To understand why the MMT-designed job guarantee is so critical, we must first see the absolute devastation wrought by involuntary unemployment and underemployment. (Before even that, however, we must understand that there is involuntary unemployment [and underemployment] to begin with.)
- Managing price stability only for some, on the backs of millions (our current system)
- It is official American policy to keep millions unemployed.
- Our overly-rosy unemployment statistics ignore millions.
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This post was last updated May 29, 2021.
Disclaimer: I am a layperson who has studied MMT since February of 2018. I’m not an economist or academic and I don’t speak for the MMT project. The information in this post is my best understanding but I don’t assert it to be perfectly accurate. In order to ensure accuracy, you should rely on the expert sources linked throughout. If you have feedback to improve this post, please get in touch.
Warren Mosler: All the wars combined
Warren Mosler, at 3:40 into this video (credit to David Tramer):
It’s probably fair to say that the losses from unemployment over the last two years, just in terms of lost output are far higher than all the costs of all the wars the U.S. has ever fought in its history combined.
Unemployment is a scourge
The effects of involuntary unemployment are absolutely devastating to both individuals and society as a whole. Without exaggeration, it behaves like a communicable disease – a plague would not be that outlandish a term (Tcherneva 2017). As referred to in the paper:
Unemployment is also unambiguously racist, as described in this 1999 paper by William Darity, called Who Loses from Unemployment?. Since jobs are artificially scarce, disadvantaged populations are also targeted by unions whose primary task is to protect the jobs of their membership.
Unemployment creates what Stephanie Kelton calls a cruel game of musical chairs – when we clearly have the ability to provide more than enough chairs for all. From page fifty five in her 2020 book, The Deficit Myth:
Forcing millions into involuntary unemployment in order to fight the never-before-seen Boogeyman of runaway inflation is…
…a convenient argument for those who are content to leave millions behind, but it’s not reality. In reality, no matter how smart or hardworking the population may be, the Fed sees too much risk in allowing everyone who wants to work to do so. Some people view this as rigging the game in a way that chronically leaves too many people without jobs. If the Fed believes the NAIRU is 5 percent, then it’s only safe to allow ninety-five musical chairs for every one hundred people in the game.
Excerpts from Pavlina Tcherneva’s 2017 paper, Unemployment: The Silent Epidemic
(Emphasis added and references removed.)
This paper examines two key aspects of unemployment—its propagation mechanism and socioeconomic costs. It identifies a key feature of this macroeconomic phenomenon: it behaves like a disease. A detailed assessment of the transmission mechanism and the existing pecuniary and nonpecuniary costs of unemployment suggests a fundamental shift in the policy responses to tackling joblessness. To stem the contagion effect and its outsized social and economic impact, fiscal policy can be designed around two criteria for successful disease intervention – preparedness and prevention. The paper examines how a job guarantee proposal uniquely meets those two requirements. It is a policy response whose merits include much more than its macroeconomic stabilization features, as discussed in the literature. It is, in a sense, a method of inoculation against the vile effects of unemployment. The paper discusses several preventative features of the program.
Page 2: “Instead, here we will look at a particular aspect of the behavior of unemployment that best describes it as an infectious disease, virus, or even an epidemic. We focus on the transmission mechanism of unemployment, its macroeconomic behavior, and socioeconomic impact.”
Page 6: “This pattern suggests that unemployment behaves much more like a virus or an infectious disease than a random shock event. Not only does it propagate in a specific geographic pattern, but it also inflicts severe consequences on individuals and communities.”
A Deadly Impact
Without slipping into hyperbole, joblessness is found to be literally deadly. In a widely cited research paper, Case and Deaton find that increased mortality among working-class white men has been driven by “deaths of despair”– that is the pain, distress, and social dysfunction that emerged from the loss of stable blue-collar work that started in the 1970s and continued well after the Great Recession. Overall economic distress, and joblessness in particular, has produced complex socioeconomic and health problems that have contributed to the rise in mortality. But the link between unemployment and dying is even more direct. A metadata analysis of 63 countries reveals that the impact of unemployment on suicides is nine times higher than previously believed. One in five suicides are due to unemployment…. Additionally, Stuckler and Basu estimate the number of suicides in the US that are specifically linked to Great Recession joblessness and find that states with higher unemployment rates have higher suicide rates.