Tuesday, January 14, 2014

The Job Guarantee as a Price Anchor?

Contemplate the following hypothetical scenario:  Walmart decides to offer its own private Job Guarantee.  It guarantees to hire anyone who wants to work as a Walmart associate, even if it means hiring all 20-some odd million unemployed Americans.

There is just one catch .... the associates will not be paid in dollars.  Instead, they will be paid 10 WalBits per hour.

Unfortunately, you cannot use WalBits to pay your taxes.    Uncle Sam will not accept them.

The good news is that Walmart will accept WalBits as payment for its merchandise, based on a floating exchange rate.   On the first day of issue, Walmart will accept WalBits as payment for its merchandise on a one WalBit per one dollar basis, but starting on the second day the exchange rate will be determined by a floating exchange on Wall Street.   Walmart will make no attempt to control the exchange rate. Who is Walmart to question the infinite wisdom of the free market?

However, Walmart's economists claim that because WalBits will be "anchored" to an hour of unskilled labor, you never have to worry about WalBit inflation.

You are unemployed and you contemplate accepting the Walmart Job Guarantee.  Who knows, maybe WalBits will be the next BitCoin?  Maybe someday one WalBit will be worth $1000 dollars?   You might become a WalBit millionaire! 

Should you agree to work for WalBits?


1 comment:

  1. The way it is set up, no. The crucial part which makes it unrealistic, without historical precedent and unlike a JG is : "Walmart will make no attempt to control the exchange rate. Who is Walmart to question the infinite wisdom of the free market?" This makes it just a way to evade minimum wage laws - having people trade their scarce labor for approaching-nothing amounts of goods. Like bitcoin, because there is no genuine demand. Unlike dollars, because there is nothing you can safely buy with Walbits. The Walbit is not a price anchor, unlike a real JG.

    If Walmart set prices in Walbits - which is what states do with their currency - and then let the Walbit "float", it would be comparable to a JG. Walmart could probably benefit from this way of thinking - old-fashioned (and highly beneficial) Fordism - pay workers enough to buy the cars they made. If it paid its workers more, they and their families would shop more at Walmart. The same effects that would make it possible, even likely that a minimum wage hike would increase, not decrease employment.

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