An independent Scotland should have a job guarantee - here's why

The Future Income and Work Research Network based at the University of St Andrews organised Scotland’s first international panel on a job guarantee for Scotland on December 11. Scotonomics co-founder William Thomson was invited to give his thoughts. Here are his opening remarks:

Although the job guarantee is a macroeconomic policy designed to stabilise the economy, it has other appealing features. A job guarantee is a priority if we are to tackle the multiple crises we face today. These include inequality, the continual blight of poverty, and the ecological damage we have wrought on the earth.

The job guarantee scheme embeds the government as the employer of last resort.

The government is already:

• The banker of last and first resort.
• The doctor of last and first resort.
• The lawyer of last and first resort.
• The builder of first resort.
• The educator of first resort.

Most of those functions were hard won, and we must fight against the same arguments we hear against a job guarantee.

The government should be the employer of last resort. It should ensure your human right to safe and secure work. In a fundamental sense, to argue against a job guarantee is to rile against the national health service, public schools, roads, rail and the central bank.

A job guarantee funded by the UK government can improve our economy and society. The state funding the job guarantee must be a currency-issuing central state, not a sub-national or regional-level government, so for the sake of any doubt, this should not be funded by the Scottish government.

So, a job guarantee for Scotland? Yes. But let's be realistic. As we are still part of the UK, this would have to be funded by the UK government. And the chances of the current Westminster administration or coming next year, a slightly different one, investing in a job guarantee, is fantasy politics.

If Scotland were independent, a job guarantee would have to be funded by a monetary sovereign, currency-issuing independent Scotland. This, unfortunately, is not the current Scottish government policy, which, post-independence, would see us tied to England’s currency for a decade, making a post-independent job guarantee scheme impossible, too. Besides, the recent Scottish Government paper Social Security in an Independent Scotland failed even to mention a job guarantee.

We are in a bind owing to what economist Stephanie Kelton calls learned helplessness powered by economic ignorance.

Two relatively new schools of economics, modern monetary theory and degrowth, dominate the current discussion on job guarantees.

The most illuminating element of MMT teaches us that monetary sovereign governments, like the UK, are not financially constrained. They are resource-constrained. The Scottish government is financially constrained. The Scottish government is a currency user like you and me and has a very different relationship with money than Westminster, the monopoly issuer and creator of our currency.

The UK government can afford a job guarantee scheme now like it can afford to eradicate poverty and provide a decent home for everyone who wants one. But it chooses not to. As John Maynard Keynes said, speaking of the UK government: “Anything we can do, we can afford”.

The critical insight from Degrowth is a very logical one: An economy built on perpetual growth can only lead to planetary destruction or human extinction. This insight pushes us towards the need not for individual policies like the job guarantee but for a new type of economy.

The job guarantee is a wellbeing policy, and the current economic framework cares little for wellbeing. It would have real difficulty fitting in.

But let's look at a job guarantee's two most significant impacts, assuming it was accommodated within the current economic framework.

The first is to remove the evils of unemployment. If you have ever been unemployed, you know the horrors that await. And you think yourself very lucky if you can find a job.

Lack of a job impacts mental and physical health, poverty, withdrawal from society and levels of happiness. All of these worsen the longer you are without a job. The negative impacts of unemployment still affect people when they have re-entered the labour force.

A recent report by Sydney University found that unemployment and underemployment were the cause of 10% of suicides in Australia. One of its recommendations for any suicide prevention scheme: A job guarantee. It removes these horrors at a stroke.

Many sociologists see unemployment as a disease. And like all diseases, prevention is better than cure. If we are a compassionate society, we should do everything we can to ensure that if someone wants a job, they have one.

READ MORE: How foreign investors extract wealth from Scotland

Finally, the job guarantee affects employers and employees outside of the scheme. Goodbye, bullshit jobs, a technical term for low-paid, precarious jobs. 100,000s of Scots are in bullshit jobs. They rely on poverty wages and short-term contracts if they are lucky to have a contract.

A job guarantee redresses the balance following 40 years of undermining wages in favour of profit. With a new player in the market providing a tailored, local, decent and good-paying job, the private sector will have to significantly up its game.

A job guarantee tackles inequality, poverty, and ecological damage. The UK government can be written off when it comes to wellbeing policies. But in Scotland, there is at least a chance. The challenge is to persuade the Scottish Government that a wellbeing economy, without a currency issuer's full monetary and fiscal powers, is an unlikely destination.

On the last Scotonomics episode of the year on Monday, December 18, at 7pm William and Kairin will discuss three structural deficiencies of the Scottish economy. Plus, the job guarantee, Scotland’s new fiscal framework and their top five economics books. Join them live here.