For the second installment of Current Affairs’ podcast series “Is MMT Real?,” podcast host emeritus Pete Davis and finance editor Sparky Abraham spoke with economist Pavlina Tcherneva about the connection between MMT and a nationwide jobs guarantee. 

You can listen to the podcast episode on Patreon. (if you haven’t subscribed yet, consider doing so! It does not cost much money at all!) You can also read the transcript of the first episode here, if you’re not a podcast person.

As always, the following transcript has been lightly edited and condensed for clarity.

SPARKY ABRAHAM:

Okay, welcome back everybody. Sparky Abraham here. I’m the finance editor of Current Affairs, here with my good friend Pete Davis. 

PETE DAVIS: 

Hello everyone. Episode 2. 

SA: 

You’ve decided to come back to us. Thank you so much. We’re so happy to have you. You know, it’s a little shocking honestly, but I’m really glad it happened. So, welcome, hello, thank you. We are here for a second installment. Just like Pete said on the first installment, we’re trying to learn and we’re also trying to work together on this and think through and have questions and get those questions answered. 

PD: 

About what questions, Sparky? 

SA: 

If you all go back to the first episode, there were a whole lot of questions we talked about at the end of the first episode. 

PD: 

But the big question. The giant big question. 

SA: 

Oh, you want me to say the title of the thing. Is MMT real? This is our question: is MMT real? 

PD: 

Is MMT real? 

SA: 

Is it real? Is it true? Is it new? Is it useful? These are our questions and we’re going to have just a million sub-questions. So, before we get into the sub-questions—Pete, can you tell the listeners who our guest is going to be in a few minutes here?

PD: 

Okay, our guest today is Pavilina Tcherneva. She is an associate professor of economics at Bard College. Her specialty—this is like in a heist when they’re taking banks, some people work on weapons, locks, and keys, other people hack into the computer system— is the jobs guarantee. She is probably the leading expert out there on the jobs guarantee. Which, to MMTers, is one of the major policy proposals that (according to them) comes out of their ideas about Modern Monetary Theory. 

SA: 

Before we start talking to Pavilina, we want to talk about the questions that we have left over from our last guest, Professor Stephanie Kelton.

We have questions about everything, and we’re going to have questions about even more because we didn’t really talk to Professor Kelton very much at all about the jobs guarantee. I think it may have come up here and there, but I expect that we’re going to get a whole lot of new information to chew on while we try to get our lingering questions answered.

PD: 

Well, we were left with: how does inflation work? What is the national debt? Does it matter if people are savers or spenders? Is there any use to a wealth tax? How far can MMT go with regards to giving money to states or around the world? What is a bond holder? 

SA: 

What does it mean that there is a market for money—the supply of dollars? Is that a different thing domestically than it is internationally? 

PD: 

Kelton mentioned the jobs guarantee, but we’re going to really talk about the jobs guarantee today. We want to discuss real resources and under-utilized real resources. 

By the end, we’ll know it all. But MMT is really big on the idea that you can keep spending if the real resources are not being used. The reason they’re really into the jobs guarantee, I think, is because an unemployed person is a real resource not being used. 

SA: 

Yeah, and Professor Kelton said something in the last episode that we didn’t talk about much, but it kind of stuck in my head, and it was also kind of brought up in a recent article in Current Affairs about MMT—she said “unemployment is a policy choice that we keep a reserve of unemployed people on purpose for some economic reason and that that is a bad choice.” I think that is what the jobs guarantee is kind of aimed at, but I want to know what that means. 

I don’t understand what that means to say, “We’re keeping a reserve of unemployed people.” How are we doing that? Why would we do that? What is happening? What is the orthodox thinking there, such that the heterodox thinking is, “No, no, we should give everyone a job.”   

PD: 

Yeah, is it like unemployment is an unfortunate problem that we need to solve? As opposed to just a choice we could flip a switch and make happen? 

SA: 

Right. 

PD: 

An underutilized resource, according to Matt Bruenig—frequent critic of the jobs guarantee—might be just like a mom or dad deciding to stay home or someone deciding to have more leisure time or a kid deciding to not work until later and have fun in their early 20s or something. 

SA: 

There’s a question as to how we’ve defined what actually is a job, or what is a resource. What is value in the economy? 

PD: 

Yes. I want to really ask her about that because on a human dignity level, we’re getting into “you aren’t an underutilized resource,” or “you’re fine just the way you are.” 

Then on an environmentalist level, I bet an environmentalist would say, “that river is an underutilized resource, or it’s a thing that should just stay a river and not be used to lower inflation.” What does this mean when we say underutilized resource?

SA: 

Right, the river is a great example because the first notion of conservation in terms of water conservation was making sure that no water was left in the river bed. To use it all. I’m hopeful that we’re going to talk to Matt Bruenig later [editor’s note: they will] to get his perspective also on some of this. Based on what I’ve seen on twitter, one of his main critiques on the jobs guarantee is that it’s workfare, and I think we need to ask about that. 

I think this is something he constantly says: “The jobs guarantee is just workfare. It’s welfare with a work requirement.” We decided we are okay giving people money as long as they go to work, which has a very ugly history in the United States. Welfare programs in the 1990s introduced these work requirements that were creating a lot of misery and kicking a lot of people off of public benefits who really needed them. 

I don’t necessarily quite know what this means, but I think we need to get into a little bit here and try to find out what’s right about this and what’s wrong about it. 

PD: 

I’m sure Professor Tcherneva has been in these fights before, and she’s got some thoughts on this. And it’s interesting because it plays up against universal basic income (UBI), which is an option where the government takes its money and just gives it to you. The other option is for it to take its money and make jobs. That’s something that maybe MMTers would question, because there’s not a finite amount of money. 

SA: 

Right, and one of the big questions that we started with—which I am really expecting that we’ll be able to get at least some clarity on is—I still don’t understand why MMT people love the jobs guarantee and hate UBI, and why people who hate the jobs guarantee and love UBI also hate MMT. What are the actual relationships between these things? 

PD: 

So, should we dive in? 

SA: 

Yeah, let’s jump right in. 

PD: 

Let’s bring Professor Tcherneva into the “Is MMT Real?” studio. 

PAVLINA TCHERNEVA: 

Hello, thank you for having me. 

PD: 

We’re so glad to have you here. You just wrote this book called The Case for a Job Guarantee. But before we jump into the content of your book, we’d love to ask you about your personal history of coming to this cause. 

What is the story for our listeners of how you got turned on to MMT—and specifically, how you got turned on to the jobs guarantee within it? 

PT: 

Yeah, thanks. As an undergraduate, I was fortunate enough to have some professors who opened my eyes to different traditions within economics. And so I think it’s just from Day 1, I was asking questions and looking at different perspectives. But I was fortunate in my junior year to get an internship with somebody that the listeners may know called Warren Mosler, who had some ideas of his own and was looking for a researcher to see if there was any merit to his ideas. 

My task was to see whether there was any literature that might be supportive. There were very provocative ideas about money, how government spends it, and what we can do with the public budget. I basically did some critical study of his work, but it turned out that it actually fits very neatly within several traditions within economics. BUt they didn’t quite put the message the way Warren did. 

So, that launched the research project. I was mostly interested in big picture macro questions. How do we stabilize the economy? I was mostly interested in this paradox that we are taught in economics that somehow policymakers have to choose between unemployment and inflation. 

It seemed to me that there was definitely a better alternative than keeping mass unemployment. So, I came at this as a macroeconomist but eventually began researching the practical aspect—the human, if you will, aspect to job creation. 

And here we are. 

SA: 

We want to ask a little bit about the history of the jobs guarantee, too, but just something you said hit on a question that we had. You said that conventional wisdom suggests you have to choose between unemployment and inflation. 

Can you say a little bit more about what that idea is or was? How does that work? Why do people think that you have to choose between unemployment and inflation? 

PT: 

There’s a concept in economics called the natural rate of unemployment, and the idea behind it is that the market mechanism will produce some number of jobless people. This is assumed to be natural because we can’t create any more jobs, and if policymakers attempt to bring the unemployment rate lower than this so-called natural rate, we might have to put up with higher prices. 

The idea is that there might be too much income generated in the economy. There might be too much spending generated in the economy that might push prices up—but also if there is a shortage of unemployed workers, workers might actually start asking for higher wages. They might be able to bargain a little bit more, and that might push wages up and then consequently prices would rise as well to cover those costs. 

So, you see the paradigm is that we need to maintain a reserve of the unemployed to be able to tame prices. That just did not sound like a good way to run an economy. There really should be alternatives that allow us to stabilize prices without inflicting mass unemployment and all the social costs that come with it on the economy. 

Economists don’t really talk about other social problems as natural. We don’t talk about the natural rate of homelessness.We don’t talk about the natural rate of hunger—that somehow if we allow more people to have homes or feed themselves, that will just unleash all sorts of terrible things on the economy. But for unemployment, that’s the conversation. 

SA:  

Right, interesting. 

PD: 

One further followup question and then we’ll jump into the solution that you’ve been promoting, which is the jobs guarantee. 

Economists like to talk about this trade off between unemployment and inflation. But some people on the left actually want wage inflation. They don’t want general inflation, but one of the reasons they want full employment is that wages then start going up. 

If everything starts going up, then the wages get eaten by higher prices. But is the goal to stabilize wages, or is the goal to just have wages go up (but not have other prices go up)? We’re obviously revealing our hand as laymen, non-economists here. So, could you help unpack that question a little bit for us? 

PT: 

Yes, that’s an important question. So, there are two parts to this story. 

First, we all want wages to rise. We all want the floor to be lifted up so that it is firmly above the poverty wage floor. Almost half of American workers earn less than $15 an hour. There are millions that don’t even earn that, and others who don’t even have a job so they earn zero. So, we want to raise the floor. We want to firm up what constitutes a basic decent wage level that’s uncompromising—and anyone, wherever they work (whether that’s in the public or private sector) can earn it. 

The second bit is about stabilization. We know that the economy has a heartbeat. We know that the economy expands, contracts, expands, contracts. And we want to be able to produce an environment that is generally stable without periodically laying off workers en masse. So what the jobs guarantee proposal does is actually provide a stabilizing mechanism that’s a substitute for unemployment. It raises the wage floor by providing a basic job option to anyone who wants it, and it also matches this heartbeat of the economy. 

When there are people that are laid off en masse, it actually provides employment opportunities. But when the private sector recovers and starts growing and provides more employment opportunities and better paid wages, then the program shrinks as people move to better opportunities. So, we’re looking for a structural change that provides good incomes and a stepping stone to better employment opportunities within a full employment environment that is all around better.

It’s better for the unemployed, for unions, for the private sector, for the public sector, you name it. 

SA: 

You’ve described how this looks and what the structure is, but can you say a little bit more about what the jobs guarantee is? How does it work in practice? 

PT: 

So, maybe it’s useful to start with this question: do we believe that if somebody is looking for work, they should be able to find it? Is this a basic proposition that we can all agree on? I think that’s probably sensible. That way if somebody wants to work, they should have employment opportunities. They shouldn’t  be going into this environment that’s kind of cruel, trying to out-compete the next unemployed person for the scarce jobs that are out there. 

Okay, now what should that environment look like? Well, of course we want good jobs. We want the private sector of the economy to create robust, better-paid employment opportunities with good work conditions but we’re noticing that it doesn’t. There are jobless recoveries and the jobs that are created are precarious. 

So, what if we put in place a public option that constitutes the basic job offer as the minimum that one can find in the labor market and let that be the floor. It could be the standard for all jobs in the economy in terms of a basic pay and benefit package. Think of this as a public option. 

You go into the unemployment office, you look for work. We try all the conventional ways to find you work benefitting your skills—but if we absolutely cannot find you exactly what you want, we will create a menu of options in the public service sector to fulfill some much-needed public service work. Now, it turns out that this program will benefit precisely the people who have the hardest obstacles to enter the labor market or to hold on to good jobs. Those are the people who juggle two or three part-time jobs because they cannot find one stable employment opportunity. Those are the people who have the greatest obstacles to employment because the private sector considers them undesirable or unemployable for one reason or another. 

So, I think of the jobs guarantee very much the way I think of, for example, public schools. Young people should have a guaranteed education. So, we guarantee it. If as a society we think that we should have an environment where everybody can find work and we should guarantee a basic decent job offer, then that’s the jobs guarantee. 

SA: 

So, I’m trying to drill down on this a little bit. You say that it would be a guarantee of a job that would fit someone’s skills. So, I’m an attorney. Right now, I work in legal services. If I were to lose my job and then I were to go to the unemployment office because I couldn’t find another attorney job—because we’re in a recession or whatever—are they going to try to get me an attorney job or am I going to be cleaning up the park? Does it depend on what my community needs at that point, or does it depend on something about me? How does this kind of play out? What does it look like for people? 

PT: 

Yes, this is a design question. The question is: what kind of jobs will we create, and for whom? Now the principal mechanism for job creation is that it creates some community work that is needed and fits the job to the person in the sense of their skill and need. But it’s still a basic job offer for macro-economic reasons. It provides the basic wage benefit package. 

So, if you’re an attorney and you would like to do some work with a community organization, some legal work that may be in short supply, then the public service employment program will provide it. Now, you can really expand the definition of the kind of work that you can do. Because there are all sorts of folks that might lose their jobs, and of course if you’re an engineer at NASA, this might not be terribly satisfactory, right? This is a basic job offer of a $35,00-$40,000 benefit package, so you might seek other employment opportunities. 

The way the economy works is that the higher skilled individuals don’t tend to experience the scorch of unemployment. They don’t experience unemployment for very long—and if they do, they tend to have the assets to weather a short spell of unemployment. 

But really it’s the bottom that we’re trying to firm, the people who are the foundation of the labor market. We want to provide a mechanism that really strengthens the labor market and provides better working experiences for those at the very bottom. So, folks who might have not completed high school, folks who are regularly last hired, first fired. Folks who have difficulty holding on to certain private sector jobs—for example, people with disabilities who would like to work but the market doesn’t quite create jobs fitted for people with disabilities. In fact, our law allows us to pay as little as $1 an hour for a person with disabilities. 

So, what we want to be able to do is provide a suitable job for anyone who comes in. If your particular condition requires you not to stand for very long hours, if you have a particular skill, then that’s the program that will be available to you. 

PD: 

For someone who has never heard of a jobs guarantee before, it sounds very out there. But I’d like to talk about a few examples that may normalize it a bit. I would love to hear your thoughts on them. 

So, one is I see this on a very small level a lot. You have these community groups like churches and there’s a member of the congregation who’s having trouble keeping a job. The church will be like, “Hey do you want to be the accountant for the church for a year or do you want to be the person who cleans up? We’ll pay you for it.” The goal is not really that the church needed that job at the time, but it would be useful and it serves this purpose of keeping this congregant employed. You see this with some civic groups, too. Even in small towns sometimes the city will hire someone because they’ll take one for the team and be like, “Yeah we’ll hire them. We’ll keep them going.” This seems like that on a national level. 

The other normalization I’ve seen of this is this was pitched in the civil rights movement and in the 1960s there was a whole kind of push for this. It was part of the civil rights package at the March on Washington. The March on Washington for Jobs and Freedom was the long name for it. So, I’d love to hear whether that first example is something that people have used as a metaphor before, and also to talk about the civil rights history of it. What are some of these ways we see a jobs guarantee in national culture already? 

PT: 

Yes, I think you’re right the guarantee is what scares people. When they hear jobs guarantee, they’re like “Wait a minute, what are you talking about?” Why are we guaranteeing jobs? By guarantee, I just mean that there’s a program that’s there that you can tap into on an as-needed basis. 

The second thing I think we want to think about is how the current environment guarantees mass unemployment. This is really the problem we’re trying to deal with. We try to find a way to reduce that drastically to provide a stepping stone employment opportunity for people who need it, and to reduce all of the social and economic costs of unemployment. It is an extremely expensive proposition from an economic and social point of view to maintain people in mass poverty and joblessness. 

Now one question is: are these not real jobs? The answer is no. They’re quite real. We have a public sector that’s responsible for dealing with social problems, and we also see that there’s so much public sector work that is neglected. It might seem small and insignificant, but it actually makes a huge difference. I am reading that in New York City trash is not being picked up because budgets are being decimated through the crisis. It seems like a simple thing but it’s a public health concern. Sanitation is a public health concern. Tree planting might seem like a simple—and maybe a fake—job but you know we recognize that tree planting is vital infrastructure, especially for urban and polluted areas. Those are the lungs of the city. 

So, we can talk about how many things we can do if we just put these two problems together. One, that the unemployed need work. Two, the public sector does need to fill in a whole bunch of gaps. So, we are creating jobs for the public purpose. It’s a bit of a different model. But also, the job component was recognized as a basic human right even before the civil rights era. You can think of the U.N. Declaration of Human Rights that codified the right to work, and many modern constitutions actually have the right employment in the constitutions—but the mandate is not met. You can think also of FDRs Second Bill of Rights, the Economic Bill of Rights that began with the right to a job. 

I think this is a very important point:  in any market economy one of the primary ways in which we provision ourselves is through wage paid work. It’s not the only one, but it is one important mechanism, and it is a basic right for somebody to have access to paid employment. So, during the civil rights era that conversation was revived that began in the 1930s and 1940s. We understood the intersection of unemployment with other social and economic injustices like racial subjugation. Full employment was very important to the African American community and that was taken up by Martin Luther King as a signature piece. We keep having this conversation. Right now, the jobs guarantee was embraced by the green movement. It was put in the Green New Deal. 

So, we keep coming back to this idea that it’s not just jobs. It is a precondition for so much of what we try to do, whether it is racial justice, whether it is gender issues and equity issues in the labor market. Whether it is the transition from fossil fuel jobs and providing safety to folks who might lose their employment as we move to a green future. Everything is connected to everything, and employment seems to be kind of at the heart of these problems. 

SA: 

When you talk to people who are into modern monetary theory, or when you read about modern monetary theory, the jobs guarantee is something that frequently comes up. In the way that you described it so far, I can see someone thinking this is a great idea even if they don’t know anything about modern monetary theory. What are the connections here? How is MMT and the jobs guarantee connected, and why are they so often joined in the conversation? 

PT: 

Yes, clearly the jobs guarantee predates MMT. People have arrived at this conclusion that we need to guarantee this basic human right. I think what MMT has done is take a different research program and tried to explain how public finances work, how the government budget works. And it has dispelled a whole lot of myths about these artificial constraints—that  somehow the public sector doesn’t have financial resources and we need to tighten our belt and we just can’t afford economic rights or anything else of public value. 

So, MMT talks about money and specifically state money and the public purse. It breaks that shackle to reveal that the public sector has, in a technical sense, unlimited funding capacity to pay for its priorities, to finance its budget deficits and debts. MMT also has another kind of contribution to conversation: if you issue a currency, you also have a responsibility to provide it in a manner that is consistent with public objectives and consistent with economic stability and consistent with full employment and price stability. 

So, going back to the start of our conversation, the current model uses employment to stabilize the economy. Now, if the public sector is in charge of macroeconomic stabilization and if the public sector can appropriate budgets to that end, then let those budgets be linked directly to providing a base wage in the economy. This can be through a full employment program that provides important anchors for the labor market and for prices. It provides an automatic stabilizer that did not previously exist. So, in some sense they are inherently connected because the government has the ultimate power of spending and the ultimate responsibility for providing economic security. 

PD: 

One thing I’ve seen as a connection to MMT is, “Focus on inflation, don’t focus on the deficit and debt.” And one of the reasons that I’ve heard that MMT is interested in the jobs guarantee is because if you have unutilized real resources, including unemployed people, you can activate those resources through public payment without having a lot of inflationary pressure. Because they were underutilized before and now they’re being utilized. Is that a correct summary or connection here? 

Is there  less inflationary pressure from a jobs guarantee than there is from, say, a UBI where you just send people money without asking them to do anything? 

PT: 

Yes, absolutely. I mean, there are many reasons why a jobs guarantee is less inflationary but there are two main things. The first thing is—let’s compare the jobs guarantee to current policy. What do we do? We imagine an enlightened government and that enlightened government says, “Okay, we’re just going to achieve full employment by all means possible. We’re going to prime the pump, and we’re going to send contracts anywhere and everywhere and provide subsides and tax cuts and all of the conventional things that we do.”  

And we dump a lot of money into the economy. Now, that we can use for sure. There’s a lot of work that has to be done. But if we try to stimulate, usually that happens by picking winners. We try to stimulate an industry that is already at capacity. That includes highly skilled labor and folks that don’t experience unemployment, and then there’s bidding wars in those industrial sectors for skilled workers. 

You can see how this kind of stimulus would be more inflationary than if you just went and employed the unemployed, and just provided the basic job offer rather than hiring from the top. What I’m suggesting is that there are many industrial policies that are needed, but it’s not going to secure full employment because it doesn’t ever trickle far down to those who need work. Especially when you work through private sector agents who are for one reason or another, finding certain workers not to be suitable for their jobs. 

So, in this sense, the public sector can just go directly to the problem by employing the unemployed, and there’s plenty of public needs that need to be tapped. By comparison, one raises the flaw while the other one kind of bids up wages from the top. With respect to UBI—I mean, look there are many versions of UBI, I can spend a whole hour talking about what that is—but if you’re thinking of instead of a job providing $30,000 of income to every citizen in the country, by comparison, this kind of budget is going to dwarf multiple times over what the jobs guarantee budget will be. If you dump it into the economy, it doesn’t create additional output on its own. You also provide that money to folks who don’t need it, and it basically does represent a major fiscal injection that doesn’t have the automatic stabilizing feature of the jobs guarantee. UBI still doesn’t create enough jobs for all. 

SA: 

What if you just had a $30,000 a year unemployment benefit? 

PT: 

Well, I mean, it doesn’t solve the unemployment problem. It’s not a financial question—you know the government could do it. But what is going to be the impact on the market? What is going to be the impact on paid employment? Is it going to provide the kind of stabilizer in terms of wages if the government is providing $30,000-$40,000 of income? Is that going to have a negative labor supply effect? I think these are legitimate questions. Is that going to cause a lot of people to step out of some precarious private sector work? 

Now, then the next question is, if those folks still need work, if they still want to find paid work, will the private sector create those job opportunities? And my contention is that the answer is no. The private sector will not, and we just need to provide work with a supplementary program. The reason is because unemployment is important to folks for reasons greater than income, and I think this also has to be recognized. People don’t work just because they’re going to get income. There are multiple other social psychological health reasons why people like to work, or want to work. My contention is we should provide those opportunities. So, what I’m saying is the jobs guarantee is not the substitute for other policie,s and we should think carefully how we should craft a jobs program along with an income program to support folks who cannot work and shouldn’t work.

I tend to talk about something called “participation income.” I think of the jobs guarantee as income provided to participate in public service and the community, and I think of it as a program that resides within a broader welfare system that supports students with free tuition, universal child allowance, robust social security—guarding against all of the other demotions of economy insecurity that folks tend to experience. 

PD: 

I have a few questions here. Eventually I do want to get the question of: is unemployment a problem on a civic moral level? But before we get to that, if you provide very healthy unemployment benefits for people that can’t find private sector work and people did start dropping out of Burger King and Subway and home healthcare jobs to take that unemployment income, benefit entitlement, whatever you want to call it, would not those jobs start saying, “we need to compete with unemployment income to get our workers back,” so they would start raising wages to try to woo workers back? 

Why do we think that would not cause there to be wage raises? So, you’re saying “if you always have a $15 job guarantee, that will make other people want to pay $15 to win workers back.” But if you always have the equivalent unemployment for two or three years, whatever length it lasts, wouldn’t that also cause the same thing to happen? 

PT: 

There will be some effect like that, yeah. If you’re getting unemployment insurance that’s generous, you know $2,000 a month and McDonalds is giving you $1,000, of course you’re not going to take the job. So, yeah, I see that there will be some benefit. Now, think of all the other aspects to comparing unemployment to a job. A job also creates a public output. It creates some specific public good. Now, unemployment doesn’t by definition. And unemployment also creates this odd problem of unemployability. So, if McDonalds or other restaurants increase their wages due to the consequences of trying to compete with unemployment insurance, they’re still not going to hire the unemployed. They will still prefer to hire people who have already worked. 

That is what we notice in the labor market. It just works in this way that especially the long term unemployed have the hardest obstacles. In the eyes of the employer, they are no good. And so while I appreciate the sentiment—and I absolutely agree that our unemployment insurance system is just broken and needs to be fortified—you still don’t deal with these other aspects and other obstacles. There are just so many other ways in which employers discriminate and basically find methods of not employing workers. So by comparison, the jobs guarantee is a step up in improvement for their life chances. 

PD: 

I’m sympathetic to some of those arguments about participation and the community, and also on a practical level. Having a big gap on your resume could kind of kneecap your whole career.  I think a lot of people’s concerns—and I’d love to hear your response to this—are that… well, let me tell it through this story. 

One of the most shocking facts that haunts me, and I think haunts a lot of people, is the computer revolution doubled our productivity but yet we work more hours than we did back before the computer revolution. Some people use the joke about robot communism or robot space communism or something like this. 

There’s an idea, like Andrew Yang talks about with automation, that we could increase our productivity and technology and pay those dividends into working less, working fewer hours and having fewer people work. In that view, unemployment is actually the thing we are trying to build as a society—growing technologically and productivity-wise to achieve all of our needs without having everyone work. The fear is that the jobs guarantee locks in this paradigm that we’re always working forever. So I’d love to ask what you think about that question. Let’s say in the next 50 years we triple productivity. Should we all work ⅓ as much? And is there a concern that the jobs guarantee might prevent that, or set us down a path of saying, “oh we should always just work up to the productivity level and just make more and more and more.”  

What do you think about that kind of challenge? 

PT: 

Yes, so we should all work less. We are overworked, over stretched. There’s lots of work that’s nonsense out there. We’re not utilizing technology in the right way. We should automate a whole bunch of jobs. People should not be in the meatpacking industries. They shouldn’t work in dangerous environments. Absolutely. Use technology. 

But I really question this vision of the unemployment society. I mean, what is that vision? Is that a vision of where people don’t do anything and they don’t organize? If you’re talking about a paradigm shift, we provision for ourselves. We care for ourselves. Everything we do, 80 percent of what we do is we educate, we train ourselves, we feed ourselves, cloth ourselves. It’s all services. So, the question is, is that going to go away with mass unemployment? Wage work happens to be the coordinating mechanism of this work now. If you want to envision a different coordinating mechanism, sure—let’s go. We can talk about that. At this juncture, wage work is one important coordinating mechanism. And that work has to be done. People do have to eat. 

So, I just cannot foresee this leisure class of society where somebody will be kicking up their feet and somebody else will be feeding them. Who will that person be? So, the idea is that the jobs guarantee could establish a job standard. As I discuss in my book the 30-hour working week was the popular option back in the 1930s. That was almost a hundred years ago. It’s long overdue. If we do a jobs guarantee that has reduced working hours, then that becomes the standard for pay and for working time. If the jobs guarantee provides universal childcare and Medicare benefits, then that becomes the standard for all. I would much rather decouple medical benefits from jobs, but we also need a mechanism to do paid leave and all the other things. 

So, it’s a structural reform. Unemployment is not a structural reform. If you want to think about a paradigm shift, the jobs guarantee does offer something valuable here because it recognizes and pays underpaid and undervalued existing work. It provides employment opportunities on a different basis, because we’re going to generate high profits from your employment. If that’s the model then unemployment is a cost. If it is a profit-driven employment paradigm, then employment is always a cost. People will always be too expensive to be hired. But if the employment is done for public use and public service, then the jobs guarantee kind of fills that gap. You can potentially envision a society that has transitioned to valuing better types of activities that just need to be done by the public sector. 

SA: 

One of the most common criticisms that I’ve heard of the jobs guarantee is that it’s basically just workfare. We have a long and ugly history of taking something that we offer as a social safety net benefit, and then attaching a work requirement to it as a way to basically get people off of it, right? To do austerity and force people back into the economy in a way that really has nothing to do with dignity of work or anything like that. How is this not workfare? 

When you talk about providing jobs for people who, for example, are undesirable to the private employment market because of a disability or whatever, right now a lot of those people would be collecting disability payments and some of them might want to work and do jobs that they’re not allowed to do. Some of them might be perfectly happy doing their own endeavors, whether those are artistic or something else. So how does this interact, and what would you say to people who think, “well, you’re just trying to replace federal disability benefits with a work requirement.”   

PT: 

Well, I mean the answer is no. A straightforward no. This is an additional program. I talk about it as a missing piece of the social welfare system. It’s a broken system and we need to do much better on many accounts, but again the logic is the following: if you have food insecurity, we have to guarantee food. If we have education insecurity, we have to guarantee education. If there is retirement insecurity, we guarantee retirement. If there’s job insecurity, we give you a little bit of money and then maybe train you for jobs that aren’t there. We need to also have job options. Now, you can do a jobs guarantee in a bad way and in a good way. You can certainly have a policy that is punitive, and I think that there are politicians that don’t hesitate to use direct employment to those ends. 

So, we have to be able to advance in a formative and more democratic solution. The jobs guarantee as proposed is just a straightforward job in the public service sector that is proposed and designed at the local level, from the ground up, by folks who understand the needs of those communities. The point is if we want to really affirm the right to employment, we want to do it in a dignified way. This is not a substitute for other benefits. That’s not the jobs guarantee. 

Now, I want to go back to something that we talked about earlier. What about unemployment insurance? What about a generous unemployment insurance? We have European countries that have generous unemployment insurance and almost close to permanent unemployment insurance. They still struggle with the problem of unemployment. They still don’t have a policy that ensures that if somebody needs work, they can find it. 

So, in that sense, this is a missing component of the welfare safety net. Now, with respect to artistic endeavors and valuing creative work, etcetera, that’s all part of the public purpose. I don’t really see why these are formidable challenges because we’ve done this before. We’ve seen it done in so many areas in small scale and big scale. The New Deal, of course, understood that musicians and poets need to eat and they need some basic economic stability. We see that across the oceans in India, there’s a rural employment guarantee. We see the material immediate benefits of providing direct employment for people who need work. 

PD: 

So, public employment has played this huge part in American history. The New Deal, a lot of it was just a very large jobs program with the Civilian Conservation Corps and things like that. I’d love to ask your thoughts on why a jobs guarantee is better instead of just, say, taking the National Park Service budget and adding 5 million jobs to it. Or say every year you assessed the level of unemployment and just increased the amount of public jobs as job positions not as a guarantee. Is it right to think of it as a more flexible way of doing a large increase in federal hiring? 

So, instead of saying, “let’s add 5 million jobs to the National Parks Service,” you say, “let’s add this amount of jobs and let every community decide how they want to use those jobs in their list of nice to have that they have on their city request sheets.”  

I guess the first question is why not just increase the staff of the federal government? And two, is it correct to think about this as a more flexible way of increasing the staff of the federal government? I’d love to hear your general thoughts on that. 

PT: 

I’m very happy you asked me this question because there’s so much confusion out there on this point and I feel the jobs guarantee has been asked to do an impossible task. It has to now fix all public sector problems that we’re facing, and of course we’re living after 50 years of austerity and decimated public services and all of that. A lot of folks find the appeal of the jobs guarantee to be because they think, “now I can hire a whole bunch of people.” Just hiring the people would be absolutely my preference. 

The public sector will be far better suited at employing those people. Get them to work in the public service. We can absorb them much easier while we are providing the training, the credentialing, all the other things that folks might need to transition elsewhere. So, I think the answer is: yes, you want to have stable ongoing public services that are well supported. You want to have a private sector that generates good jobs and you will still need a public opinion for those who are left behind. 

SA: 

I want to just come back to something that you said. I don’t know the history here, but you said something about the New Deal understanding that poets need to eat. I wonder if you could just say a little bit more about that and how that fits in with the jobs guarantee.

People I know who are writers and want to make a living being writers are big fans of something like a UBI and are very skeptical of a jobs guarantee. They say, “what I want to do is write, and I don’t necessarily want to have to go work 30 hours a week doing something, especially if that thing feels artificially created in order to justify my being able to live and do the more artistic endeavor that I actually want.” It sounds like that’s kind of an incomplete understanding of how that actually worked.

PT: 

Yes, absolutely. I mean during the New Deal we had a program that specifically employed historians, writers, teachers. We had a theater project that employed unemployed actors. There were programs for unemployed musicians.

So, it’s an odd idea that an artist will say it’s a made-up job where the idea is precisely to bring in that work into the community to allow others to access the output, if you will, of those people. 

SA: 

Yeah, I think you’re giving a more sophisticated answer than the question suggested. I think people often imagine that the jobs guarantee involves jobs that focus on cleaning up the park, right? I don’t think people can usually conceive it as, “this jobs guarantee would actually pay me to do the thing that I want to do, rather than the thing that someone tells me I have to do.”  

PT: 

Yeah, I agree. It is a matter of imagination.

SA: 

You’re totally right. 

PT: 

There’s kind of something dehumanizing about the way we talk about folks who just can’t do anything that can be of use, and I contest that. Now, I agree that many folks that have something to contribute of different value—whether it’s artistic, whether it’s some green work, some care work, I know that there’s that fear out there that, “I would absolutely hate to have a jobs guarantee worker do Meals on Wheels for my elderly grandparent.”  

And the question is: why? Why are we horrified by this idea? Do we not have elderly problems? Do we not have folks who might need companionship? There’s a way to train people to do this work, and some folks may be suitable and some may not be suitable. But what we’re suggesting is that if we open up the imagination of what is considered useful in society, the jobs guarantee can help to create those opportunities. 

Once again, I want to emphasize that I’d much rather have permanent structures that deal with this work. So now we just have to completely rehabilitate the idea of the public purpose and that it’s the job of government to do those things. 

PD: 

Let’s end on a positive note, which is: what is the state of the jobs guarantee in the United States? You’re probably more aware than anyone else out there of where it’s picking up steam. Which candidates are getting interested in it? Are there prospects for it becoming law in the coming decade? What’s the state of this policy idea? 

PT: 

Well, it very quickly became mainstreamed, I think, during the political cycle when a number of democratic presidential candidates endorsed it. Then there were a number of bills that were in the works.

Now, what I find very exciting is how other people who are working on other issues are finding and understanding how the jobs guarantee connects to their work. Like the Green New Deal, for example using the jobs guarantee in a multi-pronged way. I also am encouraged by a recent polling. 

We have been polling the jobs guarantee, or the idea that the government should create jobs for the unemployed for quite some time, and it’s always been upwards of 50 percent. But in the last few years, recent polls are showing upwards of 70 percent with strong bipartisan support. So, jobs are not like a left and right issue. I think that it resonates with many people. I’m encouraged by the fact that international organizations are paying attention and listening—or at least trying to revive this idea of the right to employment. 

I think that it’s incumbent on the government to provide what people want. And if people want jobs, I think we need to find a policy that does that. If there are those who don’t want jobs, we can think about what kind of support we can provide for those people. This deals with a very particular problem. If somebody wants a job, we can guarantee a basic job option. So, to that end, I’m encouraged that the conversation is widespread. I think that on the policy level, some sort of direct jobs program is going to happen. It’s almost irrespective of who is president. There will be direct employment. There will be some infrastructure, but the question is: are we going to be building walls, or are we going to be fighting fires in California and dealing with the floods and hurricanes across the nation? 

PD: 

Thank you so much for coming on Current Affairs and helping us get closer to the question of,  “is MMT real?” We really appreciate it. Stay tuned, listeners, for more questions in this realm of ideas that are rising up around modern monetary theory. 

PT: 

Thanks so much for having me. 

PD: 

We have just talked to Professor Tcherneva—mostly about the jobs guarantee, touching a little on MMT. 

Sparky: your initial thoughts? What is your takeaway? 

SA: 

It seemed like she saw it much more like an incremental fix. A smaller step in the right direction in terms of solving the problem of unemployment, the problem of the social safety net, the problem of less worker power—as a step in this direction as opposed to the end state, which I found a little more palatable, I think. 

PD: 

I’m totally with you on that. That was actually my big takeaway. I’m totally with Bruenig: why are we locking in “the unemployment is bad” paradigm? But a jobs guarantee as a pragmatic way to address the fact that we still live under a system of wage labor with spotty public supports. Maybe the jons guarantee is a very reasonable thing. 

SA: 

It’s hard to say without getting into the specifics because I think that she said there’s a bad way to do it and a good way to do it. I think that there are probably thousands or millions of bad ways to do it. Probably fewer good ways to do it. Toward the end she was talking about, “this could be the project for either party.” Well, I think that if it’s the project for either party it’s very dangerous. 

PD: 

It’s dangerous. 

SA: 

It’s very dangerous, right. There are lots of very upsetting ways that this could go. 

PD: 

I kept thinking, imagine there’s city unemployment offices or neighborhood unemployment offices, and people go to those neighborhood unemployment offices. And they’re like, “I want a job and I’ll do anything. I just want a job.” Then the city is like, “we’d love you to plant trees, but we don’t have the money in our budget to plant trees.” So maybe on a local level it’s a “nice to have” thing but not a “need to have” thing, and you just get federal grants for it.

SA: 

That’s an interesting framing. But that raises the question for me of “why even link it to this jobs guarantee framework?” Why not just have a federal grant for local governments, so that they can pay people to do their “nice to haves.” Why would you link it to unemployment as a problem?

PD:  

I think Professor Tcherneva would say, “if you do a bunch of grants for your ‘nice to haves,’ that’s what the federal government already does with a lot of things.” If you want to build a highway or fight racial injustice, communities can apply for federal grants.

The whole reason they have federal money for it is local communities want to do a thing, but they don’t have money in the budget. But then they hire people for those gigs who are kind of in the middle of the employment spectrum. They don’t hire unemployed people. I imagine there are some programs like this—if you hire a formerly incarcerated person, we will subsidize that wage. That sounds like something that would have a state or federal program behind it.

SA: 

I think this gets back to the incrementalism point, because I think one of the things you don’t want to do is make it so everyone has a right to have a boss. 

PD: 

Yeah. 

SA:  

You don’t currently have a boss? Don’t worry, we’ll give you a boss. 

PD: 

If you have a certain amount of income and you’re part of a certain flexible professional class, you can set your own hours. That’s still a fight too, of course, but you usually take your retained earnings and buy freedom with it. Either freedom from the economy, or freedom in the economy.

So, that is available to the top third of the income bracket in the United states right now. A lot of flexibility and freedom comes through income, not through a jobs guarantee. Part of the goal, I think, is not the leisure of sitting around, it’s the leisure of spending time with your kids, volunteering at church.

SA: 

If I want to plant trees—if I’m getting a solid UBI—I can go plant trees if I want to. 

A big part of the question is who your boss is and how much power they have over you. Like right now, if you could make the jobs guarantee boss, then they’re going to be operating in compliance with whatever the federal requirements. But as long as that structure is better than what private employers are generally doing, I could see how that would create pressure on private employers to be better bosses to allow people more freedom. It’s not rich person freedom, but if it’s better than working for Uber. 

PD: 

That’s interesting. Was it fun to work for the Civilian Conservation Corps? Maybe it was. Maybe it felt like a great thing. Maybe these jobs are great. 

SA:

Sometimes it probably sucks. 

PD:

She opens up the idea that it’s not just about money, it’s about freedom or meaning or purpose, participation, things like that. Is the jobs guarantee providing that? Maybe it is. Maybe it’s not. 

SA:

That stuff gets really complicated too. I have feelings about this just because I have members of my family who I think have gotten trapped in the disability depression cycle. One of my potentially more conservative views is that actually having a thing that you have to do is really helpful for a lot of people. I think that without that structure, listlessness can be really harmful. 

I’ve seen people very easily fall into a trap. If you don’t have anywhere that you have to be, then you stew in it. It’s just very easy to fall into a really harmful pattern. But on the other hand, that’s the argument that people make to do workfare. 

PD:

This is lwhat is at the heart of all these debates. We have to figure it out. Critics of the job guarantee say that when wealthy people have kids who are stuck in the depression disability cycle, those kids get money but the money is not coming from the government. it’s coming from their trust fund. That allows them to find structure, it’s just within a structure that has more meaning. Their parents sit them down and say, “you should get into a hobby or something” or “don’t you want some money to start a business” or whatever. That gets them out of it, as opposed to” you must work or you will starve.” 

SA: 

That’s definitely true. So much of the depression trap is a trap about money and not feeling like you can do anything.

PD:

It could be that that’s not the case, to give a fair hearing to the other side. Is it a form of dehumanization to tell a person, “oh you have no interest in those moral and civic goods of employment participation”? 

SA:

Well, there are a lot of different ways to do the jobs guarantee. I don’t necessary think that I would want to work that much. I mean, I think that if I had an option, I don’t know. It’s a hard question. 

PD:

What if now we are recording a podcast that we’re not paid for? 

SA:

That’s true. No, I mean this is exactly the thing. I guess now I have taken payment for maybe an article that I’ve wrote for Current Affairs, but I usually do that for free too. I don’t get paid to do the editing or anything. 

PD:

Is that a case for or against the jobs guarantee? So, for the jobs guarantee, it’s like we want to work, against it’s because we are economically secure from some other part of our life. For both of us, Current Affairs is like another job that we can do for fun. Maybe Bruenig’s vision of UBI would make it easier for others to do things like this.

SA:

Right and I think it’s a utopia versus pragmatism thing to some extent. Because I think my utopia would be: my work is divorced from my life security. I can eat, I can be housed. No matter what I’m doing, I just get to choose what I want to do completely separate from work.

The jobs guarantee, I think is a little bit more routed. This is what Pavilina said, “we are in this system right now where we run a lot of our economy and a lot of our society through the employment system.” So, the jobs guarantee works with and through that system. That’s not necessarily the best way to run a society, but that’s what we’re doing right now and so that’s where that idea is aimed. I think a UBI kind of imagines a different society. 

PD:

I really do think this is what Bruenig tries to get at with the social wealth fund. That’s basically a way to formalize the idea that as the economy grows, it pays a dividend to everyone and slowly increases their income and wealth, which I assume many will cash in to decrease their time spent in undesired employment. 

In the dream where all the wealth is created by the robots, Pavilina is right—you still need to be served at the restaurant. If the experience of the restaurant is being served, you still need someone to play in the theater performance. It’s not all going to be automated. You still need someone to cut your hair, and so there has to be some system of deciding how production is done. I do think there is a claim that you cannot just have employment be decided based on who wants to work at all or not. 

SA:

I think of Current Affairs legal editor Oren Nimni, because Oren has made this point on the podcast before. We need to know if something like the jobs guarantee—even if it would improve things in the near term—is it creating a structure which will then be harder to get rid of if it’s not ultimately the structure that we want. Like, is the jobs guarantee strengthening the links between the obligation to work and the necessities of life?

PD:

Where I’m at right now is: if the jobs guarantee helps end the immiseration of unemployment  for the people who are really suffering under that, especially people like formerly incarcerated people who really are desiring jobs but don’t have them because of barriers, but it never is used as an argument to not expand the welfare state and entitlements, then that’s fine. 

If it solves things in the short term, and it cripples our ability to fight for a UBI or other such fights, it might not be worth it. I don’t know and I think that might be at the heart of these debates on the jobs guarantee. 

SA:

Yeah. That seems right. We’re still talking about the jobs guarantee. We did not talk to Pavilina as much as I would have liked because we did not have enough time about the structure of MMT. 

PD:

I thought the whole argument was going to be that MMT lowers inflation or UBI causes inflation, whereas the jobs guarantee does not. They don’t seem to be arguing that anymore. 

SA:

Well, she doesn’t at least. She emphasized that very little. It’s a point that you had made in our notes, which is that it’s hard to argue the jobs guarantee is a complete inflation control because that would mean that all of the jobs would have to be adding the full value of exactly how much money you’re putting into them. That just seems unrealistic.

PD:

Yeah. I understand how if you have a car sitting in a lot, hidden from the world and you bring the car out to the lot, that lowers inflation because you’ve increased the supply of a real resource and someone is demanding that car and they get the car. Money didn’t go up. Real resources went up. I assume that the reason that the jobs guarantee is connected to MMT is because they think unemployed people are underutilized real resources.

When we provide a thing that’s not being demanded by the market, like a public good, does that increase inflation because that money was paid to that guy and he goes to Walmart and pushes inflation pressure by buying stuff?  

SA:

I think that thinking about things in this way kind of requires an economic value view of more of life that maybe I’m inclined to put in those terms. 

PD:

If you cleaned up Yosemite 100 times—like let’s say you clean it up every hour with an army of people like the Tokyo subway cleaners—at what point does that cause inflationary pressure? If we all as a society really wanted that, we all just suddenly felt that it was really important that the trails were cleaned at all times, does this lower inflation pressure? 

SA:

Right. Who are we going to talk to who is going to explain this to us? 

PD:

If you are listening right now and if you have an answer, I’d like to know because I thought the jobs guarantee was about inflation. It doesn’t seem to be ,but I think that is why it is tied to MMT. It’s not just that this one subculture decided as a completely separate matter to get into this one policy area. So, we have to figure that out. 

Sparky before we go, is MMT real? Do you think we are closer to the answer? Where are we in the detective journey? 

SA:

I think because we didn’t manage to get into these very basic and probably stupid structural questions that we have, I don’t feel any closer to knowing whether MMT is real. I feel like I have a better understanding of what the jobs guarantee could be, about what problems it sort of addresses or could address, about what it’s possible failings are. I think that she gave us a nice situating of the historical push for a right to jobs with the kind of current understanding of modern monetary theory. It makes sense why those two would be allies in her descriptio,n but I don’t think we got the intricate links that allow me to feel like I understand MMT any better. 

PD:

Yes, I think I’m with you there. 

SA:

I think in terms of our three questions—which are: is it true? is it new? is it useful?—we got a little bit of an idea. If you think the jobs guarantee is useful, then adopting the MMT framework is useful. I think there are still questions about whether the jobs guarantee is good, and I don’t think that tells us a whole lot about whether MMT is true. It assumes that MMT is true. 

PD:

Yes. I think we’ve placed more chess pieces on the table without taking them off, which is expected of the second episode. 

SA:

Yeah, I mean you got to make a mess before you clean things up. 

PD:

We’re only going to start really answering things later in the series. Maybe we’ll see. So, stay tuned.