Why not government work projects for the unemployed?

Who gives a fuck if the private industry can compete or not? “Piss or get off the pot” comes to mind. If the private industry could provide jobs then we wouldn’t have 10% unemployment.

You must be mistaken. Unlike the 80’s and early 90’s, welfare is no longer a diamond that last forever. Depending on your State, benefits may last from a few months to a whole year. After that you’re cut off.

  • Honesty

If we’re going to pay them to scrub toilets that don’t need scrubbed, why not just pay them and don’t make them waste time doing useless work?

It would be more efficient to hand someone a check for $100 than to make them dig a hole in the ground and fill it up again before you hand them the check.

The problem is, unemployment doesn’t last forever. You can no longer collect welfare benefits forever. Yet jobs are NOT being created right now. What happens when your XYZ benefit runs out? What then?.

And who says the toilets don’t need to be scrubbed more often, anyhow? That was just an off-the-cuff example. As I said, I’m sure that we could come up with something if we wanted to but over and over I hear “can’t compete with private industry”. If private industry was so flipping good at making jobs we wouldn’t be in a recession. If private industry is so great why does it fear government competition? If government is so inherently wasteful and inefficient private industry should have no problem competing with it, right?

Right now, no one wants to create new jobs for the unemployed (or can’t create new jobs) yet the last two decades the social safety net/welfare has been slowly dismantled to discourage “idleness” or whatever… the end result being that more and more people are screwed. Sure, hand out a minimum subsistence cash grant rather than “make work” but then don’t start complaining about the people on welfare and why don’t they just get a job, m’kay?

So set up a business doing this “necessary” work.

If it’s not “make work”, then there must be some demand for it. Fill that demand.

Identifying and filling a real demand is the distinction between productive work and the kinds of meaningless digging-holes-and-filling-them-in that seems to be the idea here.

Could I get a cite on how much money is currently not invested anywhere, and how taxing it away and giving it to people to do things that nobody wants done will help the economy?

Regards,
Shodan

Thanks for the macro lesson but I’m familiar with Keynesian economics. I’m not talking about stimulus in general. I’m talking about creating “make work” jobs for people just to keep them busy. I am not convinced that there is an economic value to pay people to (metaphorically) dig holes and fill them up again or build highways and bridges to nowhere. If the government is going to pay out large stimulus packages, I think the money would be better spent improving infrastructure and other projects that have an actual economic value.

You should give a fuck. Because ultimately the health of the economy is dependent on the success of private industry.

I don’t think there is any disagreement on a preference for spending on projects with an “actual economic value”, it’s just that you seem convinced that ALL government work projects are in the “make work” category. You see no possibility that there might be a way to fund new jobs through the government to do work that is useful even if it’s not permanent?

I already gave the example of my Census work and of post-storm clean up. Those aren’t “make work” and they do have economic value even if they don’t result in tangible objects. Services have real economic value, perhaps we should look at that? I’m not talking about just keeping people busy, either, I’m saying we should take a look around, see what needs doing, or what we need done more often, and try to figure out a way to match that up with people who are ready, able, and willing to work but are having trouble finding a job right now. I’m not talking about a career, I’m talking about something to tide people over some bad times until the situation improves.

Or I suppose we could just extend benefits and loosen up criteria for welfare if you prefer, but if we could find something with an actual economic return it would be preferable to simply handing out cash. If we can’t find something with an actual economic value yeah, handing out cash would be simpler and cheaper in some ways, but no one seems willing to do that beyond a certain point, whether or not that leaves people wholly without income or not.

Well, then, we’re all screwed I guess because (wake up and smell the coffee) private industry is in the crapper right now. The economy is NOT healthy.

Welfare represents the next buffer zone after unemployment and it is not a singular entity. Some of it has no time limit (“earned” income credit), some of it runs for 10 years (section 8 housing), some of it is aimed at children (health insurance) etc… When you look at welfare it is alive and well and hiding in a bureaucracy of programs. I’ve seen communities where almost every apartment was government subsidized.

I guess what I’m trying to say is that it’s a fallacy to think Welfare had it’s legs cut. It was just renamed and spread out under various agencies such as HUD. People who have never known unemployment are not aware of what is out there. It’s interesting if you grind the numbers. The best example I can give is Section 8 housing. In my area that equates to something like $86,000 over 10 years which would buy most of the homes that rent to Section 8 beneficiaries. The benefits are out there but it’s not one-stop-shopping to get it.

Um, sorry but that’s exactly what money does in a bank. It is lent out to businesses and mortgage companies. That is the problem right now is that there isn’t any money to be lent out. I don’t think you understand what a housing bubble actually is. It’s not a reduction in the value of houses (that is a subset of what is going on). It’s the collapse of the mortgage and banking industry. Money lent out is not getting repaid and the process to recover the capital involves selling an asset for less than it’s worth in a market that is stagnant because there is no money to lend out because people are defaulting on their loans. This occurred at the same time under-secured loans were insured by companies through under-secured derivatives. One entity thought it was making money on the back of the other.

If you read the news there are still thousands of banks which are not solvent. GM was forced into bankruptcy because there was no money to borrow to continue operating. THIS is the problem with businesses expanding. They have to borrow money to do this and banks can’t lend what they don’t have. If I can quote from “It’s a wonderful Life”, you’re thinking as if the money is actually in the bank. It’s not. If everybody tried to empty their accounts the banks would shut down. This is occuring now as people draw down their savings due to hard times. The government’s response is to print money to cover the loss while the bank reorganizes.

It’s not that I’m against work programs it’s that I have to think in terms of the best use of the money. Our banking system has collapsed under the weight of bad mortgages. It has to be made whole again so that money flows normally. This takes government backing. If we duplicated the work program of the Great Depression then we risk delaying the recovery by funneling the money away from banks. For the Government to create new jobs out of thin air requires a bureaucracy run by another bureaucracy. At some point the government just starts printing money and the value of the dollar falls. We’re seeing that now. Many of the stimulus programs are not going to kick in for awhile so the lag factor of government intervention is expensive and not very helpful to people who need a job now. I can show you WPA culverts that are still in use today to prove we got something for our tax dollars. I can’t say if it employed enough people to cover it’s cost.

You got that right. I drive by restaurant row and see the parking lot filled with late model cars and wonder if these people have a clue how close they are to financial ruin. I saw this coming and started building a war chest years ago and I’m taking a beating.

Of course improving infrastructure is better. I don’t know anyone who thinks otherwise.

And yet there is still an argument to be made for projects that have no long-term economic value, like digging and refilling holes or building bombs and dropping them on Nazis. Even without the war, we could’ve built those dozens of ships and sunk them in the ocean ourselves, and it still would’ve put people to work and it still would’ve broken the back of the Depression. It does, in fact, create wealth to do these things, if only indirectly through job training and by pushing up the velocity of money with multiplier effects. You’re free to think that the costs outweigh the benefits in this case (and I’ll probably agree with you), but you can’t deny that some wealth is created. People who receive paychecks they would not otherwise have received will spend those paychecks on all of life’s little wants and needs, and that spending ripples through the economy. As long as interest rates are nudging up against zero percent, borrowing money to create these little ripples remains a feasible idea.

If the money is lent out, then it’s not sitting around gathering dust in a bank vault, is it?

No, that’s not right. Anyone who’s been watching government bond auctions already knows this. The Treasury is having zero problems borrowing money right now because there’s so much idle money to borrow.

Your little primer on the banking industry is nice, and somewhat accurate in parts, but it also contains a few important misunderstandings. Are there banks out there strapped for cash? Of course. And even if they aren’t dealing with immediate cash shortages, some are still suffering liabilities greater than their assets, which means they’re doomed to insolvency eventually. The FDIC releases the names of failed banks every Friday, and there’s at least one every week. One of the more notable finance sites online posts a little haiku for each failed bank.

But that’s not the situation of all the banks. There are plenty of banks out there that are relatively healthy with plenty of cash in the vault, and they’re not lending either. And when a sickly bank fails, its shareholders are wiped out, some of its creditors take a cut, and then the healthy kernel that’s left is sold to one of the healthy banks, and even afterward, they’re still not lending out money. And then the too-big-to-fail banks, which were cash strapped, received gigantic infusions of new cash from the Fed and Treasury. This cash has propped them up, replenished their balance sheets, and even allowed some of those big banks, the very institutions that screwed us over, to post immense profits. To support the financial industry and to fight deflationary pressure, the Fed has quite literally doubled the monetary base. It’s “printed” about a trillion new US dollars and dumped those dollars into the financial system. There’s even more support in the form of loan guarantees and other promises of Fed backup should things start getting hinky again.

In ordinary times, a central bank literally doubling the monetary base would lead to runaway inflation. That isn’t happening right now. Why? Because that new money is not being lent out.

It’s hard to blame the banks for this. It’s perfectly reasonable for them to want to sit on all their new cash in the face of the biggest economic downturn since the Depression. What’s not reasonable is to claim that there’s no money out there to be lent. US deficits are extremely high, the Treasury is issuing all sorts of new bonds, and yet it’s having no trouble at all raising this money. Even with these deficits (the majority of which coming from inherited economic conditions, let’s not forget), even long-term interest rates are well within normal parameters. The loanable funds markets aren’t having any problem at all coming up with the cash to support the government, because so much cash is lying around doing nothing but gathering dust. There’s no crowding out right now because the banks aren’t lending money to the private sector, which leaves them free to lend all that spare cash, mountains of it, to the government.

There are things that never get done simply because there’s no one to do them because they don’t directly make anyone any money. There’s lots of tutoring or mentoring or even nursing home visiting that could be done and could even significantly improve lives. There are organizations that are usually volunteer-only that could use warm bodies. Broomstick mentioned trails, and that’s a good one. My BIL is involved with Buckeye Trail, for example, and he mentions how old their membership is. Extend unemployment for people volunteering. Get people active and involved. They might stick with it even once they find a job, which would be win-win.

These aren’t things where they would be competing with private industry. There are places where private industry simply isn’t involved.

Oddly, the FHA is dragging it’s heals on loan approvals for people trying to take advantage to the first time home owner incentives. The right hand is jerking the left hand around (or jerking something).

This. If I were back at work at my fucking CAREER, to which I have devoted 34 years of training and experience, I wouldn’t pay a quarter in taxes that I would if I were digging ditches. As near as I can tell, the POINT of graduated unemployment insurance is that I should have a reasonable period to find a job at which I paid as much in taxes as at my old job.

So let’s make them real jobs. Do you know how many houses in this country have obsolete wiring? Do you know how many burn down a year because of this? We could use public funds to retrofit hard-to-sell 100-year-old houses, & increase their value. I have several standing empty in my neighborhood, looks like the free market isn’t getting it.

I’m sure we could come up with other things. Like, say, training nurses, 'cos there’s a nursing shortage. Or building medical labs. Those things create value, don’t they?

If private industry is just too ignorant to enter a sector, then tough cookies. I’m not going to tell my government to sit on its ass & hope some investor notices a need. At the least, they can nudge the private investors to do something constructive. The real worry is when private investment just can’t do the job as well as the state (as sometimes happens). Sometimes the value to society is there, but the profits just aren’t. As in trying to provide cheaper education or medical care; or my retrofitting old houses proposal.

So they’re bad because they don’t last, but it’s worse if they do last? I know you’re trying t say something rational here, but you’re doing it badly.

Ideally, they’d be shut down when no longer needed, right? So that’s not bad. It’s the permanent entitlement that’s bad.

Or is it? I think the real danger is having government funds that aren’t repeatedly examined in light of current needs. That’s not a case for denying new projects funding, but for being willing to move funding out of old ones. Highway spending is on automatic pilot in this country, & it’s a mess. We should be looking at medical infrastructure spending. In twenty years it may be something else. That doesn’t mean we end government jobs, just that we do them smarter.

Good thing we aren’t advocating magic finger-snapping as a serious policy then. :rolleyes:

Thanks for the macroeconomics points, Hellestal. It’s been a while since I took that class, & I wasn’t ever an econ major. And there’s a lot about the present crisis I just don’t know.

Spending IS stimulus.

And honestly, I never understood why we expect companies to borrow for normal operations. A start-up, sure. But is it really more cost-effective for an established company to borrow repeatedly than just to keep an operating fund?

I don’t think we know the first, but the second is basic macro. Governments (federal, state, & local) want money to be moving because they tax the movement of money. They might not care so much if we went to a wealth tax base instead an income/payroll/sales base, but we don’t even have an estate tax right now, & with the economic crash, I’m not sure how much property tax is even being paid.

Piffle. “Private” isn’t necessary in that sentence.

Earned Income Credit still requires one to work. It’s sort of a rebate of payroll tax, not a benefit to the unemployed. I’m not sure about the rest.

There’s no way to give an exact answer to this question. [[id]=EXCRESNS&s[1][range]=10yrs"]But here is a graph.](http://research.stlouisfed.org/fred2/graph/?chart_type=line&s[1)

“Gathering dust” is an understatement. It’s almost enough to take your god damn breath away. Note that the vertical axis is measuring hundreds of billions of dollars. Remember, too, that deposit institutions are only one kind of bank. The largely unregulated shadow banking system is larger than the traditional banking sector. God knows how much money those assholes have squirreled away somewhere. But like I said before, Treasury is having no problem selling its bonds. Government demand for borrowed cash is up, yet there is plenty of idle cash to fill that demand. No real crowding out right now.

Well, Section 8 in MY area has a closed waiting list - if you aren’t already on the list you can’t get on it, and even if you are on the list you have to wait years before you actually get the benefit - I have no clue where these people are supposed to live while waiting 6 or 8 years for a slot to open up in the program. SCHIP (children’s health insurance) is only there if you’re a child - if you’re an adult you just don’t get it. So while welfare may be “alive” I don’t think you can argue it’s “well” and the maze of programs - frequently unadvertised - is unknown to the newly unemployed and difficult to navigate.

This misses the point of the current situation, though. Sure, people can’t go on job interviews while digging ditches. But when you have a period where there are simply far more people hunting for jobs than there exist jobs available, having a larger number of people hunting for the same few jobs doesn’t end up helping anyone. That’d be like having a government service that helps everyone make the snazziest resumes possible; it might help each individual with everything else held constant, but when the whole population does it the benefit disappears. So it is with giving people more time to go out on interviews.

In regular economic times, by contrast, there are theoretically jobs available for everybody, and the period of unemployment rests with search costs instead of lack of jobs. So it makes sense to pass out unemployment checks to cover that temporary period while they find the job that suitably matches out with their skills and abilities.

I may be misreading him/her/it, but I take it as “People with jobs are likely to prefer defending them (where they produce little to no valuable service) to finding productive work.” And unfortunately, few government “jobs” programs are actually good at getting useful output. It’s not in the nature of government - one might say its core competency lies elsewhere.