Ep. 5 - The Right to a Job ft. Pavlina Tcherneva

Funny Money is a show about the economy; how it works, and how it can work better. 

In this episode, Ka and Andrés are joined by Pavlina Tcherneva, author of The Case For A Job Guarantee, to discuss unemployment, interest rates, and the right to a dignified job. The way the economy works right now, we intentionally keep a bunch of people out of work, and it doesn't have to be that way. We have the perfect guest to discuss how to fix this. 

Pavlina Tcherneva is a Professor of Economics at Bard College, the Director of the Open Society University Networks Economic Democracy Initiative, and a research scholar at the Levy Economics Institute with a specialty in modern money and public policy. 

Episode Visuals: https://bit.ly/PavlinaVisuals

Transcript

0:02

Welcome back to Funny Money. This is the podcast about the economy, how it works and how it can work better. And today we're talking about jobs. That's right. We have a great episode for you because last time, if you remember, we talked about the Green New Deal, but we didn't go that much into depth about one of its most important parts, and that is the federal job guarantee. The way the economy works right now is we intentionally keep a bunch of people out of a job, and it doesn't need to be that way. And we have the best person to explain

why and how: 0:32

Pavlina Tcherneva. This is going to change the way everyone thinks about the economy and the world. I think so. I agree. I agree with that. This is a big one. So without further ado, Pavlina Tcherneva is a full professor of economics at Bard College, the director of the Open Society University Networks, Economic Democracy Initiative and a research scholar at the Levy Economics Institute. She specializes in modern money and public policy. Pavlina, what an honor. Thank you for being with us. Hello. Hello. Very nice to be here. I hope we can meet the expectations. Yes. We're so happy to have you on. We're going to get right into it because people need to eat dinner and that's very important. But people can't afford to eat dinner if they don't have good paying jobs. And that is the topic of a lot of what we'll be discussing today. And I think it's really important because we all have these ideas based on what they see on the news. And if people bother to tune in to congressional hearings or what the Federal Reserve is saying. But we hear a lot of narratives about employment and unemployment. So one of the first things we hear is we get these jobs reports. People talk about what the unemployment numbers are. So we're really interested to hear how do we currently measure unemployment and feel free to tackle some of what you don't like about the way we do it currently. Yeah, that's right. When people hear the unemployment numbers ... today we hear that they're very low, historically low. We're at full employment or something called over full employment or whatever that means. But basically, we have a statistical agency that tries to assess who's looking for work and they have a pretty narrow definition. They sample 50,000 people and then they extrapolate for the population as a whole. And then they ask them, are you employed? And, person may say no, and then they will inquire, why not? And if the person says that they have not been able to find work, they will

also ask them: 2:42

well, did you look and how long ago did you look? So the bottom line is, if you have been looking for work in the last four weeks and you have not successfully found a job, you will be counted as officially unemployed. But if you have been looking for three months, for six months, for a year, but not in the last four weeks, you actually will not be counted. And if you have been discouraged altogether and stopped looking, you also won't be counted. So there are some of these very basic fundamentals that we have a very, very narrow definition of who's active. And by that we mean who's actively looking. But if we are really asking the question, how many people need jobs, we really need to be looking at much broader, more expanded definitions. So the Bureau of Labor Statistics has alternative measures. It does have more expanded definitions, which you don't hear about in the news. And those definitions recognize that some people may not have been able to look for the last month. So they will include people who have been looking for the last year or the previous year. Some of these definitions will also include people who are discouraged or they say that they just don't see any prospects, and that's why they've stopped looking. But they might also include people who are working only part time, which is also another interesting statistical artifact. You can be counted as employed even if you worked one hour in the previous week. And so you might be looking for more than one hour, right? You might be looking for a full time job. So we have this category called part time for economic reasons, meaning you can't find full time work. So the Bureau of Labor Statistics will have some expanded definitions. And if you look at them normally, you would find that about twice as many people are in need of work according to these statistics. But even that is, I think, kind of the of the baseline, the most I would say narrow way of looking at how many people need work because there are just so many folks who would take a job if one were provided. And we see this in another kind of statistical measure, and that is when we try to look at who's getting jobs, whenever people find employment, we're trying to say to ask the question, well, who are those folks? And many of them come from outside of the labor market. They're not captured by any of these measures that I just explained. So out there is some kind of hidden demand for work, a lot of it comes from caregivers, people who might say, well, no, I don't need a job because I have one at home. I'm taking care of children, I'm taking care of elderly parents. But if a good job comes along that can afford the family to take care of the elderly or the children and work, then they might take the employment opportunity. And then there would be others who don't report as being unemployed but might take employment. So there are lots of statistical artifacts. I particularly like to look at unemployment at a kind of a regional level, to look at every corner of the country, to see what's happening in the backyard, in your neighborhood, in a remote, rural or even metropolitan area, because the national statistics just don't capture these huge disparities. I mean, right now we're looking at 3.5% unemployment rates. But when you look at the West Coast, if you look at the Deep South, if you look at the Rust Belt, we have communities, towns that have unemployment rates double digit. And that is not just today. That is on a good day. That is in a bad day, that is just permanent high level of unemployment. So there are these statistics, official statistics we just described how poorly they capture the actual need for jobs. But if you look at the official statistics at the local level, you will find that on on a good day, there are communities that have double digit unemployment rates. And if you then break it down by group, say, young people, by race by age, you'll find that those levels are also much higher. So, no, I don't like to look at the national statistics. That's a baseline scenario. You want to take a look at what the official numbers are saying. But you got to look deeper to get a sense of what we're really talking about. I think it puts us in a really precarious position when we want to make an assessment about the health of our economy. And we talk a lot about the real economy here, because when you even have these figures supposedly measuring unemployment that aren't actually capturing what our productive capacity is when it comes to labor and who can actually work and who is working and who is not, it really makes it difficult to understand how there could possibly be this trade off between unemployed and inflation that they talk about so much. People hear Jerome Powell and talking heads say all the time these days that inflation is really bad for working people because our grocery bills are higher, energy bills are higher. And we feel that weight. And I'm just so sorry, but the trade off that needs to happen is more of you need to be unemployed to get these prices down so that we have balance in the economy because the labor market is hot. Can you say some more about this supposed, perhaps-make-believe-not-demonstrated-in-the-data tradeoff between unemployment and inflation? Yeah. This is such an important article of faith that economists have that there is some kind of law, regularity, economic rules that says that there is. Well, you can have the best of both worlds. You know, you can either have really, really tight labor market, low unemployment, good jobs, well-paying jobs, or you can have stable prices. And at some point, if you get way too many jobs that pay really good wages, God forbid people will spend those wages on production, on goods services, and they will then bid up those prices. You know, you go to the grocery store, too many of us go there and then all of a sudden the price of avocados goes up and voila, we have inflation and today people are experiencing inflation. And it's not because there are too many jobs or well-paying jobs. That's one thing we didn't say in the first segment that we're talking about, people who don't have jobs. But there are many, many people who have jobs that are very poorly paid, jobs that are precarious, jobs, unstable jobs. Those are part of the official employment numbers that show that we have a good economy. But it's not so good, actually. So we are experiencing inflation and we could get into what it is caused by, but certainly not because there is strong spending and strong income and labor markets. But the policymakers are looking at prices going up and energy prices, of stuff, of services, etc., and are saying, well, what are we going to do about this? This this takes a bite out of the purchasing power of every person. We need to make sure to stay that we can stabilize those prices. And what is their solution? Soften the labor market. And that's just jargon for create more unemployment, eliminate some jobs, diminish some of this purchasing power, even though the Federal Reserve recognizes explicitly that that inflation is not a cause of strong labor market, that jobs are not creating those inflationary pressures. So that's why I say that this is an article of faith that in economic theory there is this trade off known as the Phillips curve or as the more fancy name today that we use as the NAIRU, the non accelerating inflation rate of unemployment. And then that somehow is this like ideal case of unemployment where we might have stable prices. And so the policymakers are searching for this number, for this magical number that's going to secure stable prices. And you will hear, you know, pundits, economists, mainstream economists, the Fed say, well, we might need to have elevated levels of unemployment for a few years in order to bring prices down. All of this is just based on bad economics. It is not empirically supported. Only two years ago, the very same Fed was questioning this very concept. Jerome Powell under oath was saying, well, this NAIRU relationship seems to have broken down, but we need to figure out what this relationship is, because the policymaker doesn't have another way of thinking about how to fight inflation. And so the primary tool is job losses. I'm reminded of Coretta Scott King's famous quote, because she was a big champion of the job guarantee, and she argued that only the unemployed are called upon to be sacrificial lambs on the altar of fighting inflation. So I think we have a broken economic paradigm. The profession hasn't really thought of another way of dealing with prices except by creating more unemployment. And I think that we I reject that outright and I think that we can create guaranteed employment, at least secure a basic job for anyone who needs it without creating inflationary pressures. So when I talk about this, I often say, well, the motivation for them doing this is there are a lot of people in power that are quite happy when wages are low and benefits are low and workers are not competing for the same job. So employers, they want it so many workers are competing for the same job so that they're willing to take a little bit less than what their labor is worth. Oftentimes a lot less than their labor is worth. So that profit margins are high. And a lot of times they say you just sound like you really hate corporate America, right? You sound like a raging commie. That's not how it works, but it's often reflected in the data that this relationship is not there. It's something that Jerome Powell has said on the floor of Congress, that this relationship really isn't as strong as it used to be. He said this, and then went on to a period of interest rate hikes, month over month with this explanation that this is why he's doing it. The exact logic he argued against on the floor of Congress just three years ago. So we have a chart that's showing what the natural rate of unemployment, which is something that's said a lot, basically the non-accelerating inflation rate of unemployment that you just described, where they predict we expect if unemployment is at this level, inflation will be relatively stable. So I guess my question is, have there been periods where unemployment was high, but inflation was not? Yes, lots of them. We can leave that chart up. And being helpful. We have had periods where unemployment was very, very low and inflation was very, very low. I mean, the nineties was an example of that. We had again 3.5%, which was lower than what we had seen in the previous four decades. No inflation in sight. In fact, we haven't had really any substantive inflation since the oil shock of the seventies. We really worried and that's what the Fed worries more about. It's deflation. After the great financial crisis, when we had mass unemployment and a global kind of collapse of the financial system of production, we had, you know, zero inflation negative inflation. Japan is a classic case of a country that has been flirting with deflation, which means prices are coming down. And you might think this is a good thing, but it's not really a great thing. So the reason why I say that the Fed is afraid of deflation far more than inflation is because what that means is people are selling stuff, they're selling their inventories, they might be selling their houses, incomes are falling, profits are falling. So when you have deflation, you just have a general rise, kind of a decline in the value of things. And that's not a good thing. You want to have a little bit of inflation. So the Fed has been trying to engineer that little bit of inflation after the great financial crisis without much luck. Okay. And we then entered this kind of unusual period in the recovery post pandemic. And we started seeing inflation coming from the various bottlenecks, from the disruptions, the logistical issues around shipping and restarting the supply chain. There's energy; energy costs increases as a result of the war in Ukraine and various other factors. But these are all on the cost side. And I think there's a general consensus that inflation is coming from these disruptions. And corporate America is also taking advantage of this moment and increasing their profit margins. So it's not that the Fed engineered inflation. They've been trying to do this since 2008. They were unsuccessful. We are seeing inflation because the pandemic engineered it because of the disruptions and because firms are taking advantage of this moment to raise their prices. So it's not the Fed. But what is the Fed charged with? They're charged with securing stable prices. But I should also say the Fed in the United States has a dual mandate. They're supposed to secure a maximum employment and stable prices. It used to be full employment and price stability. Now, not all central banks have the same kind of mandate. So when you think back to the trade off, the Fed is supposed to give us both stable prices and full employment, but it has to choose because it believes it has a trade off. Currently the Fed is facing inflation. So what are they going to do? They're going to use unemployment to tame these wage increases that come not from the labor market. So it's a real problem because they are not able to engineer inflation, they're not able to tame it. I mean, they've been increasing interest rates for a year and inflation is coming down on its own. Whether or not they had raised interest rates, inflation would have come down because we're working through these bottlenecks and these logistical problems. So the Fed is actually quite impotent in managing the economy or making creating what they are hoping is the soft landing. What the Fed can do is they can break things so they can increase interest rates to such level that things start falling apart. People can't afford their mortgages. The small business owner cannot get a loan to pay the wage bill. And then we have like business shutdowns. So we are teetering towards that moment where they actually going to create quite a lot of unemployment if they continue this aggressive interest rate increases. And for those of you who are watching this live and saw the chart, you would notice that when unemployment increases, it doesn't just tick up. It doesn't just slowly go up, it shoots up, it accelerates. So that's what I mean by the Fed breaks things when it's the Fed's role. But in many cases it is other causes for the recession, whether it's the financial crisis, whether it is a housing crash, whether it is some other. In the nineties it was the surplus. So there are various reasons why we enter recessions. But the Fed has far less power to give us a Goldilocks economy than most people believe. All right. To everyone's displeasure, I'm introducing a new character to our story, a character named Jason Furman. If you haven't heard of Jason Furman, he was appointed by Barack Obama to be the chair of the Council of Economic Advisors and then also for the National Economic Council, where he was a deputy there. He just so happens to be the heir to a real estate and shopping center tycoon. Let's watch this video of this villain in our story. What do you think the unemployment rate needs to look like in the United States to become, quote,“stable”? I don't know. Look, if you want to get inflation to 2.0, I think you need an unemployment rate in the sixes. In the sixes if you want to get to 2.0. Okay. That's that's a that's a massive shift from where we are today. I don't think we need to be at 2.0, though. I think if the Fed gets to 2.99, okay, but to get to 2.99, so we need to be at 4.5. Do we need to be at four? What is it? What is that in your mind? I would guess around 4.5 to 5 and these things are super hard to contain. Is that politically palatable? And that's why we have central banks has to make tough choices. So what kind of model do we think Jason Furman is just running in his head there to spin out these numbers like this? It's really impressive. The computing power in his brain. What kind of data is he taking in and putting back up? Can you just say a little bit about, what's with hiking interest rates to throw people out of work? What do you make of what Furman said there? Well, I mean, listen, it's not like he's volunteering himself to lose his job so we can tame inflation. It's always other people's jobs. Look, what's the model? Highly undemocratic, right? That's what he's saying. He's saying, thank goodness we have somebody who's not really accountable to the public to make the tough choices, to create enough unemployment, to fight inflation, because, number one, there is a broken theoretic model unverified by my statistical data, but it's the only thing they've got. And so they are turning to this kind of draconian tool of throwing people out of work to deal with inflation. It is just so morally bankrupt in addition to being just not good science. I mean, I'll give you many examples. After the great financial crisis, official reports that the European Commission were putting the natural rate of unemployment in Spain at 26%. So they're basically saying this is the most that the economy can create, and that is the unemployment rate that is consistent with stable prices. What kind of economic model is that to consider this to be unacceptable scenario? In the nineties we saw the same story play out. We came from the eighties in the early nineties, a very high level of unemployment and the unemployment level kept coming down and the early nineties, mid nineties and the Goldilocks breaking through every estimate of the NAIRU that was out there put forward by professional economists like Furman. I mean I don't know if he was actually one of them, but that was basically the profession. That's what central bankers were saying. The natural rate is 12%. No, no, no. The natural rate is 7%. And that unemployment rate keeps falling. No, no. The natural rate is 5%. So we can't these numbers can't be trusted. We need to really put this aside and start asking the hard questions. How can we make sure that people have good and stable jobs? And if there is inflation, how can we secure stable prices without throwing people out of work? I mean, you began the segment with what's a healthy Economy? And one of the most fundamental building blocks of a healthy economy are good, stable jobs. We can't have a model in which people are laid off, hired, fired, hired, fired, according to whatever the whims of market activity or changes in growth. I mean, we need to have some kind of sense of economic security and one of the fundamental prerequisites of economic security is having a good and stable job. But we don't have that, which is your chart shows us so, so clearly, because in the United States, unemployment is a huge yo yo. It goes up, it comes down. And again, this is just the official data. Behind the curtain, there are millions and millions and millions who are looking for work, would like to have work, but they don't have that access. Professor Tcherneva, you brought up avocados and it just reminds me of all of these articles that are written about how millennials are pushing up the prices on avocados. And I can tell you that we probably are. Just kidding. I think we need a Green New Deal for Avocados. But in truth, though, so many people that struggle with unemployment are young people. And that's kind of like something that that we see very often. One of the framings that you have offered in your work about unemployment is to understand it as an epidemic, as an infectious disease that starts to grow rapidly. We actually have a video that shows changes in the employment rate and changes in unemployment throughout the United States. If you are listening to us on a podcast, make sure you check it out in our show notes when you have a moment. So let's check out that video. Can you tell us a little bit about why you use that video in many of your lectures and what some of the insights are about these changes in unemployment? They don't affect everybody equally, right? Are there particular communities that are hit harder by by the phenomenon of unemployment? Yeah. This animated map of unemployment across the United States, I think is just really telling. And it provides a new and different perspective of how to think about the problem. The first thing that we notice is that there are communities, as I said earlier, that always have double digit unemployment rates. And some of these communities, we are really talking about 30, 40, 50% unemployment. But the video also goes through three periods of recessions in the early nineties, in the early 2000s, and after the great financial crisis. And what we find is that, well, unemployment behaves in a very particular way. There are almost, you can say, hot spots where the mass layoffs take place and then those layoffs ripple in the form of more layoffs throughout the community. And in a sense, unemployment kind of spreads from one epicenter to the periphery and further and further and further. And that is kind of the reliable result of a downturn of a recession, whatever its causes. And then we wait for the jobs to return, but they never quite return to the epicenter that is plagued by high levels of unemployment. And so if you consider the behavior of unemployment, there is one other kind of phenomenon that behaves this way, and that's really a viral spread. Epidemiologists, their models of disease spread and contagion actually look like this. So it's not just the metaphor, because this kind of behavior has some very important real consequences. The unemployment problem has social and human costs that typically economists don't consider. But you can find them in psychology. You can find them in studies of public health. I mean, they're intuitive things. You and I understand if you've seen somebody who's been unemployed for a very long time, you know that probably their mental health is not great, potentially their physical health, maybe their kids are not doing as well as you can, take them to the extracurriculars, provide for them. That has a material impact not just on the unemployed person, but on their family, on their children. So there are health costs, there are cost to the opportunities that their children and family members might have. And economists only look to a scarring effect, which is the lost income that's really not adequate. Virtually every social problem we can think of is in one way or another, linked to absence of jobs. And, you know, these communities that have very little like economic life or economic opportunity mean that they don't have mom and pop shops, they don't have the kind of businesses or community services that they need. And so we've talked about the so-called depths of despair that come with the loss of good, stable employment, with kind of the gutting out of the middle class and the loss of important jobs in some of these what used to be good manufacturing centers. So this map to me kind of explains how unemployment number one spreads. And again, we're talking only about the official data behind those numbers. There is perennial economic insecurity, people who are persistently experiencing these costs of unemployment. So if we were to think about employment creation or dealing with the problem of unemployment, I tend to think of it as a as a public health problem that we shouldn't do it when a crisis hits. We shouldn't be scratching our heads and saying, okay, well, now we have 10% unemployment. What shall we do? Well, let's just send some stimulus, some checks, and maybe we can just give some contracts, build a bridge That's too late. Thinking about unemployment in this way to address it when the crisis hits is we've already incurred the costs, we've already devastated the communities, and then it's jobs return far more slowly. So I tend to think about the problem in a preventative way. I'd much rather have kind of infrastructure that creates employment as needed, wherever it is needed, whoever needs it, young people, caregivers, people returning to the labor market, that that is an infrastructure that is on the ready, that provides employment, whatever the circumstance in every community. And would that would be a way of reversing these kind of perverse dynamics that we see through in this movie. So today, I think we're seeing a revival in a sense of really thinking about and grappling with the problem of unemployment, mostly thanks to your work. And I think of others like Darrick Hamilton and Sandy Darity. But there's been a long history of a fight for the right to employment and for the idea of something like full employment. I think we have some slides that that speak to this a bit. Can you take us through what these key points from this beautiful slide? Well, you know, this is important. The job image is not a new idea. But notice that at least one of the earliest mentions of securing the right to work is in 1793. Now, why is that? Like 1793 is well, it's the time of the first French Revolution, but also the time when the social relationships changed. Right. They changed in a way where people become far more dependent on markets and on wage work for their livelihoods. So, landed peasants have access to the resources to well, you know, I'm not selling landed peasantry or feudalism as a good economic model. But what I'm saying is that that was a fundamental transformation. So people need to read The Great Transformation by Karl Polanyi to appreciate what a radical transformation of life that was to be removed from the land and to be able to to provide for yourself through wage work or not be able to provide for yourself through wage work. And so some of the early calls for the right to employment come then, when people realize how essential a job is to one's existence, and then fast forward, we have the industrial revolution, we have the emergence of the market economy rapidly evolving and rapidly changing highly unstable depression, depression, depression, depression. Just read Charles Dickens. That's the world of the 1800s of poverty, misery, Yes, opportunity, growth, things unseen. But as well as massive economic insecurity. And so yet again, the international community starts thinking, how shall we provide for this most basic, essential right as as it is understood. So in the United States, we had this conversation in the context of the Great Depression. Franklin Delano Roosevelt had a commission in the thirties to address the problems of unemployment, and that was front and center in his agenda. As we know, he created directly many, many jobs and many works projects. But the philosophy that guided this policy approach was that, first, economic security is fundamental for democracy because people out of work and out of a job hungry and out of a job at the stuff of which dictatorships are made, right. That was his quote. And he says, okay, well, how do we make sure that people are not out of a job and they're not hungry? Well, we need to have a two pronged approach. The first one is provide employment security, and the second is income security. So we did a fair amount on both fronts during his administration, but it was not enough to deal with the massive unemployment problem. And then the problem from a policy perspective is that these were temporary measures. We ended up with kind of a system, a public system, welfare system, if you will, that largely prioritizes income support, but has forgotten that employment support and employment security is a key piece that was articulated yet again in the Universal Declaration of Human Rights, where the international community then understood that this is a fundamental, inalienable right. People should have access to jobs not as a reward for good behavior, not because they are productive or they have done the right things the way we typically think of employment today, but that the right to employment, along with a series of other economic, social, political rights are inalienable and they are to be guaranteed to every person, no matter the place, no matter the time, the context, or the or who they are. And so it's a really important kind of a philosophical foundational perspective on how policy should be designed. But we don't design policy this way. And so we've been attempting to do this time and again the Civil Rights Movement understood you can't have civil rights unless you eliminate the problem of economic insecurity. It's a key tool of racial subjugation. It has to be part of the agenda. And so the Green New Deal, again, inserted and I think that's why the Green New Deal was so effective in capturing people's imagination, because they understood that climate and jobs are not foes, that we can we can provide for both and so today we are having another kind of revival of the job guarantee idea. I think that, at least in my work, I try to emphasize the structural benefits of the job guarantee and the macroeconomic benefits and why the job creator really is an alternative to the NAIRU problem. Because we haven't had a moral statement of why jobs are necessary, but we are now also having kind of an economic statement that this is good policy, this is a good economic model. And so for our viewers and listeners, the slide that you just saw, which I thought was excellent, our producer, Mike and I actually pulled that from a lecture that Professor Tcherneva gave at the Watson Institute at Brown University, which also happens to be where Ka went to school, so Ka’s alma mater. So everything is connected. But on that note, let's talk a bit about the job guarantee. Yeah, let's just start with the basics. What is the job guarantee? It's a policy, a public policy that says if you need work, we will guarantee it. Come to employment office and you're seeking decent employment. You know what we might call a basic job that provides essential living wage, living wages and benefits, then that will be provided through the public sector. No ifs, ands or buts, not conditional on whether you have done X, Y, and Z. It is it's just a public option, if you will. It's a public employment opportunity that is direct. The projects are created in the community and people can then apply and take up those local jobs because it's a public employment opportunity. It also is proposed to serve the public purpose, right? We're not competing with Ford and producing cars or, you know, tires or whatever. We are addressing essential problems in the community. Care needs, environmental needs, work that is typically under provisioned, too anyhow. So the job guarantee has this dual objective of providing employment for those who need and producing something of social value for the community. It's a jobs program, but it does have some import and structural features. If that were open ended, if the program were universal, if it were implemented in every corner of the country, then it will have some profound impacts, I think, on the labor market and the way the economy works. I want to actually get into some case studies. Has anyone tried this before? Maybe cases outside of the United States that we can point to? Yes. I mean, we I already talked a little bit about the New Deal of the thirties that had such a huge range of projects for the unemployed. And they were both creative projects, art projects. They were history projects. They were projects for musicians as well as infrastructure projects. Now, I want to say that especially the Civilian Conservation Corps was so, so popular with people that they considered it really to be their right, that the government did owe them a job. But the program was not reauthorized. So when you look around the world, typically there are large and small programs, but they tend to be temporary. Usually they're put in place in the middle of a crisis. We can think of the Argentina Plan Jefe as you have this program that was implemented as a direct employment program to deal with the crisis of 2001. We have projects that are ... the employment stimulus in South Africa. That was a direct employment program to deal with the unemployment problem that stemmed from COVID. These are large scale. There are smaller programs and they target particular groups. So in the UK, actually in many, many countries there are direct employment programs for the youth, but they are very small, really, really small. They're very effective and seem to have good results. But they again, temporary and they're not at the scale to address the youth unemployment problem in Europe. There are programs that specifically target the long term unemployed. As I said, there are major scarring effects and once you are unemployed, it's actually the longer you stay unemployed, the harder it is to get back into the labor market in addition to the other problems that I explained. So in Europe, there are some very interesting and notable experiments called the Zero Long-Term Unemployment areas (TZCLD) that was launched in France with a reasonable success, so much so that the program was expanded, a budget was appropriated for it at the national level, and it now covers most regions in France. However, again, it needs to be scaled up to address the problem of unemployment. Here we are targeting only the long term unemployed. Austria has a really interesting, similar program for the long term unemployed, the one program that I want to single out, the permanent program is in India, and that's the National Rural Employment Guarantee Act. This is the only program, to my knowledge, that is implemented as a matter of a basic human right. It doesn't guarantee open ended universal access to everyone. It's only for rural households and it only guarantees 100 days of work. But you don't have to be unemployed to access it. It is guaranteed as a basic human right. You can avail it yourself no matter your circumstance. So it's a very interesting program because it is very large. It covers I mean, India is a big country, but it covers around 30% of all rural households. So it's interesting to see how very poor regions are actually able to create employment opportunities to see the impact and to do this on a regular basis because the program is not temporary. If you're entitled by law to it. So there are challenges there. And no doubt, in this kind of neo liberal paradigm, the fastest way to undermine a program is to underfund it. And India's definitely suffering from that. Nevertheless, it's interesting because it has provided a critical lifeline and people are demanding more. They're asking for 200 days. They are asking for expansion to rural areas. They're asking for, again, creating projects and specifically targeting youth, etc.. So there are other very interesting programs that marry the direct employment approach with some other problem. Ethiopia, for example, uses the direct employment approach to deal with droughts, with food insecurity, etc.. So I think that if we look, we will find some good case studies that teach us what a job guarantee might look like and what some of the effects are. But this is still, I would say, a non-conventional approach. You know, typically policymakers don't think of providing a job to a person who needs a job. And it is paradoxical because we tend to think about direct provisioning for so many things, maybe not in the US, but if you don't have retirement income, we guarantee Social Security, right? We provide retirement income, right? If you don't have food, we guarantee access to food. But if you don't have a job, we do not guarantee employment. We provide a little bit of income and send you on your way. We might provide a little bit of training for jobs that are not there. And so the direct employment approach, I think is prime for taking center stage and for reconsideration as a key policy for full employment. Well, and price stability and economic security and environmental renewal, you name it. So here in the United States, we now have a congressional resolution put forward by Rep. Ayanna Pressley that calls for a job guarantee program. And that has come about from your work, from the work of groups like Policy Link and the Modern Monetary Theory community in general. Can we now kind of break down what a United States based job guarantee policy would look like? Because what I find really important and special about it is that it is, in my opinion, at least, and I think all of

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the heart of the Green New Deal in many ways and part of a big part of the just transition component of the Green New Deal. And so we have a slide, an image that looks at the three job guarantees in the Green New Deal, three ways that a job guarantee is enacted and put forward. Can you kind of break down what this speaks to? Yes. I mean, you know, the Green New Deal is really a vision of what a good might look like. It's not just a proposal for a technical solution to a climate question. It says, what is that economy that we want to inherit that not only stabilizes temperatures, but also stabilizes livelihoods. And the job guarantees that key piece in there. Now, there are, in my view, three different job guarantees in this vision. The first one is kind of the mass mobilization approach. There is little time. There are urgent climate crises that are a battle barreling throughout the globe. We see them every day, right? We need to address them. Hurricane after hurricane, fire after fire, flood after floods. Who picks up the pieces? Right. We need to be able not only to address these crises and that takes jobs. So that takes employment, direct employment, mass, large scale employment. But we also need to change our infrastructure so that we prevent these crises. So the all hands on deck, this kind of industrial mobilization that guarantees everyone participation, I'm thinking about more kind of like wartime mobilization where every company, household skill level, people are participating in a comprehensive plan for transitioning the economy, the grid, the infrastructure and agriculture, etc.. So really thinking about the way we fought the war, World War Two. So that's the kind of mobilization that might be required. But then what we didn't do and we laid on our laurels in the United States after World War Two and we secured full employment. We thought that would last, but it didn't last. As soon as we transition to a peacetime economy, unemployment returned because we didn't have the employment and safety net that the New Deal projects provided. So that the second piece of the Green New Deal is that there will be a job guarantee there that will provide safety net in these two dimensions for people who have toiled in the fossil fuel industries, they will have income support, they will be guaranteed good retirement, but they can also be guaranteed a job if they so desire in the green economy. And we see this because I talked to people, the Appalachian communities, that have been decimated by mining, and they understand how important the Green New Deal is to them and their livelihood and transitioning their communities, filling up the mines, making manmade lakes or whatever, reforest, doing reforestation, restoring their ecosystems. So that is both a safety net for the people who have been working maybe the most vulnerable, but also who can restore their communities. And then the second piece is that this is just an employment safety net for, as I said, anyone, whatever their circumstance, perhaps you've lost the job due to automation. Perhaps you will have stepped out of the labor market for caregiving responsibilities. Whatever the reason, there will be a public option for you. And then the beauty of this program is that it actually stabilizes the all of us experience this economy like we know we understand this. You don't have to be an economist to understand that we go through these ups and downs and sometimes are better and sometimes a worse. And that creates a lot of instability. This shuttering of businesses and layoffs and returning of jobs. The job guarantee by virtue of being there, providing employment in every community, actually stabilizes those communities. And we don't see this huge kind of yo yo of businesses coming and going. If you look at economies that have attempted to secure full employment, they're far more stable than our economy. They don't see this big volatility in the unemployment rate. So what what I'm suggesting is that our recessions are not going to be as deep. Our booms are not going to be potentially as speculative, although, listen, we've got to do other things to address speculative booms. But in general, at least, people will not be victims of speculation when they lose their jobs because somebody is speculating in the housing market. They will always be secured. Unemployment, a good living wage, employment opportunity. One of the things I love about the idea also is that it creates this new anchor. I have heard before, right? People say the minimum wage when there's unemployment around is not whatever we set it to seven, ten, 15, it's zero. Because when you're unemployed you don't have an income. And so I really appreciate and think it's very powerful the way the job guarantee sets a wage floor at whatever, you know, we politically and democratically decide it should be the living wage. And I feel like that is a very powerful kind of leverage for workers and the labor movement in general. Yeah, this is really such an important point that you're making because, we might have tomorrow kind of a very progressive president, great administration. And they say, okay, we are raising the minimum wage and we have Congress behind us and we're going to raise the minimum wage to$20 an hour. Great. But if you don't have a job, what good is it to you And really, it's important to appreciate how the lives of people who are employed are affected by those who are not employed. Then whatever progress we eke out on our jobs, on the job front, it's always under jeopardy because you could always lose the job or somebody might be willing to take the job without those benefits that we fought for. We see this slide on over the postwar period. We've seen this happen, the erosion of the good, stable job with a public option that guarantees employment at some basic wage, that provides an entirely different dynamic in the labor market. That means that if somebody wishes to offer you$7 an hour, they won't really be able to because you always have the 15$20 option. If a an employer wants to harass you or take away your benefits, you can walk away. You can say no. And so it is really a structural kind of support that says, well, this is what we think has to be the basic job and it should be accessible to all and let the marketplace sort out the rest of the jobs in the economy. That is a very effective way of eliminating poverty, jobs. Right. It creates the so coveted competition, right, for the marketplace. So the bad employers are either driven out of business or they're incentivized to do better. So what I'm saying is law is not enough. You have to also have access to employment to be able to secure the floor and to be able to guarantee those benefits. I mean, you can think of it also as a as another tool to achieving other objectives. If the public option gives you Medicare, then employers that do not provide health care will have to think twice if they if they want you on the job. And they might again be urged to offer health care as well. So there are multiple benefits to to securing kind of a guaranteed, you know, public employment opportunity. All right. So to kind of wrap this up, in a sense, we've got to come full circle here and bring up a tweet by our nemesis here at Funny Money. And I want to speak to to this because there was a claim made that, historically speaking, you needed to have or it was important to have balanced budgets in order to keep the unemployment rate low. What's the problem with this framing in this argument? Look, these are two unrelated things. The unemployment rate can be very high with low deficit or vice versa. What we do know is, of course, when you have high unemployment, the public sector has to respond, Right? When you have high unemployment, you have lost incomes, you have lost tax revenue. The public sector, well, we have institutions that address or at least attempt to address the poverty that comes from unemployment. So they kick in automatically. Right. So there is there is some kind of a relationship, if you will, between government spending and large unemployment. But the point here is that the deficit is not a measure of well-being. It's not it should not be a target of policy. It's usually a reflection of something that's happening in the economy. And you may have very high unemployment. And you can have very low, low deficit, which is the case in Europe. And it's structurally they have decided that they have they should have these deficit rules and they have tied their hands and they're cutting their budgets and they have mass unemployment. So this is not a particularly useful way of thinking about either the deficit or the unemployment problem. One of the ways that I've heard this talked about before is to move away from this idea that we need sound finance in order to accomplish our goals in the macro economy, which really means like, what's happening to people's lives. The other way I've heard it talked about and I think this is a central component of the modern money paradigm, is to talk about functional finance, which is to say what are we trying to accomplish in the economy? It's not about what our budget or our deficit looks like, but it's actual like the real social health and environmental consequences that we can develop or foster in our economy, in real communities. Yeah, the deficit myth, you know, balancing the budget, whatever conventionally is understood as fiscal responsibility. I call fiscal irresponsibility. These are basically the the primary obstacles to achieving policy objectives. They hold policy hostage because they divert attention from the real problems. Do we have mass unemployment? Do we have large social costs? Do we have the real resources to address the Green New Deal objectives? Those are the real questions. Do we have inequality? Do we have opportunity? But the answer to these questions is always subjected to this litmus test is whether we have money and we have to put that to rest, because I don't know how many more teachable moments we need. We've had the financial crisis. We had COVID. We have endless wars, and we see that budgets and financial resources, money is mobilized on short order, no questions asked. Whenever whatever the policy priority is, it's never a question of whether we have the money. Yes, we do have the money and the size of the deficit has never been an obstacle to pursuing these objectives. And so at the same the same sort of thing has to happen with the Green New Deal, with jobs, with housing, with infrastructure. We need to be looking at what is the goal and to achieve it in terms of its real resources, finances, just a tool it enables our achieving our goals. And it is readily available as these crises amply demonstrate. Now that all of our listeners are just hungry for more of your work. Professor Tcherneva, I want to remind everyone that The Case For a Job Guarantee is a brilliant book that you should definitely get and read. Thank you so much for being with us, Professor Tcherneva, and breaking this down. Do you want to share anything about work you've got going on or other ways to follow what you have coming down the pike? Well, thanks. This is great conversation. I am, well, happily going on a sabbatical, but I have a new project called the Economic Democracy Initiative, which is creating a lot of curricular and research projects. So I would say definitely stay tuned. Follow me on Twitter and hopefully there'll be some new things coming up to share. Amazing. Very excited to check out the Economic Democracy Initiative. Also very, very exciting to share is that the job guarantee work is now going to be featured in a special report, U.N. report, to be released at the end of June. I was very happy to help with that report and will be participating in the launch. The reason why I think it's very exciting is because we are coming full circle to that conversation we began almost 100 years ago of how do we secure this basic human right? And with the report, I hope that countries will then well, they will have to respond and perhaps will take the moment to reflect on this new policy tool that, as I said, is under underappreciated and under utilized. Thank you.