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Sunday, August 01, 2010

Shiller: Use Government Policy to Directly Create Jobs

The ideas expressed below have been discussed around here for some time, and Atrios (among others) has been making similar points (e.g. put people to work painting roofs white). So it's nice to see Robert Shiller helping to deliver the message. Too bad Congress refuses to hear it:

What Would Roosevelt Do?, by Robert J. Shiller, Commentary, NY Times: Across the United States, thousands of federally financed stimulus projects are under way, aimed at bolstering the economy and putting people to work. The results so far have not been spectacular.
Why not? There’s nothing wrong with the idea of fiscal stimulus itself. We need more stimulus, not less — but we need to focus much more on actually putting people to work.
Two friends of mine, both economists, came upon a stimulus project ... highway ... sign that read “Putting America to Work: Project Funded by the American Recovery and Reinvestment Act” and prominently featured a picture of a worker digging with a shovel. Out on the road, there was plenty of equipment, including a gigantic asphalt paver, dump trucks, rollers and service vehicles. But there wasn’t a single laborer with a shovel. That project employed capital, certainly, but not many human beings.
Like many such stimulus projects, it could be justified if you accept the idea that gross domestic product, not jobs, is central — a misconception...
So here’s a proposal: Why not use government policy to directly create jobs — labor-intensive service jobs in fields like education, public health and safety, urban infrastructure maintenance, youth programs, elder care, conservation, arts and letters, and scientific research?
Would this be an effective use of resources? From the standpoint of economic theory, government expenditures in such areas often provide benefits that are not being produced by the market economy. ...
President Franklin D. Roosevelt's New Deal, though no more than partly successful, was much more focused on job creation than our current economic stimulus has been. It seems that the New Deal was also more successful at inspiring the American public.
Consider one of the most applauded of Roosevelt’s programs, the Civilian Conservation Corps, from 1933 to 1942. ... The C.C.C. emphasized labor-intensive projects... Congress has recently set plans for tripling the size of AmeriCorps, the modern counterpart of the C.C.C.... At its peak, the C.C.C. employed 500,000 young men. Under current plans, AmeriCorps would top out at 250,000 people in 2017, even though the nation now is two and a half times larger. We ought to be bolder.
Big new programs to create jobs need not be expensive. Suppose the cost of hiring a single employee were as high as $30,000 a year, several times typical AmeriCorps living allowances. Hiring a million people would cost $30 billion a year. That’s only 4 percent of the entire federal stimulus program... Why don’t we just do it?

    Posted by on Sunday, August 1, 2010 at 12:42 AM in Economics, Fiscal Policy, Unemployment | Permalink  Comments (38)


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