Re: Full Employment is what?

[paul davidson <pdavidson@xxxxxxx>]

At 12:40 PM 5/29/01 , Warren wrote:
> Right.
>
> I like to point out that the logic is that the private sector wage will always
> be
> slightly ahead of the JG wage in order to attract needed workers
> from the JG pool.

How much slightly head to select workers from the ELR pool?  After all
unless effective demand exogenously increases employers will never want to
"need" ADDITIONAL workers from the ELR pool.  (After all that was the
raison d'etre for WPA and PWA -- government employer of last resort
--policies under the Roosevelt Administration during the great
depression.  The only problem was there was so my unemployed  and not
enough government funding of these WPA and PWA agencies to employ all who
were willing to work. And when War broke out, the government placing
contractual orders for war material increased effective demand so much that
the WPA and PWa workforce was completely depleted [ also military
conscription] and the private sector induced housewives and others who were
not in the labor force to take a job -even doing what in those days was
considered "man's work", e.g.,Rosie the Riveter.)


In the bsence of an exogenouys increase in effective demand, with
productivity increasing employers require fewer "needed" workers. thereby
swelling the ELR pool no matter what the wage differential.


>  This is qualitatively different that saying the JG wage must
> be set
> below the private sector wage.  The JG wage could be set at any level, and
> market forces will effectively make the JG wage the 'minimum wage.'


Yes, the ELR wage is the minimum wage  and it could be significantly
arithmetically and statistically lower than the the market wage. That is
why I called ELR the naturtal rate of unemployment with a humane face----

But with compassionate conservatism in the White House, given the level of
effective demand, the White House could significantly increase the
differential between the market wage rate and the ELR rate in order to give
self-interested workers a "market incentive" to get off their duff and seek
out a productive job rather than a make waste on.  And the money we save by
paying ELR less could be used to further cut the income tax rate for "those
who are productive and pay taxes".  So in the hands of the wrong political
philosopky, ELR could be fare from a humane face.

As my earlier quote from my 1972 EJ article suggested -- given societies
values , I prefer "cheap money" to encourage private sector increases in
effective demand --.

 And if that fails to generate full employment (even with a close to zero
interest rate, e.g., Japan) for the government to more directly (via the
"socialization of investment as spelled out in the GT) stimulate more
contractual orders from enterprise and therefore increase the demand for
"needed" workers at the market money wage rate -- until full employment is
reached
I guess I am still a believer in the entrepreneurial system as the most
progressive system that mankind has devised -- provided that the problems
of an excess demand for liquidity and hence too small  point of effective
demand can be eliminated by policies spurring private enterprise

> This has a
> different tone to it than in Paul's statement below, and perhaps a slightly
> different dynamic than he may be
> implying?
.
Correct.

Paul