End Involuntary Unemployment

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Work and war - Matt McGinn

"The build up to the war had been in little bits and pieces; slow but unsure and yet somehow sure. Ordinary folk knew little of the machinations behind the scene but they could see the sudden appearance of jobs where none had existed before; men exchanging Labour Exchange Cards which were tattered with years of vexing use for picks and shovels, sandbags appeared around public buildings; gas masks were issued to all and sundry and Glasgow Green was raised two feet to make way for an Air Raid Shelter in its bowels.” 

Glasgow folk singer, Matt MacGinn witnessed the UK Government undertaking a massive mobilisation of resources, including people, to fight during the Second World War and unemployment ceased to be.

To NAIBER not to NAIRU - End Unemployment for Good

During his seminal 1972 rectorial lecture at the University of Glasgow, Jimmy Reid said:

"I am convinced that the great mass of our people go through life without even a glimmer of what they could have contributed to their fellow human beings.  This is a personal tragedy.  It's a social crime.  The flowering of each individual's personality and talents is the pre-condition for everyone's development" 

However, the NAIRU, or 'non accelerating inflation rate of unemployment' has severely constrained personal development.

This noxious neoclassical economic notion's central tenet states that a certain percentage of unemployment must be tolerated by society to keep inflation down and that this is a 'natural state' in any economy.  Therefore, the 'job' of the unemployed is to fight inflation.

Alongside this, society is being expected to tolerate a natural rate of homelessness and a natural state of drug addiction too. Societal problems which are fuelled by the adoption of the NAIRU as a working policy.

So much human potential has been wasted by this thinking.  Social and business interactions that never occurred, human connections lost, medicines remained undiscovered, problems remained unsolved, businesses never started, people living uncared for and our environment left to wrack and ruin. 

Considering all of the above consequences, this mistaken adherence to the NAIRU is like running an economy equivalent to a Porsche and driving it like a milk float.

Retaliation and relief from the NAIRU comes in the form of the NAIBER, an acronym for the ‘non-accelerating inflation buffer employment ratio’. The NAIBER proposes the retention of a ‘buffer stock’ of employed, as opposed to unemployed people.  Those who are familiar with the concept of a buffer stock will realise that due to the current economic set-up, it would seem that we care more about sheep's wool than for people.

It is not the remit of private business to maintain full employment. Their purpose is profit and wages reduce profits, ergo costs must always be reduced and and so unemployment is the inevitable consequence of this.  Moreover, the constant churn of business cycles will always hang the so-called 'low-skilled’ out to dry first, and they will be last to be employed.

Private businesses are always reluctant to re-employ people who have been unemployed for any length of time. Somewhat understandably, they fret about the loss of workers' skills, both practical and social.  Thus, the longer the term of unemployment, the more unattractive unemployed workers become.

However, any government and the communities that those governments serve should be concerned with unemployment due to the societal costs or the 'externalities' that result.

The Job Guarantee suggests a bottom-up approach to employment with a scaling-out of responsibility to local community level. At Modern Money Scotland, we suggest control of this programme be handed over to community councils via money direct from central government. This could be a first and meaningful step to increasing local democracy.

The onset of Covid-19, has amply demonstrated that the UK government in no way relies on taxpayers money to fund their spending.  This is possible because the UK government is the monopoly issuer of our currency, the pound, which is an unpegged, fiat currency. Government spending is simply clicked off of a computer at the Bank of England.  As we witnessed in 2008, they can be the lender of last resort and as the young Matt McGinn observed they can be the employer of last resort too.

The Modern Money Scotland paper on a Job Guarantee https://www.modernmoney.scot/policy-papers



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