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Saturday, 22 August 2015

Krugman the Homeownerist?
2002- Krugman calls for a housing bubble. Busted!
See also:
Mosler's (MMT) response to Krugman's mumbling speculative nonsense on debt.
Debt is good? Comments say that debt is obviously bad. Well folks its not good or bad it is what it is.

Sunday, 16 August 2015

Generic labour market reform

These proposals are for the Spanish Labour Market that is pretty screwed up, but on second thought can work as a generic package.

First off there needs to be a radical supply side reform, abolishing all or most labour market regulations and banning trade unions. Some may say this is "illiberal." Well there are laws against "cartels", businessmen colluding for theirown benefit. Trade unions are basically workers colluding for their own benefit. The proper name is labour cartels. So if you support trade unions logically you should support cartels. Finally welfare (payments to fit, able-bodied people who can work but don't) should be abolished, except for the disabled and sick and elderly and perhaps an unemployment benefit for between-jobs unemployment that can be claimed for say 3 months.
Immigration needs to restricted (see must read article here) via a points based system so businesses invest in the native population.
 I feel that the left wing really hate this part of the reform.
But hold up lefties because before you've called me an ultra-right wing, evil scum of the earth you've missed out the second part of the reform.
The second part is that we need serious competition in the labour market and the government should introduce a - Job Guarantee
This is an open job *offer* at £x/hour (start at the living wage) available to all provided by the government. It offers an employed buffer stock instead of the current unemployed buffer stock, which is superior to it for several reasons, but mainly because it reduces hiring costs and the "long term" unemployed issue. The government operates a buffer stock of jobs to absorb workers who can't find employment in the private sector. The pool expands (declines) when the private sector expands (declines.)
What sort of jobs will the JG create?
The jobs will be nonessential but useful, and that will serve public purpose for example a Teacher's aide. You will have JG open source software projects. But the *output* is less essential than the reduction in hiring costs. It also helps reduce black market activity, especially prevelant in places like Spain. You allow open borders to nations also with a Job Guarantee and similar social infrastructure (universal education and healthcare.) So you would exclude third world countries like the USA. This is a sanction that says "improve your social infrastructure and join us" and a pragmatic way to open borders.
The Government operates a buffer stock of jobs to absorb workers who are unable to find employment in the private sector. The pool expands (declines) when private sector activity declines (expands). The JG fulfills this absorption function to minimise the costs associated with the flux of the economy. So the government continuously absorbs into employment, workers displaced from the private sector.
As Neil Wilson (3Spoken) says:
"the majority of people on the JG will be unskilled and from the secondary job market. And anybody else, almost by definition, likely has an obsolete skill set. 

A derivative trader will not be trading derivatives on the Job Guarantee because those skills are obsolete and serve no public purpose. A lawyer that ends up on the Job Guarantee for whatever reason will find work using their legal skills at, say, the Citizen's advice bureau - because that has a public purpose.

The Job Guarantee will use people's *transferable* skill set and help them transition to a different role. That's one of the reasons Warren Mosler calls the Job Guarantee a 'transition job'. 

The Job Guarantee wage is set as it is because that is what the people coming to it are worth. There is no better bid in the market, otherwise they would not be applying to the Job Guarantee."