So what do we do about the job situation?

[Leaper]

CN argues that it's the lynchpin problem (http://money.cnn.com/2009/01/09/news/economy/pain_ahead/index.htm?cnn=yes), and I can't see any reason to disagree.

So what do we do about it? Obama thinks more public works will help. Conservatives think that a tax cut for businesses would produce more in jobs than it costs in lost revenue.

Whaddya think? Whatever you believe is the right solution, how likely do you think it'd be implemented? Are we doomed to just "wait this out"?

[Martini Enfield]

I think the first thing to do is to put a Media Blackout on the Financial Crisis. Ignore it and pretend it's not happening, except for the really big business failures.

Most of the "jitters" and "lack of consumer confidence" stuff is, IMNSHO, caused by the constant coverage of the Financial Crisis. It's like Paris Hilton- it's news because the media keep talking about it.

Admittedly, I'm writing this from an Australian perspective, where most of the job losses and so on here are being caused by low retail sales figures, which are being caused by people not buying anything... because of the Financial Crisis in the US, which until a month ago wasn't affecting many people here at all.

I think that a tax cut for everyone- not just people with kids or on pensions- and an increase in Government or City Council employment (ie, actually hiring people instead of subcontracting everything out) would go a long way towards helping the economy, along with a removal of all taxes, duties, and tariffs on the purchase of a primary residence- doesn't matter if it's your first home or your sixteenth, as long as that's the house you plan to live in- and a Government-secured First Home Buyer's Mortgage at, say, 3% p.a. for 15 years and then 5% for the next 15 years.

I know, it will never happen, but I can dream...

[ASAKMOTSD]

I have a couple ideas (nothing necessarily new):

How about tax breaks for businesses that actually create and maintain jobs in the US instead of incenting them to ship the jobs offshore? (I heard it during the campaign, but I want to see it in practice).

When we talk about public infrastructure, how about technical infrastructure as well?

[JThunder]

Public works require a considerable amount of long-term planning before any actual construction can be done. I don't see that as a good way to stimulate short-term economic growth.

[Kobal2]

My totally uneducated opinion is that, assuming anything should be done (like Martini Enfield, I believe a lot of it is in people's minds - but I don't like in the US either so...), Obama's in the right.

First of all, while tax cuts to businesses could create jobs, the money could also end up in a fat cat's pocket, or raising the salaries of existing workers leaving just as many people out on their ear, or even saved "just in case, there's a crisis after all". By comparison, public works face much higher corruption scrutiny and create jobs from scratch.
Note also that by definition, public works benefit everyone, not only those who are paid to do them, whereas private businesses may or may not. OK, maybe not all public works do, roundabouts every 50 meters only aggravate - but again, there's more open scrutiny.

The downside would be that public works don't create the basis for future income generation and are only a temporary measure to get people to start spending again, but isn't that what the whole deal is about, emergency measures ?

[Fear Itself]

Conservatives think that a tax cut for businesses would produce more in jobs than it costs in lost revenue.I've never understood this reasoning. We are in a recession; no one is spending, so demand for products is down. So why would tax cuts for business produce jobs? What business expands capacity when demand is down? Business tax cuts in this economy go straight into the pockets of the stockholders.

[John Mace]

I've never understood this reasoning. We are in a recession; no one is spending, so demand for products is down. So why would tax cuts for business produce jobs? What business expands capacity when demand is down? Business tax cuts in this economy go straight into the pockets of the stockholders.

Because smart people realize that we won't always be in a recession, and they will want to invest in the future. The less it costs to do that, the more likely it will happen. You can invest without expanding capacity.



How about tax breaks for businesses that actually create and maintain jobs in the US instead of incenting them to ship the jobs offshore? (I heard it during the campaign, but I want to see it in practice).
But if it makes economic sense to "ship the jobs offshore", why would we want to de-incentivize that? I don't want the government deciding which jobs should be done in this country and which things we should just import. That's a decision for the private sector.

[Sateryn76]

I have a couple ideas (nothing necessarily new):

How about tax breaks for businesses that actually create and maintain jobs in the US instead of incenting them to ship the jobs offshore? (I heard it during the campaign, but I want to see it in practice).

When we talk about public infrastructure, how about technical infrastructure as well?


Most of the jobs that are sent offshore are manufacturing and other production jobs. If we kept them all here, retail prices would skyrocket due to giant increases in wage and benefit costs to the employers. So the "people" would still get screwed, because they couldn't afford to buy anything.

[Maeglin]

Most of the jobs that are sent offshore are manufacturing and other production jobs. If we kept them all here, retail prices would skyrocket due to giant increases in wage and benefit costs to the employers. So the "people" would still get screwed, because they couldn't afford to buy anything.

Alternatively, we would have to keep wages and benefits here competitive with the rest of the world.

No one really wants that.

[hdc_bst]

You can invest without expanding capacity.

Could you go into a little more depth with this?

[John Mace]

Could you go into a little more depth with this?

Product development. New business start-ups. R&D.

[MichaelQReilly]

This is my take on it: its not just jobs, its the lack of well paying jobs. As everyone knows, despite the fact the economy has grown quite a bit since 1980, middle class people's salaries have not. Almost all the gains have been pocketed by those at the very top. In order to maintain their lifestyle, middle class people have been forced to spend more and more of their savings or go into debt. Fast forward to today, and middle class people are maxed-out. The savings and credit are gone. This is, imho, the root cause of the problem. People aren't going to have money to spend, allowing the economy to recover, until they are paid more at their jobs.

[shallora]

No.

The root cause of the problem is quite simply people have lost perspective.

"People" have been "forced" to spend more and more of their savings or go into debt? I don't think anyone "forced" the middle class to buy McMansions that you liberals hate so much. I don't think anyone "forced" the middle class to buy those useless SUVs that you liberals hate so much. I don't think anyone "forced" the middle class to buy those expensive wide-screens, or Xbox or Wii, or etc. etc. etc etc.

The truth is that people were led to beleive that the prosperity of the '90s would last forever. People still think the prosperity of the 90s was the norm, not the exception.

The norm, everyone, is something a lot less extravagant than the 1990s. Which we are now figuring out.

Once we begin to accept that, normality will eventually and truly return.

FYI, offering a $3k tax incentive to businesses that hire each $50k/year employee won't help, either, because the simple math says that 50-3 = $47k loss. Why would I hire someone that costs me $50k per year to employ if I get only a $3k tax credit for doing so? Especially if my business isn't selling enough product to keep that employee busy in the first place? The whole idea is absolutely ridiculous.

A better solution is to give Americans on an individual level another individual tax break or individual tax credit or incentive or rebate or something. When Americans have cash, they typically spend it and vote with their wallet on where that money needs to be spent first (and if they again choose SUVs and McMansions instead of saving it or paying down debt, well again it's their own damn fault). But I think people have learned . . . I hope, anyway . . .

[hdc_bst]

Product development. New business start-ups. R&D.

Ah, yeah. I can see where there would be quite a lot of incentive to either differentiate your product or increase production efficiency.

[L. G. Butts, Ph.D.]

No.

The root cause of the problem is quite simply people have lost perspective.

"People" have been "forced" to spend more and more of their savings or go into debt? I don't think anyone "forced" the middle class to buy McMansions that you liberals hate so much. I don't think anyone "forced" the middle class to buy those useless SUVs that you liberals hate so much. I don't think anyone "forced" the middle class to buy those expensive wide-screens, or Xbox or Wii, or etc. etc. etc etc. <snip...> shallora, I don't really disagree with most of the content of your post, but since this is GD, why don't you provide a cite regarding how liberals hate McMansions and SUVs.

This kind of invective is pretty damn offensive and ruins a perfectly good point. Now instead of wanting to expand on what you said, maybe reach some common ground (since I am not so far away), I only feel like pitting you for trying to paint me into a corner when you know nothing about me and mine.

[Merijeek]

FYI, offering a $3k tax incentive to businesses that hire each $50k/year employee won't help, either, because the simple math says that 50-3 = $47k loss. Why would I hire someone that costs me $50k per year to employ if I get only a $3k tax credit for doing so? Especially if my business isn't selling enough product to keep that employee busy in the first place? The whole idea is absolutely ridiculous.


Funny, maybe it's because I'm a "liberal", but in MY job I'm actually expected to produce, not just sit there and draw a check. So, in your idiotic example, my boss doesn't see employing me as a $47K loss - because if he did, he wouldn't employ me.

I actually generate a relative revenue in excess of $47K. Maybe you don't?

-Joe

[John Mace]

Funny, maybe it's because I'm a "liberal", but in MY job I'm actually expected to produce, not just sit there and draw a check. So, in your idiotic example, my boss doesn't see employing me as a $47K loss - because if he did, he wouldn't employ me.

I actually generate a relative revenue in excess of $47K. Maybe you don't?

-Joe

Here's an idea... If so many people are unemployed, and there is a $50k job that existed last year that is now worth $47k to the employer, then why can't he hire someone for $47k without dipping into my pocket to make up the difference? If the job isn't worth $50k to the employer, then it shouldn't be offered at that rate.

[RickJay]

Funny, maybe it's because I'm a "liberal", but in MY job I'm actually expected to produce, not just sit there and draw a check. So, in your idiotic example, my boss doesn't see employing me as a $47K loss - because if he did, he wouldn't employ me.

I actually generate a relative revenue in excess of $47K. Maybe you don't?

You entirely missed shallora's point, which is completely compatible with yours. S/he was pointing out that a $3K tax break will not encourage a business to hire someone to a $50K job they would not have hired them to anyway.

...

To make another point, I have to be pedantic, but people are usually NOT paid their salaries based on how much they "produce." You aren't paid $50K because you generate $50,001 or more in revenue, you're paid $50K because that is the market price for your services. It wouldn't matter if you produced a million dollars; if the market rate for your experience and talents is $50K, that's what you get. Obviously, many or most employees do not have easily definable "productivity" by revenue; how do you define the revenue generated by a custodian, or a bookkeeper, or the manager of preventive maintenance?

Some people do get paid piecework or commission, but that's a minority of jobs.

[mazinger_z]

My solution is nothing new. Fast track existing infrastructure projects. Tax cuts to corporate tax rate, capital gains, and make it easier to buy second homes and investment property (something has to be done with the extra capacity). Relax TARP money lending requirements. I've been helping out in our capital finance group lately and if banks have the same problem we have (my friends at Merril/Bank of A confirm this), it's government excess regulation that is keeping banks from lending. But, what can you do? Bad lending was one of the reasons for this mess in the first place. I guess enforce stricter regulations later. My whole plan will involve growing the economic pie and let the government create safety nets.

[Oy!]

Ron Suskind, in his excellent book The Price of Loyalty, quotes Paul O'Neill, Bush's first Secretary of Treasury and former Alcoa CEO, as saying (paraphrasing here): "No [sane] CEO ever makes his business decisions [like hiring or choosing whether or not to do R&D] based on tax policy." He ought to know, so I believe him. Although he is quite a solid right-winger (for example, he believes desperately in privatizing Social Security), he thought the tax cuts of 2001 were wrong, because they would not stimulate the economy.

As I understand it, it's pretty well understood that cutting taxes, even for individuals, doesn't typically lead to increased spending, especially in a period of economic downturn when people are afraid. To get the most bang for the buck, the best bet is to put money in the hands of people who don't have any, and thus will spend any they get. This is done by increasing unemployment benefits and by creating jobs.

Let's be honest here, if nowhere else. The whole business with tax cuts is a sop to the Republicans to get them to buy into the stimulus package. While I have been saying consistently from well before the election that we don't need a Bush of the left, I could wish that Obama was a little less determined to be so overwhelmingly non-partisan in this case. The stimulus package doesn't need anything like eighty votes to pass, and I think that sixty-five to seventy would be plenty to qualify as having bi-partisan support. I'd like to see us put our money into the area where it will actually generate the greatest result.

If anyone doubts this, let's look at TARP, in the course of which we granted very large amounts of money to businesses that supposedly were in serious trouble. Have they created jobs or increased R&D? No. Several bought other companies, thereby leading to more debt. Others increased dividends and/or executive bonuses.

With respect to "shovel-readiness," the government could spend a fortune just working on repairs to current infra-structure, which presumably would not require a lot of lead time to get under way. That would give people ample time to ramp up for planning any new infrastructure projects, assuming there are any states that don't have a number of projects ready to go and simply lacking funds. Repairing dams alone would probably take quite a bite, and we desperately need to do this. There are an estimated two million dams (http://whyfiles.org/169dam_remove/index.html) in the US and 25% of them exceed fifty years in age. Highways, power grids, bridges - all of these need fixing, but there's no money, and since people will elect anyone who promises lower taxes, there's not going to be any money.

Personally, I'd like to see the stimulus package include a small, progressive tax increase to help at least a little in paying for the spending, but I know that won't happen. Political reality is what it is, and the Democrats ran on a platform of bipartisanship. In real terms, that means that the far right wing of the Republicans will be able to block anything it wants to, by screaming really loud.

[Quartz]

I don't know about America but over here I'd like to see a removal of fuel duty (it's over 100%, maybe 200%) and a slashing of sales tax from the current 15% to 5% or less. The former would make it vastly easier for people to travel to new jobs and the latter would encourage spending. I'd also like to see large tax allowances for children - again this will encourage spending.

[Fear Itself]

Because smart people realize that we won't always be in a recession, and they will want to invest in the future. The less it costs to do that, the more likely it will happen. You can invest without expanding capacity.So the tax cuts aren't going to create jobs in the short run?

And why would government 'invest' in companies if the payoff won't come until after the recession? After the recession, companies shouldn't need subsidies from the government; good companies will attract investment from the private sector.Product development. New business start-ups. R&D.Compared to manufacturing, those activities produce relatively few jobs. If job creation during a deep recession is the goal, business tax cuts are a poor way to do it.

[ASAKMOTSD]

Most of the jobs that are sent offshore are manufacturing and other production jobs. If we kept them all here, retail prices would skyrocket due to giant increases in wage and benefit costs to the employers. So the "people" would still get screwed, because they couldn't afford to buy anything.

Perhaps its time to offshore a few CxO jobs?

[L. G. Butts, Ph.D.]

You entirely missed shallora's point, which is completely compatible with yours. S/he was pointing out that a $3K tax break will not encourage a business to hire someone to a $50K job they would not have hired them to anyway.This is what happens when people sprinkle their arguments with hateful, troll-like, rhetoric; people don't get the point on focus on the name calling...

[msmith537]

Compared to manufacturing, [R&D, etc] produce relatively few jobs. If job creation during a deep recession is the goal, business tax cuts are a poor way to do it.

Creating new products and new brands produces few jobs? That is exactly what creates jobs.

The 90s started out in a recession. It only became a time of wealth and affluence around 1995 when a combination of concern over Y2K and the commercialization of the Internet and business technologies created thousands of new jobs.

Here are some actions that tend to create jobs:
Lower taxes so people have more money to spend and invest
Government investment in infrastructure and research
Investing in training and education

Here are some actions that tend not to create jobs:
Tax increases
Protectionism
Clinging to obsolete or declining industries

[Chessic Sense]

What about a sales-tax holiday? The problem with giving out money is that people might save it for the proverbial storm clouds on the horizon. Instead, how about making the good cheaper? That way, you can't benefit from it unless you spend the money.

There's no "Welfare state!" objections because a dollar is a dollar, regardless of who it comes from. So if a poor guy spends 5 bucks and a rich guy spends 5 bucks, they both benefit the same.

If states don't want to do it, the federal gov't can reimburse them for their losses. Consider also that if there's a sales tax relief for, say, a month, people with money would go and buy the most expensive things they've had their eye on. That means houses and cars. And which two industries are hurting the worst right now (besides finance)? Auto and Real Estate.

It just makes sense to me. The problem is that no one will buy goods right now and people thus get fired. So the best way to encourage buying is by making stuff cheaper. I say don't give people money, just let them keep what they've got- but only if they start spending it.

[Simplicio]

What about a sales-tax holiday? The problem with giving out money is that people might save it for the proverbial storm clouds on the horizon. Instead, how about making the good cheaper? That way, you can't benefit from it unless you spend the money.

Many states already do this. It usually makes for poor stimulus as consumers simply tend to buy a bunch of stuff at once during the holiday rather then buy the same amount of goods all at once. For example, from The Tax Foundation (http://www.taxfoundation.org/research/show/1771.html):

According to the New York State Department of Taxation and Finance, while the Empire State's first sales tax holiday increased sales during the period of the holiday, sales for the year were virtually unchanged. In other words, shoppers didn't buy more; they just shifted the timing of their purchases.

Other studies have indicated that retailers may raise their pre-tax prices during the tax holiday, leaving consumers out of the full tax savings.

As it turns out, sales tax holidays are more hype than anything. Not only do they fail to live up to their advertising, they generate numerous problems. For one, the complexity and administrative burden that sales tax holidays create can be mind-numbing for small-business owners. Tax holidays create unstable tax codes that force businesses to develop new administrative and compliance strategies every time a tax holiday is enacted.

The complexity mentioned in the last paragraph would be greatly multiplied in the case of a federal sales tax holiday, since the entity funding the holiday would be different then the one collecting the sales tax. Also, politically some (probably also mind-numbingly complicated) mechanism would have to be adopted so that the stimulus money didn't end up going only to those states with high sales tax while totally skipping those with no state sales tax.

Other rebate schemes might work better, but I think people are pretty uncomfortable with schemes that basically have the federal government bribing its citizens to go buy a bunch of big-screen TV's and the like.

[dgrdfd]

Consider also that if there's a sales tax relief for, say, a month, people with money would go and buy the most expensive things they've had their eye on. That means houses and cars. And which two industries are hurting the worst right now (besides finance)? Auto and Real Estate.


What kind of sales tax do you pay on a house? In the two states I have lived you pay 5% or less in tax when you buy a car. That's certainly not enough to make one decide to buy or not buy.

[Richard Parker]

Public works require a considerable amount of long-term planning before any actual construction can be done. I don't see that as a good way to stimulate short-term economic growth.

There are many works that have already been planned and just need funding. We're not talking about the Hoover Dam. We're talking about rebuilding schools, highways, etc.

[Oy!]

I don't know about America but over here I'd like to see a removal of fuel duty (it's over 100%, maybe 200%) and a slashing of sales tax from the current 15% to 5% or less. The former would make it vastly easier for people to travel to new jobs and the latter would encourage spending. I'd also like to see large tax allowances for children - again this will encourage spending.

It's also a good way to stimulate the use of petroleum products. Let's take the people who have made the greatest strides in turning toward alternative energy sources, and give them incentives to use more petroleum instead. In the meantime, the US will stimulate R&D in green tech with government spending, eliminating the leg-up that Europe currently has in these fields. Yeah, that's a great idea.

[Quartz]

It's also a good way to stimulate the use of petroleum products.

I'm not interested in discussing AGW in this thread.

[Kobal2]

Creating new products and new brands produces few jobs? That is exactly what creates jobs.

The 90s started out in a recession. It only became a time of wealth and affluence around 1995 when a combination of concern over Y2K and the commercialization of the Internet and business technologies created thousands of new jobs.

Ah yes, the Dot Com bubble. That was a fairly good time wasn't it ? When people could make millions on an email adress and a vaguely worded mission statement. That'll build a strong economy ;)

Here are some actions that tend to create jobs:
Lower taxes so people have more money to spend and invest
Government investment in infrastructure and research
Investing in training and education

Here are some actions that tend not to create jobs:
Tax increases
Protectionism
Clinging to obsolete or declining industries

Considering the choice is between the first two items on you list of things that create jobs, I don't see you making a relevant argument here :dubious:.

[hobscrk777]

I'm not interested in discussing AGW in this thread.

It's not solely an issue of AGW. If, in fact, there are many potential jobs available in alternative and renewable energy development, then removing fuel taxes, which would stimulate demand for petroleum products, would dampen the push for alternative/renewable energy sources, thus suppressing job development.

[Rand Rover]

CN argues that it's the lynchpin problem (http://money.cnn.com/2009/01/09/news/economy/pain_ahead/index.htm?cnn=yes), and I can't see any reason to disagree.

So what do we do about it? Obama thinks more public works will help. Conservatives think that a tax cut for businesses would produce more in jobs than it costs in lost revenue.

Whaddya think? Whatever you believe is the right solution, how likely do you think it'd be implemented? Are we doomed to just "wait this out"?

I assume by "we" you mean the U.S. federal government. Before asking what we should do about the job situation, you should first ask whether we should do anything about it. IMHO, the answer to that question is no--the U.S. federal government should limit its activities as much as possible to those that directly protect its citizens from enemies (like other countries and terrorists, not the "enemy of joblessness" or whatever).

[Quartz]

If, in fact, there are many potential jobs available in alternative and renewable energy development, then removing fuel taxes, which would stimulate demand for petroleum products, would dampen the push for alternative/renewable energy sources, thus suppressing job development.

Unfortunately there are relatively few jobs in research compared with the vast numbers of people getting from A to B. And the latter group have an immediate need whereas the former holds the possibility of a solution - and likely a more expensive solution at that if petrol needs to be taxed. To get us out of this hole we need to get people earning money. High taxes on petrol put a very large damper on the mobility of the workforce.

[Richard Parker]

I assume by "we" you mean the U.S. federal government. Before asking what we should do about the job situation, you should first ask whether we should do anything about it. IMHO, the answer to that question is no--the U.S. federal government should limit its activities as much as possible to those that directly protect its citizens from enemies (like other countries and terrorists, not the "enemy of joblessness" or whatever).

Actually, you should first ask whether we should have a federal government at all. Go Articles of Confederation! And now that I think about it, actually, even before that, you should ask whether governments are a good idea for any purpose. Viva Proudhon! Of course, even before that, we need to know about the fundamentals of human nature to know which kinds of social hierarchy will work. And before that you're going to need to establish how we "know" any of this, given the possibility that we're all dreaming or have hallucinated all of our seemingly empirical knowledge (I realize you don't need to do this, RR, as A=A, but the rest of us might need more). Indeed, before that, you'll need to show that you other bastards even exist! Damn! It's assumptions all the way down!

Or, maybe, there's a difference between an assumption and a carefully considered, widely shared conclusion. And maybe we could discuss problems without reestablishing, each time, more basic conclusions underlying the discussion. Just a thought. I'm happy to discuss some Descartes though.

[hobscrk777]

Unfortunately there are relatively few jobs in research compared with the vast numbers of people getting from A to B. And the latter group have an immediate need whereas the former holds the possibility of a solution - and likely a more expensive solution at that if petrol needs to be taxed. To get us out of this hole we need to get people earning money. High taxes on petrol put a very large damper on the mobility of the workforce.

I agree that the people of the workforce have an immediate need, and the research group holds only thepossibility of a solution. Having said that, however, I still think substantially lowering fuel taxes is just as bad an idea now as it was when it was proposed in the U.S. in July or August of 2008. Lowering prices (and therefore stimulating demand) on a non-renewable resource that already has an incredibly high demand is only going to exacerbate our problems.

[Rand Rover]

Richard Parker, I humbly submit that there is a difference between the question "should the US federal government do X?" and the question "Are we all just brains in a vat?", and that it is possible to conclude that it is appropriate to consider the first without having to consider the second. Any assertion to the contrary is pure orneriness for its own sake. The US federal government is a government of limited powers, which necessarily raises the first question.* There is nothing about the exercise that necessarily raises the second question anÿ more strongly than does the decision whether to get out of bed in the morning.

*The looseness of those limits is much younger than the limits themselves and is based on judicial interpretation, which can change over time.

[toadspittle]

Repairing dams alone would probably take quite a bite, and we desperately need to do this. There are an estimated two million dams (http://whyfiles.org/169dam_remove/index.html) in the US and 25% of them exceed fifty years in age.

Good point. And bridges, as you say—has everyone forgotten that 2007 bridge collapse in Minnesota already? Some 25% of all bridges are either "structurally deficient or functionally obsolete." (http://www.msnbc.msn.com/id/22793811/) Eep. Plenty of work to be done there.

And to those who complain that infrastructure improvements need planning to ramp up ... so? Engineers, architects, surveyors, project managers, office secretaries, etc. etc. don't need work, too?

[Honesty]

But if it makes economic sense to "ship the jobs offshore", why would we want to de-incentivize that? I don't want the government deciding which jobs should be done in this country and which things we should just import. That's a decision for the private sector.


No one is taking that away from the private sector. What Obama stressed during his campaign was offering a tax credit to those employers whose business is the United States and hires Americans. It makes perfect sense. If a company finds that its more profitable to have its operations overseas, then why should the federal government bend-over-backwards and help (i.e. offer additional breaks) them once tax-time rolls around?

[toadspittle]

Ah yes, the Dot Com bubble. That was a fairly good time wasn't it ? When people could make millions on an email adress and a vaguely worded mission statement. That'll build a strong economy ;)

Despite the negatives of the dot-com crash, the one thing that the bubble DID give us was a huge infrastructure investment: The massive amounts of fiber optic cable laid down during the bubble (that then went unused for a couple of years after the crash) helped spur our ongoing broadband revolution.

One could hope that a government-funded infrastructure investment could similarly help.

[Honesty]

CN argues that it's the lynchpin problem (http://money.cnn.com/2009/01/09/news/economy/pain_ahead/index.htm?cnn=yes), and I can't see any reason to disagree.

So what do we do about it? Obama thinks more public works will help. Conservatives think that a tax cut for businesses would produce more in jobs than it costs in lost revenue.

Whaddya think? Whatever you believe is the right solution, how likely do you think it'd be implemented? Are we doomed to just "wait this out"?


I think its all backwards. We're still working on a Reagan model of trickle-down economics. Instead of figuring out contrived ways to pass federal dollars from the government, through the bank, to the employer, and finally to the consumer; why don't we just pay the consumer directly? It would be nice for the federal government to peel a $40,000 check to every working American. It'd allow people to pay down their debts and urge people to start spending a little more than they are. People aren't foreclosing on their mortgage because they think its cute, they are doing it because they can't afford it.

- Honesty

[Richard Parker]

Richard Parker, I humbly submit that there is a difference between the question "should the US federal government do X?" and the question "Are we all just brains in a vat?", and that it is possible to conclude that it is appropriate to consider the first without having to consider the second. Any assertion to the contrary is pure orneriness for its own sake. The US federal government is a government of limited powers, which necessarily raises the first question.* There is nothing about the exercise that necessarily raises the second question anÿ more strongly than does the decision whether to get out of bed in the morning.

*The looseness of those limits is much younger than the limits themselves and is based on judicial interpretation, which can change over time.

The paragraph you posted could have been posted in all the threads about federal policy on this board. It is a totally generic critique based on libertarian principles, with which everyone who spends time in GD is familiar. It is a good idea to challenge long-standing and widely-shared conclusions, but it is "pure orneriness" to do it in every single thread that touches on politics or poverty.

The idea that Libertarianism is necessarily raised by every question of non-military federal policy in a way that is different from the way in which such questions raise Anarchism is just false. The two are identically (ir)relevant. Both are tangents challenging an assumption of the question of which the speaker was almost certainly aware.

[Rand Rover]

Both are tangents challenging an assumption of the question of which the speaker was almost certainly aware.
I disagree with this--I don't think most people or most GD participants are aware of these issues, which is why I bring them up.

And you haven't made an argument yet on the issue of why this question is different than the brain in a vat question, you've just contradicted my argument with the bare assertion that it is wrong.

[treis]

I'm not so sure that we have to do anything. Yeah, the economy is in the crapper, but I don't think we can establish the expectation that the Govt. will ride to the rescue every time the economy turns south. It gets us deeper into debt, for a benefit that I don't think is worth it. If it were the case that we ran a surplus in good times, and then went into a deficit in bad times, that would be fine. However, we consistently run giant deficits. A 400 billion deficit should be viewed as a big counter-cycle budget, but in reality that's the normal. We have to return reality to the finances of the U.S.

[Magiver]

I think its all backwards. We're still working on a Reagan model of trickle-down economics. Instead of figuring out contrived ways to pass federal dollars from the government, through the bank, to the employer, and finally to the consumer; why don't we just pay the consumer directly? It would be nice for the federal government to peel a $40,000 check to every working American. It'd allow people to pay down their debts and urge people to start spending a little more than they are. People aren't foreclosing on their mortgage because they think its cute, they are doing it because they can't afford it.

- Honesty You want the government to cut a check for $3 trillion dollars?

You realize the current bailout money is generally in the form of loans don't you? It's not just handed out to businesses as a gift.

[mazinger_z]

I think its all backwards. We're still working on a Reagan model of trickle-down economics. Instead of figuring out contrived ways to pass federal dollars from the government, through the bank, to the employer, and finally to the consumer; why don't we just pay the consumer directly? It would be nice for the federal government to peel a $40,000 check to every working American. It'd allow people to pay down their debts and urge people to start spending a little more than they are. People aren't foreclosing on their mortgage because they think its cute, they are doing it because they can't afford it.

You really should find out what "trickle-down" economics really is, or you know, read something about economics before you post something you clearly know nothing about. While I have argued that efficient distribution of wealth is, at its most efficient, a direct payment to the people, I think it's obvious that those who do receive payment are those who clearly demonstrate a need. Otherwise, what you are stating is the start of hyper-inflation.

[NinetyWt]

To make another point, I have to be pedantic, but people are usually NOT paid their salaries based on how much they "produce." You aren't paid $50K because you generate $50,001 or more in revenue, you're paid $50K because that is the market price for your services. I'd assumed that it was loosely tied. I know that design professionals are paid based on their production; the rates charged by the firm are based on the employee's hourly rate plus overhead. Custodians, bookkeepers etc. are 100% overhead.

When we talk about public infrastructure, how about technical infrastructure as well? Technical as in ... ?

Public works require a considerable amount of long-term planning before any actual construction can be done. I don't see that as a good way to stimulate short-term economic growth.
Communities and agencies across the U.S. have responded to a request for "ready-to-go" projects for this proposed stimulus. You can see some of the projects listed on the Conference of Mayors website (http://www.usmayors.org/mainstreeteconomicrecovery/stimulussurveyparticipants.asp) (thanks for the link, Yllaria).

As to the OP, I'll cross-post something I had said in IMHO (http://boards.straightdope.com/sdmb/showpost.php?p=10675141&postcount=24). I would like to see infrastructure funding take the form of increased funding of already established programs:

I was visiting with a colleague of mine yesterday, and we were talking about the business outlook for the year. The subject of this stimulus package came up, and he mentioned that the easiest way for this funding to get down to small communities is for the Feds to beef up and/or introduce loan forgiveness into existing programs, such as the SRF program (state loan program for water, wastewater, and some stormwater projects).

I got to thinking what a good idea that was. Wouldn't it be a more streamlined process to add funding to things like FEMA's Hazard Mitigation Grant program, Rural Electric Cooperative Association, State Aid programs for transportation needs, and Community Development Block Grants?

[elfkin477]

It's not solely an issue of AGW. If, in fact, there are many potential jobs available in alternative and renewable energy development, then removing fuel taxes, which would stimulate demand for petroleum products, would dampen the push for alternative/renewable energy sources, thus suppressing job development.
How does creating jobs around alternative energy lead to a net increase in jobs? This is a serious question, because we have a fairly finite energy demand. Suppose alt energy sources suddenly supply us with 75% of our energy needs - what happens to people employed by traditional energy suppliers? They lose their jobs. If they're lucky, they pick up jobs with the alt energy companies, but that's not creating more jobs, just shifting workers around.

[toadspittle]

How does creating jobs around alternative energy lead to a net increase in jobs? This is a serious question, because we have a fairly finite energy demand. Suppose alt energy sources suddenly supply us with 75% of our energy needs - what happens to people employed by traditional energy suppliers? They lose their jobs. If they're lucky, they pick up jobs with the alt energy companies, but that's not creating more jobs, just shifting workers around.

(1) It's going to take a LONG time to get alt. energy up to 75%; that's not going to put the traditional folks out of a job anytime soon

(2) we have a FINITE energy demand, but not a FIXED energy demand; it's constantly increasing, both in the US and abroad (China, India esp.)

(3) if we can create a strong alt. energy industry in the USA, then we can SELL THAT technology to other countries, much as they now sell us oil, manufactured products, etc. Why should we NOT try to become a world leader in an emerging tech/manufacturing sector?

[msmith537]

Ah yes, the Dot Com bubble. That was a fairly good time wasn't it ? When people could make millions on an email adress and a vaguely worded mission statement. That'll build a strong economy ;)


I'm not talking about that Pets.com shit. What I'm talking about is the thousand of new, very real products, services and jobs that were created in the technology boom of the mid 90s. Email, networking, web development, corporate systems, cell phones, online banking, MP3, Amazon.com, Google, Yahoo!, EMC, and so on. Most of these things did not exist in anything but a very nacent form prior to around 1995.

What caused the speculative bubble, IMHO, was the emergance of online trading. Thanks to E*trade, etc, now every jerk and his brother can jump on the internet, open a brokerage account, and bid up the price of any tech stock they could get their hands on. Venture capitalists see these stocks skyrocketing and they want in. So they greenlight any IPO that has anything to do with tech without ever doing a proper valuation. And of course by 2001 it all came crashing back to earth.

That doesn't change the fact that there was huge job creation during the 90s, thanks to investment in tech.



Considering the choice is between the first two items on you list of things that create jobs, I don't see you making a relevant argument here


The choices isn't between lowering taxes and increasing spending. John Maynard Keynes, the world famous economist recommends deficit spending to mitigate recessions. By investing in infrastructure and the private sector, the theory is that it will stimulate the economy and produce greater long-term output. Of course, the downside is the potential to increase inflation. So you can't just go crazy spending whatever you want.