Minsky on government-guaranteed employment

2020-05-05

in Economics, Politics, Psychology

As recently as March 5th, The Economist published an article entitled: A recession is unlikely but not impossible

The April 18th issue reports: “On April 14th the IMF warned that the global recession would be the deepest for the best part of a century.”

I can’t find my note about it, but somewhere I recorded that a particular figure recommended that their staff read Hyman Minsky’s Stabilizing an Unstable Economy, which I have added to my non-thesis reading collection. It is somewhat difficult going as I am not especially well grounded in economic theory and terminology. Still, the central ideas seem accessible and somewhat surprising, especially the argument that governments should act as employers of last resort. Once I get through it, perhaps I will get the chance to ask Hugh Segal about how that approach compares with his preferred option of a universal basic income. Minsky argues:

Social justice rests on individual dignity and independence from both private and political power centers. Dignity and independence are best served by an economic order in which income is received either by right or through a fair exchange. Compensation for work performed should be the major source of income for all. Permanent dependence on expending systems of transfer payments that have not been earned is demeaning to the recipient and destructive of the social fabric. Social justice and individual liberty demand interventions to create an economy of opportunity in which everyone, except the severely handicapped, earns his or her way through the exchange of income for work. Full employment is a social as well as an economic good. (p. 10)

I can already see some of the appeal in government guaranteeing decent employment to anyone who requests it, since it would establish a floor for what private employers could demand in terms of working conditions. If nobody was forced to seek work through private job markets it would be helpful both in times of economic crisis when unemployment becomes extreme and at normal times, when the greater power of employers over employees may drive the latter to accept unacceptable working conditions or illegally low wages. Especially with the degree to which labour unions have become enfeebled, having the government offer acceptable alternative employment to anyone who wants it could play an important role in rebalancing power toward employees and avoiding labour exploitation.

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