New Zealand’s unemployment was less than 1% for 30 years from 1946 to 1976. Now the government, the Reserve Bank and traditional economists settle for 4% unemployment, as ‘full employment’.
This version of ‘full employment’ means 8% youth unemployment and 16% Maori / Pacific youth unemployment. Problems such as family poverty (including children missing meals), mental health, suicide, poor health and reduced self-esteem which accompany the lack of a job are barely acknowledged or debated there as to whether they are too high a price to pay.
Martin Taylor of progressive economic thinktank Digital Strategies who has been working on a jobs guarantee argues this could cost as little as NZ $1.6Bn, approximately 0.5% of GDP. And, this is more than outweighed by the benefits such as dignity of work, improved mental and physical health, improved social and environmental outcomes, boost infrastructure and care work.
Full article by Catriona MacLennan published on Radio New Zealand website, 29th April 2020.
A plain-English guide to what it is and why it’s interesting
“There’s nothing to prevent the federal government creating as much money as it wants” -Alan Greenspan, former Chairman of Fed Reserve, USA
Stephanie Kelton, Professor of Public Policy and Economics at Stonybrook University argues that there is no harm in printing money, there will be no inflation as long as there is unused economic capacity or unemployed labour. Government spending can be used to boost the economy and eliminate unemployment. Inflation can be controlled either by reducing government spending or withdrawing money by increasing taxes.
Explains that highly publicized instances of hyper inflation in pre war Germany and Zimbabwe were due to lack of resources to boost economies, rather than printing money.
While traditional economists still haven’t accepted MMT, what many governments are doing since GFC is printing money.
Government spending can be used to boost the economy and eliminate unemployment.
“The cruelty of high inequality countries is to induce starstruck dreams upon their young people, but refuse to fund pathways to get there”
George Lakey, ex Professor for Issues in Social Change, Swarthmore College
The social-democratic economic model.
High taxes, high wage costs, short hours of work, long vacations, even longer maternity leave, free childcare, free college education, extensive social welfare programs that pay an unemployment benefit of up to 80% of your wage,
And highly productive economies sound like an oxymoron, a fantasy too good to be true.
How would you encourage entrepreneurs and compete in a globalised economy when your costs are so high? In a world where low labour cost and low taxes are deemed essential for success.
This book dispels the myths that prevail, putting Scandinavian success down to culture, a homogenous population, size of the countries etc. An anomaly.
The arduous journey these nations undertook to transform their economies, from the Viking spirit of war and adventurism to capitalism with a human touch, a caring society. The struggles of the Nordic people to achieve a more equal country over more than a hundred years. The battles to overcome missteps that arose, trying to follow the neo-liberal models that changed the Anglo-American economies in the 1980s. The recovery from virtual bankruptcy that engulfed Iceland following the Global Financial Crisis of 2008. A clue -they didn’t bail out the reckless bankers. And they resisted pressure from the IMF to implement harsh austerity measures.
Scandinavian countries have a higher rate of startups than the USA, free higher education builds human capital, an excellent social welfare net encourages risktaking.
Businesses are encouraged to be competitive, except by cutting wages and benefits. Strong unions provide a balance between employers and employees. Successful cooperative ventures dispel the myth that private ownership or listed companies are the only viable economic models.
Scandinavians support high taxation, as they know they get a high level of services in return– “To get a lot, we pay a lot”. The economic system was built for everyone. It is not a system that encourages the notion in high inequality countries that the winners are supporting losers.
Social welfare programs, while comprehensive, encourages a strong work ethic. The focus is on getting people back to work. Sole parents are encouraged to work by providing free childcare. Teenagers are supported into employment or apprenticeships, providing a smoother transition from school.
This book by George, an American who lived in Norway for many years tells the story of the Nordic economic model. The successes, the challenges, warts and most importantly, lessons for the rest of the world. How we can achieve a highly productive economy where people are treated with dignity and the balance between business and society is highly equitable.