Unemployment – A Job Guarantee Solution

In Australia at the end of September 2019 there are around 700,000 persons unemployed. A further 1.1 million persons are underemployed. https://www.abs.gov.au/ausstats/abs@.nsf/mf/6226.0

Unemployment and the associated poverty and social ill effects include:-

  1. The longer people stay unemployed, the more they lose work-skills and non-government employers tend to prefer to hire from those already working or who have been unemployed short-term.
  2. Poverty reduces people’s capacity to buy nutritious food, housing and health care.
  3. Unemployment can indirectly affect health because of reduced participation in society or from the stress of financial strain.
  4. Prolonged unemployment can lead to an erosion of skills, basically robbing the economy of otherwise useful talents. 
  5. Unemployment can force families to deny educational opportunities to their children and deprive the economy of those future skills
  6. Particular parts of the community are more severely affected than others, exacerbating problems of inequality within metropolitan areas and between the cities and some regional areas. Outback Qld circa 13% Youth around 20%.
  7. Mature-age job seekers lose their skills tend to be lost over time, particularly as they are more likely to experience longer periods unemployed. These skills are also lost to the labour market and industry.
  8.  Prolonged unemployment can lead to greater skepticism and pessimism about the value of education and training – workers less willing to invest in the years of training some jobs require.
  9. Young people are particularly adversely affected – large numbers, particularly in rural and remote areas – a dreadful situation for them to be in to face a meaningful future in our society.
  10. Government’s providing derisive and inadequate income support eg Newstart to provide a Budget Surplus!!!!
  11. Drugs, alcohol abuse and crime flourish in a poor, unemployed community.

Distinguished British economist John Maynard Keynes, as long ago as the 1930’s wrote : ‘… outstanding faults of the economic society in which we live are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes.’  https://www.investopedia.com/terms/k/keynesianeconomics.asp  

The government should introduce a Job Guarantee that offers a job at a living (minimum) wage to anyone who wants to work but cannot find employment. See:-https://futuretofightfor.org.au/policies/01/ and Associate Professor Pavlina Tcherneva  https://www.pavlina-tcherneva.net/job-guarantee-faq

The Australian government can afford this program because it has has no financial constraint as the issuer of the currency. A currency-issuing government can always choose the unemployment level once the spending and saving decisions of the non-government sector are implemented.

In terms of the overall working of a national economy ( macroeconomics), a Job Guarantee would be an automatic stabiliser that ensures that the Government is doing necessary amount of spending where it is needed in the right places and right time to achieve full employment with stable prices.

When the private sector is recovering, federal government spending would automatically fall as people leave the Job Guarantee for higher paid jobs elsewhere.

When the private sector experienced a downturn, federal government spending would automatically increase as people lose their private sector jobs and enter the Job Guarantee. 
Unemployment is a major loss of valuable productive resources, depressing the economic economic growth and lowering our standard of living of the whole community.

Offsetting the cost of a Job Guarantee would include lesser demand for Centrelink services, enhanced tax revenue and receipts, including those on superannuation and investments.
The costs associated with substance abuse, including health care costs and police interventions would lessen. Unemployment and its adverse social effects adds very substantially to on-going and escalating Government spending.

Local economies, particularly those in Rural and Remote areas would see an enhanced economy and small businesses would have better prospects.

Training must be included, to ensure that the unemployed are equipped with skills that will be needed when the private economy starts again to employ more people.

Not a “work for the dole” proposal. This is voluntary, full time employment, guaranteed and managed by the government.  It is not intended to be compulsory: it’s there for people who want to work. How to deal sensibly and humanely with those who are able to work and refuse to do so should examined and addressed – it is beyond the ambit of this paper.

Those who cannot work because of drug or alcohol dependencies should be offered health care, training counselling and more to equip them for meaningful work.

Job Guarantee Programs should be managed at local area or even neighbourhood levels. Each area’s Program must be managed and supervised  by appropriately qualified people – a well paid, sought-after job. (eg – maybe Centrelink staff, fewer of which would be now needed).

Some Job Guarantee examples

  • Noxious Weed eradication – pests: graffiti
  • Rubbish removal on beaches and in waterways
  • Road Maintenance at low levels – small truck/4 or so workers- potholes, rubbish.
  • Bike paths – many rural roads see cyclists at risk from traffic. Path enhancement is useful and ‘pick and shovel’
  • Climate change responses – tree planting and care 
  • Aged Care needs, care etc – working with the long term professionals.
  • Community gardens, particularly in remote areas – good tucker for kids, aged, deprived.
  • Enhanced care of National Parks, recreation areas, sporting facilities, school premises and streets and neighbourhoods generally
  • Maybe ‘Night Watch’ patrols – DON’T approach or  try to apprehend suspicious parties – just call the Police!
  • Indigenous health, nutrition, social and other problem areas  – Care for Country. 
  • Gardens for fresh produce in remote areas, particularly Aboriginal and Islander Communities.

 The points made above are only a very broad outline – see here  and  generally  online and elsewhere for much more information.

 

Deficits and Budget Surpluses

We must also balance the budget!

Both Labor and Liberal/National Coalition are still making Policy decisions based upon  outdated ideas about how a modern economy really works. Governments, much of the media, some economists, academics and others are just as uninformed.  Most of the rest of us believe what we have been told without looking too hard at the substance of what we are told: economics is boring and we have our lives to live.

The Australian Budget 2017/2018 intended to-

  return to balance in 2020-21 and continuing projected surpluses ….will enable a reduction in debt. This will place Australia in a better position to withstand any future economic downturns. It will reduce the need to increase taxes or cut back on essential services ….by living within its means the Government will not burden future generations with debt from today’s everyday spending. From 2018-19, debt will not be required to fund recurrent spending for the first time since the GFC. This will make Australia stronger and more resilient to the shocks that may come its way.

See  Australian Budget.

These statements of intent are totally at odds with the reality for a Sovereign Currency Nation’s public purpose. Australia issues its own currency, $A. It can  run a pure deficit, without borrowings. A budget surplus  drains savings from the private sector and that leads to loss of jobs and less work done. The Government has to spend money into existence. Without that there can be no tax. 

Nobel Prize winning economist William Vickrey wrote-

‘If a budget balancing program should actually be carried through …sooner or later a crash comparable to that of 1929 would almost certainly result. .. relinquish our unreasoned ideological obsession with reducing government deficits…the economy and not the government budget that needs balancing …-

Vickrey, William A Disquisition on Demand Side Economics William Vickrey October 5, 1996)

A Sovereign Currency Nation’s government like Australia’s primary purpose is to improve the well-being of its population. Balancing budgets is an irrelevant and destructive blind alley.
The real economy is what is relevant to well-being, care for the environment, defence, research education, aged-care and employment (and so much more).

A Sovereign Currency Government issues the currency and it must first spend it by crediting private bank accounts before it can tax – by debiting bank accounts. The claim that governments must tax or borrow to ‘finance’ its spending is false under a fiat-currency system. See – https://www.investopedia.com › Economy › Economics

The restrictions on government spending are the quantity of real goods and services available for sale in its own currency, including all the unemployed labour. The only constraint that a currency-issuing government, such as the Australian government faces, are how many real goods and services are available for sale in $A.

A currency-issuing government can, for example, mitigate the economic and social disaster caused by mass unemployment by spending enough. Aboriginal and Islander Communities could see a Job Guarantee based around care-for-country and the public good rather than destructive handouts and associated misguided measures.


 

Health and Education – School Gardens

As an Old Fart …. Elderly Gentleman, working with others at the Portarlington School’s Community Garden, I want to help with offering a food garden and its produce to provide better tucker and an understanding of the health and educational benefits of gardening, cooking and eating good food rather than the junk food and sugar-laden drinks promoted by intensive advertising.

This Blog acknowledges that Portarlington and much of the Bellerine is by no means as socially and economically challenged as the less fortunate neighbourhoods around which junk-food outlets cluster see Science Direct. However, the Portarlington School’s Community Garden and the support given to it by Portarlington Primary School’s Principal, Teachers and Staff may assist other School Gardens and Blogs and provide assistance to the community generally.

The economic burden of treating obesity-related diseases is estimated to rise from A$12 billion in 2014 to A$21 billion in 2025. We spend far, far less on measure to deal with obesity and its origins.

Back in the Herb Section of the Portarlington School’s Community Garden, I am working out how best to add – this week, Tarragon (Artemisia dracunculus) French Tarragon

 

French tarragon requires full sun to partial shade, rich, well-drained soil and regular watering. Soil should not be too wet. OK in large pots.

New plants must be produced from rooted cuttings or purchased as potted stock from a nursery, I am uncertain as at mid September if I can divide a container plant from home or buy some potted Tarragon from The Diggers Club https://www.diggers.com.au/– I am a member and will pass on members’ discount if pots are needed.