Sunday :: Jun 6, 2010

The Case for More Government Spending Now

by Mary

Via Mark Thoma, Maxine Udall asks the question: What Exactly Are We Crowding Out?

In particular, she addressed Edward Glaesser's concern:

If you hire thousands of people on make-work jobs, then you are wasting their time. That cost needs to be weighed against the benefits of countering the recession.

"Make-work jobs?" How are teaching, public health, road-building, grid updating, new energy, and law enforcement "make-work" jobs? Some of any well-targeted fiscal stimulus would presumably go to preserving such jobs and services. In an ideal world, some "make-work" jobs would improve roads, bridges, mass transit, and other infrastructure. This is a reasonable role for government to play, especially if private entities are unwilling or unable to coordinate and produce these things. It's "investment" in public infrastructure and in the productivity of future generations. As a share of GDP, public infrastructure spending has declined since the 1950s and remained fairly constant since the 1980's. Meanwhile, we're still driving across unsafe bridges.

How is it a waste of their time to take someone who is otherwise unemployed and pay them to do such work, especially if it provides us with something of long-term value and them with earned income? AND it stimulates demand. Where is the down side, pray tell? Even if we guess wrong, we'll have much needed improved infrastructure, mass transportation, new energy sources, better educated kids and safer streets and highways.

I believe the problem for Glaeser (and many others who dither while unemployment is high) is a morbid fear that putting people to work with taxpayer money (much as we have done for investment bankers) will crowd out efficient private sector productivity and jobs....some day. I'm left to wonder why crowding out of public infrastructure and education by unproductive, inefficient speculation in private financial and mortgage markets is OK, but I digress.

She's right, you know. It's obvious that too many people need work. It is insane that the leaders of our country do not realize what a travesty it is to dither while so many are going under in this jobless recovery.

Mary :: 12:37 PM :: Comments (4) :: Digg It!