Question 4 - Is the Job Guarantee green?
The Job Guarantee approach also challenges the conventional Post Keynesian approach to restoring full
employment. Post Keynesian economists reject the orthodox emphasis on microeconomic factors when
considering unemployment. Following Keynes, they argue that large-scale unemployment is due to
insufficient demand and can be cured if the public sector stimulates spending using traditional
fiscal and monetary instruments. While not denying the thrust of this approach, we argue that
deficient demand can only be a proximate cause of the unemployment. The reason there has been
a long-term deficiency in aggregate demand lies in the deliberate decline in government involvement
in economic life. This reflects the individualism that has replaced the sense of collective
responsibility that characterised economies following WWII.
The problem is not in the mechanics although some might say that with path-dependence in investment,
the slow down in the 1970s has now created a disparity between the labour supply growth and capacity
growth which renders it difficult to restore full employment using existing technologies. The real
problem is that the types of growth rates required are likely to cause irreparable damage to the
natural environment. There is a difference between growth and development.
Macroeconomics has never focused on the scale of activity - which is the size of the economy relative
to the ecosystem. Any discussion about full employment must be put into the economic growth versus
sustainable development debate. Independent of whether cutting real wages or stimulating demand
directly is the way to increase employment, it still remains that to increase employment we need
higher levels of output. So the issue of what the higher levels of output implies is relevant.
However, the standard Post Keynesian view also fails to take into account issues of environmental
sustainability. Even if it was possible to expand demand enough to promote growth sufficient to
keep pace with labour force growth and productivity growth and mop up the huge stocks of long-term
unemployment, how could the natural ecosystems, already under great strain, cope?
The Job Guarantee proposal acknowledges the environmental problem. There is a need to change the
composition of final output towards environmentally sustainable activities. These are unlikely to
be produced by the private sector because they have heavy public good components. They are ideal
targets for public sector initiative. If the unemployed workers are deployed in these areas of
activity, the individuals gain a restored personal dignity and the society gains from the increased
provision of environmental sensitive goods and services. It is not increased demand per se that is
necessary but increased demand in certain areas of activity.
The required jobs are unlikely to be produced by the private sector because they have heavy public
good components. They are ideal targets for public sector initiative. Numerous service jobs could
provide immediate benefits to the society, when filled by Job Guarantee workers. These include urban
renewal projects and other environmental and construction schemes (reforestation, sand dune stabilisation,
river valley erosion control and the like), personal assistance to pensioners, assistance in community
sports schemes, and many more.