Thursday, June 12, 2014

No. 000016 Economics for Democrats: Should the Fit Work? Start of a series based on Minsky

This is the first of several posts in a series based on work of now deceased Washington University Economics Professor Hyman Minsky.

Professor Minsky writings are collected here at the Bard College Digital Commons.

Today, a lesson from Minsky, Hyman P. Ph.D., "Economics for Democrats 1" (1992). Hyman P. Minsky Archive. Paper 183 or

Life is not fair, its most robust unfairness being that nothing tends toward equilibrium. Most certainly, due to information asymmetries, markets do not. Supply and Demand Under Limited Information (paywall). Consequently, lack of jobs, good paying jobs with benefits, is anywhere and always a problem. 

Roger Farmer at Keynes and Sticky Prices: Time to Think Outside the Box has as good a short explanation as you can find explaining that a lack of jobs is not due to worker inflexibility but is instead due to the fact that, as Keynes taught, an economy can reach "equilibrium" at less than full employment.

As a consequence we have a choice, the dole or the New Deal. Democrats historically rejected the dole understanding that, as Minsky wrote,
 "A successful economy fully uses its resources and [thus] creates resources. It achieves and sustains a close approximation to full employment. Its ability to produce grows as a by product to sustained full employment."
Minsky continues, Democrats must, learning from the New Deal, create 
"1) Devices that decrease the dependence on transfer payments for those fit to work. In a humane society this can only be done if access to income from work is available to all."
Now, what would be an example of such creative thinking?

Consider, for a moment, our current school lunch program. We have parents unemployed and at home, not working, while we bus or transport their children to schools were we provide meals.

Democrats need to ask themselves, might it be a better program if that unemployed parent rode with his or her child to school to work in the school meals program for an income? Wouldn't such be perceived as being fairer by the next door family, fortunate enough to have work, where parents are up to prepare meals before spending a day away from their child or children?

Consider further, the indirect benefits of such a program. Skills are maintained, new networks are built, and references are earned.

If people truly understood the lost opportunity cost of unemployment … but that is for another post.