Uploaded September 2016 | Updated September 2026, 3 weeks ago
Professor Pavlina Tcherneva discussing the implications of a Job Guarantee on the inflation rate. One way to look at a Job Guarantee is as a convertibility promise of labor time into dollars (just like a gold standard was a convertibility promise of gold into dollars). By pegging the Job Guarantee wage at a fixed number, the program permanently guarantees that anybody is able to convert an hour of work into the promised wage. In so doing, it fixes the "worth" of the dollar, at whatever the worth of an hour's unskilled labor is. This is why a Job Guarantee policy is sometimes called a "Labor Standard."
It does this by setting a price rule rather than a quantity rule. Most spending uses a quantity rule: the government buys 10 staplers and lets the market determine the price. Instead, a JG uses a price rule: the government offers a fixed price for labor, and lets the market determine how many people take the job. Doing all the spending of the government with a quantity rule leaves the "conversion rate" of the dollar to freely float, but spending using a price rule fixes this conversion rate at whatever the price offered is.
Read more about the government's ability to set the price level, as the monopoly issuer of the currency: modernmoneynetwork.org/sites/default/files/biblio/Pavlina_2007.pdf
Watch the entire panel here: youtube.com/watch?v=nkZdHPE_cf4
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Professor Pavlina Tcherneva discussing the implications of a Job Guarantee on the inflation rate. One way to look at a Job Guarantee is as a convertibility promise of labor time into dollars (just like a gold standard was a convertibility promise of gold into dollars). By pegging the Job Guarantee wage at a fixed number, the program permanently guarantees that anybody is able to convert an hour of work into the promised wage. In so doing, it fixes the "worth" of the dollar, at whatever the worth of an hour's unskilled labor is. This is why a Job Guarantee policy is sometimes called a "Labor Standard."
It does this by setting a price rule rather than a quantity rule. Most spending uses a quantity rule: the government buys 10 staplers and lets the market determine the price. Instead, a JG uses a price rule: the government offers a fixed price for labor, and lets the market determine how many people take the job. Doing all the spending of the government with a quantity rule leaves the "conversion rate" of the dollar to freely float, but spending using a price rule fixes this conversion rate at whatever the price offered is.
Read more about the government's ability to set the price level, as the monopoly issuer of the currency: modernmoneynetwork.org/sites/default/files/biblio/Pavlina_2007.pdf
Watch the entire panel here: youtube.com/watch?v=nkZdHPE_cf4
Follow Deficit Owls on Facebook and Twitter:
facebook.com/DeficitOwls
twitter.com/DeficitOwls
