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You say WPA, I say PWA

By Owen Paine on Monday August 9, 2010 09:57 PM

Above: a ghoulish of aspect -- and dying -- Citizen Hopkins and of course, the Vozhd himself.

Lots of kindly folks with long deep hearts and a smattering of economic good sense like putting themselves to sleep at night fantasizing about WPA II...

... That Roosevelt-era gimmick where Uncle Sugar puts millions on the federal payroll doing good public deeds for chump change -- kind of a liberal gulag day-camp gig tricked out with various solemn claims to lasting value and thriving virtue.

Now Harry Hopkins, the father of the WPA, is a real honest-to-Marx hero of mine, and despite the facts, I wish he, like that other great Harry, Harry Dexter White, had really in fact have been one of Stalin's robots. But alas, such poetry is all too sentimental for Mother Clio.

Hero or not, though, we don't need no more lousy make-work projects, despite what such recently revered authorities as the late Hy Minsky claim. And thank our class stars we don't.

(Here's another snap of Harry H in a fine hat, looking more as I like to recall him.)

And here's the other Harry, obviously ready to subvert jolly J Alfred Keynes, lord Ha-Ha, and his utterly sublime draft of a postwar international economic architecture:

These WPA multiple wet dreams, if any of 'em were ever to actually climb out of their local dream factory, and into the mainstream of American work life... it would prove to be, yes, just as awful as high school -- a sweatbox imposed by minimum security and financial desperation -- an American floating opera as labor gulag -- a workhouse without walls.

Honest toil? Maybe. Even kinda useful work? Maybe. But not an honest job; not a job mediated by the Tartarish market mechanisms. A job neither good and well paying enough to suck in private sector workers with an existing private sector gainful employment, nor a job able to excite the fury of our private sector chiefs of production.

Those glorious WPA jobs of pwog memory and myth were little more in ultimate motivation then confected Calvinic chores for idle hands, punishment for preterition at the hiring office of Limited Liability Inc., doing good by pouring concrete and sweat -- and, I hasten to add, quite unlike the work of the anagrammatic PWA, brainchild of that tightassed fatfaced thumbtack of a man Harold Ickes, which produced objects of a bygone glory and a splendor for ever and a day.

The WPA was not convict labor -- not literally, at least -- but neither is 11th-grade French homework. A WPA job for almost ever would end up as generally popular as forty years of high school; and throughout it would remain in essence Cain's curse, stigmatized labor.

Think about it: you yourself wouldn't "resort" to that type of job setting unless you don't have any choice, right?

The notion is that by this means we can set up a receptacle that can fill up higher and higher when there aren't enough Mcjobs, no matter how many missing Mcjobs we need. But why bother with this crap slide when we can in a perfectly straightforward way use macro policy to induce as many Mcjobs as we need, and have 'em all be more or less self-sustaining?

Take, for example, noted plagiary and cave wizard Hy Minsky, the Howard Zinn of macro. He includes a recipe for make-work in his recipe for perpetual stability: Uncle as employer of last resort. He wanted a Fed for the broken jobsters, like the Fed we already have for broken bankers.

But in this new context, with the society we've got out here, that's a nasty hellfirish concept. If Uncle becomes employer of last resort, by definition we end up with a 6th army of losers at a siege of Stalingrad job site, chopping wood and clearing brush at some deeply discounted wage.

Uncle, if he paid a decent wage, would in a stroke become the keeper of the job vortex. Given a choice, who would work for a corporation if the same work at the same pay were offered by a sunny side of Uncle Sam? Think the dynamics of this through to its "stable equilibrium": either this WPA evolves into a living job hell or it gets its neck broke just like Ickes' WPA got it's neck broke.

You can only be a last-resort employer at a penalty wage rate, right? So now imagine the effect of implementing such a pit of bottomless capacity on long-term private sector wages.

It could easily become a diabolical form of wage suppression; and, horror of horrors, Hy Minsky himself prolly figured all this out right down to the exact penny!

Now Hy, of course, Gandalfian type that he was, liked to call his employer of last resort a yellow brick road to lasting "inflation control" -- which comes to the same thing, doesn't it?

(Hy was obsessed with chronic inflation of the kind sponataneously generated by credit and fiscal deficit macro policies, and social-democratic counter-cyclical policies. His implicit motto: "Death to transfer systems!")

But even if you worry about unwanted uncontrolled inflation(*), you don't need to undermine the job market to cure it. There's no reason forcing you to create a perpetual class of dole-underpaid underclass workers. If inflation is the concern, you need to take it on at the source where pricing decisions are made -- i.e. at the corporate level. You need to construct a system-wide mechanism able to thwart these unwanted uncontrolled anarchic bursts of inflation by... by... wait for it...

... Imposing a markup cap-and-trade warrant system(**)!

Oh dear, there's so much room for digression here, but blogs call us to end the huffing and puffing more or less as quickly as possible. The point is simple: if in the end we want to maximize value added and wages per hour, maximize job participation rates and minimize job hours per week/year/career, then setting up a nonstop WPA is just effectively a way to absorb an oversupply of job hours by setting up sweatful local purgatories, and as a result, over time, hold down the entire wage structure of our corporate sector by stabilizing any level of stag in the corporate job market deemed most profitable.

Instead of heating up the job markets by heating up effective demand, we follow Hyman and simply sop up the unemployed with a public make-work program -- all the unemployed, that is, who are willing to face this Nurse Ratched and her gauntlet.

What, in the long run, is that gonna do? Among other things, keep the corporate job market slack while keeping goo-goos contented that all souls are fast at work, and God's will is done on earth. With last-resort employer Uncle Sam in place, there's no more need to pump up demand.

"Why Paine," you say -- "Paine, you arrogant shallow twit! We could employ 10 million folks today, right this second, greening up our production platforms, our infrastructure, our apartment complexes..."

I agree. But that kinda work is PWA work, not WPA work: projects long premeditated and planned, slowly implemented and paid for at honest union wages, not some fly-by-night rocks-into-pebbles act, not some red-white-and-blue prison without barbed wire. Not some take-it-or-leave-it Mother Hubbard ration station.


(*) Accelerating inflation can indeed be the outcome of a Wild Bill Vickrey final solution to job scarcity, if you cure our ills by using giant fiscal deficits backed by bank credit to drive us to hyperemployment. You need something to backstop bosses that is, in fact, a serious threat of bankruptcy in the final analysis.

(**) Now of course that will lead at some point to a nice toe-to-toe class-on-class slugfest over "shares" of value added; but that too is another story.

Comments (31)


what a wind bag i can be !!!!

my real purpose was to draw savage attacks
from as many
"do the right thing go wpa ..."
and "hy was aces" type
pwog polar bears
as possible

let us hope some venture here

certainly some honey ...got spilt

even if it's a bit
too thick and profuse

Al Schumann:

Owen, I'm happy to attack it. The PWA still leaves too many people working who shouldn't be and the labor market insufficiently tight. That market needs to be bound up tighter than a Berkeley professor on all cheese, no fiber diet. In place of the PWA, how about that SBA cheap credit program you mentioned, with progressive loan forgiveness, with a citizen's dividend that keeps Homer at home, surfing the web, buying the stuff the rugged individualists make in their SBA-funded artisans' shops?

Al Schumann:

For marketing purposes, the citizen's dividend should be called the Hilaire Belloc Freedom Fund. For those who object to foreign names, simply call it the Milty.


suggested edit:

Think the dynamics of this through to its "stable equilibrium": either this WPA evolves into a liv(ing job hell or it gets its neck broke just like Ickes' WPA PWA got it's neck broke.


i flat out like the mitty

and of course the great oklahoma loan rush
orchestrated by a SBA that
after P3D ' people party in power day'
has scaled itself up...like goldar http://thephilter.com/oldimages/tvh-goldar-403x371.jpg

the social dividend ...
well more on that in another post

after P3D ...whither homer ?
---busting amerika's infernal job ethic ---



i seem to have confused everyone by doing this wpa pwa dance

the intentions of the line you indeed made sense out of
have no connection to the sense
u made out of it
"Think the dynamics of this through
to its "stable equilibrium": either this WPA evolves into a living job hell or it gets its neck broke just like Ickes' WPA got it's neck broke"
Ickes name
it should be Hopkin's

the PWA did indeed vanish too in the war machine re org i think
but its spirit continued on to this day
and a WAR on BROWN could be led by a new PWA

WPA got wiped out because private interests
feared its "competition"
--i might add including the construction unions--
even in its purgatorial form
i might add
much as prison contract labor
to private industry -- like coal mines
honda assembly plants--
gets knocked around
in state after state


God help your editor.


This post has encouraged me to look up stuff about the WPA.
For instance:


Work promotes confidence? I thought work made you free.

What about PFU, which Nancy Rose, citing Business Week, calls the most savagely hated and quickly killed of all the ND dart-throws?

Why not mimic the corps and beat em, at least in the most obvious areas, at their own game, with appropriate upgrades in pricing, output, ecology, and distributional results?

Hooray for JOBS!

Everyone's biggest goal in life is to WORK FOR SOMEONE ELSE!

And hopefully, that someone else WON'T GIVE A SHIT ABOUT HIS/HER EMPLOYEES!

But that won't matter because work is just about INCOME!

And that's all there is to the analysis!

Hooray for JOBS!


always can depend on oxy to take the bait
let the hook sink in deep
but then snap the line

he must have thousands of rusty bits of hooks
in his gut
and so many scars in his mouth that....

Bait? I'm hooked? What?

I equate op's posts to the local "sportsman's warehouse" store, and place the bait offered on the same shelf as Uncle Josh's**, and remind you that this is a spring creek with a heavy small mayfly hatch, and what looks like taking the bait is nothing more than window shopping... time-killing... icksetteruh.

Lots of words to plead with me for a comment posting, huh? Next time, try marshmallows & corn niblets!




if you see this
i'd like your take on this:


my e-mail is:



What aspects of it?

The SIM model basically equivalent to the model that many of the crude MMTers seem to be using: simple closed economy with only "vertical" money, aka all government spending is money financed, no banking sector.

It's a pretty limited model. I think it's mainly just a way of introducing their consumption function and imperfect expectations.


speaking of MMT, they are big fans of the ELR as a means of anchoring inflation.

I have to confess that I don't quite understand how this would work, in a conventional economy without Minsky's other policies, ceteris paribus. How does a employer of last resort paying a below market wage lower the wage structure compared to a system with unemployment? I don't see how it would exert more downward pressure on wages.

From what I can tell from the relevant passage in Stabilizing an Unstable Economy (p.348), the anti-inflation aspect is not a function of the ELR itself, but rather a function of the government no longer attempting to maximize output. Basically you would not both trying to stimulate the economy, let the the ELR absorb the unemployed and just let the private sector go along at whatever rate. Seems like you would get a stable but stagnant economy. I don't see it as "undermining the job market" so much as willfully accepting stagnation, while mitigating unemployment.

that hardly seems like the type of thing the MMTers would be into. I have a feeling that a lot of them haven't really read up on it, as it doesn't really seem compatible with their deficit spending fetish


actually on second thought it's not incompatible at all.. duh



maybe you might re read minsky with this perspective

he hates transfer systems
safety nets etc
i admit i attacked hy from the first
but maybe only a post can handle this

-----as to:

"How does a employer of last resort paying a below market wage lower the wage structure compared to a system with unemployment? "

the comparison is to exactly that a safety net of problematic impact like we have
and indeed both are nice wage structure compressors and sinkers

the notion of full employment achieved by macro controls is the contrast i'm suggesting
if we have a job market strategy
i think it ought to be vickrey's not hy's
neither appear very plausible in the short run
but true full employment thru high effective demand
ie tightening the wage bargain process
obviously leads to a better
long run outcome



i was pointing to the whole raft of models at that site if i only gave you the click on
for the starter model
it wouldn't surprise me

every model that appears
in wynne's magnum o
monetary economics is there in fact
ready to play with


oh yeah, I thought I mentioned the models to you a while ago.
I played around with them a bit, but I don't really know Eviews. It's pretty clunky.
It would probably help if I had a partner in crime trying to learn this
check your email


""How does a employer of last resort paying a below market wage lower the wage structure compared to a system with unemployment? "

the comparison is to exactly that a safety net of problematic impact like we have
and indeed both are nice wage structure compressors and sinkers"

I don't mean unemployment benefits, i mean unemployment itself: the reserve army of labour. Doesn't that push down wages? Conversely wouldn't increased unemployment benefits push up the wages? Doesn't the ELR in-and-of-itself have the same effect of pushing up wages by making workers less desperate?


"reserve army of labour. Doesn't that push down wages"
of course
but today given half decent social deomcracy
unemployed means mostly on unemployment benes

"the ELR in-and-of-itself have the same effect of pushing up wages by making workers less desperate"

well no less desperate then unemployment insurance swedish style

now the like's of ned phelps tell us
all this swedish massage
transfer net shit "raises" wages
and lowers productivity
as you suggest
because it makes job loss less nasty
but is that the end of the story ??

corporations simply accelerate
their innate jobicidal tendencies
mean while withELR the fallen get to swim for their lives
in the el fresco gulag
and obviously the gulag itself needs to get turned up a few hellish notches ...eh ??

in any case
the misery factor has to go higher
to restore "incentives to work on the job"

ratchet ratchet ratchet
answer ??
according to phelps
bust up the safety net and create more incentives like EITC and retraininng classes
flex security as the danes call it
yikes !!!

consider the long run consequences
of a chronically slack job market

slack now not because folks
are at home idling away on the dole
but actually toiling away at pyramid building wages producing
non essential outputs
why non essential ?
because the corporates
will not allow enchroachment
if corporations are too weak
to stop enchroachment
their hegemony is broken
and we might as well directly
push them over the cliff into
progressive socialization
then pulling a silly end run around em

minsky prefers this jobs for all comers
to the present dole because
at least they are producing something
oddly he thinks this will reduce price pressures on the corporate sector
because of all this wpa output
some how absorbing demand with its output
i guess...he doesn't get very specific here
which puzzles me considerably
much as the bulk of hy's reforms puzzle me

the section 345-349 as u notice
stomps around on these points
to no effect in my estimation

though i note he specifically abolishes
a minimum wage and adds
"the wpa wage"
ought not to be tied
to average corporate wages or else
it becomes
"a handmaiden of inflation"

the guy is really against wage increases eh ??

he'd prefer productivity increases
get expressed in lower prices
then higher wages
like some damn austrian unicorn

at any rate
if we substitute a sub market toiling pool
for the dole
the corporate sector can shed wage earners
into it without fear of reprisal

"hey you can get honest work go see uncle "
imagine the fall if you're a redundent
soft ware writer

this whole business needs
much more analysis of course
but with out a rising real minimum wage
tied to median "value added"
as well as a falling job week
the spontaneous emiserizing
of the corporate job market
will grind on apace

a pool of under class wage opportunities
will only make this horror
compatible with merit class Gradgrinds

"hey they are learning to work by working
they can go to community college they can
go to career schools grants and loans are availible ...what more opportunity need we offer THEM "
are there not ELR's enough ???

double humbug


what no e mail ???


hmm, no I sent you an email to kapshow@hotmail.com

You didn't get the last one I sent you either. Maybe check your spam box?

Ill forward them both again


did you get those?


"which puzzles me considerably
much as the bulk of hy's reforms puzzle me"

That makes two of us.

Stabilizing an Unstable Economy is quite the tangled thicket

My guess is that he was traumatized by the 70s inflation... or something.

Have you read his John Maynard Keynes? I'm just starting it now, but it seems a lot clearer, almost as if it were written by a different person


have no notion what's going wrong


folks get me there every day

send something without attachments


"My guess is that he was traumatized by the 70s inflation"

his whole generation of keynesians were
except lerner and sidney weintraub and a few others

btw lerner was on to this problem of wage push
in the late 40's

his nose never failed him

and he attacked the problem head on
not by silly rube goldberg
nostalgia nonsense

like more equity smaller corporations

santa's village shit


oh ya and collateralization of all/much as possible
corporate debt

wynne has done far more then formalize hy's gabbble


just sent another

title: "test"


sent one from another account

title: "test2"

let me know if either gets through

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