The Issues
Jobs and Business
The benefits of our proposed reforms, on the impact on jobs and business, would be fairly dramatic for a variety of reasons. Both a job guarantee and the restriction of the private allocation of public funds to public interest uses would yield significant advantages in this area. The game of musical chairs that our current monetary system plays with our livelihoods is a policy choice, not a necessary feature of a well-functioning economy. Our reforms would end this ruthless and socially divisive game, allowing both businesses and employment to flourish in a more economically hospitable environment.
Our Current System
In the current system, the central bank intentionally creates and maintains unemployment as a necessary measure to combat excessive inflation. It does this by raising interest rates when unemployment gets “too low.” This slows bank lending, typically causing a recession and thereby restoring desired levels of unemployment. This effectively means that our central bank makes sure there are never enough chairs for everyone. Unemployment undermines labor’s bargaining power and keeps wages down, as workers are reluctant to demand better wages when they could be replaced by the unemployed at any time. Further contributing to this musical chairs dynamic are the recurring financial crises that result, in large part, from the high private debt levels that are associated with our over-reliance on private borrowing to furnish the economy with a money supply. These crises not only increase unemployment, they also take businesses under, which means it is not only workers that suffer from the harsh economic conditions engineered by our current system.
Job Guarantee Benefits
A job guarantee would directly abolish involuntary unemployment, not only ensuring everyone has access to a job but also improving wages and benefits for those who are already employed. It would achieve this by eliminating the threat of unemployment and putting a floor under wages and benefits, thereby significantly improving labor´s bargaining power. While this might appear to be at the expense of employers, businesses too would benefit from a job guarantee in a number of ways. Increased consumer demand generated by expanding employment and raising wages would mean stronger sales. By providing a job to anyone who wants one, the program would also allow the workforce to develop its work experience and maintain its job skills even when private sector employment is unavailable. This would promote the employability of the workforce for private sector employers.
Key proposals for jobs and businesses would stabilize the economy, thereby dispensing with the especially harsh economic conditions periodically produced by the design of our current system. In a severe recession, consumers cut back on spending significantly. This is partly a result of contraction of the money supply, as loans are repaid and banks cut back on lending. However, it is also due to a general loss of confidence in the economy as individuals try to hold onto the money they have. This makes it much harder for businesses to be profitable and can lead to layoffs as well as business failures. As a result, this further suppresses spending, making it even harder for businesses to be profitable. This vicious cycle tends to consolidate the dominance of larger corporations over their markets as they are better able to withstand the harsh economic environment these recessions create. Smaller businesses (and sometimes large corporations too) that were able to profit in normal economic times are often pushed out of business, leading employees of these businesses to be laid off in large numbers. The stabilizing effects on the economy (See Recessions and Crises) hyperlink to Recessions and Crises in issues section would create a more economically hospitable environment for both workers and businesses by mitigating the conditions that cause instability in the first place, as well as counteracting the descent into recession that crises trigger.
Lastly, by restricting the private allocation of public funds to public interest uses and allowing a job guarantee to pick up the resulting slack in the money supply, proposed reforms would significantly reduce the need to take on private debt in order to create the money supply necessary to facilitate economic activity. This would mean that both workers and businesses would be able to keep more of the money they earn rather than paying it to the banks in interest. This reduction of indebtedness would both free up consumer spending power and lower the cost of doing business. Consumer spending would be bolstered by reducing the amount of consumer income that goes to servicing debts. The cost of doing business would be reduced as increased profits from increased consumer spending allowed businesses to finance more of their expenditures with retained profits rather than with bank loans that have interest attached. Both of these effects would be good for jobs and good for business. Essentially the former would lower the bar businesses need to clear in order to succeed in the economy, while the latter would lighten the load they carry as they attempt to clear it. This reduction in debt burden would strengthen businesses and their ability to offer quality employment in a job guarantee-strengthened job market.