Real Progressives boasts a veritable “who’s-who” of talented and brilliant economists, but old narratives die hard and there are still many who consider our MMT message – and the policies we justify using it – to be fringe. It’s not every day that we can bring “mainstream bigshots” into the conversation; but that’s just what Pavlina Tcherneva did with her interview with Mark Cuban (yes, the same Mark Cuban of Shark Tank and Dallas Mavericks fame).
With the right push, Pavlina believes we can get Cuban on board as a powerful and vocal ally of the Federal Job Guarantee. Over the course of several meetings, Pavlina and Mark will be going through our proposal to cover our response to his concerns. The first one aired in September. He’s listening, but – in true Shark Tank fashion – he wants to make sure this is something he wants to get behind; he wants that payoff. This is not a bad-faith capitalist objection; return on investment matters in any economic framework, capitalist or not.
I was able to have a chat with Pavlina herself, who provided some of the clarity I hope to convey. It is my hope that this article – originally intended to just be a summary of Mark and Pavlina’s conversation – can provide some of the persuasion Mark (and others with similar concerns) will need.
First, though, an anecdote:
My father taught music in inner-city Cleveland, Ohio. The building he was in had no working air conditioning. When it rained, there was a leak in his classroom. Teachers were buying school supplies with their own money. There was little to no money in the school, so when an education levy was proposed the Teachers’ Union embraced the idea zealously.
The levy passed with flying colors, and the teachers celebrated. Finally they would get an upgrade to their building, a bump in their wages, and the resources they needed to do their jobs.
Only that’s not what happened. The roof wasn’t patched, the air conditioning wasn’t repaired, and no money made it to the teachers. Instead, the Principal and Administrator began showing up for work in limousines and new Cadillacs.
Barbara Byrd-Bennett, who was at the top of this malfeasance, wasn’t brought to justice for this. This kind of behavior was tolerated with grim cynicism – “that’s government for ya.” Instead, Byrd-Bennett was rewarded with prestige and her name on a building – at least, until she was sent to jail (a comfortable one, of course, nicknamed “Camp Cupcake”) – in 2019, for yet another scandal involving school money.
“That’s government for ya.”
This is exactly the sort of thing the Mark Cubans of the world are cautious about when it comes to government spending to fix problems (as Ronald Reagan famously said, “The nine most terrifying words in the English language are: ‘I’m from the Government, and I’m here to help’”). Money in and of itself does not solve problems – the money must be allocated in a smart and efficient – not corrupt – way. If it isn’t, the result is at best a farce. And farces aren’t solutions.
When tax money pays for programs – as it did in Cleveland – this is particularly egregious. We will move forward assuming that we all understand that taxes do not fund spending at the federal level; but understanding this will eliminate “wasting taxpayer dollars” as an additional concern. Instead, of course, money spent at the federal level is freshly created, new money. If this process isn’t understood or why it matters, please read this before continuing.
Framing The Cost/Benefit Analysis
Mark Cuban is open to the idea of a Federal Jobs Guarantee (FJG), but is hesitant to jump into advocating a “fringe” idea without proof of concept. Considering tales like my father’s – and there is no shortage of such stories – “just throwing money at something isn’t going to fix it” is a fair point. After all, that’s what that school levy did – it threw money at the problem, but the investment didn’t pay off because of corruption. Who will get the money, how will it be distributed, and how do we make sure anything good actually comes of it?
These are absolutely fair concerns and they have equally fair answers.
First, we have to think about how we want to measure the “efficiency” of a FJG. In normal for-profit market conditions, “efficiency” is a simple measure of direct financial inputs – by a private entity – and relatively direct financial outputs. In other words, we measure the efficacy of financial investments by financial return on investments.
Simple enough – but efficiency here must necessarily be measured differently. Financial inputs from the currency issuer do not represent consideration in the normal sense, because federal money is not a valuable asset to the issuer of federal money; this means the government doesn’t need to “justify” the new money with tangible financial outputs the same way a private investor would.
Because the “investment” isn’t valuable to the investor, the return on that investment should be given a totally different frame of reference. “Efficiency” of inputs and outputs are measured in the engineering sense (e.g. did we inspect every pipe in the city? How long did it take us to replace the bad pipes?) rather than the financial sense. In other words, because public purpose spending is all about social returns, both the cost and the benefit in this cost-benefit analysis must be reframed. There is no “Nature” that writes us a check for cleaning it up, for instance; we still have to clean it up, though, if we hope to have a livable habitat to make money in. Can’t sell bread if you don’t have an oven.
A return on investment will come then in tangible, although not necessarily financial terms – cleaner air, less cancer, safe streets, less drug addiction, guidance and hope for troubled youth, redirection for gang members, arts and music centers, and so on. When combined with a green energy infrastructure plan – a Green New Deal, if you like – this also has the potential to create a massive economic and industrial revolution.
Framing The Question of Waste
A Federal Job Guarantee is designed to switch us from paying for negative productivity to paying for positive productivity. But again – how do we make sure it does what it’s advertised to do? There are still other points to cover first, but we will get there.
For the question of waste, the framing is also important. Ironically, the point about “throwing money at the problem” is precisely our point about our current unemployment scheme! Right now, when people cannot find employment in the private sector, we “throw money at the problem” in the form of unemployment insurance. We pay people to do nothing. That’s not a smart long-term strategy, and conservatives should be very pleased to hear us say so!
Yes, we already pay dearly for unemployment – not just through unemployment insurance (this cost over $520 billion in 2019) but also through societal degradation: hard drug use, suicide, high crime rates, reduced rates of volunteerism, protectionist immigration policies, increased reliance on Medicaid/Medicare, decreased state and local budgets, and so on. We already pay as a society for having unemployed people, both monetarily and otherwise – but we’re paying for negative productivity. Any believer in fiscal responsibility should see that this is a problem, especially when there is clearly so much work to be done!
Structuring A Productive Alternative
With these issues framed correctly, we can now postulate about the structure of an efficient FJG and demonstrate that something good will happen if we create it. We know that it could, we know it should, and we know that it’s a better idea than what we do now (paying people to do nothing); but we also know that implementation is tricky, corruption is everywhere, and unintended consequences always emerge. We can redefine value all we like; how can we make sure that it will actually give us the return on investment that we advertise?
Remember, of course, that this is legislation we’re conceptualizing, and the exact language of “the proposal” hasn’t been finalized yet. Perhaps someone like Mark Cuban will come along and lend his expertise and improve what we’ve got!
The structure of the process as we are building it is something along these lines (Cindy Banyai expands on this here, beginning around the 31- minute mark):
- Federal qualifying criteria are established for accessing FJG money. Program proposals might be required to – for instance – provide positive and productive activities for youth, and/or modernize infrastructure, and/or improve local ecology in specific ways, etc.
- Municipalities write a grant – a proposal for a program they would like to implement locally, complete with an assessment of objectives, design, budget, and a certified guarantee that all FJG expenditures will be publicly disclosed. For instance, Albuquerque NM might create a program like Job Training Albuquerque using FJG money.
- The grant is approved or denied on the basis of the qualifying criteria.
- The municipality then builds that program, hires hundreds to thousands of people, and works on generating its deliverables.
- If deliverables do not meet the minimum threshold established in the grant, the program will move into a corrective phase that could include replacing the administration.
One of Mark’s specific concerns in his recent chat with Pavlina was that proposals will be written and awarded in bad faith. Yes, of course: malfeasance is always going to be a concern in any system – including the one we propose and the one we have now. Accountability is always going to be a challenge. This is why we must build it the very best we can, including ironclad clauses about full public transparency and consequences for malfeasance. Constant public oversight and the threat of fraud charges should keep administrators well enough in line; but even where these safeguards will fail – and they inevitably will, make no doubt about it – we have to remember that the alternative is paying people to be unproductive, even while breeding crime, suffocating in polluted air, and exacerbating the drug epidemic.
After all, Barbara Byrd-Bennett was a bad actor – but that doesn’t make public schooling inherently pointless or corrupt and we aren’t scrapping public schools over it. Bugs and patches will never, ever go obsolete.
If it would be absurd to leave things the way they are – as we agree it would – then we have to do something else. If there is a better option than the FJG, any honest person would want to hear it. If the FJG proposal is a good place to start but needs some work, then we should have smart people doing that work. Know anybody that could help do that work, Mark?
Buy-In And Implementation
One of Mark Cuban’s themes in that first interview was that any program must be structurally sound, not merely well-intentioned. Part of this integrity for programs is in “buy-in” – a trust in and commitment to it by competent and upright leaders. In other words, how do we attract the right kind of leadership for administering these programs, and how do we generate the confidence we need to attract these minds? After all, many “CEO types” are just as skeptical as Mark Cuban is about the efficacy of “big government waste” and might never show up for the job. What then?
Don’t we need to demonstrate success on a small scale to show that it’s got potential? Isn’t going all in, all at once, getting slightly ahead of ourselves?
There are two answers to this: basically, yes and no.
There are good reasons an “all-at-once” approach is strongly preferred:
- There is historical precedent showing that “revolution-sized” programs like these are wildly successful. Not only is this demonstrated in the New Deal’s Civilian Conservation Corp and the Works Progress Administration, but also in Argentina’s Plan Jefes y Jefas de Hogar Desocupados. There is no need – from a material or theoretical standpoint – to question whether something like this would be successful; it’s already been successfully done before. From an evidence standpoint, we have already proven what we need to prove, and we have the blueprints of successful programs in hand.
- One of the most important aspects of its efficacy is its universality – granting a chance to all, rather than dealing with the consequences of lopsided economic shifts. FDR’s New Deal would have been fundamentally different if it had been phased in slowly and bit by bit; there is also no guarantee that it would have been as successful. Surely modern cynicism is an important obstacle, but on a conceptual level one big wound/obstacle may be a lot easier to bear than the million papercuts/obstacles we’d have to endure implementing small bits at a time.
But we concede that just because we see no need to demonstrate efficacy, there is still the pragmatic impediment of cynicism. Confidence is something no engineer can create; that’s the job of marketers. Still – it’s a real concern and must therefore be figured into the equation! We live in a world ground nearly to paralysis by bad information and political noise. Therefore, as much as we’d prefer otherwise, there remains a good case for generating buy-in in the way Cuban suggests. We have several ideas for how this might look, including these:
- Create a federally-awarded “trial run” of an FJG program for one municipality to serve as our “case study.” The structure would be roughly similar to the Job Training Albuquerque program in New Mexico. If successful, more grants can be awarded one at a time.
- Create a national-level FJG expanding on the Job Corps infrastructure for a specific demographic, such as teenagers and young adults; then, if successful, eligibility could be gradually expanded to other demographics (in this case, older and older adults)
Either way, though,we are not asking Mark Cuban – or anybody else – to “go gung-ho” for a specific bill – at least not yet. What we will accept, however, is help creating the air-tight ship we want to create, so that we can have a specific bill to “go gung-ho” for.
We will continue to work on this. Incredible work has already been done on every “blind spot” Cuban brought up – it’s far more intricate and detailed than I can get into in a single article – but if we missed something, we’ll be more than happy to fix it; and if there’s a better idea, we’ll be happy to adopt it. We all agree something must change – so we must offer some kind of change. Only fools would offer vague, shoddy answers, and we are not fools.
For any legislator, businessperson, or concerned citizen: One thing is for sure – we are planning on doing everything we can to make the FJG movement even more popular than it already is. That means that it’s a “good investment” of your energy to make sure this popular and growing movement centers good, well-designed policy. Something’s got to give, and something’s got to replace it. You could just leave this to us, but you could also help guide this change. Either way, change is coming.
Help us make sure that change is good. You’re invited.