Teaching the Job Guarantee with Keynes’ Z-D diagram

The Job Guarantee may well be the only policy tool capable of addressing the myriad serious and sometimes existential problems we face today. Fortunately, it can be added ad hoc to even Orthodox economics courses so long as the possibility of less-than-full employment is admitted. Unfortunately, such an inherently incompatible framework greatly reduces the likelihood that the student remembers the lesson beyond the final exam. In almost every program, they will have been exposed to Neoclassicism’s arsenal of self-reinforcing and mutually-consistent free-market analogies and metaphors, leading them to–if not the day of the lecture, then as time passes–view the Job Guarantee as a curious outlier. This is why placing it in the context of Keynes’ Z-D diagram is so important. Because it is a general equilibrium model whose two main components are drawn straight from the mainstream tradition, it will feel familiar to Neoclassically-trained students. And yet it is that very familiarity that creates the opportunity for an epiphany. With a few intuitively-appealing modifications to the mainstream story, they will not only come to learn how powerful the Job Guarantee can be, but they may actually remember it.