Jesse A. Myerson wrote an article in Rolling Stone entitled “Five Economic Reforms Millenials Should Be Fighting For“. The first of these reforms is “Guaranteed Work for Everybody”.  (This is immediately qualified to “everyone who wants to contribute productively to society”, probably since the original might be interpreted as meaning forced labor.)

Anyway, Myerson claims that “A job guarantee that paid a living wage would anchor prices”.  How? As I see it, if all the unemployed (or even a significant number of them) were suddenly being paid money for work, it would result in an increase in the price level–that is, inflation.

Now, this isn’t necessarily as bad as it sounds, since the problem in most recessions is deflation, and pursuing an inflationary policy to combat unemployment is an old Keynesian trick.  (Although in this case, unemployment would presumably be almost 0, so there would be no need to combat it…) 
Also, since it’s a living wage, if prices go up, the government would have to increase the wage to keep up with prices, which could cause prices to go up again, and possibly lead to a never-ending inflationary cycle.  But that might just be my pessimism talking.  Nevertheless, I don’t get how this idea, whatever other merits it may have, is supposed to “anchor prices”.

I know I’ve talked about this before, but it never ceases to fascinate me how the Republicans can miraculously understand and believe in Keynesian economic theory when military spending is at stake, and then forget all about it later.

By the same token, I do think it was a mistake on the administration’s part to make those cuts during a period of sluggish economic growth.  If you buy into Keynesian macro-economics, you have to admit, even if you oppose the military-industrial complex, that it is a useful economic tool.   Maybe not the best way to build an economy in the long-run, as Richard Nixon kind of alluded to in the famous “Kitchen Debate“, but even so, it certainly does work the same way as any other fiscal stimulus program.

This kind of doublethink is quite irritating, but at the same time it’s important to see what underlies it: the huge divide between Republicans and Democrats.  It is not just a matter of disagreement on economic theory, but on what the nation ought to be like and what it ought to produce.  It’s much deeper than just economics.