The European leadership’s grasp of market forces is even worse than I had imagined.

Unless they somehow cut back on oil consumption, and no one else buys from Iran,
Iran’s sales and prices received don’t change:

Europe Agrees to Ban Imports of Iran Oil; No Date Set
Published: Wednesday, 4 Jan 2012 | 1:01 PM ET
By: Reuters

European governments have agreed in principle to ban imports of Iranian oil, EU diplomats said Wednesday, dealing a potentially heavy blow to Tehran just months before an Iranian election.

65 Responses

  1. It hurts Iran a little bit. Not only are the oil markets not perfectly efficient, but oil is not a perfect commodity. Iranian oil is presumably a little bit different from other oil which may require some refinery tweaking. Also, there are potentially higher transportation costs and other transaction costs involved with finding other buyers.

    Of course according to you, the Saudis could really hurt them by driving down the price of oil single-handedly. We might see some coordinated action at some point, since the Saudis are as afraid of a nuclear Iran as anybody.

    1. @ESM,

      so if the Saudis wanted to drive down the price of oil how would they do that? Just simply saying….”this is the price to pay for oil” and then as Warren says, “let quantity adjust”? Is it just that simple to change the price of oil?

      1. @WARREN MOSLER,

        I hear it is the other way. Saudi Arabia is considered the marginal producer, and analysts say it is their level of production that causes supply, and prices, to change (absent some sort of shock to the market). Still, they change their production plan only a few times a year, and prices gyrate wildly every day. If the Saudis were willing to sell only at one particular price, and to sell all their potential output at that price, then the market price would gravitate toward that one price, not vary as wildly as it does.

        I think they sell their day’s production at the market price of that day.

  2. sounds to me like more “drumbeats” for war….these guys are asking for a fight it seems to me. They are clinically insane imho.

    1. @Mario, Are you referring to the UK, USA, Iranian, or Israeli policy makers? Or any permutation of all 4 groups – meaning they’re one & the same? Just working out the details of who’s pawns will sacrifice themselves where? And who’s being cut down a notch in the pecking order.

  3. Warren, you cannot reduce politics to bean counting. The window of opportunity to push Iran back to middle ages is closing soon. What is significant is not the rhetoric about the sanctions but the fact that the Taleban leaders are to be set free from Guantanamo Bay. Israel did something similar with the Palestinian prisoners. Iraq has been fully evacuated. So the focus has shifted and the front shortened by a tactical withdrawal. In Egypt the thaw is over and moderate Islamists will act as a fig leaf for the junta. Democracy as a tool is not needed any more. It’s time for bullets.

    You have to understand that nobody will allow for a threat of another Holocaust when Iran can nuke Israel at any time. You have to understand what the Holocaust means for the Jews not only for these living in Israel. If I am wrong this means that the West has already lost its mojo and the game is over.

    In Iran I do not expect a repetition of the disastrous Iraqi 2003 campaign but rather surgical attacks aiming at the destruction of the infrastructure and killing the top Iranian leaders. You cannot enrich uranium if all the power lines and transformers are destroyed. This should be enough but of course the Iranians have means to retaliate. However every single Gulf country will be supportive. It is interesting to see what the Russians will do. They may be given some economic or political concessions.

    1. I disagree. I think that the bottom line is ultimately what counts and therefore you CAN reduce politics to bean counting. It’s like saying that anything other than earnings drive stock prices in the long-run.

      1. @Colin,

        “what counts and therefore you CAN reduce politics to bean counting”

        This is a dangerous oversimplification coming from the illusion that humans are rational – as rational as Hitler, Stalin, Pol Pot or the others who maximised their utility function by killing millions until the marginal utility from killing was equal to the marginal cost of bullets.

        You cannot define a goal function which can me maximised because the processes in human societies are not stationary. You cannot maximise an undefined function. We are not rational in that sense and economics is a pseudo-science.

        Stock prices are irrelevant when the stock exchange is bombed.

      2. Colin,

        When you make the following statement:
        “It’s like saying that anything other than earnings drive stock prices in the long-run.”
        you identify yourself with a certain very simplistic way of thinking about complex processes.

        I can only recommend reading “John Maynard Keynes” by Paul Davidson especially “Uncertainty and the ergodic axiom” on page 31 and below.

        Since we are dealing with the world which is changing over time (is not stationary or cannot be described by an ergodic process) we cannot say that we can assign numbers which would represent the desirability or value of certain outcomes – either in the micro or macro scale. You cannot define a time-invariant metrics. This is what I mean by inapplicability of “bean counting”. Not only the human behaviour is often unpredictable but the system itself often cannot be mathematically described in such a way which would allow for optimisation.

        I am not saying that we cannot describe the processes which do occur around us or make an attempt to use heuristic methods to make the right decision but there is absolutely no guarantee that our even well informed decisions will not lead us again to a catastrophe like in 1914 (the decision to start a war) or 1934/1939 (the decision not to start a war – attack Hitler when he was still weak).

      3. @Adam (ak),

        You have to understand that nobody will allow for a threat of another Holocaust when Iran can nuke Israel at any time. You have to understand what the Holocaust means for the Jews not only for these living in Israel. If I am wrong this means that the West has already lost its mojo and the game is over.

        What country are you from, and who are you loyal to? Sixteen (16) US intelligence agencies, in the strongest possible language, said in the 2007 National Intelligence Estimate (NIE) that Iran was not making nukes. Iran IS creating nuclear reactors for power, but they are allowed to under the NPT. Iran has not been able to enrich uranium beyond 4-5%. They needed 20% enriched uranium for their medical isotopes. They got that from Russia. They would need to enrich at 92% to make weapons, and it took them 20 years to enrich at 5%.

        The 2011 NIE isn’t out even though it’s ready because, as leaked sources have said, it says exactly the same thing.

        The only people pushing for war with Iran and threatening WWIII are Israelis, actually the Israel-Firsters in this country. Both the current and former heads of the Mossad said Iran was not a threat to Israel. The former said it last week. The latter said it in January 2011. (Google Haaretz for both.)

        In fact, the right-wing Israeli newspaper Arutz Sheva said today (1/4/2012) of Meir Dagan, “In June, he said the Netanyahu government’s policies on Iran are irresponsible, and publicly warned against attacking Iran. He said that an aerial attack on the Islamic Republic’s nuclear facilities would be a ‘dumb idea, the stupidest thing I have ever heard.'”

      4. I am not happy to continue this topic but since my personal credibility was questioned – I need to respond.

        I am ethnically Polish with mostly Polish, Belarussian and Ukrainian ancestry. One of my ancestors may have been Jewish but I don’t know much about it – this was concealed for rather obvious reasons, being 1/2 or 1/4 Jewish in Poland in 1942 equalled to a death sentence.

        What I know for sure is that one of my grandparents was imprisoned in a concentration camp (but survived). Another joined the resistance and was blowing up German supplies to East Front. During communism my family was also persecuted. But why is this relevant? It is relevant because I heard stories about the NKVD and Gestapo from first-hand witnesses that is from my family and because I read a lot of historic literature. Accusing me of supporting Zionism or working for Likud is a bad joke.

        I am simply not naive.

        By accusing me of repeating Israeli right-wing propaganda my opponents have recycled “generic” left-wing propaganda that Iran needs enriched uranium to make isotopes and it is a peace-loving country. It is as naive as appeasement policy championed by Neville Chamberlain or the anti-nuclear movement from the 1980s acting as Soviet puppets during the last phase of the cold war. Have you ever lived behind the Iron Curtain? Did anyone ever threaten you with persecution for example being drafted to the army unit for punishment for making political statements? (This happened to me when I was a student). This is the main difference between us. For me WW2 or communism is not something what happened on another planet. I remember perfectly well tanks deployed on the streets in 1981/1992 because some workers wanted to reform socialism. The fact that I do not subscribe to neoliberalism doesn’t mean that I have to believe in the anti-West ideology.

        First of all I studied a bit of physics at the university and I will question this sentence:

        “Iran has not been able to enrich uranium beyond 4-5%. They needed 20% enriched uranium for their medical isotopes. They got that from Russia. They would need to enrich at 92% to make weapons, and it took them 20 years to enrich at 5%.”

        It took them quite long to build the equipment despite all the effort to disrupt it. Once uranium is enriched to 5% or 20% the task of enriching it to 80% is fairly trivial. See

        The statement that the Iranians were not making nukes in 2007 does not mean that they are not working on achieving that capacity, on the design of warheads and long-range missiles. I can provide links to the reports showing that.

        If the only reason to master nuclear technology is to produce energy and isotopes why did the Iranian government reject several plans to receive nuclear fuel in exchange for abandoning developing the dual-use enrichment technology?

        But the real reason why I think that Iran is a threat is very obvious. It is exactly the same reason why Marshal Pilsudski wanted to overthrow Hitler in 1933 – because the intentions of the tyrant have been clearly communicated in open text many years before he was able to implement them.

        It is their president who said (quotes from Wikipedia):

        “Our dear Imam (referring to Ayatollah Khomeini) said that the occupying regime must be wiped off the map. We cannot compromise over the issue of Palestine. Is it possible to create a new front in the heart of an old front. This would be a defeat and whoever accepts the legitimacy of this regime has in fact, signed the defeat of the Islamic world. Our dear Imam targeted the heart of the world oppressor in his struggle, meaning the occupying regime. I have no doubt that the new wave that has started in Palestine, and we witness it in the Islamic world too, will eliminate this disgraceful stain from the Islamic world.”

        “Some European countries insist on saying that during World War II, Hitler burned millions of Jews and put them in concentration camps. Any historian, commentator or scientist who doubts that is taken to prison or gets condemned. Although we don’t accept this claim [of the holocaust], if we suppose it is true… If the Europeans are honest they should give some of their provinces in Europe – like in Germany, Austria or other countries – to the Zionists and the Zionists can establish their state in Europe. You offer part of Europe and we will support it.”

        “In the second World War, over 60 million people lost their lives. They were all human beings. Why is it that only a select group of those who were killed have become so prominent and important? Do you think that the 60 million who lost their lives were all at the result of warfare alone? There were two million that were part of the military at the time, perhaps altogether, 50 million civilians with no roles in the war – Christians, Muslims. They were all killed. The second and more important question that I raised was, if this event happened, and if it is a historical event, then we should allow everyone to research it and study it. The more research and studies are done, the clearer the issue gets. We still leave open to further studies absolute knowledge of science or math. Historical events are always subject to revisions, and reviews and studies. We’re still revising our thoughts about what happened over thousands of years ago. Why is it that researchers are jailed? Why is researching this issue prohibitited? Where as we can openly question God, the prophet, concepts such as freedom and democracy? And the third question that I raised in this regard: assuming that this happened, where did it happen? Did the Palestinian people have anything to do with it? Why should the Palestinians pay for it now? Five million displaced Palestinian people is what I’m talking about. Over 60 years of living under terror. Losing the lives of thousands of dear ones. And homes that are destroyed on a daily basis over people’s heads. You might argue that the Jews have the right to have a government. We’re not against that. But where? At a place where their people were – several people will vote for them, and where they can govern.”

        If this is not enough, what else do we need?

        I think that these comments should be enough to discredit the Iranian regime as a responsible player. “There is zero evidence that the Iranian government wishes to commit suicide by attacking Israel.” – to me there is evidence shown above that Iran wants to destroy Israel. They do not have to do it in an open confrontation – imagine terrorists smuggling a warhead or two to Gaza, West Bank or Lebanon and then detonating it in Tel Aviv. Who Israel can retaliate against in that case? This renders the “mutual destruction” doctrine useless.

        I am not a war monger. A conventional war and occupation in these circumstances would be an act of stupidity.

        I also do not advocate destroying nuclear facilities in Iran because this is not enough – in my opinion Iran should be presented with a credible threat of repeated surgical attacks on its all infrastructure combined with crippling economic sanctions but also a big carrot. If they are rational they should choose the carrot.

        Otherwise Mr Ahmadinejad and the Iranian religious leaders should be given the same treatment which was applied to Col Gaddafi or Bin Ladden.

        In my opinion we have a moral duty to prevent another round of senseless mass killing in the Middle East, promised by the mad ayatollahs who want to “liberate” Palestine and then mould the whole region in the way prescribed by their sacred scriptures. If this sounds unpleasant or politically incorrect – I don’t care. There is no dialogue with somebody who is trying to draw a gun at you. You either convince him to give up and go away or shoot him before he can shoot you.

        This doesn’t mean that I love Benjamin Netanyahu, George Bush or Milton Friedman. This only means that I do not try to escape into the delusions of well-wishers.

    2. @Adam (ak), The US and the Soviet Union did not destroy each other with nukes. Why would you expect Iran to provoke a devastating response from Israel and with a nuclear attack?

      1. @pebird,

        I put the probability that Iran would launch a suicidal nuclear attack on Israel at less than 5% but not less than 1%. That’s not terribly comforting, nor does it encapsulate all of the risk involved in Iran going nuclear. Iran could give nuclear weapons to terrorists, and it could use its nuclear capacity as a shield to allow far more aggressive military actions in the region.

        Finally, when you have two arch enemies with nuclear weapons pointed at each other, the probability of an unintended nuclear is material. I think those who take comfort in the fact that the US and Soviet Union survived the Cold War unscathed are guilty of a logical error. Not only is it a sample size of one, but both governments had a vested interest in keeping their respective populations (and the world) in the dark about the numerous instances in which disaster was barely avoided.

      2. @ESM, Right now the probability is 0% unless the Iranians steal a nuclear device. The probability that Israel would strike Iran with a nuclear is greater than zero, in that they have nukes.

        I agree that we dodged a bullet with the US SU MAD doctrine.

        I think a nuclear-free Middle East is the way to go, but the US and Israel will never agree to it.

    3. @Adam (ak), sounds like you drank the kool-aid man. Persia isn’t exactly known for crusade like behavior. The same lines and tactics used to justify Iraq are now being used for IRan. History repeats itself. Iran is no saint, but I would rather live there than in ally Saudi etc.

      Seriously you have to be insane to think that they would get a nuke and then proceed to launch on Israel. What kind of idiot would do that? Blathery rhetoric from the likes of Ahmadinejad is one thing (and really, is it much different from Bush, Mccain or Cheney?) but expecting the political elite to actually wage nuclear war is downright inexcusable.

  4. will India/China benefit 90%, or only 50%?

    you gotta think Obama sent a message saying “we’re gonna bomb ’em & cut off their oil exports anyway”

  5. People always ask if MMT provides insights that help you make money using your knowledge of how the economic system works. Your posted results from investing in treasury bonds with the Bank was one of the best testimonials about the value of the accuracy of MMT in practice. JPMorgan selling 100 trillion in swaps, or BofA or Goldman couldn’t do THAT. Pretty amazing stuff. I wish you kept that post on the blog. I linked to it but the link disappeared. =(

    1. @Ryan, I doubt whether MMT could tell where to invest, but it can say this: If the federal government commits to increasing deficit growth, the economy will flourish. If the federal government commits to “balanced budgets” or “revenue neutral” or any other such nonsense, the economy will sink.

      So far, “sink” looks to be ahead for 2012.

      Rodger Malcolm Mitchell

    2. @Ryan,
      I think It does provide inside more than mainstream. I’ve been enjoying reading Warren’s blog and he called treasury interest rate fall loud and clear.(thanks Warren) The thing about Warren is, he is too fast and short, Bill Mitchell is too long and boring, and Randy is somewhere in between. 🙂

  6. @Adam. Good heavens, Adam, give it a rest! There is zero evidence that the Iranian government wishes to commit suicide by attacking Israel. And incidentally, as Chris Hedges has noted, there is not a more American-friendly population on earth at street level than the Iranians. However, there is a hell of a lot of evidence that the Likud factions in Israel are dangerously brutal and ambitious and wish to attack Iran, and indeed, continue with the overall Zionist programme of destabilizing and fragmenting the entire Middle East. Are there two countries on the entire globe that are bigger bullies and more dangerous and have caused more suffering to others than the US and Israel? Israel may be a taboo subject in the US, but in Israel, at least, there are cooler and frankly, more decent and humane,heads than your average hysterical American when it comes to the topic of Israel. Can one imagine more repulsive and criminally-minded people than Netanyahu and that psychopathic defence minister, Barak? And it is absolutely scandalous and shameful the hold that the Likud has on the US GOP, especially through that reptilian Lieberman, not to mention the disgraceful and repulsive Gingrich.

    1. @Jon …so when I thanked Adam for clarifying to everybody that he had no idea what he’s talking about I was pretty prescient? LOL I rule so hard.

  7. the saudis lowering the price will also hurt themselves.
    what if europe replaces iran by the saudis as supplier?
    anybody knows whether saudi spare capacity could handle that and how that would work out with opec arrangements.

    1. @Colin, “We should do whatever we can to exterminate the blight on human progress, starting with the worst offender, Islam”


      How is Christianity better? And what is human progress?

  8. OT. I see this JG argument is not going away. Cullen Roche is at it again. He seems to have taken the rhetoric up a notch. No comments allowed. He is afraid the internet will explode. Prolly right.

    1. @jonf,

      Cullen needs to take a chill pill.

      I mean “in this case, the hiring of up to 30 MILLION government employees” – really.

      The government isn’t hiring those people. It’s just paying their wages, and paying people is what the Federal level is good at.

      Let the voluntary, charity and non-profit making sectors do the hiring and see where it get us.

      And if the private sector doesn’t like that then they have a simple solution – pop down the bank and hire some people.

      1. @Unforgiven,

        > none of cullen’s concern stand up under close examination

        Agreed. Any idea what he’s really kerfluffed about?

        If he’s trying to harm both himself & MMT, he’s doing a good job. Needlessly. What’d someone comment about a circular firing squad? In this case, it’s a single assassin with a circular barrel!

        Someone please send in a trained crisis negotiator to this topical hostage situation. Otherwise the only options left are silence & downhill.

    2. @jonf,

      Nothing will explode just Mr Roche has aligned himself with the 99% (of the commentators), taking “MMT” (the term I did not like anyway) with himself for his private use and inventing a “schism”. “Privatise the profits, socialise the losses”.

      Let’s translate what Mr Roche wrote to from English to Marxian and then back to a humanly readable form:

      “The ideals that built that economy were based on small government and individualism. We took the idea of a constitutional republic and combined it with a rugged sense of individualism that unleashed a whirlwind of innovation and wealth creation.”

      means to me:

      “We needs high unemployment to preserve our great American dream and The Only Right Way of Doing Things. We need it almost like a great American icon, the Marlboro Man, needed a fag. Then when people are sick of unemployment the government needs to print some money and give it to the rich corporations so the wealth can trickle down again.”

      So what’s left from MMT when JG is removed? The version of Keynesianism practised by President Nixon (“I am now a Keynesian in economics”).

      Would it work again? The real issue is that old-fashioned full employment policies based on managing the aggregate demand usually lead either to inflation or to “socialism” (unchecked growth of the public sector) or both. The way to “cheat” the Philips curve is to hire the unemployed in such a way that the employer of last resort does not compete with the private sector in hiring and minimises its competition in satisfying the demand for real goods and services.

      The Keynesian concept of a “buffer stock” has an exact equivalent in computer science (a “jitter buffer” used in Voice over IP applications) and an almost exact equivalent in electronic devices (UPS).

      Mr Roche should take a short course in electronics to understand how a Zener diode can be used to stabilise the output voltage in a circuit.
      The best way to stabilise a parameter (the bottom price of the labour) is to introduce an element enabling flow with a high elasticity.

      But such an over-simplistic “hydraulic Keynesianism” approach is not compatible with his preferred methodology as stated on pragcap website:

      “The research and market methodology is based on cognitive science and the theory of chaos. Through the understanding of market psychology you can derive that markets are non-linear dynamical systems which are susceptible to inefficiencies. Markets are inefficient in short time periods due to their chaotic nature (a symptom of human psychological irrationality). This creates opportunity.”

      Yes it creates an opportunity. It seems to me that Mr Roche has replaced “great Nation” by “great Profits”.

      1. @Adam (ak),

        Well, it’s great training and we’re likely to run in to that kind of stuff. All the dialog helps me understand MMT better. Neil’s article I referenced above and Tom Hickey’s post over on Mike Norman’s site (excerpt):

        “Therefore, since the state has created the conditions for unemployment to exist, it has an obligation to deal with these results through its economic policy.”

        Suddenly a aspect of MMT and JG locked in for me. But then, I’ve historically avoided economics like I avoided religion, so much catching up to do…


        Proposal update for Obama

        Posted by WARREN MOSLER on January 21st, 2009

        [Skip to the end]

        Full ‘payroll tax holiday’ where the Treasury makes all payments for employees and employers.
        Restores incomes to assist those still working to make their payments, keep their homes, and end the credit crisis.
        Reduces corporate cost structure to help contain prices as demand increases.
        $300 billion in revenue sharing for the States on a per capita basis with no strings attached.
        Enables States to fund operations.
        Enables States fund infrastructure projects.
        Fund an $8/hr. National Service job for anyone willing and able to work that includes full health care coverage.
        Addresses unemployment from the ‘bottom up’ rather than the ‘top down’ the way other measures do.
        Provides for a far superior price anchor than the current practice of using unemployment for that purpose.

        Eliminate the need for the Fed to demand collateral from member banks when it lends to them.
        Demanding collateral is redundant and obstructive to lending.
        Allows the NY Fed to hit its assigned fed funds target.
        Take action to immediately reduce crude oil and crude product consumption.
        (Details available on request.)

    1. Agreed. Gold standard? eliminating the fed? chaos would ensue. But he’s the only candidate who isn’t lusting for war so in that sense his economics are good. (war = bad for living standards at home). Maybe we can have the best of both worlds if he stops the US from starting wars, and then Congress can prevent him from doing anything insane like trying to restore the gold standard.

  9. @ Neil Wilson

    Perhaps Cullen is just being realistic by giving the JG idea the cold chill it deserves.

    Let’s translate JG into plain English.

    No more unemployment subsidies unless the jobless submit to mandatory work no one is willing to perform for a crappy minimum wage.

    And this is supposed to save capitalism from its sins? I guess the left has really bought into the low expectaions/no future fad. Old Karl Marx – a guy who appreciated the revolutionary nature of capitalism – must be turning in his grave.

    Plus there is always the risk that some innovative thinker in the Pentagon may like the JG idea and suggests it be implemented by sending some healthy unemployed for a mandatory gig in Afghanistan.

    It’s really sad to watch profound thinkers who developed a deep undertanding of modern money fall in love for an untested and likely utopian idea.

    And they haven’t even thought of asking the beneficiaries (victims?) If they like the idea. Elitism, anyone?

    1. @Jose,

      “No more unemployment subsidies unless the jobless submit to mandatory work no one is willing to perform for a crappy minimum wage.”


      (i) Unemployment subsidies would likely continue
      (ii) The work is voluntary. The employer(s) offer jobs at the fixed price and employees are not required to take them.
      (iii) The crappiness of the minimum wage is down to politics. The minimum standard of job in society is a political decision you just have to make.

      Perhaps you could point out where in the MMT literature your interpretation came from?

      All the literature I’ve seen suggests that the state should just pay the wages for the JG job and some mechanism created to provide the work the private sector is refusing to supply – so that people have something to do to add meaning to their lives if they want, and it likely helps them secure a position in the private sector.

      Perhaps you can explain how mandatory systemic unemployment is better for society?

      1. @Neil Wilson,

        (i) and (ii) If people are offered the choice between collecting UE subsidies while actively looking for a new job or accepting a minimum wage job in an area outside their expertise that will impinge on their necessary free time to look for new opportunities, there’s a strong likelihood that most will choose UE benefits and answer a polite “no, thank you” to the JG offer.

        (iiii) the low minimum wage is not only the result of bad politics – it’s also a consequence of years of low growth, themselves at least partially due to a generalized misunderstanding of the operations of the economy and the monetary system that gave us decades of inflation targeting by the CBs of the developed world.

        My point is that the economy should aim for growth. That – and only that – will give us rising standards of living and automatically get us near to full employment, with no need for a JG.

        MMT provided us with the understanding of the workings of the monetary system. The neoclassical veil has been lifted once and for all. We have eaten from the tree of knowledge and things will never be the same as before. In spite of the refusal of TPTB to even recognize the existence of MMT I believe it’s just a matter of (some) time before truth becomes exposed and the neoclassical delusions are sent to well deserved oblivion. In the age of the internet it can’t be long before an educated population manages to decipher the comparatively easy (if, say, we take contemporary Physics as the benchmark) mechanisms of modern money and aggregate demand.

        It follows that the main task for MMTers (or MMTists) should be preservering in the process of delivering their message to the corridors of the academia, the media and the populace at large. A fixation on a controversial, untested JG can only detract from this key mission.

        And btw it would be hard to deny that one the most successful “deliverers” has been Cullen Roche. It thus makes no sense for those within the MMT camp to use minor differences over prescriptive programs in energy-wasting attacks on him.

        Let us all simply concentrate on unmasking our true adversary: neoclassical economics and its diabolical grip on a captive elite western mind

      2. my proposed $8/hr transition job increases real output for the economy via the provision of a shovel ready
        labor force for the private sector as it expands due to my FICA suspension, vs the traditional labor bottle necks even at high unemployment levels due to the illiquidity of the unemployed.

      3. @Jose, I believe the JG has a lot to offer here and it needs to be flushed out. It seems to me Cullen is doing all the attacking. Most of us are just trying to get to the details, you know where the devil resides. I especially like the idea of the price anchor to control inflation. I would also guess that some of the JG could go for a higher wage rate, depending on the skill needed. But I will leave that for another time.

      4. @Jose,

        “. That – and only that – will give us rising standards of living and automatically get us near to full employment, with no need for a JG.”

        And how much compensation are you going to pay to those who fall outside the full employment definition? That will still be millions of people.

        Which will be definition be a lot larger with an unemployed buffer stock than it would be with an employed buffer stock due to the increase in hiring risk.

        Eliminating that hiring risk is why JG is good for business. Rather than just paying compensation to the unemployed, the state is paying somebody to try out hires on behalf of businesses.

      5. @Jose,

        “(i) and (ii) If people are offered the choice between collecting UE subsidies while actively looking for a new job or accepting a minimum wage job in an area outside their expertise that will impinge on their necessary free time to look for new opportunities, there’s a strong likelihood that most will choose UE benefits and answer a polite “no, thank you” to the JG offer.”

        I doubt it.

        JG is not a minimum wage job, for one thing. Warren proposes $8 an hour, which is more than the Federal minimum already, PLUS full health insurance, which costs about $6 an hour for a single full-time worker, PLUS child care. Minimum wage jobs do not inlcude these fringes. (And I have seen elsewhere the phrase “full benefits”, which would include pension plans, tuition reimbursement, counseling, etc., etc.)

        There will be some whose skills are in high demand who expect only a short period of unemployment who will work on their resume and job search, and probably not even file for unemployment. JG is designed mainly for the long-term unemployed, and they will find the increased income and benefits well worth their time.

        And JG workers should be paid to work on their resumes and apply for jobs, or to be trained for a different job, perhaps for 1-2 days a week while they work at the Food Bank the other 3 days.

      1. @WARREN MOSLER,

        With 35% of wage earners making 25k/yr or less, JG would go a long way towards preventing cascade failures in all income brackets. I think your banking proposals would cinch it.

        From there, tax cuts, spending as needed. Automatic stabilizers will bring us to cruising altitude.

  10. There are some services the city performs that are not adequate since they do not have enough budget or capital So some things like mowing, snow plowing, busing the elderly are not at optimum levels. There are neighborhoods here that never get the snow cleaned up amd simply wait for it to melt, for example. But a pick up truck with a plow can be used to plow it. Every once in a while a person in the neighborhood does it. Why can’t that be a JG job? Why can’t we charge the city say half price and pay a tad more to the JG people? Just a thought.

    1. @jonf,
      I think that would be the best starting point, ensuring state and local governments are adequately funded during recessions, in order to retain their existing staff, and continue providing these basic services to the level we expect before worrying about implementing a JG.

      Maybe calling it something like the Australian ‘Work For the Dole’ program, instead of Job Guarantee would help. I think some of the objections stem from the sense of entitlement implicit in the name, that you are guaranteed a job no matter how lazy, incompetent, offensive or tardy you are.

    2. @jonf,

      Things that government is already doing, but not well or not enough, are not suitable for JG. For one thing, they are mainly unionized and the union members would be very upset at the competition (politicians will be tempted to substitute JG workers for union workers if they can get away with it), and for another, when the economy improves and there are no JG workers to do these jobs we’ll be back in the same boat again.

      These are permanent government jobs. If there is a lack of budget for them, then they are a good target for the

      >$300 billion in revenue sharing for the States on a per capita basis >with no strings attached.
      >Enables States to fund operations.
      >Enables States fund infrastructure projects.

  11. @jonf,

    I think it’s pretty flexible Jonf, as long as people are willing and able. We might even have some congresspeople think it would be cool to hop in an old Power Wagon and plow (at JG wage, of course), now that they don’t have to spend so much time debating about the deficit.

  12. @ Colin: one of the least intelligent, frankly disgraceful, crude, and brutally bigoted comments I have ever read here. You throw thousands of years of culture and the efforts of extraordinary men to the winds for your “technology.” Of course, your knowledge of Christian and Islamic culture and history must be profound. You are clearly a learned and refined scholar.

    @Warren: good article here on oil–perhaps you’ve already seen:

    Chris Cook: Naked Oil

    By Chris Cook, former compliance and market supervision director of the International Petroleum Exchange

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