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OK. Well, welcome and today I'm talking to Pavlina Tcherneva who is a Professor at Bard College in New York State in the United States, and she's the author of the book The Case for a Job Guarantee from Polity Press. So welcome Pavlina. Thanks for joining us.

(Thank you for having me, Bill.)

Yeah, it's a pleasure. And in mainstream economics, there tends to be a concept that there's a trade off between inflation and unemployment and that justifies policies that keep unemployment at elevated levels. Now, you've done a lot of work on this and you have a view on this. So do you care to explain what you think about that proposition?

Yes, thank you, Bill.

This is a very important concept in economics and I would say a pernicious one that the namely that there is a trade off between unemployment and inflation then the policymaker has to choose between one of two evils.

Now, from an MMT perspective, that we don't have to face this impossible choice. There are, in fact, policy options, macro policies that can achieve both goals or at least come close to achieving both goals better than under the current status quo. And the federal jobs guarantee programme is that proposed solution.

It is, as the name suggests, a option for jobs. It's a public policy that guarantees employment opportunities to all. But it's not really only a jobs programme. It is a structural fiscal response to the very regular instability that economies experience. We know that, yes, unemployment is perennial, that, yes, private markets are not capable of creating enough employment opportunities for all.

And we know that we can experience inflationary pressures, but we don't actually know what those are because we constantly work in a quasi-slump. And there are inflationary pressures that come from other sources like cost push inflation. So the modern paradigm is crumbling.

And in fact, even mainstream theory is questioning the concepts of the NAIRU and the natural rate and they cannot find good models for for the NAIRU inflation determination. This is this is even acknowledged by central bankers. So what are we left with? Why do we insist on the necessity of unemployment for the purposes of price stability when in fact we can put in place a policy, a programme that provides employment for the unemployed on an ongoing basis - rain or shine to provide a decent floor for incomes for employment opportunities - a transitional step to those who have difficulty catching the job stream?

So what the job guarantee would do is provide that employment assurance safety net that it will be most necessary in crisis in times of recession and the programme will expand as people find employment opportunities in that programme. And that itself provides the stabilisation force for the economy that provides the requisite stimulus to stop the demand from collapsing.

And we know that then the stimulus is directly connected to job creation. When the economy recovers and focus transition into other employment opportunities, then public sector spending declines.

And so we actually have an automatic stabiliser that is superior to the existing unemployment automatic stabiliser. So to sum up, really, the cost of unemployment are baked into our current economic model, we pay them whether we like it or not, governments are responsible for the social fallout, for the loss of productivity, the forgone output. We can just do things differently. We can simply spend resources to employ the unemployed and do some very useful public service employment, which is also neglected and also needs to be filled. There are many social needs gaps that need to be performed.

So in some sense, we have a perfect coordinating macroeconomic tool that provides macroeconomic stabilisation and investment in the sort of neglected areas of social life.

(Right, thanks very much.)

Thank you. Thank you for having me.

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