Mosler Sem.: Wray - Workfare, Motivation, Inflation

[John Gelles <jjgelles@xxxxxxxx>]

	             Mosler Seminar: Randy Wray --
	    ELR vs. Workfare, Motivation of Entire Economy,
	             Fear of Inflation is Real


On Mon, 3 Mar 1997, Randy Wray wrote:

> To John:

>   1. workfare must be better than welfare. agreed. i think this is
>      almost a matter of definition. work is indeed better.  and we
>      can ensure that the work is not demeaning but instead produces
>      useable skills and accomplishes desirable things.

  Reply:
	I was concerned that ELR would BE workfare -- a bad thing
	to be -- hated by unions as underpaid work, as something
	even worse than welfare.

	I hoped ELR would BE employment -- a good thing to be --
	because it's NOT underpaid (if we raise the minimum wage).

>   2. output will have to rise in order for all to have rising real
>      living standards. agreed. this is accomplished by first ensuring
>      the elr jobs do add to standard of living. and second by
>      ensuring bpsw is set high enuf to raise agg D.

  Reply:
	We should not ask that ELR job output (or any economic
	output directly produced by people who need government
	support) will add to aggregate output the things needed
	by ELR workers or others with greater earnings.  Adding
	to total prized economic output is what automation in
	the rest of the economy is for: It is what the stimulus
	to aggregate demand (for the output of people already
	working) is for.

	Not that the ELR job outmust MUST be deficient -- just
	that it CAN be close to zero, (as far as the standard
	of living for everyone is concerned), BECAUSE automation
	in the non-ELR part of the economy is ready to raise
	living standards, IF aggregate demand allows it to.

	Because we must set the ELR wage high enough that
	it is IN FACT a living wage, and NOT workfare, the
	uncertainty of the effect of higher aggregate
	demand -- (Will it REALLY raise output enough for
	a general increase in the standard of living?) --
	we must include EXPLICIT anti-inflation planning
	in the package before submitting it to middle class
	voters.


>   3. address fear of real inflation. i don't understand your
>      point. motivation will be increased, not reduced. work
>      is good for motivation.

Reply:
	My point is that a decently paid ELR can spook the
	whole workforce. At least rich people fear it can.

	The worker who fears the sack, on a scale of 1 to 10,
	at the 10 level, may fear the sack at only a 7 score.
	A 3 point drop in fear might translate into a 2 point
	drop in productivity -- and output (not made up for by
	technology).  Hence inflation fears.  Hence explicit
	recognition of an inflation concern in the package.

	Do not hate me for name dropping:  Milton Friedman
	read my plan in 1985 and wrote me that this was his
	concern.  He advised me of the fears of ordinary
	middle class people (and above) that my plan, (and
	by implication any guaranteed living wage for people
	not under the fear of the sack), would bring on
	hyper-inflation.  Friedman may have been wrong,
	but his concern is not without merit.

	John Gelles


     John Gelles   5706 Loma Vista Rd   Ventura, CA 93003
     Voice (805) 642-6675        Email  jjgelles@xxxxxxxx
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        A Plan for Global Individual Economic Rights:

     1. Tax forced saving instead of NIARU.
     2. Inflation protection of savings and loans.
     3. Keynesian financing of public priorities.
     4. Microloans for a right to jobs or self-employment.
     5. Automation for a high minimum standard of living.

     6. Rescue loans if automation overproduces.
     7. Anti-hoarding and anti-inflation laws as needed.
     8. Trade protection for national security.
     9. Foreign loans instead of certain imports.
    10. Traceable money to fight crime and corruption.