On the day after Labor Day, I feel the need to write a short piece about what strikes me as the most important social issue for us in the US right now - jobs. There simply aren't enough of them. Far too many people have been out of work for far too long. Safety net programs are both inadequate and losing their efficacy and more and more folk are falling through the cracks. All of the politicians are marching out their plans to create jobs and frankly all of them fail to consider the long term. That is fine and indeed, that is appropriate at this time when we are in such a crisis. The question then is, do the programs work.
Here's where the math comes in. Laying off government workers makes more people unemployed. Immediately. Unemployed people don't spend money which causes businesses to lay off people which causes spending to go down which causes businesses to lay of more people and the spiral goes down. Take away jobs... and the number of jobs goes down... in a spiral. Cutting government contracts makes people unemployed. Similar but more complicated arguments could be made regarding infrastructure and education although both are more long term issues and so probably don't fit in this discussion.
Some folk will come out with plans that advocate lowering taxes on businesses or lessening environmental regulations and safety regulations. Again, I think in the short term, that might be fine as a stop gap to get things moving. Here's the problem. Neither works. Businesses already have money, what they don't have is customers. Cutting taxes on businesses doesn't create customers. Lowering safety standards and environmental protections doesn't create customers. Even cutting taxes on individuals doesn't help that much because it only impacts the folk who have jobs. What we need are jobs... and they will follow customers... but without jobs, we get no customers.
So what can the government do? Spend more money. Yes, I know that would raise the deficit and it certainly isn't a good strategy for the long term, but in our immediate crisis, it is what we need. Jobs are the presenting problem. If your house is on fire you don't stop the firefighters from hosing down the house because you're worried about water damage. You deal with that after the fire is out. The deficit is like water damage while the job situation is clearly a fire. Government should be hiring more people, not laying them off. Government should be passing money out to the states for every program that can be kick started with an infusion of cash not cutting back. Government should be hiring folk to go in and clean up after Irene. Government should be investing in research, supporting new technologies and strategies to make us more competitive. Government should be spending more, not less. If it means borrowing money. Borrow it. Interest rates are lower than they have ever been. Take advantage of that. Spend. Spend. Spend. And do it in a way that the money ends up in the pockets of real people and puts real people back to work so that businesses can begin to see customers and so need to hire more workers... and the spiral begins to go back up again. Then, when the population are more stable financially, the government can begin to wrestle with dealing with the long term problems.