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Response to Demeter (Reply #15)

Tue Apr 24, 2012, 09:56 PM

20. Randy Wray: The Job Guarantee and Real World Experience

 

http://www.nakedcapitalism.com/2012/04/randy-wray-the-job-guarantee-and-real-world-experience.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

There have been many job creation programs implemented around the world, some of which were narrowly targeted while others were broad-based. The American New Deal included several moderately inclusive programs such as the Civilian Conservation Corp and the Works Progress Administration. Sweden developed broad based employment programs that virtually guaranteed access to jobs.

From WWII until the 1970s a number of countries, including Australia, maintained a close approximation of full employment (measured unemployment below 2%) through a combination of high aggregate demand plus loosely coordinated direct job creation. (Often there would be an informal “employer of last resort”, such as the national railroads, that would hire just about anyone.) As Bill Mitchell argues, a national commitment to full employment spurred government to implement policies that created jobs—even if it did not explicitly embrace a national and universal job guarantee/employer of the last resort program.

In the aftermath of its economic crisis that came with the collapse of its currency board, Argentina created Plan Jefes y Jefas that guaranteed a job for poor heads of households. (See Tcherneva and Wray 2005 here) The program successfully created 2 million new jobs that not only provided employment and income for poor families, but also provided needed services and free goods to poor neighborhoods.

For many years Argentina was proclaimed to be the success story of IMF austerity and market liberalization policies, until it experienced an economic meltdown in the winter of 2001-2002. (I won’t deal with causes of the crisis here—but it was the inevitable result of adopting a currency board arrangement. By giving up its own currency, it faced a financial crisis even though its budget deficits always would have met Maastricht criteria.)

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