A radical economics theory to eliminate unemployment using government funds is gaining traction in Australia.
Visiting US economist Professor Stephanie Kelton believes that the Federal Government should underwrite jobs for all Australians struggling to find work, the ABC reports.
The jobs would be created in the community sector, but the wages would come from Treasury.
Rather than rely on Treasury revenue, however, Prof. Kelton recommends that the Government print money to fund the new ‘jobs guarantee’ payroll.
The idea is part of the modern monetary theory (MMT) school of thought that has been developing since the early 1990s, the ABC sa.
But critics of governments printing more money when they run out of cash say that the process leads to runaway inflation and a devaluation of the local currency. This view is also in dispute among other economists.
Prof. Kelton is being hosted by organisation GetUp’s Rethinking Our Economy roadshow. A jobs guarantee is a key plank of the organisation’s Future to Fight For campaign.
In an interview with SBS News, the economist said: “They might say ‘it would be of value in this community to have someone provide an extra pair of hands in a school or a crossing guard or working to mitigate climate change. There are tens of thousands of jobs that you could imagine.”
Her views are echoed by University of Adelaide economics lecturer Steven Hail, who believes that governments should not obsess about balancing budgets.
“In a country with nearly 15 per cent underutilisation of labour, over 30 per cent youth underutilisation, fragile private balance sheets, and a growing need for green and other infrastructural investments, it does imply that budget repair is a red herring,” Mr Hail said.
“This means the Government could and should be using its role as the currency issuer to promote full employment, social inclusion, ecological repair, and healthy private sector balance sheets.”
The Greens are understood to have explored the benefits of MMT and recently, Mr Hail briefed the Canberra branch of the Labor Party on the theory.
There are about 700,000 jobless Australians. Last month, the unemployment rate fell to a six-year low of five per cent.
“There is nothing to prevent the Australian government, if it chose to do so, from funding a large-scale government job program that would offer employment to anybody who wanted work and couldn’t find it anywhere else in the Australian economy,” Prof. Kelton said.
“We want the local communities being the ones to imagine the kind of work that is going to provide the most value.
“So it’s not a top-down government, bureaucratic (model) … they just provide the funding and the community decides what needs to be done.”
Do you think the Government should pay the unemployed to work for other organisations? Would you be willing to risk inflation in order that no older Australians would be jobless?