But two things seem clear. The first is that the nature and quality of work are central, and any reform program
must focus on creating higher-quality jobs for more people in more places.
The second is that it must be big in scope and scale—something
with ambition and motivational power comparable to the New Deal or the
Marshall Plan.
Work must be central because it is where many of the chronic and
pandemic-related economic challenges intersect: inequality, precarity, and
the new informality; geographic disparity; and technological change. A much
greater availability of high-quality jobs is also the main common yardstick
to measure the success or otherwise of a comprehensive range of policies.
What these policies should be is, of course, the big question, and one that
ought to be democratically anchored. In my recent book The Economics of Belonging, I argue for a program that
Embraces productivity growth and the technological upgrade of jobs by
demanding more from employers
. It is when unproductive jobs give way to more productive ones that work
becomes safer, more pleasant, and better paid. In the European Nordic
economies, wage egalitarianism has spurred productivity growth by making
low-productivity labor uneconomical and incentivizing investment in
productivity-enhancing capital. This approach can be adopted elsewhere to
combat chronic low-paid, low-productivity work in lightly and rigidly
regulated labor markets alike (both the United Kingdom and France have
their precariats, for example) and to direct the reallocation about to take
place as COVID-19 makes some activities unviable. Concretely, this means
ambitious minimum wage increases and strong and strictly enforced workplace
standards.
Produces a high-pressure economy
with strong demand growth to give productive firms reason to expand and
ensure new jobs appear as bad jobs disappear. High demand pressure is
necessary to benefit those on the margins of the labor market—the young,
ill-educated, and minorities—who tend to be fired first in a recession and
hired last in an upturn. Concretely, this means running macroeconomic policy “hot,” calibrating monetary
and fiscal policies to keep demand always slightly ahead of the economy’s
capacity, to encourage companies to pull more people into the labor force
and seek productivity-enhancing improvements. This is admittedly more
easily done in large, rich economies, especially reserve currency
issuers—which also puts the onus on their policymakers to lead global
demand growth.
Lowers the cost of leaving a bad job and finding a better one
. This requires a panoply of policies, including greater spending on
skills, well-resourced active labor market policies, and social security reform to untie
benefits from jobs. Changing jobs and upgrading skills are costly for
workers, and are not undertaken if people have low buffers to live on
between jobs. Direct and unconditional payments, including a basic income
or negative income tax to avoid low-income traps in the benefit system, are
ultimately the only way to overcome these obstacles. They are also the most
effective and quickest way to improve living conditions for the worst off,
especially when more targeted approaches are unable in practice to reach
those most in need.
Reforms tax systems to encourage high-quality work.
This means shifting taxes away from labor to encourage job-switching and
hiring. The tax revenue loss must be made up elsewhere. This requires that
a greater tax burden fall on capital, ideally through a net wealth tax,
which is more productivity-friendly than other capital taxes. In addition,
carbon taxes should be significantly increased to reallocate labor and
capital in a green direction. The proceeds should be redistributed as a
“carbon fee and dividend” or “carbon checks.” Finally, international
corporate taxation must be fixed to level the competitive playing field
between multinational and locally employing firms, and to allow governments
more room for maneuver in taxing capital.
Reforms financial systems and tax rules
to be less favorable to debt and more favorable to equity-type funding,
which is both more conducive to productivity growth and restores an
appropriate balance of risk between workers and investors. Governments
should convert COVID-related rescue loans to companies that struggle to
repay into tradable equity stakes.
Incentivizes a broader geographic spread of the highest-value-added jobs
. The goal of policy should be to make more places host a critical mass of
high-paying jobs. This is easier said than done, but at a minimum requires
greater investment in transport and IT connectivity, local infrastructure,
and amenities to make places attractive to live in, and policies to make
financing available for new ventures in declining areas. The change to
remote working provides a promising opportunity to use tax or regulatory
incentives to shift good jobs from large central cities to more remote
locations.
