economy when the private sector cannot or will not to maximise the potential output of the economy.

Further reading:

Modern Monetary Theory: The Last Progressive Left Standing

Scottish Independence – A Modern Money Analyisis

Those are some of the basics of MMT then, not that I can capture it all in 1,500 words. For more reading, try some of the links on my blogroll.

If the private sector’s not doing it, doesn’t mean it’s not worth doing!

Regular readers will know I favour a policy known as the job guarantee. This is where the government pays the wages of anyone willing and able to work, but unable to find it. This appeals to me because I believe the following things are true:

  • In our society, working (either for yourself or an employer) is seen as the norm; part of being a good member of society;
  • Doing a job of work that people think is worthwhile brings a lot of benefits in terms of mental and physical health;
  • People consciously or unconsciously understand this and most people want to work;
  • People shouldn’t have to work for wages below a level which allows them a reasonable standard of living;
  • Without active government involvement, there will never be enough jobs for all or enough jobs paying a socially acceptable wage.

So I am fully signed up to the idea that a job guarantee would be a very fine thing. Convincing others of the merits of this idea is much more difficult than I thought though! A lot of people accept there aren’t enough jobs, that wages are too low and that work is becoming more and more casualised. Despite this, they would rather leave people unemployed than have the government actually create jobs. I’m not quite sure why this is, but I it’s partly a lack of imagination (what would they do/non-jobs/digging holes and filling them in etc), and partly the usual “nice idea, but how will you pay for it” response.

It also seems to be received wisdom that the profit motive ensures that everything worth doing is already being done by the private sector, and if the private sector is not doing it, it must not be worth doing. It’s this argument I want to address now by suggesting a few areas either not being delivered or are under-delivered by the private sector, but are nevertheless quite worthwhile!

  1. Adult social care – We are often told there is a crisis in adult social care. At present, private sector companies are contracted to provide a lot of the home visits to the elderly an infirm. Contracts are often awarded to the lowest bidder, which means these services are delivered on the cheap. Staff are often on zero-hours contracts, poorly paid and only permitted to spend 15 minutes or at most half an hour on each visit. They are often not even paid for travelling between visits! So why not train up some of those willing and able to work, and pay them to provide a much more comprehensive service to people in need? This would help take the pressure off our hospitals if people are being well cared for in their homes, and allow resources in the NHS to be better targeted.
  2. Sports/Fitness coaches – As well as an adult social care crisis, there is also an obesity crisis. We could train people to deliver sports coaching to kids on a much wider scale. There are a lot of sports that require very little equipment, but with a coach who can inspire and importantly, a service that is free or heavily subsidised for the user, we could start to reverse the obesity trend. This again reduces expense in the long term on the NHS and kids who are fit and active do better in school.
  3. Childcare – Childcare is very expensive and means that a lot of people who want to work find most of their wages are going on childcare. Training people to provide childcare would lead to lower costs, meaning work becomes a more viable option for many. In addition to this, for those who prefer to look after their own kids, could also be paid to do so. A lot of people struggle to see looking after your own kids as being a job, but it could be argued that it’s a pretty important job. The production of the future generation will always pay for the future consumption of the current generation, so if kids are brought up happy and healthy by a parent in their early years, they will likely become more valuable members of society when they grow up. Is it really that different paying someone to look after someone else’s kids, to paying someone to look after their own?

Those are just three suggestions, but I know others will have much more imaginative ideas! There are so many socially beneficial jobs that would enhance our environment that just aren’t being delivered by the private sector (at least not at a price affordable to all). We could change this, but we need to lose the private sector good/public sector bad mentality. It’s holding us back!

Labour’s compulsory job guarantee vs the real thing

Labour re-announced their proposals for a ‘compulsory job guarantee’ today, along with their plans for funding it. I’ll ignore the funding proposals because they are just playing the nonsense  ‘how will you pay for it’ game, but there were some extra details on how the programme will work in practice. It had previously been said that it would only be a one year programme, but now Labour say 5 years. Not all the details are in, but there are enough now to do a compare and contrast with Labour’s plans and what the real thing would look like. By real thing I of course mean the job guarantee as envisaged by MMTers. Apologies for the formatting of this table, but I’m crap at html!

Labour’s Compulsory Job Guarantee MMT Job Guarantee
Eligibility 18-24 year olds claiming JSA for over 1 year; Aged 25+ on JSA for over 2 years Anyone willing and able to work
Compulsory? Yes, possibility of having benefits sanctioned if refuse job No
Choice of which type of work? Unclear. Some element of choice likely Yes. People would be offered work suitable to their skills and interests
Jobs where? Private and non-profit sectors Non-profit only
Pay Current minimum wage Living wage
Hours 25 hours per week Flexible depending on circumstances. Full time and part time options
Duration 6 months Indefinite – until the individual finds a regular job
Training included Yes, but £500 cost cap Yes
What type of work? Unclear. If like Future Jobs Fund, could be a wide range Very broad range

To summarise then, I like the fact that Labour are acknowledging a need to create jobs, but dislike pretty much everything else about their plans. The pay’s too low, the hours too short, the private sector are involved (to what extent is still unclear), 6 months isn’t long enough, there are unnecessarily threatening undertones (sanctions!, compulsory!) and so on. It’s a start though I suppose.