I recently wrote about an interview I had with economist and professor Stephanie Kelton at Netroots Nation this year.
The context was “Five Questions” and the talk ranged from climate and “burnable carbon” to what led her to become a leading light of the Modern Monetary Theory (MMT) school of economics.
(For a quick look at what MMT economists think, click the link above, or see my own lay-friendly explanation.)
But the question whose answer interested me most was this one (paraphrasing):
If you were president — with an FDR-style mandate and FDR’s Congress, both houses — what would you do the fix the economy?
She answered first about the financial situation, meaning bank and financial sector regulation, and then about the economic situation, about the health of the economy. The financial recommendations were strong and well put. But the economic recommendations contained this striking proposal — let’s make the government the employer of last resort. From that proposal, all sorts of good things flow.
Listen to the clip; it’s not very long. Then a comment after.
The discussion of her financial-side fix is at the start, and as I said, very strong (unlike the “fix” in that other sense offered by the people at the Fed, for example). Then at 3:49 she gives her economic solutions. Along the way, Kelton says the following:
The economy performs well when you have lots of consumers with income to spend, and they go out and buy the stuff that the firms are producing. And the firms have customers and nice revenue streams and the economy works well. … The economy doesn’t work well when you’ve got the kind of inequality you have today. …
80% of all the income gains since the recovery went to the top 20% … we’re just shoveling cash into wheelbarrows for these folks. And what do they do with it? They don’t need another refrigerator … they plow it into the stock market … they buy art …
The prescription is to get incomes rising for the people at the bottom. … We need unions to come back. We need a jobs program.
And what does a Kelton “jobs program” look like? It looks like this.
If you don’t like your junk job, you can work for the government and get a living wage
How’s this for a jobs program on steroids, and a minimum wage program, and a working conditions program, all rolled into one? She starts with a look back at FDR-era programs like the WPA and CCC, then adds:
If [FDR-style jobs programs] were created the right way, and you said, “Anybody who’s ready, willing and able to work, or unable to find a job in the private sector — or if you just don’t like that job — you can come and take this [government] job. We’re going to create one for you at a living wage with these benefits …”
You create a package for the worker that then becomes the minimum, [which] everyone else has to provide … or they’re not going to get workers. That becomes the de facto minimum. … We’re not going to let you starve in America.
Fascinating proposal, one that would work beautifully. My translation back to her (6:55):
I don’t want this to go by without people getting what was said. … You’re saying that you don’t really need to define a minimum wage, because the government sets a floor. … [Then] anybody who wants a better job than the junk job they’ve got, can work for the government. That forces the private employers to compete with the government for workers, and that’s a good thing for workers.
Instant fix to junk jobs, public infrastructure needs, and all kinds of employment minimums like health care and working conditions. The economy sails because as Kelton said, the economy works well when most people — the non–very wealthy — have money to spend. Instant gains for the economy; instant gains for workers and working conditions as well.
Feel free to talk this up. And if you encounter one of those “but deficit” hawks who magically appear when the rich want more than they have, read this. It’s the perfect answer to the bipartisan question, “When would you like your austerity, now or later?”
Again, to listen to the entire interview, click here. It’s worth your time.
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