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The Fiscal Cliff Mythology and the Full Employment Alternative

Author

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  • Fadhel Kaboub

    (Denison University, Granville, OH, USA)

Abstract

This paper critiques the fiscal cliff mythology and the neoliberal push for economic austerity policies and sequestration of government programs. The purpose of the paper is to shift the debate to a social justice alternative that can sustain and enhance the social safety nets by implementing a full employment program that is both financially affordable and economically productive. First, the paper critically assesses the laissez-faire approach to job creation and lays out the mechanics of the job guarantee (JG) program as an alternative to the neoliberal model. Next, the paper critiques the deficit hawks’ and deficit doves’ “fiscal cliff†debate and demonstrates how the JG program can be financed according to modern money theory (MMT). Finally, the paper presents the cost estimation of the JG program for the United States to demonstrate its financial affordability and its productive capabilities.JEL Classification: B5, E5, E12, E24, J2, J3, H3, H6, O51

Suggested Citation

  • Fadhel Kaboub, 2013. "The Fiscal Cliff Mythology and the Full Employment Alternative," Review of Radical Political Economics, Union for Radical Political Economics, vol. 45(3), pages 305-314, September.
    • Handle: RePEc:sae:reorpe:v:45:y:2013:i:3:p:305-314
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    More about this item

    Keywords

    fiscal cliff; austerity; sequester; modern money theory; functional finance; sound finance; job guarantee; ELR;
    All these keywords.

    JEL classification:

    • B5 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H6 - Public Economics - - National Budget, Deficit, and Debt
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada

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