Solves – JG

The MMT economists are chomping at the bit to prove them wrong, and they are joined by advocates of the public banking movement, led by Ellen Brown, author of Web of Debt. The state bank of North Dakota offers a model , since 1916, of how banks can serve the public interest through times of economic boom and bust. Their well documented success is now being studied for potential replication in a number of cities and states, including California. State Bank of North Dakota "Values based banking" If a state bank can work alongside private sector banks, imagine how much greater the impact might be if the Federal government, the sovereign issuer of currency, could begin to increase public investments in developing renewable energy, infrastructure improvements, and employment programs? These investments would be similar to recent stimulus packages proposed under President Obama during the Great Recession, but they could be implemented on a much larger scale and could be publicly financed without creating funds from debt to be paid back with interest. Franklin Roosevelt’s New Deal offers a somewhat similar model, in that the Federal Reserve was used to create low interest loans for small farmers and business owners during the Great Depression. Many MMT economists offer what they call a Jobs Guarantee (JG) program designed to address the problem of poverty directly and, indirectly, the extremes of income inequality that we are now experiencing in the US and around the world. The JG program offered by MMT economists differs from most Federal programs that are provided by government agencies and usually focus on job training. modern_money_Job_Guarantee MMT style JG proposals are funded Federally but offered locally through the nonprofit sector. The economy is divided into the private sector, public or government agency sector, and the nonprofit sector. By design, the JG proposals kick in only when the private and public sectors are not able to provide jobs for those who are willing and able to work. Nonprofit organizations are focused on community based needs and have the capacity to hire but lack the funds to do so. When the unemployment rate (including those who are underemployed and have given up their job search) rises above a certain level (4% is typical) then Federal funds are made available to nonprofits on an application basis. When private sector employment expands businesses can hire from the public and nonprofit labor markets. The nonprofit sector is not small or negligible in relation to the overall economy. Roughly 1.6 million nonprofits account for 11.4 million jobs, 10.3 percent of all private sector employment, and contribute about $880 billion dollars to the economy, or about 5.5% of G.D.P. Building the capacity of these organizations to innovate, develop social enterprises, and increase services where needs are critical is a strategy that is attractive across the political and ideological spectrum. Note that the JG program funds are used to employ individuals, not train them in the hope that private sector companies will hire them after a new skill is learned. Inspired by the work of Hyman Minsky, who argued, during Lyndon Johnson’s Great Society programs, that providing a job with a living wage, regardless of skill level, will address head on all the problems associated with poverty: crime, housing, diet-related health problems, drug and alcohol addictions, divorce rates, abortions, school dropout rates, etc. Surprisingly, net cost projections for JG programs, even when based upon hourly wages of $15, $18, and $21, are in the modest range of $7-800 billion dollars. While costing about the same as a government economic stimulus program, significant cost reductions can be anticipated as poverty rates decline. There will be less need for public sector social welfare programs that address the symptoms of poverty: crime, housing, health, etc. MMT economists and their fiscal policies, even more so when combined with public banking alternatives, offer the potential to address all aspects of the progressive agenda – poverty, rebuilding of our transportation infrastructure, transitioning to 100% clean energy, investing in neighborhoods that have been neglected for decades, cleaning up brown field sites, transforming our industrial food system and implementing agro-ecological practices that support carbon sequestration and policies designed to revitalize local, organic, farms serving local cities and towns.