Radical Democrats Are Pretty Reasonable

Tuesday, July 3, 2018
New York Times

Now, there’s a huge amount of evidence to the effect that minimum wage hikes don’t significantly reduce employment. To be fair, however, $15 is outside the range of historical experience, and you can make a plausible case that in low-productivity regions like much of the south there would be some job losses. On the other hand, those are precisely the regions that could really use some aid.

And even progressive economists like Josh Bivens aren’t sure whether a job guarantee is a good idea, mainly because they wonder whether the government can figure out how to manage large numbers of workers hired under the program and are uncertain about the cost. For what it’s worth, I’m pretty much with Bivens here, although I think he may be overstating the difficulties a bit; the goal of the jobs guarantee is laudable, but there are better ways to get there.

Also for what it’s worth, estimates by the leading academic advocates of a jobs guarantee – Paul, Darity, and Hamilton – say that it would be expensive, costing more than $500 billion a year, although they believe that part of this cost would be offset by lower spending on safety-net programs and higher tax receipts.

My own take is that they’re both too optimistic and too pessimistic. On one side, they believe that a huge number of people would enter the work force — that U6, the broadest measure of unemployment, would fall to just 1.5 percent, far below anything we’ve seen even at the peak of previous booms:

My guess is that they’re way too optimistic here, that many of those not working still wouldn’t be working for a variety of reasons even with a guaranteed job.

But if fewer people than they think took those guaranteed jobs, the program’s cost would be correspondingly lower. Say it only ended up costing half their projection, $270 billion a year: how irresponsible would that be?

Well, the Trump tax cut, according to CBO, will increase the fiscal 2019 deficit by $280 billion. And it will do that while delivering little or nothing to working-class families. Whether or not you support Ocasio-Cortez here, she’s advocating a more responsible policy than that actually enacted by Republican in Congress.

The point, in any case, is that while a jobs guarantee is probably further than most Democrats, even in the progressive wing, are willing to go, it’s a response to real problems, and it’s not at all a crazy idea.

So next time you hear someone on the right talk about the “loony left,” or some centrist pundit pretend that people like Ms. Ocasio-Cortez are the left equivalent of the Tea Party, ignore them. Radical Democrats are actually pretty reasonable.

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