Re: Full Employment is what?

[Bill Mitchell <ecwfm@xxxxxxxxxxxxxxxxxxxxxxx>]

> At 07:05 AM 5/29/01 +1000,  Bill Mitchell wrote:
>
> > Warren's ELR is similar to my Job Guarantee model. In both, the JG wage
> > only has to be slightly lower than the
> > private sector wage not significantly lower to gain the inflation control.

Paul wrote:

> What do you mean by not "significantly lower"?  Surely the use of
> significance is not using the statistical concept here?  If it is
> statistically not significantly lower in the statistical sense then the
> sample mean for ELR workers might equal or even by "not significantly
> lower"  than the private market mean price for workers.  But the mean
> price for workers is well above  (significantly in the statistical sense)
> the legal minimum wage in the US.  So that would suggest the ELR wage was
> well above the minimumum wage -- which surely is more relevant for the
> marginal worker.
>
> but then you must mean not significantly lower in the arithmetic
> sense.  But what is "not significantly lower"?  2 per cent below the
> minimum wage, 5% , 25%.  "In this sense not significantly lower is like
> "beauty" -- in the eye of the beholder.


my statement about significance has no distributional connotation. it was
in reaction to your own
words that I was replying to "but the problem is that the government wage
rate MUST be significantly
lower than the private sector wage rate." Your use of the word
significantly lower carries the tone
that the JG wage will be VERY LOW. well not at all. it just has to generate
a dynamic to ensure that
the JG sector does not inflate above the inflation rate in the private
sector. The JG is also accompanied
by a raft of social wage measures available to all lower income workers
with a means test cut off to ensure
that public education, health, etc are to be enjoyed. The point is that
distributional issues are dealt with
outside of the JG wage and therefore outside of the allocation system.

That partly replies to Sven also. There is no hint in the JG that you would
tighten welfare if by that
we mean genuine welfare - a safety net for those without jobs, aged, sick
etc. those provisions would be
very generous. But then we hit the rub!!! In my own view, as author of the
JG, the government is bound
by the UN human rights agreements which include full employment. The
agreement says in part that the
government should do everything it can to ensure there are enough jobs.

But I think that individuals also have a responsibility to their
communities if they was this security. Otherwise
they are free to solve their economic (and social) problems independently.
If they don't wish to contribute
in some way to the community that is fine. So the key provision of welfare
as currently known (in Australia)
- the unemployment benefit - would disappear because there would be enough
jobs for everyone currently
receiving it. the jobs would be locally available (so in general, no
coercion to move), they would be varied
(to suit indoor, outdoor, manual, non-manual types) and they would broach a
range of talents. In that sense,
I think it is reasonable to expect people to take a job if they are fit and
well if they want the income security.
I don't see that as a tightening of welfare.

>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.

best wishes
bill



William F. Mitchell
Professor of Economics and Head of Department
Director, Centre of Full Employment and Equity
University of Newcastle
New South Wales, Australia
E-mail: ecwfm@xxxxxxxxxxxxxxxxxxxxxxx
Phone: +61-2-4921 5065
Fax:   +61-2-4921 6919
Mobile: 0419 422 410

WWW Home Page: http://e1.newcastle.edu.au/economics/bill/billeco.html