Comment on ‘Fiscal Policy and the Job Guarantee’

This paper provides a critique of the Job Guarantee Scheme proposed by Mitchell and Mosler (2002). Although we agree that unemployment is due to a lack of aggregate demand and that active labour market policies and demand management can help, we argue that there are significant problems of operating a job guarantee scheme at a fixed money wage. The job guarantee scheme proposed is driven by an analogy to a wool stock scheme: unlike most goods labour (services) cannot be stored. We critique the implicit role of money in their model and the absence of a formal macroeconomic model. We discuss some of the unintended effects of a job guarantee scheme: declining productivity (due to a fall in “worker discipline”), an increased bargaining power of workers leading to increased real wages and hence implications for inflation, and the decline in political power of the “bosses” (a la Kalecki).