ABSTRACT
Modern Money Theory (MMT) economists have being advocating for the government to institute a job guarantee (JG) programme to create a buffer stock of employed people, rather than a buffer stock of unemployed. Under a JG programme, the government guarantees to employ people gainfully at all times, at a specified wage rate. If governance is effective, then with relatively positive increases in incomes and safety nets for the poorest of the poor, the population at large may tolerate higher price levels too. When an economy faces unemployment the government must increase its spending to reach full employment. Economies across the world are facing a chronic industrial unemployment problem, especially with an automation revolution underway. From a short-run stabilization point-of-view the MMT argument for full employment rests on solid ground. But this is not a new proposition; it draws heavily upon the lessons of functional finance as propounded more than 60 years ago by the Keynesian economist, Abba P. Lerner.
