Friday, May 11, 2012

The Job Guarantee is a Description of a Prescription, like Much of Macroeconomics

While recognizing that most of this blogosphere discussion has passed me by months ago, I thought I'd share my perspective, redundant though it might be.

"Can you have MMT without a Job Guarantee?" The question phrased this way is a bit too ambiguous for my taste... I view the job guarantee as a description of a policy prescription. I agree with those who consider the job guarantee description to be integral to MMT, but I believe actual policy recommendations (prescriptions) can always differ by individual.

MMT describes the current economic system as it is and the policy space available to national governments. Any attempt at a full description of macroeconomics as viewed through the lens of MMT that lacks a description of employed versus unemployed buffer stocks would in my opinion be incomplete, as shown by the gaping black hole in this [partial] table of policy examples:

A full description of the economy (as you might find in a good macroeconomics textbook) should discuss both the agreed upon and the controversial pros and cons of each policy choice. For example, even mainstream macroeconomics textbooks discuss their own versions of the difference between being on a gold standard and not, the choices for social safety net implementations (such as unemployment insurance), etc. Yet there are plenty of advocates for going back to a gold standard and/or completely removing the safety net -- so there is no universally agreed upon policy choice in any of the above examples.

In a sense, to not describe all the relevant policy choices in the context of discussing a particular policy-related topic would be to advocate for the remaining choice(s). Thus, while I have some [small?] reservations and concerns about the job guarantee myself (despite my giving it the benefit of the doubt overall), I'm doing my best to communicate the pros and cons of each choice (including points of controversy) as I build content on

To address a possible objection -- yes there are policy choices not on the above list that don't warrant description of each policy choice (e.g., "should government provide puppies for everyone?"). But MMT has shown all the above examples (and others) to be highly relevant to the goals of national governments.

Educational resources that represent fields of knowledge such as MMT or mainstream macroeconomics generally distill the most important descriptions from both the history of that discipline and the work of the current professionals within that discipline...

It's my understanding that all current MMT-affiliated professional economists consider the employed buffer stock to be a superior policy choice to the unemployed buffer stock, thus it's no surprise that they highlight the JG the way they do in the econoblogophere (a much more informal medium than academic papers). I think they have every right to express opinions along the lines of "you'd be crazy to know about this policy option [JG] now available to most monetarily sovereign nations and not to advocate using it" in the same way that mainstream economists express individual opinions about the gold standard, minimum wage laws, etc. And I think it's perfectly valid for any individual who discusses the economy in the light of MMT to judge that the "cons" of the JG concept outweigh the "pros" -- as long as that person is explicitly acknowledging both buffer stock options and describing the detailed reasoning behind his or her conclusions.

In case I haven't been clear enough, this is my personal perspective. I make no claims that this post is consistent with the way MMT professionals view this topic.

Tuesday, May 8, 2012

The Zero Waste Jobs Program Revisited: Can We Recycle Over 80% of Trash Instead of Under 35% While Ending Involuntary Unemployment?

I recently outlined an unconventional idea for a specialized jobs program implementation. If you are interested in the topic but have not read the post, please do so: The Ultimate Job Guarantee Implementation: Can we Achieve Zero Wasted Labor AND Zero Material Waste Simultaneously?!? Two excerpts:
"What if the role of job guarantee work was to "intercept" the not-currently-recycled part of the waste stream with the goal of reclaiming recyclable, reusable, and organic (compostable or biofuel-ready) materials to the maximum extent possible?"
"To repeat, the high level aspiration outlined here is to "kill two birds with one stone" by matching the goal of reducing human labor waste (involuntary unemployment) with the goal of reducing other external costs currently borne by society. This post focused on the "other external costs" related to materials flow and associated environmental sustainability, but are there other large-scale external costs a JG could potentially address?"
An interview summary at NPR reminded me that I spent some time researching the practicality of this after that last post (but didn't follow up). Some quotes from Edward Humes (via NPR), author of a book called Garbology:
"Americans generate more trash than anyone else on the planet: more than 7 pounds per person each day. About 69 percent of that trash goes immediately into landfills. And most landfill trash is made up of containers and packaging — almost all of which should be recycled, says Pulitzer Prize-winning journalist Edward Humes,"
"In a difficult economic environment, it's just crazy to take all this material and just bury it in the ground."
"The real solution is just to stop putting so much stuff in giant burial mounds, but that's a really tough nut to crack."
In January after the last post I researched a number of documentaries about the trash and recycling industries. One was particularly interesting: Garbage Dreams, a film about an unusual community:
"On the outskirts of Cairo lies the world's largest garbage village. A labyrinth of narrow roadways camouflaged by trash, the village is home to 60,000 Zaballeen — Arabic for "garbage people." The Zaballeen have survived for centuries by recycling Cairo's waste. Members of Egypt's minority Coptic Christian community, these entrepreneurial garbage workers recycle nearly all the trash they collect, maintaining what could be the world’s most efficient waste disposal system.
With a population of 18 million, Cairo — the largest city in the Middle East and Africa — has no sanitation service. For generations, the city’s residents have paid the Zaballeen a minimal amount to collect and recycle their garbage. Each day, the Zaballeen collect more than 4,000 tons of garbage and bring it for processing in their village, where plastic granulators, cloth-grinders, and paper and cardboard compactors hum constantly. As the world's capacity to generate trash skyrockets, Western cities boast of 30 percent recycling rates — admirable, until you compare it with the 80 percent recycling rate the Zaballeen can claim.
In 2003, following the international trend to privatize services, Cairo sold multimillion dollar contracts to three corporations to pick up the city's garbage. Shimmering waste trucks now line the streets, but these multinational waste disposal corporations are only contractually obligated to recycle 20 percent of what they collect, leaving the rest to rot in giant landfills. As these foreign companies came in with waste trucks and begin carting garbage to nearby landfills, the Zaballeen watched their way of life disappearing."
"... Unfortunately, the ability of the Zaballeen to both acquire and process Cairo’s garbage has become harder in the last few years. Cairo’s Zaballeen are still locked out of the trash trade by the multinational companies that arrived on the scene several years ago as part of the Egyptian government’s failed attempt to overhaul the municipal waste management system."
I don't want to downplay the potential problems with labor-intensive attempts to minimize the waste stream. For example, from the wikipedia entry on the Zabbaleen:
"The Zabbaleen community is characterized by both low health and high rates of disease, especially those related to their garbage collecting activities."
I haven't watched Garbage Dreams or read Garbology. But, here are some observations on the broader topic:
  1. The assumption that more labor can enable more recycling appears accurate -- the Zaballeen were recycling 80-85% of Cairo's waste stream, versus as little as 20% for the corporations that replaced them.
  2. The incentives and guidelines in place for these multinational waste disposal corporations (profit for shareholders plus whatever basic rules and regulations they have to meet) probably are NOT well aligned with the well being of the planet. Based on my admittedly superficial consideration to date, this certainly seems like an area that governments should be more actively involved in (in some countries, I believe they are, but I have not researched the details). Might not a specialized job guarantee be one feasible means of achieving public purpose here? (Note: I'm not arguing that the only way a Job Guarantee program could be beneficial is by focusing on reducing external costs in this way).
  3. Surely a modern first world country such as the US has the resources to equip Zero Waste Jobs Program workers with adequate tools and safety equipment to minimize health risks? The Zaballeen's only sources of income were very low fees charged to residents, plus the waste material itself (selling it or products made from it) -- yet they achieved a lot with very little.
I'd be glad to hear comments, though you might first scan the previous post's detailed list of pros and cons related to this idea (it includes recognizing the merits of source separation and of consumers reducing their own waste streams, the merits of automation when possible, social stigma concerns, etc). It would also be interesting to hear if anyone has more detailed knowledge on this topic -- such as on the economics of the waste industry or on practices outside the US that demonstrate potentially preferable alternatives to tackling these problems.

UPDATE: Minor edits for clarity plus added one sentence at the end.