Category Archives: Economic Recovery

The Simple, Obvious, But Nonetheless Powerful Way To Get People Back To Work

Friday, September 16, 2011

What usually happens when we have downturns is that our President and elected representatives, Democrats and Republicans alike, flail about while they wait for the economy to get better on its own, not because of and often in spite of the billions we may have wasted with misdirected, ineffective policies and programs. Whoever’s in office when the recovery occurs takes credit for it, and we move on. That’s not happening this time, that is, the economy isn’t recovering fast enough on its own because there are structural issues, big things wrong with the economy which will take time for it to fix, time we don’t have.

Every now and then, I take myself way too seriously. I find myself facing what appear to be difficult, complex problems, the kind that make your head hurt when you think about solving them. But then eventually, thank goodness, there comes a moment. You know what I’m talking about. It’s the one when I blow my diet on the grounds that stress is more harmful to my health than fat, after an hour or two of mindless TV, followed by a pass-out nap on my couch. It’s the moment when I realize that the problem wasn’t that complicated after all. I strip the problem of its extraneous detail and focus on its core elements, and a simple, reasonable, often elegant albeit sometimes radical sounding solution presents itself. This is one of those times.
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Things We Can Do For Free To Put People Back To Work

Wednesday, August 8, 2011

Hi. While spending money to put everyone back to work may be necessary – although our President and Congress haven’t a clue how to do that – there are some things that we can do immediately that won’t cost anyone a dime.

Unemployment Benefits: Too little to be effective.

Tuesday, December 22, 2009

Unemployment compensation has been a tool for reducing the impact of any downturn since the 1930s. The idea is simple. In a consumer driven economy, when employers feel the need to lay off workers, one of the most effective tools at your disposal is to continue to pay the unemployed for humanitarian reasons, of course, but also so that their demand for goods and services will not decline so substantially as to make matters worse.

The Bass Ackwards Economics of Bailout II

Wednesday, December 9, 2009

Ours is a consumer-driven economy. Everyone knows this, including our government, which is why it keeps extending unemployment benefits. Do everything you can to keep people spending, even while they’re unemployed and looking for work. It is the most, and possibly the only really effective thing the Obama Administration and Congress have done to prevent an already horrendous recession from being even worse.

The same logic should apply to the design of any bailout. If you want to generate jobs in a hurry, give every dollar you (the government) can spend to the people who need it most, whose propensity to spend it is the highest, preferably 100%. What you shouldn’t do is give it to business, large or small, hoping they will use the money to hire more people. That doesn’t work. Particularly during a recession, companies are reluctant to hire people unless they have a proven market for whatever product or service they sell. As for public works projects, they take forever and don’t hire nearly enough, fast enough – directly or indirectly – to lead a recovery. (Funding public works projects in a recession is all about politics, and is not good economic policy.)

What to do when monetary and fiscal policy aren’t enough: The third tool for economic recovery and growth.

Saturday, October 17, 2009

Economists are worried that the jobs we’ve lost in this recession are not going to be coming back when the economy recovers. Unfortunately, the economy is not going to recover until the people who have lost their jobs find new ones, and that’s the rub. How are we going to get all these people back to work if the jobs they had are gone for good?

Traditional monetary and fiscal policy aren’t going to help here, nor will our government’s fixation on the stock market and solving large company problems. Continue…