Communism for some, pay rises for others!

KyussBishop

mariaalice wrote: »

Okay you have almost convinced me

An idea I think might work and be compatible with what you propose.

There are a lot of young men ( and some women ) who would like to do an apprenticeship in all sorts of areas but we will start with construction.

The government guarantees that anyone who wants to do an apprenticeship will be provided with the work element so the person can finish the apprenticeship.

The government or it could be funded by a philanthropist, give the money to an organisation who set up a not for profit building company and the company keeps building and recycling ( knocking down ) the same set of building so as to provide the work element of the apprentiship... in the same way a model factory could be built for anyone who want to be an instrument tecl/tool maker, the producers would be recycled instead of being put on to the open make, thus meaningful work and training could be provided with out affecting the current markets for the products. Is the the sort of idea you have?

Kind of It would be funded by public money (probably through printing new money, which goes from wages into paying down debt and basic living expenditures first, getting rid of most of the inflationary potential of the new money), rather than by a philanthropist, and you could either buy the building resources as surplus from industry, or extract them from publicly-owned natural resources (such as from quarries, publicly owned forests which get replanted, etc.).

You would not want to waste the productive effort put in (the actual work/effort the apprentices do), so you would not want them knocking down what they build (you still could do that, it would just be less efficient), meaning they'd work alongside professionals who make sure their work is usable.
This would mean that the size of that set of jobs, would still be limited by available surplus resources, unless government decided they were willing to accept a small amount of inflation in a certain resource market.

However, a point that is just re-occurring to me, that I mentioned earlier: There are a lot of excess private construction resources available right now, meaning private industry can scale up quite a large amount, providing these resources, before they hit supply limits, which cause demand-pull inflation.


You still need useful construction projects though, and these can range from community service type things, such as public care homes (which I think is an in-demand market), daycare centers, community sports facilities, school renovation, town center renovation etc.; there's lot of useful stuff that can be built, and which can optionally be spun off to private industry later.

This would help apprentices train, provide new jobs in the places built, and would allow existing construction (and other) workers to keep their skills sharp, and would increase the benefits that the public in general, including private companies, receive through infrastructure/community projects.

The added benefit too, of keeping people working, feeling like they are contributing something to the community (which they are), and not going through the destructive/harmful social, health and economic effects of unemployment.

Idbatterim

read this on rte.ie earlier. I reckon the government should fund (where to get these funds is debatable) an increase in capital spending BUT at renegotiated lower rates, not boom time madness. As well as skilled jobs, construction also creates so many direct and indirect low skilled jobs...

http://www.rte.ie/news/2012/1120/construction-workers-told-to-accept-2-5-pay-cut.html

SupaNova2

KyussBishop wrote: »

Look I've already given examples here, and you're now being demanding on details, for the sake of trying to bash the idea; that's very disingenuous, and it's looking to bring down the tone of the discussion which has (thus far) been good.

I asked because having idle resources that would not have to be bid away from someone else is central to your point that a job guarantee would not cause inflation. And this is not the Political Theory forum, it's the Irish Economy forum, hence why I asked for Irish examples.

Anywhere you look with land that is not being used for farmland (vast vast areas of land with mostly grass), can be used that way, all over the country.

Straight off, in Wicklow, there are disused places where you can mine copper, granite, sulpher, lead and there are quarries all over the country, many disused.

Since your plan is to hire people at minimum wage+, can this supposed unused land be combined with labour and whatever else to produce something that sells at more than the costs? Or is that not important?

KyussBishop

SupaNova2 wrote: »

I asked because having idle resources that would not have to bid away from someone else is central to your point that a job guarantee would not cause inflation. And this is not the Political Theory forum, it's the Irish Economy forum, hence why I asked for Irish examples.

It's preferable to have the resources under public control, but it isn't central; right now the construction industry is in a very significant downturn, so there is a lot of excess capacity for production in the construction industry, such that even if you buy from private resources, they are going to be able to ramp up production a good bit before you get demand-pull inflation (when they hit capacity).

SupaNova2 wrote: »

Since your plan is to hire people at minimum wage+, can this supposed unused land be combined with labour and whatever else to produce something that sells at more than the costs? Or is that not important?

It's just one potential area of the job program; if you use the land to produce grains that can be stored over a long period of time, and you farm them efficiently, there's no reason you wouldn't be able to recoup the costs, much as a farmer would need to do.
Profit isn't necessarily the goal though (it can be, if you setup the program that way, but doesn't have to be), it is mostly a secondary benefit to keeping people employed and preventing deterioration of the workforce, and of society/the-economy.

You could even use the stored grain as a buffer for food price-shocks, since variation in the price of oil is affecting the price of food now (so the buffer stocks could be used to fight inflation as well).

SupaNova2

KyussBishop wrote: »

It's preferable to have the resources under public control, but it isn't central; right now the construction industry is in a very significant downturn, so there is a lot of excess capacity for production in the construction industry, such that even if you buy from private resources, they are going to be able to ramp up production a good bit before you get demand-pull inflation (when they hit capacity).

There may be a lot of excess capacity in construction, but we don't need more housing. Ramping up production of housing may keep housing prices from rising, but all the materials used would suffer inflation. I doubt you would advocate this, but constructing infrastructure would cause the same price inflation in raw materials. And as soon as you stop such stimulus spending all those construction workers would be unemployed and forced to re-skill. Essentially you are propping up a mostly unneeded supply of construction capacity with such stimulus.

It's just one potential area of the job program; if you use the land to produce grains that can be stored over a long period of time, and you farm them efficiently, there's no reason you wouldn't be able to recoup the costs, much as a farmer would need to do.
Profit isn't necessarily the goal though (it can be, if you setup the program that way, but doesn't have to be), it is mostly a secondary benefit to keeping people employed and preventing deterioration of the workforce, and of society/the-economy.

You could even use the stored grain as a buffer for food price-shocks, since variation in the price of oil is affecting the price of food now (so the buffer stocks could be used to fight inflation as well).

Nobody can take this grain idea seriously without anything to back it up, where is the unused capacity? And if it is profitable to simply produce more grain, why are farmers not doing so?

KyussBishop

SupaNova2 wrote: »

There may be a lot of excess capacity in construction, but we don't need more housing. Ramping up production of housing may keep housing prices from rising, but all the materials used would suffer inflation. I doubt you would advocate this, but constructing infrastructure would cause the same price inflation in raw materials. And as soon as you stop such stimulus spending all those construction workers would be unemployed and forced to re-skill. Essentially you are propping up a mostly unneeded supply of construction capacity with such stimulus.

I didn't mention housing though, it wouldn't make sense to do that? Construction could go into infrastructure, or even on a smaller scale, community projects like care homes, sports centers, schools, renovations/expansions of existing buildings etc., also it could do more wide scale stuff like rural broadband and such; there's a lot of stuff you could pick, we're pretty much never going to be short of new ideas for infrastructural upgrades.

Since construction is in a big downturn right now, that means there is a lot of excess supply in many areas, such that you can source a lot of material from parts of the construction industry before it reaches its previous capacity, and only then will you start getting demand-pull inflation.
So, that gives a lot of leeway in raw materials, before you get any inflation, which actually makes this the best time to do such large-scale infrastructure projects, since we minimize the inflation cost of them (compared to when construction is closer to capacity, in boom times).

I agree though, you don't want to just prop up construction; it would be extremely important, that any job guarantee program provides a lot of diversification of jobs.
However, at the same time, the country really could do with a lot infrastructural upgrades, so now is the right time to undertake such kinds of large-scale projects, since the boost is so needed (and because it's the best time to minimize their inflationary impact, since construction is already down); just got to factor in a gradual diversification/reskilling of workers, as the job guarantee winds down.

SupaNova2 wrote: »

Nobody can take this grain idea seriously without anything to back it up, where is the unused capacity? And if it is profitable to simply produce more grain, why are farmers not doing so?

It is just one example of a single potential set of jobs, out of likely a huge variety, which would make up a job guarantee program, and it doesn't even have to be profitable, just breaking even works as well, and you don't even need that either.
There's no readily available source of data to grab figures from on unusable land that can be converted, or unproductive land in general, so I can't get figures for this.


As I said earlier, the monetary profit from any job guarantee jobs is only a secondary benefit, because the primary purpose is getting workers out of unemployment, to give them an opportunity to earn, pay down debt, reskill, and to ameliorate the detrimental effects of unemployment.

You could decide to 100% waste their productive effort too if you want, and you will still be getting the benefits of people paying down debt, thus freeing up money to spend in the private economy, bringing it back to speed and pushing people back to work in private industry.

That in itself, paying people and wasting their productive effort, is less wasteful and damaging than what we have now, with massive unemployment (just as much a waste of productive effort), and the social, health and economic damage it causes; so straight away you are solving the social, health economic damage even if you 100% waste the productive effort people put in.

Not that I advocate that at all, I'd of course want peoples effort to be useful and productive (and I've provided many examples thus far of how it can be), but it's beneficial even without that.

SupaNova2

KyussBishop wrote: »

Since construction is in a big downturn right now, that means there is a lot of excess supply in many areas, such that you can source a lot of material from parts of the construction industry before it reaches its previous capacity, and only then will you start getting demand-pull inflation.

So, that gives a lot of leeway in raw materials, before you get any inflation, which actually makes this the best time to do such large-scale infrastructure projects, since we minimize the inflation cost of them (compared to when construction is closer to capacity, in boom times).

There are no stockpiles of fuel, wood, steel or other construction resources lying around. You would have to buy them on the market, and thus price inflation would be immediate. And in bidding away these resources, you prevent them being used elsewhere by someone else.

KyussBishop

SupaNova2 wrote: »

There are no stockpiles of fuel, wood, steel or other construction resources lying around. You would have to buy them on the market, and thus price inflation would be immediate. And in bidding away these resources, you prevent them being used elsewhere by someone else.

Price inflation is not immediate, it depends on capacity of industry to cope with demand, i.e. if there is excess capacity; when demand grows beyond industries capacity to supply, you get demand-pull inflation, until industry catches up (if it can), and we already have an underperforming construction industry with excess capacity.

When a resource is in surplus, you are not preventing anyone else from using it; a lot of construction materials are readily available resources.
Quarries, forests and unmined materials are all resources that are available in Ireland, many which were previously active during the boom, with excess capacity now (hell the state could even buy some of them that are out of business, and indeed the state owns some of them anyway).

With our construction sector in a downturn and all these resources being utilized less, now is the perfect time for a large scale infrastructure project anyway (it is a far better time than when the economy has recovered), because you minimize any potential inflation.


What materials would you expect to see inflation in, and how much inflation?

maninasia

mariaalice wrote: »

Okay you have almost convinced me

An idea I think might work and be compatible with what you propose.

There are a lot of young men ( and some women ) who would like to do an apprenticeship in all sorts of areas but we will start with construction.

The government guarantees that anyone who wants to do an apprenticeship will be provided with the work element so the person can do the apprenticeship.

The government or it could be funded by a philanthropist, give the money to an organisation who set up a not for profit building company and the company keeps building and recycling ( knocking down ) the same set of building so as to provide the work element of the apprentiship... in the same way a model factory could be built for anyone who want to be an instrument tecl/tool maker, the producers would be recycled instead of being put on to the open make, thus meaningful work and training could be provided with out affecting the current markets for the products. Is the the sort of idea you have?

This is really communism at heart. It doesn't work, nor is it even neccessary to go down this route?

What do you want to achieve here? Is it to give people a job to do? Is it for them to get skills so they can get a job? What is it?

-Why should somebody do an apprencticeship for a trade in which there is no or very little demand? Are you training them so they can emigrate?

-Who is going to pay for all of this?

- Don't we have an already badly run scheme called the 'national internship scheme'?

-Why not just reduce minimum wage, reduce employment benefits, and encourage investment and education in areas where people CAN get a job instead?

- Finally, again, who is paying for this? The taxpayer? They are already paying for too much.

maninasia

KyussBishop wrote: »

Price inflation is not immediate, it depends on capacity of industry to cope with demand, i.e. if there is excess capacity; when demand grows beyond industries capacity to supply, you get demand-pull inflation, until industry catches up (if it can), and we already have an underperforming construction industry with excess capacity.

When a resource is in surplus, you are not preventing anyone else from using it; a lot of construction materials are readily available resources.
Quarries, forests and unmined materials are all resources that are available in Ireland, many which were previously active during the boom, with excess capacity now (hell the state could even buy some of them that are out of business, and indeed the state owns some of them anyway).

With our construction sector in a downturn and all these resources being utilized less, now is the perfect time for a large scale infrastructure project anyway (it is a far better time than when the economy has recovered), because you minimize any potential inflation.


What materials would you expect to see inflation in, and how much inflation?

I absolutely agree that now is the right time for large infrastructure projects. It would create employment and help boost the economy. But we get back to the question as to WHO pays for it and HOW they pay for it.

The government chose to keep the public servants, social welfare class and the pensioners relatively happy. They basically cancelled all capital spending to do this. You've got to make hard choices, you can't have your cake and eat it.

KyussBishop

maninasia wrote: »

This is really communism at heart. It doesn't work, nor is it even neccessary to go down this route?

What do you want to achieve here? Is it to give people a job to do? Is it for them to get skills so they can get a job? What is it?

-Why should somebody do an apprencticeship for a trade in which there is no or very little demand? Are you training them so they can emigrate?

-Who is going to pay for all of this?

- Don't we have an already badly run scheme called the 'national internship scheme'?

-Why not just reduce minimum wage, reduce employment benefits, and encourage investment and education in areas where people CAN get a job instead?

- Finally, again, who is paying for this? The taxpayer? They are already paying for too much.

All of this is answered through the thread, if you read back.

KyussBishop

maninasia wrote: »

I absolutely agree that now is the right time for large infrastructure projects. It would create employment and help boost the economy. But we get back to the question as to WHO pays for it and HOW they pay for it.

The government chose to keep the public servants, social welfare class and the pensioners relatively happy. They basically cancelled all capital spending to do this. You've got to make hard choices, you can't have your cake and eat it.

It's all explained earlier; money does not have a fixed supply, but we gave up sovereignty over our currency to the EU, so the EU (rather than us) is capable of printing money which can fund this (just is forcing austerity on us at the moment, which they need to be pressured to change), this money would not be added to our deficit, and a large part of the discussion describes how that can be done to help the economy recover, while avoiding inflation.

A lot of the more detailed discussion I try to put forward on the job guarantee starts here:
https://www.boards.ie/vbulletin/showpost.php?p=81836380&postcount=32

maninasia

KyussBishop wrote: »

It's all explained earlier; money does not have a fixed supply, but we gave up sovereignty over our currency to the EU, so the EU (rather than us) is capable of printing money which can fund this (just is forcing austerity on us at the moment, which they need to be pressured to change), this money would not be added to our deficit, and a large part of the discussion describes how that can be done to help the economy recover, while avoiding inflation.

A lot of the more detailed discussion I try to put forward on the job guarantee starts here:
https://www.boards.ie/vbulletin/showpost.php?p=81836380&postcount=32

Yes, we did not need to guarantee the banks and stay in the Eurozone. But we have and we still have the Euro. We are beholden and dependent on Europe and this is a decision of both the government and the majority of the Irish people.

The government will not drop the Euro because it will cause a fiscal funding crisis, with lay-offs and salary cuts of public workers and drastic reductions in social welfare payments. They simply will not do it. They would rather a long haul of emigration and squeezing the taxpayer. No skin off their back. They have been public servants all their lives. Some of them have multiple pensions. They have never worked in private enterprise. Have any of them even spent time living overseas?

The Irish public is also inherently conservative, they ALWAYS choose the devil they know rather than the devil they don't know.

You want the EU to print money and support job creation. That's not a bad idea and aim, its certainly better than what they are doing now. Getting the Germans to agree with this will always be the problem, it's not their problem you see, it's more our problem, at least for now.

I don't agree with making up jobs that don't amount to much though. If you combine it with productive infrastructure creation then it has a shot. But not without something where the work people do is not simply wasteful and takes away paying job opportunities (as can be seen with the national internship scheme). As we all know the government and the Irish people have given away sovereignty, and I don't see any push in society to reclaim that, as they would rather take the borrowed money and hope for the best in the future.

KyussBishop

maninasia wrote: »

Yes, we did not need to guarantee the banks and stay in the Eurozone. But we have and we still have the Euro. We are beholden and dependent on Europe and this is a decision of both the government and the majority of the Irish people.

The government will not drop the Euro because it will cause a fiscal funding crisis, with lay-offs and salary cuts of public workers and drastic reductions in social welfare payments. They simply will not do it. They would rather a long haul of emigration and squeezing the taxpayer. No skin off their back. They have been public servants all their lives. Some of them have multiple pensions. They have never worked in private enterprise. Have any of them even spent time living overseas?

The Irish public is also inherently conservative, they ALWAYS choose the devil they know rather than the devil they don't know.

You want the EU to print money and support job creation. That's not a bad idea and aim, its certainly better than what they are doing now. Getting the Germans to agree with this will always be the problem, it's not their problem you see, it's more our problem, at least for now.

I don't agree with making up jobs that don't amount to much though. If you combine it with productive infrastructure creation then it has a shot. But not without something where the work people do is not simply wasteful and takes away paying job opportunities (as can be seen with the national internship scheme). As we all know the government and the Irish people have given away sovereignty, and I don't see any push in society to reclaim that, as they would rather take the borrowed money and hope for the best in the future.

Nobody advocates dropping the euro; any job guarantee requires pressure on government, to put pressure on the EU to create money to fund it, and likely an EU-wide campaign for the same.


It's all about the discourse; if we just sit down, shut up, and pretend there's no alternative to our current situation, then we're just debating over what part of the budget/public-services to slash/burn next, i.e. debating over the best method, position and angle for the larger EU members to screw us.

The job guarantee funded by money creation, is one alternative to austerity (technically it's not incompatible with austerity either, but that's another matter), but that option is locked away by the controlling EU member states right now, but that can be changed (and that has to start with discourse).

SupaNova2

KyussBishop wrote: »

Price inflation is not immediate, it depends on capacity of industry to cope with demand, i.e. if there is excess capacity; when demand grows beyond industries capacity to supply, you get demand-pull inflation, until industry catches up (if it can), and we already have an underperforming construction industry with excess capacity.

I didn't mean for you too take immediately as in 0.0 seconds, but all it would take is a few phone calls. Lets say the government approaches a manufacturer of planks with its stimulus checkbook and says we would like to order all your unsold output over the next few months at current prices. Manufacturer does not simply snap at the offer, expand production and prices don't move. The manufacturer gets in contact with existing customers, asks them if they are interested in renewing orders, if customers are interested in renewing orders and securing some of the resource they have to better the government offer. And having previously worked in a large DIY store in the doors and floors department, a lot of that source wood comes from abroad, Canada being a major one. As more euros bid for Canadian dollars, the exchange rate changes unfavorably and wood becomes more and more expensive in euros. At the speed markets move today this price inflation would happen very very quickly.

KyussBishop

SupaNova2 wrote: »

I didn't mean for you too take immediately as in 0.0 seconds, but all it would take is a few phone calls. Lets say the government approaches a manufacturer of planks with its stimulus checkbook and says we would like to order all your unsold output over the next few months at current prices. Manufacturer does not simply snap at the offer, expand production and prices don't move. The manufacturer gets in contact with existing customers, asks them if they are interested in renewing orders, if customers are interested in renewing orders and securing some of the resource they have to better the government offer. And having previously worked in a large DIY store in the doors and floors department, a lot of that source wood comes from abroad, Canada being a major one. As more euros bid for Canadian dollars, the exchange rate changes unfavorably and wood becomes more and more expensive in euros. At the speed markets move today this price inflation would happen very very quickly.

That's a plausible way some inflation can happen alright, but it still goes back to excess capacity, and if there are multiple competitive sellers in Canada with excess capacity, they can bid against each other to contract with the buying government, keeping the prices down.

There may still be some inflation (that specific type of inflation probably even has a name to describe it and a lot of study behind it, which would be interesting to check), but it seems like something that would only have a marginal effect, until surplus is expended and supply capacities are reached.

Even then, we're still talking about resources which may only make up a fraction of the construction materials (and even that depends on what infrastructure projects you seek to do), where much of the rest of the materials can probably be sourced from within the EU (in fact, yes, I don't know why I was concentrating on just Ireland for surplus resources, as I'm sure there's loads of surplus and excess capacity all over the EU right now, and it'd be an EU-wide program).

Overall, even if there's inflation in some areas from a job guarantee, it looks like there's quite a lot of room to keep that down to a minimum, and with all the excess capacity about, it would be hard to see how the potential minimal inflation can override the enormous damage unemployment (and the social, health and economic affects that has) creates, combined with the damage leaving debt-deflation to fester creates.

maninasia

A lot of what KB proposes is done in China already. They use central planning to help create or reduce demand in the marketplace. They manage the yuan exchange rate carefully and pushed easy credit out to support job creation. It's worked well until this point. However it has stored up some huge problems.

- Dominance of state owned enterprises, lack of profit motive and inherent associated corruption. Jobs for the boys.
- Incredible amount off bad debt accumulated. So far they just keep rolling the debt on into the future. Most officials take their percentage of deals and hope they can emigrate or accumulate enough bribes to ride out the future bust. That can't go on forever and in fact makes the problem worse.
- Incredible industrial overcapacity in EVERY industry in China
- White elephants and bridges to nowhere, jammed up roads and highways
- Property bubble
- Environmental degradation

So central planning can and does work along with investment incentives, but it can create it's own issues.

SupaNova2

KyussBishop wrote: »

That's a plausible way some inflation can happen alright, but it still goes back to excess capacity, and if there are multiple competitive sellers in Canada with excess capacity, they can bid against each other to contract with the buying government, keeping the prices down.

There may still be some inflation (that specific type of inflation probably even has a name to describe it and a lot of study behind it, which would be interesting to check), but it seems like something that would only have a marginal effect, until surplus is expended and supply capacities are reached.

Even then, we're still talking about resources which may only make up a fraction of the construction materials (and even that depends on what infrastructure projects you seek to do), where much of the rest of the materials can probably be sourced from within the EU (in fact, yes, I don't know why I was concentrating on just Ireland for surplus resources, as I'm sure there's loads of surplus and excess capacity all over the EU right now, and it'd be an EU-wide program).

I just gave one example but the same process will happen for oil and other raw materials, oil is the most important commodity for anyone wanting to increase industrial output. All eurozone oil is imported, and absent conspiracy theory oil is being pumped at close to full capacity. Also if money creation was all it took to secure oil, Zimbabwe would be flooded with it.

mariaalice

If you managed to get the EU to agree and print extra money and give it to us, and your main aim is to get people to pay down debt and after that spend in the wider economy so as to stimulate demand, why go to the expensive of the job guarantee, why not give the money directly to people? either by dramatically reducing tax on take home pay or by simply giving the money to people via a large tax rebate.

It would be much easier and a much more flexible way of achieving your aim plus it would be much easier to with draw from if inflation began to creep in to the economy.

As I said before there is no point in giving people work unless it is meaningful work, a job for the sake of a job will not counteract the social consequences of unemployment, but if we go down that route why not give young people the guarantee of an apprenticeship's if thats what they want ( ask any employer that advertises a vacancy for an apprentice particularly if for something like an instrument tec, they will get hundreds of applicants ) some people do not want to go to college or are not suited to college you cant force people to become software engineers even if thats what the economy needs.

maninasia

mariaalice wrote: »

If you managed to get the EU to agree and print extra money and give it to us, and your main aim is to get people to pay down debt and after that spend in the wider economy so as to stimulate demand, why go to the expensive of the job guarantee, why not give the money directly to people? either by dramatically reducing tax on take home pay or by simply giving the money to people via a large tax rebate.

It would be much easier and a much more flexible way of achieving your aim plus it would be much easier to with draw from if inflation began to creep in to the economy.

As I said before there is no point in giving people work unless it is meaningful work, a job for the sake of a job will not counteract the social consequences of unemployment, but if we go down that route why not give young people the guarantee of an apprenticeship's if thats what they want ( ask any employer that advertises a vacancy for an apprentice particularly if for something like an instrument tec, they will get hundreds of applicants ) some people do not want to go to college or are not suited to college you cant force people to become software engineers even if thats what the economy needs.

Tax rebates have been tried by many countries, they tend to give a small boost for a temporary period. In the US they made them long-term in the form of Bush's tax credits, this however caused their national debt to balloon. The problem to my mind is that the EU governments NEED tax income to pay for their expensive social welfare programs.

Whatever way you look at it, printing money debases the value of it and WILL cause inflation. The inflation WILL be apparent in imported goods from outside of the Eurozone, so as pointed out already, oil would immediately cost more in terms of Euros, and this would cause inflation to roll through sooner or later. You could try to mitigate that inflation by producing more energy in the Eurozone, but you then run against greenies at every turn!

The US is able to debase it's currency but reduce inflationary effect now as they are due to be a net energy exporter by the end of this decade!

Of course the degree of printing money is important. Printing money does have the very useful effect of eroding debt and making economies more competitive for exports. Since debt is a major problem in many EU countries this could even be the primary motivation. However once again, countries such as Germany have little incentive to erode their savings and purchasing power.

So the problem is really of an unwieldy amalgamation of states using the Euro at the same interest rate set for all. In fact this has always been the problem. A Eurozone with two currency zones has been proposed and may well work better than the current system. It would have the advantage of added stability and liquidity compared to a single country going back to their own currency, and at the same time allow countries to opt for a currency exchange rate more suited to their national condition.

KyussBishop

maninasia wrote: »

A lot of what KB proposes is done in China already. They use central planning to help create or reduce demand in the marketplace. They manage the yuan exchange rate carefully and pushed easy credit out to support job creation. It's worked well until this point. However it has stored up some huge problems.

- Dominance of state owned enterprises, lack of profit motive and inherent associated corruption. Jobs for the boys.
- Incredible amount off bad debt accumulated. So far they just keep rolling the debt on into the future. Most officials take their percentage of deals and hope they can emigrate or accumulate enough bribes to ride out the future bust. That can't go on forever and in fact makes the problem worse.
- Incredible industrial overcapacity in EVERY industry in China
- White elephants and bridges to nowhere, jammed up roads and highways
- Property bubble
- Environmental degradation

So central planning can and does work along with investment incentives, but it can create it's own issues.

It's not like their central planning, it's the temporary creation of public jobs, as a buffer against inflation, instead of using idle labour as a buffer against inflation.

Key word is temporary; the job guarantee gets the private sector up and running again (after a period of downturn), and then the job guarantee shuts down (it doesn't shut down all of a sudden either, it's a slow wind-down as private sector recovers and absorbs the jobs).
In fact, it may even stay on in very (very) small numbers even in boom times, because even at the best of economic times, there was still some unemployment, which wasn't just the normal amount for job turnover.

Idbatterim

The government chose to keep the public servants, social welfare class and the pensioners relatively happy. They basically cancelled all capital spending to do this. You've got to make hard choices, you can't have your cake and eat it.

yeah exactly, this hits the nail on the head. Would PPP's be worth looking at again. At the moment, what is being done with the remainder of the pension reserve fund?

KyussBishop

SupaNova2 wrote: »

I just gave one example but the same process will happen for oil and other raw materials, oil is the most important commodity for anyone wanting to increase industrial output. All eurozone oil is imported, and absent conspiracy theory oil is being pumped at close to full capacity. Also if money creation was all it took to secure oil, Zimbabwe would be flooded with it.

Oh oil is going to be a big problem alright yes, going forward; headed for neverending inflation once capacity for that peaks.

Right now though, it's not simply supply-shock inflation with oil, it's some deregulated markets, off-exchange markets, where some of the bigger financial firms have been able to make private deals to pump enormous amounts of money into oil, and since these markets are off-exchange, there is no information from them for the wider market, meaning they have better information. Anyway, that's another topic altogether.


You're right though, oil is, and will be a big problem going into the future, so that shows the perfect place to work on infrastructure:
We need to become more independent from oil (all countries in the world need to do this), and it's generally agreed upon by a lot of scientists and such (here is a good blog on this from ex-NASA guy, who did the numbers on it), that everyone is generally totally unready for this coming supply crunch, with not nearly a fast enough changeover in infrastructure away from oil.

So yes, that's the perfect place for a job guarantee program to invest in infrastructure, in power, and getting ready to move away from oil; we could expand construction of renewable resources and such all over the country, which is good to do anyway but probably wouldn't be enough, so we would do well to build a nuclear power plant or two as well (though of course environmentalists won't like that, even though modern ones are perfectly safe compared to ones that blew up or had issues in the past); that's just two ideas among lots of other stuff we'll need to do here.

That kind of infrastructure change (power and moving away from oil), is one we're going to need in the near future, and we'll need it almost more than any other infrastructure change, so we're not just running out of time to do that and need to do it, it's the perfect time to do it now as well, because oil is just going to go up and up soon, and now is the time to get a big bonus of avoiding a lot of inflation.
The sooner we do it, the more money we save, and the less economic damage we have to endure, by not scrambling to solve it when the crunch comes.

KyussBishop

mariaalice wrote: »

If you managed to get the EU to agree and print extra money and give it to us, and your main aim is to get people to pay down debt and after that spend in the wider economy so as to stimulate demand, why go to the expensive of the job guarantee, why not give the money directly to people? either by dramatically reducing tax on take home pay or by simply giving the money to people via a large tax rebate.

It would be much easier and a much more flexible way of achieving your aim plus it would be much easier to with draw from if inflation began to creep in to the economy.

As I said before there is no point in giving people work unless it is meaningful work, a job for the sake of a job will not counteract the social consequences of unemployment, but if we go down that route why not give young people the guarantee of an apprenticeship's if thats what they want ( ask any employer that advertises a vacancy for an apprentice particularly if for something like an instrument tec, they will get hundreds of applicants ) some people do not want to go to college or are not suited to college you cant force people to become software engineers even if thats what the economy needs.

You could give the money directly to the people all right, yes (though if you only focus on tax rebates you'll miss the worst off, because they aren't earning), and that would be like a debt jubilee (under bolded 'A Modern Jubilee' header), and that is another method the crisis can be tackled (and is a good idea to do anyway) alongside a job guarantee program; they could both compliment each other.

That on its own though, wouldn't get rid of unemployment, so you'd still have the personal and socially damaging effects of that, while people wait for the private sector to recover (which could take a long time).

The other big benefit of the job guarantee, is it's an entire stabilization mechanism for inflation; when the private sector is overheating and inflation rising, use fiscal/monetary policy to temper that, pushing people into the job guarantee temporarily.
Right now people are pushed out of jobs anyway, it's just they go into unemployment instead, but this is a far more efficient way to temper inflation because not only do a lot less people get pushed out of the private sector (because those who get pushed out, still have enough money to spend to the private sector, and you don't have the entire economic drag of unemployment), but you don't waste productive effort of people or cause social, health and economic damage, through unemployment.


You're absolutely right though, in regards to meaningful work; when I put forward some examples of relatively meaningless work in my posts, I'm just showing how flexible the job guarantee is, and how it can be made to shape/solve a wide variety of economic problems, problems of inflation that might come up, and how it is beneficial even if peoples work is completely wasted.

So yes, I would advocate meaningful work with it, such as some of these large infrastructure projects that we need anyway, and there is a huge variety of jobs it can support, that minimize inflationary impact, particularly those that maximize social value in the jobs rather than monetary.

Also, I partially disagree with meaningless jobs and mitigating social impact: Lets say you have a group of people stacking stones all day, then moving them to another location (deliberately silly example, I'd not advocate this); they will still get the benefits of socializing with other people, and of physical exercise (they don't have to knacker themselves or break their back doing it, it would be a collaborative effort with a group of people), and while it wouldn't achieve much, they'd still have the money to show for it at the end of the day, and would still foster social contacts from it.


The trouble with guaranteeing apprenticeships in private industry, is that it's effectively a subsidy to private industry from government, which is something you want to avoid because it will lead to some employers firing people to take on the apprentices, which dampens down the effect is has on unemployment.

Remember, private industry simply won't have the capacity to take on everyone, and increasing the number of workers in private industry, doesn't help things recover that much, it just adds to the purse of corporations rather than helping people, because there's no use of business increasing supply when demand is already down in the economy.

KyussBishop

maninasia wrote: »

Whatever way you look at it, printing money debases the value of it and WILL cause inflation. The inflation WILL be apparent in imported goods from outside of the Eurozone, so as pointed out already, oil would immediately cost more in terms of Euros, and this would cause inflation to roll through sooner or later. You could try to mitigate that inflation by producing more energy in the Eurozone, but you then run against greenies at every turn!

Most of the thread is now spent explaining ways that this does not cause inflation though, including in my post that I linked above:
https://www.boards.ie/vbulletin/showpost.php?p=81836380&postcount=32

In short: Money creation does not inherently, by itself, cause inflation; it would in a gold-standard or commodity-backed currency, but we have fiat currency not a gold standard.

A job guarantee, even through printed money, can be configured to minimize the effect on inflation, because a huge portion of the money will go to paying down debts, and to necessarily living expenditures, before you get to disposable income that risks pushing demand up enough, to cause demand-pull inflation.

You then have potential inflation from the resources the job guarantee would use, which the majority of posts in the last number of pages, have been dealing with explaining how that can be managed (and for infrastructure projects that we will need anyway, now is the right time to engage with them if we want to avoid the worst of inflation, because they will be far more inflationary once the economy recovers).

mariaalice

You could be pinging ponging this back and froward forever.

You believe if the job guaranteer was only for work in areas that have spare capacity and out side private industry it would mitigate against inflation and job displacement

Here is a perfect example of why at least one of your assertions is not true.

I am going to talk about community employment which has some similarity to what you are talking about.

I recently met someone who I use to work with about 14 years ago, they still work in the same organisation this organisation is a not for profit organisation that works in the care area ( an area that you would thing would be the ideal for the job guarantee idea ) This organisation uses a large amount of community employment type schemes, which provide the organisation with free labour, When I worked there we use to get student in the summer because at the time there was a job guaranteer for student in the summer to stop them signing on for benefits, FAS refurbished some of the centres for free, they were great for getting anything for free ( free to themselves that is the government payed for it ) At the moment they are attempting to increase the amount of community employment type workers they have thus DIRECTLY displacing newly qualified social care workers and nurses which they would have employed heretofore.



These ideas are not new look up social Justice Ireland, they were always coming up with ideas to help unemployment. There has been more that one recession in Ireland.


Also some of your ideas are highly impracticable, re opening the copper mines in Avoca you would need mining engineers for a start, a lot of the unemployed would not have the right skills.

I am not putting a downer on your ideas I think they are interesting but really its a non runner.

KyussBishop

What does that FAS example disprove? It doesn't sound like a job guarantee, it sounds like existing FAS jobs being displaced with others; that's not what would happen in a job guarantee.

Mining in Avoca (just an example of something that might be possible to do, not necessarily something I advocate) would have a very large amount of side-industry work associated with it, so you don't need a huge number of the specialized skills required for that, and we have other active mines in the country, which probably are at less than peak capacity right now, where you could source expertise from (if some of their previous expertise is not already unemployed).

It really depends upon the skill makeup of the idle workforce, and on stuff that fits the job guarantee best; straight away, the necessary infrastructural changes that can be done (regarding power and moving away from oil etc.), and which we will need very soon are a no-brainer, and could provide quite a lot of employment.


You say it's a non-runner, but you are focusing on individual job ideas when there can be hundreds of different types of jobs in the program, depending on how you set it up; and I explained earlier, it is beneficial even when the jobs aren't productive as well (which of course, I don't advocate, I'm just pointing out how productive benefits from jobs are a secondary benefit.

mariaalice

We will have to agree to disagree.

Some other things that occurred to me, jobs that pay 17,500 euro are too lowly paid to pay down debt and stimulate demand in the economy to any significant degree, you can't pay people any more or you will interfere with the existing labour in the economy.

A few things about theories be they libertarians or socialist or communist or what ever.

(1) every one thinks their theory is the correct one.

(2) nobody want to explain the contradictions in the theory, or worse they get annoyed if anyone point out the contradictions, or they keep adding patches to the theory to explain the contradictions so eventually the theory make no sense.

KyussBishop not saying you are doing any of the above except maybe a touch of (3):P

(3) The theorist wants to always keep to academic discourses and never wants to explain how the theory operates at ground level or how it operates on real live people, if the theorists is forced to give a real life example and someone point out the contradictions the theorist quickly reverts to an academic discourse.

KyussBishop

mariaalice wrote: »

We will have to agree to disagree.

Some other things that occurred to me, jobs that pay 17,500 euro are too lowly paid to pay down debt and stimulate demand in the economy to any significant degree, you can't pay people any more or you will interfere with the existing labour in the economy.

A few things about theories be they libertarians or socialist or communist or what ever.

(1) every one thinks their theory is the correct one.

(2) nobody want to explain the contradictions in the theory, or worse they get annoyed if anyone point out the contradictions, or they keep adding patches to the theory to explain the contradictions so eventually the theory make no sense.

KyussBishop not saying you are doing any of the above except maybe a touch of (3):P

(3) The theorist wants to always keep to academic discourses and never wants to explain how the theory operates at ground level or how it operates on real live people, if the theorists is forced to give a real life example and someone point out the contradictions the theorist quickly reverts to an academic discourse.

Ah, I thought much of the program you already agreed with, just with some details not worked out.

The program on its own isn't the best way to pay down debt, but if you couple it with a debt jubilee then that helps a good bit; it's still better than unemployment, remember, so that's straight away a bonus for people.

If you think about it, the fact that the job guarantee alone isn't enough to fully pay down debt, is actually something in its favour, because that shows how the wages can avoid being inflationary, since much of them will be going into paying down debt.


You're right indeed about the negative aspects of talking about things in the realm of theory, and obfuscating or flustering over shortfalls and stuff; I've encountered it a lot on debates here, so know the problems of it well, and it is important to stay as skeptical and grounded in the real world as possible.

When you look at the job guarantee in detail though, the main principle point where there can be a problem, is inflation, and there are many ways (explained throughout the thread), to manage/ameliorate just about every level of potential inflation.


I was far from sold on the idea myself months and months months back, when I first starting reading up on the job guarantee idea, but as I understand it more (and I've learned a good bit more about it and the aspects of dealing with inflation, through making my arguments in this thread), as I understand it more it makes a hell of a lot of sense.

The core part of it, is that money creation (printing money) doesn't inherently cause inflation, and that is a big myth that is being perpetuated in political discourse today, to keep us locked in austerity.

Austerity is incredibly destructive, and totally unnecessary, so people need to be able to look past that myth that money creation = inflation, and discuss ideas like a job guarantee and debt jubilee's, even if they are skeptical of them (it advances the discourse, and shows people there are alternatives; destroying the 'there is no alternative' myth of austerity).