Job Guarantees, Debt Crises, and a Modest Proposal

Via the Irish Economy blog; the Irish Times reports State should default on debt and leave euro, economist tells left-wing forum:

“[Professor Terrence McDonough] said the country should default on its debt, leave the euro, build a single public bank, provide a jobs guarantee for all workers and nationalise the Corrib gas field.”

The jobs guarantee parallels a suggestion from another surprising source, via New Economic PerspectivesBill Gross advocates for a Job Guarantee Program:

Bill Gross, co-founder of Pacific Investment Management, recently advocated for an employer of last
resort program:

In the end, I hearken back to revered economist Hyman Minsky – a modern-day economic godfather who predicted the subprime crisis. “Big Government,” he wrote, should become the “employer of last resort” in a crisis, offering a job to anyone who wants one – for health care, street cleaning, or slum renovation. FDR had a program for it – the CCC, Civilian Conservation Corps, and Barack Obama can do the same. Economist David Rosenberg of Gluskin Sheff sums up my feelings rather well. “I’d have a shovel in the hands of the long-term unemployed from 8am to noon, and from 1pm to 5pm I’d have them studying algebra, physics, and geometry.” Deficits are important, but their immediate reduction can wait for a stronger economy and lower unemployment. Jobs are today’s and tomorrow’s immediate problem.

And compare the debt default idea with Yanis VaroufakisΑ Modest Proposal for Overcoming the Euro Crisis, Version 2.2, upon which Varoukis commented in comparison to other plans recently:

Unlike the current ludicrous plans involving some voluntary roll-over, as well as the above ideas revolving around the EFSF (which contain interesting suggestions that may help at the margin of a comprehensive solution), the Modest Proposal has the advantage of dealing at a systemic level with the euro crisis, rather than treating the Greek malaise as a separate problem in need of a piecemeal solution. Unlike the proposal under 2. above, which again concerns itself solely with the Greek banks’ liquidity, Policy 1 of the Modest Proposal deals decisively with the entire eurozone’s banking system’s insolvency issues. And unlike Gros’ proposal (under 3. above) which effectively asks, again, the surplus countries’ taxpayers to buy back, and then restructure, Greece’s debt alone, Policy 2 of the Modest Proposal suggests a eurobond-financed (and thus revenue-neutral) horizontal transfer of the Maastricht compliant debt (up to 60% of its GDP) of each and every eurozone member state (that wishes to participate in this transfer) to Europe’s Centre (i.e. the one solid internationally recognised eurozone institution: the ECB). Lastly, Policy 3 adds a crucial ingredient to the anti-crisis medicine: a strategy for investment-led growth which is absolutely in sync with the Modest Proposal‘s first two policies. Such a comprehensive, imaginative, utterly feasible solution to the Crisis, once adopted, can always be embroidered with elements of some of the policies considered above; e.g. Daniel Gros’.

More on Jobs Guarantees: Hyman Minsky and the Employer of Last Resort

More on Jobs guarantees: Hyman Minsky and the Employer of Last Resort

This entry was posted in Bankers' Bailout, Budget, Debt Default/Restructuring, Debt for Equity, ECB/IMF, Economy, EU, Euro / Sovereign Money, Geopolitics, Greece, Ideology, Independence/Nationalism, ireland, Solutions and tagged , , , , , , , , . Bookmark the permalink.

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