A program of public works would address unemployment
Re: The Liberals’ economic recovery plan deserves real debate. It’s time for Conservatives to step up, Heather Scoffield, July 30, 2021
A monetarily sovereign government can always "print" monies to pay debts and so can never be forced into bankruptcy. Our Canadian government can either spend too much risking inflation, or too little allowing mass unemployment. Since we currently have 1.6 million actively looking for jobs, the government should target more projects that put people back to work.
Enhanced infrastructure spending would soak up excess engineers and experienced construction workers. Missing is an updated version of Depression-era public works that would hire from a variety of skills on initiatives such as community services to old and young, public art performances, and environmental conservation.
Like a cup that can be filled to the top, so the economy can absorb additional government spending until everyone has the opportunity to earn income and contribute to society. True full employment means higher economic productivity benefiting all Canadians, and fewer social problems that manifest with idleness.
For edited version published in Toronto Star go to https://www.thestar.com/opinion/letters_to_the_editors/2021/08/04/a-prog...
1. John Maynard Keynes, (1883-1946) British economist
"We shall try to show him that the conclusion, that if new forms of employment are offered more men will be employed, is as obvious as it sounds and contains no hidden snags; that to set unemployed men to work on useful tasks does what it appears to do, namely, increases the national wealth; and that the notion, that we shall, for intricate reasons, ruin ourselves financially if we use this means to increase our well-being, is what it looks like – a bogy."
2. What is Modern Monetary Theory, or “MMT”?
"The essential insight of Modern Monetary Theory (or “MMT”) is that sovereign, currency-issuing countries are only constrained by real limits. They are not constrained, and cannot be constrained, by purely financial limits because, as issuers of their respective fiat-currencies, they can never “run out of money.” This doesn’t mean that governments can spend without limit, or overspend without causing inflation, or that government should spend any sum unwisely. What it emphatically does mean is that no such sovereign government can be forced to tolerate mass unemployment because of the state of its finances – no matter what that state happens to be.
Virtually all economic commentary and punditry today, whether in America, Europe or most other places, is based on ideas about the monetary system which are not merely confused – they are starkly and comprehensively counter-factual."
3. William Mitchell is Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE),
University of Newcastle, NSW, Australia http://bilbo.economicoutlook.net/blog/?p=34412
Blustein (2008: 230) documents the findings of a plethora of research studies that have focused on the importance of work for psychological health.
1. “the loss of work has been consistently linked to problems with self- esteem, relational conflicts, substance abuse, alcoholism, and other more serious mental health concerns”.
2. “the loss of work has been associated with a notable decline in the quality of neighborhoods, a decline in the quality of family relationships, and an increase in crime as well as problems in other critical aspects of contemporary life”.
3. “the loss of employment opportunities … [leads] … to a marked disintegration in the quality of life, with corresponding elevations in drug abuse, criminal activity, violence, and apathy.”
4. Learn To Love Trillion-Dollar Deficits
"Politics aside, the only economic constraints currency-issuing states face are inflation and the availability of labor and other material resources in the real economy.
If any government tries to spend too much into an economy that’s already running at full speed, inflation will accelerate. So there are limits. However, the limits are not in our government’s ability to spend money or to sustain large deficits. What M.M.T. does is distinguish the real limits from wrongheaded, self-imposed constraints."
5. Abba Lerner: Functional Finance
"The central idea is that government fiscal policy, its spending and taxing, its borrowing and repayment of loans, its issue of new money and its withdrawal of money, shall all be undertaken with an eye only to the results of these actions on the economy and not to any established traditional doctrine about what is sound and what is unsound. This principle of judging only by effects has been applied in many other fields of human activity, where it is known as the method of science opposed to scholasticism. The principle of judging fiscal measures by the way they work or function in the economy we may call Functional Finance … Government should adjust its rates of expenditure and taxation such that total spending in the economy is neither more nor less than that which is sufficient to purchase the full employment level of output at current prices. If this means there is a deficit, greater borrowing, “printing money,” etc., then these things in themselves are neither good nor bad, they are simply the means to the desired ends of full employment and price stability.."
Modern Monetary Theory in Canada