The modern monetary theory movement proposes that the government should act as an employer of last resort, guaranteeing a job to anyone who needs one at some minimum wage.
There’s a lot to be said for the idea. Working is a necessary component of living a life of dignity for most people. Joblessness breeds all sorts of social pathologies and extended joblessness is a huge source of economic waste—skills go unused and deteriorate, human resources sit idle, and bringing someone back “online” after a long time out of the workforce can be very difficult.
One of the strongest objections to the idea of the Job Guarantee, however, is that it may distort the economy is unpredictable ways. The loss of a job for someone is often the spark that ignites the flames of entrepreneurialism. High unemployment reduces the opportunity cost of starting your own venture, for example. If you can’t find work, sometimes you make it.
That seems to be what happened in Brooklyn in the wake of the financial crisis. Entrepreneurialism of a certain sort—locally oriented artisanal (often bordering on luddite) production—took off. There was even talk among some friends of mine of starting off a Brooklyn Automotive Works.
New York Magazine’s big story on the Brooklyn as business makes this very clear:
Only a few years ago, the idea of a resurgence of any kind of manufacturing in Brooklyn seemed like nothing more than a nostalgic daydream, right up there with the comeback of egg creams and soda fountains. In 1978, there were 116,000 manufacturing jobs in Brooklyn. By 2000, there were just 43,000. By 2009, another 53 percent of the jobs were gone, leaving only 20,000. But all that vacated factory space—at least that part not converted to residential lofts—beckoned. People calling themselves locavores started to care about where their food came from and how it was made. The DIY movement took hold. And with the recessionary job-market crunch, suddenly the opportunity cost of launching your own business shrank dramatically. So many Brooklynites started cooking up batches of jam, chocolate, pickles, and granola that artisan aspirants had to specialize. Now you can buy Q artisanal tonic water and Empire artisanal mayonnaise and DP Chutney Collective artisanal pear mostarda. And oh, that nostalgic daydream of egg creams and soda fountains returning to Brooklyn? On a recent Thursday afternoon, Eastern District in Greenpoint was serving up chocolate egg creams using local artisanal P&H soda syrup made with Mast Brothers cocoa husks.
The details here are pretty telling and I recommend you read the whole article. Some of you may get a chuckle out of the oh-so-Brooklyn details—like guys with civil war beards and tattoos posting digital videos of their schooner bringing cocoa beads back from South America. But one thing you should also notice is how much of initial works takes place in the underground economy. Women starting a jam company by working after hours in the kitchen of the restaurant where they have day jobs.
Now what would have happened if instead of making up for lost jobs by starting risky and questionable businesses, people were encouraged to take a safe jobs on offer from the Jobs Guarantee. We don’t really know. Certainly, there’d be fewer businesses failing. Income streams wouldn’t be as volatile, as the JG would create a price anchor for labor. But we’d likely see far less of this kind of innovation.
Does that matter? If you think very broadly about the economy, perhaps it doesn’t. If all you are looking for is price stability with full employment, maybe the snuffing out of this kind of innovative work doesn’t matter to you at all.
But if you want a dynamic economy that keeps Brooklyn weird and provides the kind diversity localvorist innovation has created in Brooklyn, it does matter—a lot. And if you think economic dynamism and diversity is the particular genius of free markets, then it matters even more.
In the long run, I suspect that an America with a Job Guarantee would be a less vibrant place. As painful as unemployment is for those afflicted and for our economies ability to produce at its full potential our economic plight would be worsened by the guaranteed jobs. Dissenting business ideas, always just bubbles in the molten mass of our economy, would pop and sigh out, as the mass congealed.
Brooklyn-made my just be a shooting star, something that will burn out one day. But, as a poet once said, meteors are not needed less than mountains.