Re: City of Beijing announces Job Gaurantee

[Bruce McFarling <ecbm@xxxxxxxxxxxxxxxxxxx>]

On Thu, 04 Apr 2002 17:45:33 +0200, Sven R Larson
<larson@xxxxxx> writes:

>I don't know if you saw Mat Forstater's contribution? He cited
>extensively from a paper by Randy Wray where Randy clearly says
>that ELR is not - NOT - a no-work-no-cash program. Bill Mitchell
>on the other hand has made equally clear that his JG does come
>with such a condition. That's a tremendous difference.

I think you are misreading Bill's argument, and part of
the difference is the institutional differences between
the US and Australian income support programs.

Unemployment income support.
	In the US, this is unemployment insurance, which
is based on level of income on which premiums were paid
at the time the worker became unemployed, runs out in
three months unless the Congress declares that a
recession is on and the period is extended.  You have to
show that you are looking for work, unable to find it,
and AFAIR there is something of a job equivalence to it
... an unemployed programmer can show that they are looking
for work as a programmer, and not be kicked out because
there are garbageman jobs available (but of course I have
been out of the country for a while, so that may have been
stripped out by now).
	In Australia, it is a dole, and does not have a time
limit.  It still has the looking for work requirement of the
US system, but it a direct income support program rather than
being dressed up as a an "insurance" scheme.  More and more
people are required to perform some kind of training or unpaid
"work experience" ("work for the dole") to remain on the dole,
and under the current government there is an increasingly
aggressive program of "penalising" people for failing to jump
through one of a proliferating number of hoops by withholding
benefits.

	Now, if a a JG/ELR programme was implemented in the
context of a dole program, the dole programme would only
kick in if it took a little time for the JG/ELR program
to place you in a job.  Your official entitlement to a
dole includes looking for a job and having no offer of
work, and that simply doesn't happen with a JG/ELR
program.  Unlike the dole, people on a JG/ELR program
would be free to save up a little bit -- accumulated
savings can disqualify you for the dole.  Under normal
Australian conditions, they would either accumulate a
week of paid vacation every three months, or be paid a
top-up that would be the equivalent.  They would be free
to quit a JG/ELR job if they wanted, and re-apply for
a JG/ELR job ... instead of the draconian penalties
for someone on the dole who falls under the
work-for-the-dole categories, the penalty is the same as
someone who doesn't like their job and quits under boom
economic conditions ... they lose the wages they would
have received for the days between quitting one job
and starting the next.
	Now, IF there are "reasonably equivalent" job
requirements in the US insurance scheme, then people
who are still within their three months, and who were
let go from a job that is not "reasonably equivalent"
to an ELR/JG job would not be excluded from receiving
their unemployment benefit because of the existence of
the ELR/JG programme.  However, when their unemployment
benefit runs out, they would have something to fall
back on.

	And obviously anyone who qualifies for income
support on OTHER grounds in either country is unaffected
by the existence of a JG/ELR programme, UNLESS there
are changes to those programmes to include them.
The most likely changes in Australia would be to
make the means test phase outs on these programs
shallower, so that people are not locked OUT of the
ELR/JG programme by effective tax+phase out rates
in excess of 100%.  In any event, the existence of
a more attractive alternative than the Australian
dole, or a longer duration alternative than the US
unemployment insurance, would mean that there would
be less pressure on other income support programs
from people whose fundamental problem is lack of
employment opportunities, and other turning to
whatever income support program they can qualify
for as a last resort ... in other words, the budgets
on those programs would become less counter-cyclical.
As a regional economist I think that is a good thing,
since it makes it easier for states and local
authorities to develop their own special needs income
support programs without facing the same pressure to
prune them back in any downturn.


Virtually,

Bruce McFarling, New Lambton, NSW
ecbm@xxxxxxxxxxxxxxxxxxx