Re: Full Employment is what?

[Paul Davidson <pdavidson@xxxxxxx>]

At 09:29 AM 5/29/01 +0200, Sven wrote:
> Paul Davidson wrote:
> > At least the Mosler ELR concept has as definition of full employment
> > that has  some meaning -- but the problem is that thre government wage
> > rate MUST be significantly lower than the private sector wage rate.
> > Thus there may be many workers who would be willing to work at the
> > market wage rate but who could not find a job -- and still not be
> > willing to work at the government wage rate?  Is that what we mean by
> > full employment??
>
> If ELR is combined with a tightening of social welfare regulations - the
> extreme of which is a "no work, no cash" policy - then the definition of
> full employment in ELR does not have a meaning. Some proponents of the
> ELR idea have hinted - but never stated explicitly - that it is immoral
> not to participate in ELR programs if you're unemployed, that people
> should always do something for money. Drawing on European experience I
> can say that ELR programs tend to encourage tougher welfare policies;
> welfare policy becomes workfare policy. The concept of full employment
> over here has more or less lost its meaning both to workfare-prone
> politicians and to those who go in and out of workfare programs.


Since proponents of ELR or its Australian variant usually suggest that
"full Employment" under ELR would not create any wage inflation -- I have
also thought of ELR as the "natural rate of unemployment with a humane
face". -- but Sven apparently thinks the European experience suggests
otherwise-- namely workfare (which can be seen if an ELR policy is in
place) is less humane than welfare.

But as I wrote in THE ECONOMIC JOURNAL in March 1972 ( in  an article
entitled -- not surprisingly -- wntitled MONEY AND THE REAL WORLD) :

"as long as full employment is a social objective, and as long as a 'work
requirement' is a condition for earning income  for propertyless
households, so that full employment becomes a humanitarian as well as an
economic objective, then monetary policy should always be geared to
increasing the supply of money to all potential buyers of producible goods
who are willing to spend in excess of their income, as long as the point of
effective demand is at less than full employment."

Would you believe that was written almost 30 years ago???


Paul

> /srl
>
> --
> Sven R Larson
> PhD; Assistant professor of economics
> Department of Social Sciences, Bldg. 22.2
> Roskilde University
> Pb 260
> DK-4000 Roskilde, Denmark
> Phone: (+45) 4674 2910

Paul Davidson
Holly  Chair of Excellence in Political Economy
Editor, Journal of Post Keynesian Economics
Economics Department - 523 SMC
University of Tennessee
Knoxville, Tennessee 37996-0550
phone # (865) 974-4221
fax # (865) 974-1686
home phone and fax # (865) 692-0802
http://econ.bus.utk.edu/Davidson.html