I agree with your article, and am sympathetic to the ideas of MMT and JG.

It occurred to me the other day that JG could be combined with a couple of problems related to students: I’m already assuming that an MMT-inclined future government would absolve undergrad students of all fees (paying them directly out of deficit finance — but also negotiating more reasonable fees with the unis). There still remains the problem of what students are going to live on:

My suggestion is that all students have a “gap” year, but not swanning off around the word, but working in JG jobs in their local community, and living at home. By doing this for a year (or more if they choose), they then earn the right to continued JG-type funding while at university. In effect, students are considered to be JG-employees, earning a basic salary and pension rights, throughout their normally 3-year course. So that on leaving uni, no student has a “student debt” (and hopefully no private debt), they have at least a year’s worth of productive employment experience behind them, plus 4 years pension rights (in contrast to starting a pension from scratch (if they are lucky) in their first “real job”). Of course, if they don’t get a “real job”, they could continue in JG for as long as required.

They would be expected to spend at least some time during the long vac. working under JG conditions (perhaps allowed to transfer to a different area for variety), and would of course be allowed some real (paid) vacation time.

An advantage of the “gap year” would be that the students would not be distracted from their studies in 6th form by UCAS applications and uni interviews. None of that would happen in that time. There would be no scrambling around in “clearing” — There should be no or little need for clearing. (Something which I believe the unis would be glad of). Instead, students only apply for uni (for the following academic year) after their results are known, and the application and interview process proceeds over the course of their (1st) JG year. Thus universities will be in a position to make firm, not conditional offers on most if not all candidates. Leave for bone fide interviews would always be granted from the JG job.

There should be opportunities during the “gap” JG year to improve their qualifications if they wish by e.g. evening classes.

The JG salary should be enough to cover at least basic accommodation while at uni. This should not be a problem in halls of residence (which would have to be at regulated prices). Private sector housing might be a little more difficult.

I wouldn’t make any of this compulsory. The “Sebastian Flytes” of this world can still swan off at their parents’ expense, and won’t need the JG salary while at uni. However, this gives the majority of students from average and poor backgrounds the chance (and the right) to finish university with 1. useful work experience (and a sense of community) 2. a good degree (if they work for it), and perhaps most important 3. no debt and 4. a start on the pensions ladder.

Almost forgot: I think JG should pay _better_ than the statutory minimum wage. An incentive for employers to pay better than the minimum wage. If it causes inflation, that can be taxed away by suitably targeted taxes (I would hope). Anyway, inflation is not the problem at the moment.

Also, re: “ The wage is paid by the government fiscal authority directly from the central bank on an overdraft at whatever interest rate the central bank wants to determine for that overdraft.” — I don’t see why that can’t be a rate of zero. You have argued elsewhere (and I agree) that the notion of an independent CB is a fiction; it’s an arm of government; no need for the government to charge itself interest, surely?

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Neil: a quick question regarding your older article: “Gilts Considered Harmful” (Great title :-) ). Don’t they still have a function for “reserve drain”, or is that not necessary in the modern world? Thank you.