ELR Comes to the UK

ELR Comes to the UK

The following story, which appeared in The Guardian on Sunday 29 July, was forwarded to me by Malcolm Sawyer:

“Million jobless may face six months’ unpaid work or have unemployment benefits stopped”

In a sense, the UK, under Conservative Prime Minister Cameron, is looking to adopt a quasi-employer of last resort (ELR) scheme in which the ELR wage is set equal to existing unemployment benefits (Note: the Conservative scheme involves compulsory labor for benefits).

Cameron’s move confirms other reservations I have long had about the ELR proposal and the possibility it could also be used to undermine public sector unions and public sector wages by substituting ELR workers as replacements. In addition, there are other technical financing and macroeconomic issues. That is why I have raised questions about it and held back from endorsing it.

Recently, proponents of MMT/ELR have attacked me personally for this. I think it’s time for them to take a chill pill.

Before we jump to endorsing theories and policies, we should be confident the theories are fully worked out and the policies will not have negative consequences that outweigh putative benefits.

CORRECTED: 7/30/12

by Thomas I. Palley

2 Responses to “ELR Comes to the UK”

  1. Employer of Last Resort? « occasional links & commentary Says:

    [...] I do have to remark that it’s a cheap shot for Palley to use the ConDem government’s punitive scheme to force the long-term unemployed to work [...]

  2. Is an Anti-Austerity Alliance of Left Neo-classicals and Post-Keynesians Possible? Is it Desirable? (Part 2) « naked capitalism Says:

    [...] likened MMTers proposal that government institute a WPA-style “job guarantee” program to the policies of the Tory Cameron government that unemployment benefit recipients work for free. Palley’s concern is that the MMT job [...]

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