Episode 43 – The Green New Deal: Public Banking and Non-Fiscal “Pay-Fors” with Nathan Tankus

Macro N Cheese – Episode 43
The Green New Deal Public Banking and Non-Fiscal Pay-Fors with Nathan Tankus
November 23, 2019

Nathan Tankus [music/intro] (00:05):

A high cost of poverty is that everything costs more when you’re poor cause there’s for all sorts of ways you can avoid spending money when you have money.

Tankus (00:19):

Payday Lending is a reference to the fact that you’re lending not based on some asset, which might be put up as collateral of a loan, but you’re lending based on someone’s income.

Geoff Ginter [music/intro] (00:30):

Now let’s see if we can avoid the apocalypse all together. Here’s another episode of Macro N Cheese with your host, Steve Grumbine.

Steve Grumbine (01:29):

In this second episode with Nathan Tankus, we cover the non-fiscal pay-fors of a Green New Deal. Nathan also discusses the role of public banking and how this interplay oftentimes confuses Progressives as they move forward in trying to advance a Green New Deal. That brings me to another point here.

We’re kind of transitioning into kind of new subject territory here. Obviously, the banking system is a subject of much debate in the left, the right, in the circles of MMT even, we hear an incredible amount of discussions about public banking.

We hear about various things like infrastructure banks or creating a co-ops and these different types of banking alternatives, if you will, that people are under-banked or over-banked and so forth and access and privilege to banking services.

I guess the question to you is to start this off is Warren Mosler talks about how we’ve got to make banking boring again, basically, and that banks are already public purpose entities. Is this just a simple matter of the banks have been deregulated to the point where they no longer really represent that public purpose any longer?

Or is it a matter of that the banks are private and that we need to create a public banking system in parallel to this? Or is it a combination of both, because from my vantage point, if you tell me that banks were always public purpose entities that have gone amok, that makes sense to me. Let’s re-regulate them. Let’s make banking boring again and call it public banking, call it late for dinner.

You can call it whatever you want, but in the end, that’s in essence what you’ve done again. Then you’ve got some suggestions out there to take the postal service and turn these into postal banks. There’s so many angles of this.

I know some of them are founded in cranckery, but some of these things are genuinely founded in creating parallel paths to being able to bypass what we see as bottlenecks in the system that are no longer serving our needs. Can you kind of give me a general response to that and then we can kind of drill down?

Tankus (04:00):

Yeah. So what I would say is that bank charters inherently involved the granting of privileges, and they often involve as a result requirements of the banks in return to that bank charter. And those requirements used to be a lot more stringent.

The period that I focused on a lot, the period before the civil war, especially that early period, like the 1820s and such, bank charters would come with like requirements to fund the local house for the Y. They would come with very specific public purpose, social provisioning type of spending. They would have requirements to provide loans on demand for the state government at a specified interest rate.

They tend to come with a lot of requirements. Where I would say is, I wouldn’t necessarily say that the banking system is public purpose in the strict meaning of the term, despite the fact that they have public privileges and they have to, or supposed to meet certain public purposes is they are at the end of the day, they have private shareholders.

And more importantly than just having private shareholders, those shareholders are given the authority in a bank charter and in the corporate structure of a bank to appoint a board of directors, appoints a CEO to direct the governance of the bank.

So I mean that’s the central part that makes it very different from all the debates we don’t have to get into about whether the Federal Reserve is really private, but the difference is that the board of directors that shareholders appoint in quote, unquote, “private banks,” is given a lot of decision making authority over those banks.

Now we can regulate the banking system a lot more and regulated a lot tighter, but that basic corporate structure where there’s a board of directors appointed by shareholders who appoint the CEO and they are all aiming to make private profits subject to the regulations that they are subject to is always going to have an inherently different dynamic to whether a public agency like the post office or even the federal reserve board to provision payments to the general public.

And also will be very different than the governance structure of say a democratic cooperative that gets a bank charter, or even gets a grant making charter, which is another way you can sort of franchise out the power of public money is you can franchise out the power to spend or make grants rather than franchise entities for the purpose of making loans or buying assets.

And so that’s what I would say is . . . I would say . . . I would agree that it’s always about public purpose, but the corporate governance, as it were, between public, private and democratic forms of banking or finance more generally involve very different incentives and a very different viewpoint to approaching how to undertake these activities.

Grumbine (07:21):

I’m interested in understanding if we were to say nationalize the banks, if we were to go to a true, honest public banking system where the post offices are turned into banks, et cetera, would these kind of reserve requirements and capital requirements be in play anymore?

Is that more of a private sector thing where they’re trying to make sure that these private entities using a charter to make and create loans are kept in check, or is this something that as a government entity, that those requirements really would be null and void because now you’re doing the full faith and credit of. How would that play out in your mind?

Tankus (08:02):

That’s a very good question. So the short answer is no. The short answer is in their experience a lot of different countries with what are called state owned enterprises is if you still have the same corporate structure, unless there’s anything specific in the regulations that say, if it’s majority or totally owned by the government, these regulations don’t apply, the regulations still apply.

You still have a public entity that has that bank charter, and that makes it a distinct regulated entity. It’s also, even if you have banks that are wholly owned by the federal government, the government is still just a shareholder in those banks. They’re still appointing a board of directors. And then that board of directors is appointing a CEO.

The government has limited liability just like those private shareholders did. So that makes it a very different relationship to the banking system then if it’s an administrative agency that’s undertaking these activities. Now you can buy a company and then you can dissolve it.

You can break down its structure, put responsibilities that it has under the purview of specific agencies, and that can remove it from the purview of financial regulation, but that’s generally not how it works. I mean, China, for example, China has mostly a state owned banking system and a bunch of state owned enterprises, but it still imposes reserve requirements on its banking system.

It still has regulations on those banking systems. Now, obviously there’s a lot of forbearance that goes along if there’s big losses on a state owned bank’s balance sheet; but generally unless you dissolve the corporate structure, it doesn’t work like that. And the flip side of that, of course, is when you preserve the corporate structure, it’s more easy to re-privatize.

It’s a decision, it’s an option you have to just dissolve and you can just keep the same corporate structure and it can bounce between the public and the private. I mean, this is one of the reasons why Rohan, Raul, I and other people are skeptical towards sovereign wealth funds; or more generally towards buying companies so that they extract financial value from households from everyone else; and then using that financial value.

Our own path is we’re skeptical to this precisely because it isn’t necessarily deconstructing practices that we might consider not serving public purposes. So that’s a good question and I would say no. And if you’re going to nationalize or buy out private companies, you need to restructure it to make it consistent with the public purpose, in our view.

Grumbine (10:56):

That’s great. J D Alt presented at the very first MMT conference, and he presented an idea of an infrastructure type bank in terms of being able to lend specifically for the projects and cities and states, et cetera, that required infrastructure. I know Tim Canova has talked somewhat about that. Tim being MMT adjacent in some of his views.

You hear folks like Ellen Brown, who take it a step further, and I believe get the entirety of debt wrong; but ultimately pushing the idea of financing massive public spending through a network of public banks, none of which seems to jive with the MMT prescription.

However, it’s taken a lot of lefties and gotten them spun up into thinking differently, which is good in a sense that they’re thinking differently; but the relationship between the federal government’s ability to spend, the banking system as it is today, and it’s twisted visage, and a modern, future view of how money could work in a public setting.

Can you explain to me what the concept of public banking is through your understanding and what the various ways that lays out and maybe explain to us, I don’t want to say which one’s right, which one’s wrong per se, but which one makes the most sense through an MMT lens?

Tankus (12:32):

Yeah, so I would say, first of all, the issue about lending for infrastructure projects and those kinds of like trying to accomplish public purpose spending primarily through banking system or a network of public banks, our concern with that approach, especially that approach to the Green New Deal is why Raul, Andreas, and I wrote an op ed for Business Insider on the Green New Deal.

And how every penny should come from government spending is precisely because of this point that we’re worried about this approach. And we think that the kind of lending or purchasing equity stakes in companies to try to indirectly nudge specifically private non-financial business to act in the ways that we want them to act is a far weaker, more cumbersome approach than direct public procurement, public spending and grantmaking to directly accomplish the public purposes that we want and the use of direct regulation on nonfinancial corporations.

In the era of neoliberalism, in the era of a financialization, I think a lot of people have become convinced that the way to control or to regulate private companies’ activities is to make loans to them or buy equity stakes, such that you become their creditors or their shareholders, and have sort of forgotten or put by the wayside, the ability to just impose regulations and go through books and do site visits on plants, are regulatory tools plus the leverage that spending and grantmaking gives us over companies is far more powerful than the sort of indirect tools of private finance.

And so that’s what I would put on the table in terms of our view of public banking for public spending. The second piece of that is that doesn’t necessarily mean that we’re against forms of public banking or postal banking. Raul has been writing about this stuff for years and years and years. The essential thing from our point of view is that public banking, first of all, is an approach that you take on at the local and state level because you don’t have access to the federal purse.

But second it’s primary purpose is to provide payments systems access to the unbanked. So provide bank accounts to groups of people who’ve been systematically denied banking system payments, or get charged too much in terms of fines and fees to use the banking system; and for state and local governments to have somewhere where they can keep their money for a place for their bank accounts, where they’re not getting charged the fines and fees that they’re getting charged in the private sector.

Banks like Wells Fargo, where a lot of state and local governments have their funds deposited, they get charged literally tens of millions, sometimes even hundreds of millions of fees to get access to the payment system, which, you know, really adds up when we’re talking about the budget of state and local governments.

And so the push for public banking in LA and elsewhere has been primarily about this. And I think, you know, from our point of view, like that part is completely positive. What we’re more concerned about is proposals that come along with small dollar lending, like the idea that we’re going to replace payday lending with public bank lending, we think is really problematic because, you know, the problem isn’t so much the interest rate on these loans, even when they’re very high, but the underwriting, how careful the government is in checking on whether a borrower can repay.

And there’s also a question of like, is it actually worth it to provide small dollar lending in emergencies to lower middle class people, rather than just providing small dollar amounts of money where they can apply for emergency funds and just get the $500 and not worry about the loan part. And given the infrastructure that would be involved to collect loans, to collect debts from individuals and that go through the loan process might not actually be that much more costly for a government, even a state and local government to provide those kinds of emergency funds.

So, I mean, that’s how I would summarize is that we feel great about public baking when it’s about giving people low cost access to clearing payments and also giving state and local governments low cost access to clearing payments. But we’re more concerned about it when it becomes about lending either for quote, unquote “public purposes” or “small dollar lending.” You basically think that lending isn’t where the focus should be for those kinds of local efforts.

Grumbine (17:25):

You know, I’m in the process of reading a book called “Race for Profit” by Keeanga-Yamahtta Taylor, and having been reading some of Mehrsa Baradaran’s work, it’s very clear that minorities have been cut out of access to not only housing mortgages, but basic banking services. And they are definitely quote, unquote “underbanked,” “underserviced,” and are typically on the high end of all these risk factors.

They walk in the door and they’re already in a risk factor that makes everything they do more expensive, less secure, and always with much, much impact on their own lives in terms of freedom and the ability to enjoy this nefarious American dream. Can you talk a little bit about what it means to be underbanked and maybe touch on some of the ways that the MMT lens of public banking, et cetera, could possibly describe this and fix it, ameliorate it?

Tankus (18:29):

Yeah. So I would say that the essence of being underbanked or unbanked is simply that you don’t have consistent access to a bank account where you can make payments, where you can accept payments, where you can deposit checks, where you can get access, you know.

To be underbanked is basically that you have access to a bank account, but let’s say it’s a TD bank account, and you have to keep a balance there of a hundred dollars, or you get charged a $35 maintenance fee to have your bank account there, you know, kind of similar way to reserve requirements. Your funds there are immobilized.

So if you need to make a payment, you may go to some other sort of payment service to make a payment so that you don’t get hit with that big fee in your regular bank account, especially because getting your bank account closed down, that’s not the place where you can get your check deposited any more or get a direct deposit from your employer.

So that’s under banking is basically you have some access to the payment system, but not sufficient access, not the full access that you should be having. To be unbanked is that you don’t have even that access at all. You’re purely running through payday lenders, through paycheck catching spots. You have to get paid in cash by an employer.

Or if you get paid with a check, you have to cash that check and take the big fee that’s involved at a check cashing place. Being under banked and unbanked is basically when, you know, for either poverty reasons or because of your immigration status and other reasons, criminal record, you don’t have as much access to the banking system – to financial services as you should.

And that, to the extent that you get access, it’s high cost, predatory access. So first you get crowded out of the banking system and then you get crowded into these predatory actors. And especially you’re in this situation because you’re poor, then you’re getting basically charged a lot more money because you’re poor.

So, you know, it’s the way – the high cost of poverty is that everything costs more when you’re poor – because there’s all sorts of ways you can avoid spending money when you have money.

Grumbine (20:51):

So ultimately payday lending, what does that even mean? Can you define it? It’s such a nefarious act and yet I think it’s poorly understood.

Tankus (21:03):

Yeah. I mean, basically payday lending is a reference to the fact that you’re lending not based on some asset, which might be put up as collateral of a loan, but you’re lending based on someone’s income. The fact that they don’t have money on hand yet, but they will get a check in a couple of weeks or a week and a half. And the loan is the size of a portion of their next paycheck.

And because you are a kind of a “risky investment” quote, unquote, because you don’t have a collateral that you can put up, they are charging you a very high interest rate for that. So they’ll charge you literally like a interest rate on the annual basis is a hundred percent, 200%. And the idea is that that’s supposedly compensating for the risk of that kind of lending.

And that’s extremely high. I mean, for context, you know, credit card debt tends to be like 20%, 25% on a daily basis. And these tend to be way, way, way higher than that. So you’re getting charged a lot of money because you don’t have money and you don’t have assets that can secure that loan. Being wealth poor is [inaudible].

Intermission  (22:34):

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Grumbine (23:23):

All right. So Nathan, as we look at this, obviously people in America right now in particular, I notice more of a global issue, but people in America as a whole have been led to believe that everything’s about effort, everything’s about, you know, personal responsibility. They’re constantly being beaten down about not making good choices.

And frequently it appears that the choices that people have when they’re in desperate times are always limited to either cutting an arm off or cutting a leg off and then being blamed for not being able to run faster, pitch a baseball.

Can you maybe describe the plight of the poor in America and how the economic system in particular, the neoliberal framework has really, really haunted and hurt, not only the poor, but the average working person who maybe looks at the poor and says, “Oh, I’m better than them. So life’s not bad.”

Tankus (24:28):

Yeah. I mean, I think, you know, on a certain level, it’s kind of very simple is that we don’t provide public services, certain services that are public everywhere else. So, you know, if you go to the doctor, you can potentially get charged 20,000, 50,000. You know, if you have a really serious thing, you know, charged a million dollars and you can end up with a large pile of medical debt, which can and drives many Americans into bankruptcy every year.

Or you might just die because you can’t afford that bill, unless you can’t get access to more medical services in the future. You don’t have much support in terms of housing. So your housing is 40 50% of your income and you regularly get evicted, which has huge detrimental health effects for you and your family. And then on top of that, if you’re Black, if you’re overweight, if you’re various different categories, you get discriminated when you enter the healthcare system and can’t get coverage at all.

Just, especially the case for Black women in this country who, you know, even Serena Williams has huge maternity health scares that, you know, can nearly kill her. And we don’t have a really a welfare system to speak of, even though everyone talks about welfare cheats, you know, you have many States that are implementing work requirements for food stamps and basically the most minimal access to quote, unquote “the safety net” to sort of any protection for if anything happens to you.

So other times gets referred to a social insurance, you don’t have access to it. So, you know, if you fall down, you just die in this country or have just much worse health care and so you die early. I mean, we have a society where you’re just not protected. You’re not protected if you lose your job, really, you’re not protected.

If you have a health crisis, you’re not protected against rents that are well above your ability to pay because incomes haven’t gone up. You’re not protected by increases in the minimum wage. You’re not protected by public spending. I mean, the essence of it is that there’s no social protections.

And when you don’t have the bare minimum things, like the job guarantee that can provide you regular access to monetary income for a specific period of time, when you don’t have these regular basic supports that everyone really does need, unless you’re the very wealthiest, which is really just, you’re picking someone else’s pocket for your own security, you just don’t have any protection and you know, anything could happen that could cause a crisis.

Your car can break down, and that could be just too much money for you to be able to survive. Oil prices can go up and suddenly it’s not profitable to drive to work because you know, it costs more to drive to work and work that job then you’re actually getting paid for it. I think the essence of it, there’s just no protection. There’s no guarantee that whatever you do, you’ll be able to make enough income to survive.

And of course, some people, they get a decent paying job and they’re in a decent situation or, you know, both them and their spouse are able to work, but anything can happen that can cause a crisis that you can’t recover from. You know, one of you gets hit by a car. You have a car breaks down, you know, one of you has a health crisis.

I mean, there’s just so many things can happen and we have no protections. And that’s the difference between us and countries that have much more generous safety nets. There’s protection in case you fall, and everyone needs protection in life. And you know, even the more basic neoliberal elements of our society recognize that at some level, because you know, insurance is a private market and people buy insurance against the vagaries of events.

I mean, the problem is there’s a lot of events that can’t be insured against except by government. And you can’t buy insurance against being poor if you’re already poor, essentially. So we have certain things that we need to be protected against, things that we need to be insured against that only the government can provide.

And our government no longer provides those protections, if it ever did in certain cases, and especially for certain groups of people. Another way to look at it is wealth is a form of insurance. If you have wealth, you don’t need to get access to public insurance because you can use your wealth to protect yourself. It’s not an absolute protection, but it’s pretty good protection.

And we have a huge amount of wealth inequality in our society, but also especially towards marginalized groups like indigenous people in this country, like African Americans have been systematically denied access to wealth. And so the one kind of element of insurance that we allow our society to provision is provisioned to the wealthiest and the whitest.

If you haven’t graduated with a high school degree, your levels of wealth are going to be much higher if you’re white, then if you’re a Black person, who has graduated with a bachelor’s. That’s just the essence of it is that to the extent that we have any insurance in this country, it’s just inherited wealth and Black people have been denied at first, you know, not accumulating wealth because of slavery, then not accumulating wealth because of Jim Crow and things like the bombing of Black Wall Street in Tulsa.

And all the way through to the denying of housing wealth through redlining and systematic discrimination of the fifties and sixties and seventies, and then white flight. There’s just every step of the process has been one of denying and stripping wealth from the marginalized in this country. And wealth is our only form of insurance left. So it’s no surprise that people collapse and can’t get up. And it’s no surprise that it’s inequitably distributed to most marginalized, like Black, indigenous, Latinx people.

Grumbine (30:39):

Know this speaks to modern situation right here, right now in the midst of a presidential cycle. We’ve got, you know, varying degrees of, dare I say, at least pseudo progress, but most recently, you know, Senator Sanders has come out saying that he feels housing should be a right and comes out and says that we should eradicate medical debt. And then he says that we should also provide Medicare for all to all, not phase it in, not . . . straight up, just eliminate private insurance.

Tankus (31:19):

I think his plan has a four-year phase-in.

Grumbine (31:21):

Okay. All right. Yes. Thank you for the clarification. The other to this, which is interesting in my opinion, is obviously he’s also advancing a federal job guarantee, which is coupled with his and AOC’s proposal for a Green New Deal.

And as you start looking at this, this is like a broader, more holistic, more end to end 360 perspective on addressing these inequalities that you described so eloquently. And by providing these services, it opens up a whole new set of questions and answers, right? To me, one of the most fundamental questions is how in the world do you guarantee housing as a right?

Tankus (32:11):

Yeah. I mean, I think that’s a huge question. I think there’s been a lot of work on the legal enforcement of a right to a job. And I think there has not been similar level of work on doing that for housing. I will say that I think the legal infrastructure can be pretty much imported from the legal right to a job for the most part, in the sense that in terms of you being able to sue in a court, support the statutory responsibility of the government to provide you a job.

Or provide you housing, basically the essential kind of material difference is in the job requirement, they have to “build a job,” quote, unquote, you know, design a job and then pay you to do that job. Whereas in the housing case, they need to acquire or build housing in order to provide you housing. And so these are different basically kind of structural economic approaches that they need to go about doing it.

But I think a lot of the legal infrastructure I suspect will be similar to the legal structure of the enforcement of a right to a job. In terms of housing, I think, you know, it’s in practice, what’s going to end up being is that they’re going to have quantitative targets of how much housing they build, and where they build that housing.

They’re talking about building millions of units of mixed income, social housing, and renovating, retrofitting the social housing that does exist, or the public housing that does exist that is in disrepair. They’re going to have to do it. And I think there’s going to be this period transitioning into this statutory right to a home that they’re going to try to build a lot of public housing law at once.

And then they’re going to phase in the right to a home. The one other point that I would make about that is the nice thing about proposing these together, and if you actually would have them together, is that the right to a job and a right to housing mix in together very well because a lot of our housing problems is are people moving to six to 12 metropolitan areas because those are the only places where you can get jobs, where you can get actual livable jobs.

You have a chance to get a livable job or work in internship that you are hoping to be able to essentially parlay into a living wage job. Whereas the job guarantee, the goal is to provide living wage job wherever you live.

So there’s a lot of places that have huge vacancies in housing where they really just need the housing renovated rather than to build new housing where people are suddenly going to want to live because they know they can work at the very minimum, they can work a job guarantee job and work a job in those areas.

So the one thing I would say about the difficulty of building millions of new units of social housing is we’re going to have a more kind of evenly distributed population, I think, because of the job guarantee and potentially even on top of the Green New Deal more generally, which is going to attract people to kind of long, neglected communities, to rebuild those communities; and there’s a lot of available housing and a lot of places that just needs to be retrofitted.

Grumbine (35:38):

I look at these abandoned malls across America and, you know, with obviously online shopping rendering them obsolete, these are eyesores, but they have the infrastructure and the square footage and the internal plumbing and electric and all the infrastructure there to provide massive units of livable housing, create even little communities with shops and restaurants, you name it.

There’s no limit to this. I want to bring up something that I think plays into this as well. And that is, you know, obviously the right wing has somehow or another won the blue collar battle for labor in many ways. The right wing still has a death grip, at least in these dirty industries, on the labor’s mindset in these poor white communities. And these people represent largely Trump’s space.

But when you think about what a Green New Deal does, a Green New Deal really in essence says, “Hey, those jobs you’re doing a really dirty and we want to get you out of them. And so we’re going to create a just transition by providing a federal job.” I’m wondering if between revitalizing, them not having to leave their communities that they’ve grown up in and love, and the family and the, whatever it is that they’re doing, right.

The opportunity to be able to sell this concept beyond just, you know, the progressive community and framing this in such a way that these individuals see this as a net gain, as a way of addressing their own fears and much of what it is is fear of loss. Not just . . . these people aren’t rich. They don’t have any money. They’re not sitting there living high on the hog. They’re worried about losing out on any kind of survival.

They work hard, they got their heads down, whatever in their minds, they don’t want you taking away their way of life. So in my mind, the Green New Deal, the reason why it’s far superior to any of the alternatives, especially like Tulsi Gabbard’s Off Fossil Fuels Act and stuff like that is because it addresses these very, very fundamental transitional questions that are really blockers, if you will, to be able to pass widespread legislation, not just for people with a D next to their name, but for the full 99%.

Can you talk a little bit about the just transition? You know, obviously we talk about impact the community, vulnerable communities, but the vulnerable communities are made even more vulnerable because of the fears of the already low level, low income impoverished white Americans that vote against their own interests so frequently. Can you talk about that?

Tankus (38:36):

Yeah. One thing I would say is I think a lot less often is it people voting against their own interests, but people not voting because they don’t see any of their interests represented. I mean, I think 2016, especially in the places in the Midwest, it was white people who dropped out of voting were two term Obama voters who dropped out of it because they don’t see, you know, anything for them to vote for.

 While I do think there are some Trump voters reachable, especially Trump voters who switched from being two time Obama voters to Trump voters, I think, but just getting a boost in turnout from young people and then people who are to the left of where the Democratic Party was four years ago and are alienated from it is the essential thing.

And I think for those people often, you know, their biggest gripe being that they got foreclosed on and the Obama administration didn’t do anything for them. Things like a right to housing, to a just transition is attractive. These things are attractive for people to get on board with.

The big barrier is not so much, you know, needed to be convinced that their lives will be better if we do those things, but being convinced that Bernie and AOC, but especially Bernie, since he’s actually the presidential candidate, you know, really believe in following through on these things. And I think people generally do believe Bernie will follow through on these things.

And I think that’s the advantage of his long, long record in the wilderness, as it were, pushing a lot of these same things. So I think that essence, in terms of, to the extent to which people do feel insecure and do feel like something is going to be taken from them and given to other groups, I think that essential feeling is at essence yes, about that they’re not going to be protected and, or response to assuming the world that Clintonian Democrats set out, which is that there’s not enough for everyone.

And then kind of going from the scarcity mindset that has been viewed in our politics and then going, “Oh, but now we’re going to do more for X and Y marginalized group.” Well, if you put two and two together in terms of like, well, they’re telling us there’s not enough for everything and they’re telling us, they’re going to give to some group, then they’re telling us that they’re going to take from me.

And that also connects up to MMT in terms of like Camille Walsh’s great presentation at the MMT conference on taxpayer identity that like, you know, thinking of yourself as a taxpayer is thinking in terms of that scarcity mindset.

But I think in large part, the Green New Deal, just transition and Sanders sweeter proposals to turn that around because he is proposing essentially comprehensive social insurance, social protection against loss, against your employer, to protect you from any of these things that could happen.

And then ultimately looking to really protect you and your family and especially your grandchildren from climate change. And I think that narrative of social care and social production that is coming from Sanders is very effective and is capable of connecting. The big barrier, the big problem is getting through the Democratic Primary. I think there’s no question that Bernie would win.

The question really is whether Bernie has what it takes to break through those primary, which with everything taken together, I think is probably true, especially because even though it feels like this primary has been going on forever, we still haven’t had the first actual primary. And I think he’ll do very well in Iowa and New Hampshire. And I think the dynamic of the election is going to change as Bernie, you know, starts winning a lot of primaries.

Grumbine (42:13):

Very good. So as I understand the federal job guarantee, and I’ve talked to a bunch of different economists, obviously about this, you know, a federal job guarantee is in essence, a public option for labor. It’s purchasing the slack labor in the economy by the government, like the government purchases many slack commodities and other things.

It does this in a countercyclical way as a means of preventing the economy from tanking out. And this is typically considered a countercyclical stabilizer, but there is a social component to the job guarantee that I consider to be the ultimate democracy enhancer.

And that is the local administration of these jobs, the redefining of what work is, and the fact that it is setting the defacto minimum wage and benefits floor while being simultaneously paid for at the federal level. Can you talk for a moment about your view of what the job guarantee is through the lens of the Green New Deal and how that benefits, not just minority communities, but, in fact, those other communities out there such as the coal miner and so forth as this would roll out?

Tankus (43:31):

Yeah. I mean, I think it’s beneficial in the sense that it provides like an absolute floor. The minimum wage is a leaky floor because you can just not have a job and not have access to a job. And the job guarantee sets a floor. And because it sets an absolute floor under which nobody can fall, it’s much easier to raise that floor.

You know, there’s all sorts of debates about whether the effect of the minimum wage and you can be on various sides of that. You know, I don’t think minimum wage causes job losses, but regardless having an absolute floor sidesteps those conversations and means we can add a benefits package and we can increase that wage on an annual basis.

We can phase it in with a four weeks of paid vacation and the lever we can push, which also helps us in terms of reducing carbon emissions is increasing paid vacation. You know, going from five weeks, going to six weeks, going to seven weeks and it becomes this lever by which we can reduce work hours throughout the economy.

And it also regulates the minimum level of working conditions. It means that if you don’t want to have an erratic job schedule, you don’t have to. You can always take the job guarantee job to have a stable, flexible schedule. And as a result, private employers will have to adjust and we’ll have to provide people stable schedules or have to pay people big premiums if they want to have an unstable schedules.

And it really puts the burden on the private employer to figure out how to efficiently use labor essentially in a low wage stagnant economy, employers can use labor however they want because it’s cheap. It’s much cheaper than actually having to innovate, having to restructure the job process, having to do all these things that actually can improve the workings of the economy and the pressure of that ever rising floor, and that minimum standard changes that dynamic.

In terms of specific ways that the job guarantee interacts with coal miners, there’s a number of different ways you can. You know, for example, Pavlina talked in the conference in her presentation on the Green New Deal about having coal miners work a job guarantee job and having a supplementary basic income, you know, not a universal basic income, but a targeted, basic income to those groups that gets paid alongside the job guarantee wage rate so that they have a comparable income to what they had before.

Maybe not the full income that they had before, but a comparable similar income, while meanwhile, a whole bunch of services start getting publicly provisioned like childcare, like healthcare, so on and so forth. Another way to do it, which is starting to come up in conversations in Australia is to have an education and workforce development policy as a supplement to the job guarantee, to basic job guarantee as it were.

And the idea being here is that we have to rethink what the purpose of education is once education isn’t about, you have to find a job, but it’s about what quality of job that you’re going to be finding. Then the question opens up, how should we approach the policy of shepherding people through our education system and through workforce development.

And, you know, one way to do that is to have, you know, a department of education policy to pay basically credential premiums on top of the basic job guarantee wage rate for specific professions, but especially, you know, in this context for specific just transition jobs like coal miners, where you provide, where you can provide people a supplementary premium to work at a wage rate, which again, isn’t going to be the private market wage rate that they had, but it’s going to be a supplementary income so it’s not such a steep fall down to the job guaranteed wage rate.

And this can also potentially be this larger conversation about it, a way of shepherding people through education and to higher credentials and encouraging people to go into certain professions and discouraging them to go into others. You know, at least certain professions that we think are socially necessary.

You know, maybe like lawyers, but definitely like doctors where you’ll have this floor and there’s going to be other professions, like say like, you know, being a stock market trader where we’re not going to provide you this supplementary floor, if you need a job or you lose a job. The only public option that will be available to you is the job guarantee, is the base job guarantee job. And so there’s a few different approaches that you can approach.

And of course, you know, on top of that is making our social security system a lot better and providing a living income pensions to older coal mine workers so they are able to retire and workers more general. We’ve had a lot of, you know, implicit cuts to social security by raising the retirement age. You know, it makes sense that you should potentially lower the retirement.

That should be on the table, which is both a benefit increase. It allows people to retire earlier. In the US, we have this huge lopsided labor force participation where we have the highest labor force participation from 55 to 80. And we have one of the lowest in terms of OECD countries being employed in terms of 25 to 45.

People employed are supposed to be prime age employment are employed at much lower rates than the rest of the world. And partially that’s because of how bad our economy is. And partially that’s because we don’t have a guaranteed childcare. And also partially that’s because the healthcare system that we don’t publicly provision healthcare.

And meanwhile, you have a whole bunch of people feel compelled to work at older ages often to support younger family members. So this is all topsy turvy and lowering the social security retirement age, you know, we’re seeing those benefits to be a part of the process of reversing these trends. Getting the people who shouldn’t be employed supporting everyone who should be, and the people who essentially are the most able to do it.

Ending Credits (49:47):

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