Bring the Stubborn Unemployment Numbers Down Now

by Pavlina R. Tcherneva

Every month this year (perhaps with the exception of May) economic forecasters were stunned by the unexpectedly high unemployment numbers. Today the Bureau of Labor Statistics reported that in June employers shed 467,000 jobs, pushing the unemployment rate to 9.5%, a 25-year high. With an ever gloomier jobs picture, President Obama’s economic team has started to change its tune with respect to the promised job creation. The first economic report on the job impact of his recovery plan carefully phrased the objectives to include “creating or saving” at least 3 million jobs by the end of 2010. Those early projections called for peak unemployment of 8% in the third quarter of this year, far less than today’s actual unemployment rate of 9.5%


Many economists now believe that the unemployment rate will soon move into double-digit territory. Similarly, reversing her original projections, President Obama’s Chair of the Council of Economic Advisers, Christina Romer, also expects unemployment to keep rising well into next year, even as the economy recovers or at least until it generates 2.5% of GDP growth (a number which Robert Reich, former Labor Secretary under Clinton, believes is closer to 4.5%).
Now, there is something very troubling with the argument about “saving” jobs. It is not exactly solid evidence that fiscal policy is working. While most economists agree that job losses would have been much worse in the absence of a government stimulus, there is no way of knowing exactly how many more losses those would have been. Similarly, it is very difficult to make the case that in fact 3-4 million jobs have been saved. Is this the incontrovertible evidence we should expect from the Recovery and Reinvestment Act?

Secondly, trying to hit a particular growth rate in GDP is like shooting in the dark. No one can be certain that by 2010 we can reach the coveted 2.5% (or 4.5%) in GDP growth, which will hopefully deliver the job creation President Obama has promised. In an earlier post , I have explained that relying on GDP growth to produce the desired employment numbers is not only a political gamble but a backward way of thinking about fiscal policy. Although many call this a Keynesian approach, it has little to do with what Keynes had in mind. For Keynes targeting the unemployed directly and hiring them into public works was the way to go.

Christina Romer last week stated that her economic team has assumed a “posture of watchful waiting” and that, if unemployment remains persistently high, “more targeted interventions” may be necessary.

Which immediately begs the question: With already very troubling unemployment numbers month after month, what are we waiting for and why?

Creating jobs, a lot of jobs, is what is needed. Over the past 12 months the economy has lost nearly 5.7 million jobs. There are 9.65 million people who are unemployed today and another 2.2 million who are marginally attached (i.e. who want and are available to work but are not counted as unemployed because for reasons such as discouragement or family responsibilities, have not been able to look for a job in the last 4 weeks). This means that the original goal of creating or saving 3-4 million jobs is far too timid—these objectives too must be redefined with the economic realities.

Mark Thoma has also argued that we cannot wait any longer and must begin to maximize employment over the coming months.

Until there is a meaningful improvement in the unemployment rate, the Obama recovery plan may very well be seen as a failure, even if growth stabilizes. Jobless recoveries cost parties their midterm and presidential elections and the Obama administration is running the risk of squandering a window of opportunity to turn the economy around as boldly and as quickly as it can.

An immediate targeted intervention is precisely what Keynes would have prescribed—ambitious and creative public works projects that put the unemployed men and women to work.
A number of us on this blog have long advocated large scale New Deal-type programs. If President Obama expects to meet (and possibly exceed) his job promise, targeted intervention in the form of direct job creation is in order. If he wishes to create 4 million jobs, he can immediately put 4 million people to work (recall that most New Deal programs were up and running in just a few months). If he wishes to employ 8 million people, then he can meet his promise and beat everyone else’s expectations.

We have millions of important tasks to do and we have millions of people willing and able to do them. Let’s put them to work.

18 responses to “Bring the Stubborn Unemployment Numbers Down Now

  1. First – "If he wishes to create 4 million jobs, he can immediately put 4 million people to work…"Wishful thinking is not going to do a darn thing. The Government doesn't create jobs! The Government mandate jobs and then tax the real creators of jobs – the private businesses, so it can pay the people employed on the mandated jobs.Second – "An immediate targeted intervention is precisely what Keynes would have prescribed—ambitious and creative public works projects that put the unemployed men and women to work." Isn't the administration already doing that? Spending money as fast as they can on a projects, some of which are only big waste of the taxpayers money… and we still hemorrhaging jobsThird – "We have millions of important tasks to do and we have millions of people willing and able to do them. Let’s put them to work."What we DO NOT HAVE is MONEYFourth – The solution of the unemployment crisis is stimulating the businesses by reducing the taxes and regulations on them, but that is just my opinion

  2. Casey Mulligan has noted that while recent job losses are concentrated among men (particularly sectors like construction) Obama's job creation programs have hired equal numbers of men and women. This means they are not stimulating by "crowding in" but rather "crowding out". If you want a jobs program you should target it toward the currently unemployed. Personally, I try to avoid "make-work bias" and don't care the slightest how upcoming elections turn out, so I'd be fine with a jobless recovery.

  3. Dear Cynical,The government doesn't create jobs? Who's been collecting my garbage, processing my DMV forms, teaching my 3rd grader, plowing the snow from my streets, providing V.A. services to my retired military father, policing my neighborhood, maintaining my parks and campgrounds, etc., etc., etc.? And who, exactly is "mandated" to work for the government?Your next points are equally misguided: Private sector employees don't pay the wages of those in the public sector, and the federal government doesn't need money from the private sector in order to hire the unemployed. The U.S. government is the monopoly issuer of the U.S. dollar. You are confusing the "issuer" of the currency (federal gov't) with the "user" of the currency (the non-gov't sector). The government could announce, tomorrow if it wished, that it would hire every unemployed worker in the U.S. It could (in a reasonably short period of time) find useful things for all of them to do, and it could "afford" the entire bill. Only those wishing to work in the public sector would take those jobs (i.e. no one would be forced/mandated to work for a living), and they could return to the private sector when the economy recovered. You think we can reverse the downturn with tax cuts alone. Those of us writing on this blog disagree. Still, some of us have advocated much larger tax reductions — indeed, we have called for a complete suspension of the payroll tax. You paint the entire stimulus as a giant wasteful spending effort. But $288 billion of the $787 billion package IS tax relief. You should at least recognize that.

  4. Ok… it seems I have to split my response in few comment posts to be accepted. It seems the system is not accepting long comments

  5. What I meant was that the government cannot create jobs (WORK) on a basis to hire more people to pick up your garbage, process your DMV forms, teach you 3 grader, plow the snow from the street, provide V.A. service to heroes, police your neighborhood, maintain your parks and campground, etc., etc,. You need just , so many (fixed number) people to do the work listed above. I do not need 20 people to come every 2 days and pick up my trash,…Do you?Sure the government can mandate (COMMAND AND AUTHORIZE) the hiring of more people for the sake of reducing the unemployment, but without creating any additional value for your taxpayer’s money. I really will be happy if they hire 3 more persons for the DMV and reduce, those long lines, but then, how many people are you going to hire beyond the 3, who are needed by the public? I will ask the question – are those extra people, worth the expense? In some cases probably, but most of the time the government employees are overpaid, underworked and entitled for life to stay on “their” job no matter how incompetent they are.On the next point – are you kidding me? “Private sector employees don't pay the wages of those in the public sector, and the federal government doesn't need money from the private sector in order to hire the unemployed. The U.S. government is the monopoly issuer of the U.S. dollar….” Of course the private businesses are paying government employees wages! The government is paying their expenses, including government employee salaries, either by tax collection or by borrowing money. The third way to pay expenses is what you suggest –simply printing money… One problem is, that local governments cannot print money (see the news about the state of California handing employees and contractors I.O.U.’s , because they cannot issue money. I am sure if they can print dollars they will do it). Second problem- if the government can print money, why just don’t print the money and hand them out to every citizen staying without work out there? Because in this case NOBODY WILL NEED TO WORK! THE GOVERNMENT IS GOING TO JUST PRINT THE MONEY AND SEND OUT THE CHECKS!

  6. Next you say – “The government could announce, tomorrow if it wished, that it would hire every unemployed worker in the U.S” IF IT IS SO EASY AS IT IS, JUST TO SAY IT , WHY THEY DO NOT DO IT?” The Government cannot hire every unemployed worker and cannot find useful things for all of them to do and also – they cannot afford the bill. They could have done it if they can. As a matter of fact I believe, if they can do it, we won’t even know the meaning of the word unemployment. Everyone at every period of the history of the world would have been employed, either by the private sector or when jobs are scarce, employed on the jobs created by the government. We wouldn’t have had revolutions, strikes etc, because people will never be hungry, cause the government will provide them with jobs….What you suggest is an abomination of the free market. Again, see California as an example of a failed government – it cannot find its citizen useful things to do and cannot afford the bill.Next you write – “Only those wishing to work in the public sector would take those jobs (i.e. no one would be forced/mandated to work for a living), and they could return to the private sector when the economy recovered.” Government right now is very good at destroying the private sector. Do you think a private business will hire people, if they think the current administration HAVE TO raise taxes to pay for all the mindless spending going on in Washington? Do you think the health care industry including insurance companies will hire people if they expect that the current administration is on a path to destroy them? Do you think oil, coal, nuclear energy industries will hire people if current administration says they will rise their prices as much, so no one can afford buying from them? Do you think any company will hire employees, if they think doing business will get more expensive, because of legislations, that the current government is trying to pass?Do you know, that the most students, who are graduating from the universities, this year are planning to go into government-related fields. Why? Because it is said for the government : “Once hired –never fired”, overpaid, underworked, best benefits out there (health and pension), entitlement for life….why are they going to be willing to work for the private sector? Why?

  7. On your next point- I do not think government can stimulate the economy only by tax cuts alone, but they could have stimulated the small and midsize businesses by giving them some of those money in the stimulus bill ( I mean businesses beyond, those fixing the stop signs at your neighborhood). The federal government reports that 70-80% of all new jobs are created by small businesses, so the government I say, should stay out of the way, lower the taxes and give them low rate loans and even grants, so they hire more people… Instead what the government is doing is scaring the small businesses with the socialist agenda, that they are pushing.

  8. Dear TGGP and Cynical: If anything, this recession demonstrates that the private sector is not willing to employ; so every new job created by government is a job the private sector is not creating. Thus, there is only a “crowding in” of jobs. Who takes up these jobs is a different matter. There are far too many unemployed and marginalized individuals that want full time employment, but the total number of jobs created today by government is wholly inadequate. So it may very well be that the few-and-far-between jobs Obama is creating are disproportionately taken up by some groups. This is one more reason why many of us on this blog have long argued that an open ended, voluntary, direct job creation program by the government should be made available to all—i.e. a job opportunity to the unemployed and marginalized who WANT to work. As the other posts have explained, no one is forcing anyone to work, this is simply an opportunity. There are millions of useful things to get done and millions of people willing to do them. A combination of private and public employment is what’s necessary to attain and maintain full employment. In expansions, government payrolls will shrink as people move to better paid private sector jobs. In recessions the public sector will absorb those who have been laid off from the private sector. This is not about a government-run economy. It’s about maintaining a healthy economy and full employment over the business cycle.I am stunned by the defeatist attitude of those who argue that the government cannot create jobs that produce useful output and services. Do we really lack so much imagination? Have we not done it in the past? Have we not created the interstate highway system, electrified the nation, put a man on the moon? Is there anything that Americans have not been able to do that they have set their minds to? Or have we simply had our heads fuddled with nonsense for years and years?TGGP, you prefer a jobless recovery perhaps because YOU HAVE a job. To wait for employment conditions to recover over the long run is one of the most absurd prescriptions academic economists have invented. People need to eat and pay bills in the short run and they want to EARN their income to do so. Let’s give them the opportunity. Maybe it’s useful to remember Keynes once again:“The Conservative belief that there is some law of nature which prevents men from being employed, that it is 'rash' to employ men, and that it is financially 'sound' to maintain a tenth of the population in idleness is crazily improbable–the sort of thing which no man could believe who had not had his head fuddled with nonsense for years and years….” (J. M. Keynes)

  9. My goodness, Cynical . . . where to start?“I do not need 20 people to come every 2 days and pick up my trash,…”Do you honestly think there aren’t any useful activities for people out there? Environmental degradation, crumbling infrastructure, non-profits laying off workers left and right since public funding and giving have collapsed while public services are being cut, and so on, and son on. PLENTY to do. Yes, it’s a big undertaking, but you need to know you CAN do it before you actually start doing it, and the political culture in this country doesn’t know we can.NOBODY on this blog is suggesting MANDATING that people take govt funded jobs. If they don’t want the job, don’t take one. “On the next point – are you kidding me?”No . . we’re not. You obviously haven’t read much of this blog. The federal government CREATES money WHENEVER it spends by simply crediting bank accounts. It DESTROYS money WHENEVER it receives taxes by debiting bank accounts. Disagree if you like. While you’re at it, disagree with gravity and continue to believe the world is flat. Yes, state/local governments are in a different position since they don’t create money when they spend . . . all the more reason for block grants to the states, as Randy Wray suggested in a previous post.“Second problem- if the government can print money, why just don’t print the money and hand them out to every citizen staying without work out there”We don’t advocate that as it would be inherently inflationary. But, as even you’ve demonstrated, most don’t understand the government is not financially constrained.“IF IT IS SO EASY AS IT IS, JUST TO SAY IT , WHY THEY DO NOT DO IT?” The Government cannot hire every unemployed worker and cannot find useful things for all of them to do and also – they cannot afford the bill.”There’s a different between having the ability to do something and KNOWING that you have the ability to do something. As I noted above, most don’t know . . . and apparently neither do you. So, what we have is millions of people like yourself telling the govt NOT to do this . . . it’s then pretty obvious why they don’t.“What you suggest is an abomination of the free market.”Ridiculous. Offer a job to everyone willing and able to work at, say, the federal minimum wage (as above, there’s plenty for them to do). Those that don’t want the job don’t have to take it. If they do and later they prefer a higher paying private sector job, they can change jobs. The govt funded job doesn’t compete with the private sector, since it pays the minimum wage (by definition, whatever wage the govt pays will become the minimum wage). Free market economic theory is based upon choice. If I’m unemployed, I’d MUCH rather have the choice to take a publicly funded job than not to have it. Again, if nobody wants the govt funded job, they don’t have to take it . . . and there’s no additional government spending. We have all kinds of free marketers on board with this idea.

  10. “Do you think a private business will hire people, if they think the current administration HAVE TO raise taxes to pay for all the mindless spending going on in Washington?”Where’s the evidence that previous deficits have led businesses to stop hiring? If that were true, who would have hired anyone after WWII? Deficits were two or three times as large during WWII. Businesses hire more workers because when they see an increased demand for their product, they deem it profitable to do so. Period. The rest of your points related to this one are just silly and largely irrelevant to the points we are making.“The federal government reports that 70-80% of all new jobs are created by small businesses, so the government I say, should stay out of the way, lower the taxes and give them low rate loans and even grants, so they hire more people…”Two points here. First, yes, promote small business as much as possible. But the point here is that there is a crisis in aggregate demand. Cut taxes all you want . . .put GM or Chrylser’s taxes to 0 . . . would that have helped? No . . nobody’s buying cars (just ask Toyota). Your points are overall based on an argument we reject outright . . . government spending requires taxes now or later or inflation. Work on that one if you want to have a discussion with us. Second, don’t forget that small business destroys most of the jobs, too . . . that’s quite well founded in the job-creation/destruction literature."socialist agenda"That just demonstrates that you don't know what you're talking about. Resorting to invidious name calling also suggests you don't really want to have a discussion. Best,Scott

  11. P.Tcherneva:If anything, this recession demonstrates that the private sector is not willing to employ; so every new job created by government is a job the private sector is not creating.I suppose this is pedantic, but the unemployment rate is still in single-digits, so the private sector is willing to employ a great many people even if it's not as many as we'd wish. Moving on, let's try some comparative thought experiments. In one scenario, the government gets headhunters to "poach" people who are already employed (and as mentioned, there is a sizable supply of them) to work on new government projects. The cost of training new hires is excessive right now and their old employers expect that the government projects are only temporary, so they do not replace their employees. We have 100% crowding out. In a different scenario, the government finds people who have recently lost jobs and have been unable to get new ones (construction workers are a good bet, I don't know what the government would use ex-investment bankers for though) and hires them for perhaps some public works. Both cases featured the same recession with the same ex ante private sector unemployment, but different decisions by policy-makers determined whether there was crowding out.So it may very well be that the few-and-far-between jobs Obama is creating are disproportionately taken up by some groups.Creating or saving! I kid, I kid. It just so happens that job losses & unemployment disproportionately affect some sectors (to give a previous example, construction) of the general population. If we want to reverse that then the new jobs will have to disproportionately draw from that same segment of the general population from PROPORTIONATELY from those who have lost their jobs. So if people with graduate degrees are not losing their jobs, those degree holders should be conspicuously absent in the new hires.should be made available to allLet's alter a previous thought experiment. Rather than headhunters deliberately seeking out people who are already employed, let's say that all the currently employed people apply for these jobs (we are assuming these are decent jobs and not just paying people to lick stamps or mow their own lawns). Then there is a massive amount of crowding out. To be more efficient we would want only those who cannot currently find employment, so it would not be open to all.There are millions of useful things to get doneThere is a Galbraithian argument that there is "public squalor and private opulence" so that government projects are just very useful in themselves regardless of whether the economy is doing well or poorly. This is distinct from a Keynesian argument that during recessions government spending can correct for current shortfalls in aggregate demand. I have been assuming that we are arguing on Keynesian grounds.Have we not created the interstate highway systemI am not actually sure the costs exceed the benefits. It has resulted in much more pollution & sprawl. It has assisted large companies which rely on the publicly subsidized transportation sector at the expense of small-scale local producers though. Kevin Carson often makes this argument, and while I'm more skeptical I think it should be taken seriously.

  12. continuing the previous commentput a man on the moon?An entirely worthless endeavor, in my view. A modern day equivalent of the monuments to emperors in the past. The nation as gorilla, pounding its chest to demonstrate how big, important and dominant it is. I am reminded of the Black Sabbath lyric "We can put a man on the moon quite easy, while people here on earth are dying of old diseases". What was the opportunity cost of the space program?Is there anything that Americans have not been able to do that they have set their minds to?Turn Iraq into a peaceful, pro-America & pro-Israel liberal democracy. Of course, the idea was foolish in the first place. There are, as Bacevich says, "limits to power". The idea that the only constraint was mustering enough political will was aptly mocked by Matthew Yglesias as the "green lantern" theory of politicsTGGP, you prefer a jobless recovery perhaps because YOU HAVE a job.I would request that you not resort to Bulverism. I endorsed the same policies before I was hired. Work, like exports, is not something that we desire for their own sake. They are a cost that must be paid to get the things we want. If Bob Black's vision of the abolition of work is achieved (most likely through the Singularity, which would be wonderfully ironic given his deriding it as an "infantile obsession") it would be a great thing. Making every unemployed person officially "employed" by hiring them to mow their own lawns for 1 cent a year would not be any benefit.To wait for employment conditions to recover over the long run is one of the most absurd prescriptions academic economists have invented.I don't know if it actually counts as the "long run" but I've recently been interested in the recession of 1920-1921. It was quite severe, though short, and policy-makers (against the advice of Herbert Hoover) elected to do nothing. I asked Scott Sumner about it to challenge his view that a necessary response is monetary expansion. He did seem to think that the 20s were different from the 30s and so wages were less sticky, but I wasn't fully satisfied with his response. I am willing to accept that wages are sticky and there is involuntary unemployment, but I'd still like someone to explain that recession to me.

  13. Kudos to all of youFirst – to Dr.P.Tcherneva – why not remember Friedman? – “The great achievements of civilization have not come from government bureaus. Einstein didn’t construct his theory under order from a bureaucrat! Henry Ford didn’t revolutionized the automobile industry that way! In the only cases in which the masses have escaped from the kind of grinding poverty you are talking about, the only cases in recorded history are, where they have had capitalism and largely free trade….” Second – to Dr. Fullwiler – Yes Sir, I DO NOT THINK, that there are ENOUGH USEFUL activities for the people out there! You point ONLY two of those, which may be useful activities –fixing the environmental degradation and fixing the crumbling infrastructure. I challenge you to write down as many as you can think of and send the list to the White house (FAX: 202-456-2461). It seems they are struggling, as I am, to find and to fund those useful activities, that are somewhere out there.“The federal government CREATES money WHENEVER it spends by simply crediting bank accounts. It DESTROYS money WHENEVER it receives taxes by debiting bank accounts. Disagree if you like.” – I DO NOT DISAGREE with the mechanism how the FEDS “create” and “destroy” money. I disagree with the HUGE DEFICIT SPENDING, that our government is running.Next, as a matter of fact I KNOW, that the government CAN hire every citizen in America. What I am saying is, that they shouldn’t do it. How do I know they can hire everyone? It has been done before – in the USSR and the rest of the Ex Socialist countries. They have had enjoyed full employment from 1945-1989. And I mean FULL– the only people, who are unemployed during this time period , are the mentally ill. The role of the labor departments in these countries through the full employment years was to direct the graduating teens, what kind of profession to choose. If they have lower scores in school, they are bound to become workers in an automobile plant or steel mill workers –someone, who will work with their muscles at the same job FOR LIFE. On the other hand if you have good scores in school, after graduating high school you are going to continue to study in the university and become a doctor or lawyer or even a PhD – someone, who will work with their brains at the same job for LIFE. Once employed people cannot search for better job because they cannot quit, cannot be fired, cannot move from one city to other freely etc… People are not permitted to do any of the above, because it will destroy the equilibrium of the system. And why they would do it? They are happy to have jobs…I insist you visit my blog and see what 50 wears of full employment, have done to the people of exUSSR – The Most Valuable Thing I Own http://thecynicaleconomist.com/?p=3531Sorry, but I prefer to live in a free country with boom and bust cycles, than to live in one with planed economy.Next, I am well aware, that there is a crisis in aggregate demand, but how much do you suggest we spend? Is $5 trillion in spending enough? How about $7? Technically speaking, that would create a lot of demand and economic activity. So what is the cap, and how do we know? And how can we know when the cost of the stimulus outweighs the benefits? Inquiring minds want to know.*Funny thing – I went to the groceries store today. They had 10 check out lines. 4 of those were self check out, without cashiers and only one store clerk to help and monitor the lines. I thought probably we should slow down the invention and development of new technology, because one day no one will have a job. Everything will be done by machines. But then I thought, I should not worry – the government probably will have some useful activities for all of us.

  14. Dear Cynical . . . “I DO NOT THINK, that there are ENOUGH USEFUL activities for the people out there”Guess “cynical” is an appropriate name for you, then. When I sat on the local United Way board and the agencies came to do their presentations one by one, without exception they all had more community needs than they could afford to pay people to do them. I’ve heard the same from others all over the country . . . and that was during an economic expansion.“You point ONLY two of those, which may be useful activities –fixing the environmental degradation and fixing the crumbling infrastructure. I challenge you to write down as many as you can think of and send the list to the White house”My colleagues on this blog have already provided countless lists in previous publications, but really all you need are local community needs assessments, which are being done all over. The result is always the same . . . there’s no shortage of things . . . the basic condition of society is unlimited wants, remember? (you are a free marketer, aren’t you?)“I disagree with the HUGE DEFICIT SPENDING, that our government is running.”Why?“Next, as a matter of fact I KNOW, that the government CAN hire every citizen in America.”Good for you. Of course, that’s a straw man. We never proposed that. And we never proposed competing with the private sector for labor. Set a (below market, if you prefer) wage and hire everyone that wants a job at that wage. If the “free” market provides the jobs workers are willing to take, then nobody takes the government funded job. Choices! Still haven’t seen you address this point . . . you went off into some sort of irrelevant (to the point we’re making) discussion of your interpretation of communism.“Next, I am well aware, that there is a crisis in aggregate demand, but how much do you suggest we spend? Is $5 trillion in spending enough? How about $7?”That’s the beauty of it. When nobody else wants a minimum wage job, the spending stops . . and you know how much spending you needed. It’s probably far less than Obama’s spending (for the jobs program, at least).As an aside, your obvious aversion to government spending is clouding the discussion a bit . . . I would personally like to eliminate the payroll tax . . . give most everyone an immediate 7% raise and cut business labor costs 7% with one fell swoop. That’s a much bigger effect on the budget than the jobs program, too.“Funny thing – I went to the groceries store today”Irrelevant to me . . . completely misses the point we’re making.Best,Scott

  15. Dear Dr. Fullwiler,you are right – I haven't read the whole blog and I am unfamiliar with the proposals, that you and your colleagues have written on the pages of this blog. So please, accept my apology for the cynicism in my responses. As soon as I find free time I will read as much as I can……there’s no shortage of things… the basic condition of society is unlimited wants, remember? Yes, but, if those wants are worth satisfying the more efficient private sector would have filled the void already….When I sat on the local United Way board and the agencies came to do their presentations one by one, without exception they all had more community needs than they could afford to pay people to do them… Here is a citation from Robert Kiyosaky – "My educated dad sincerely believed that government should help people. He loved John F. Kennedy and especially the idea of the Peace Corps. He loved the idea so much that both he and my mom worked for the Peace Corps training volunteers to go to Malaysia, Thailand and the Philippines. He always strived for additional grants and increases in his budget so he could hire more people, both in his job with the Education Department and in the Peace Corps. That was his job."…….Once the "Take from the rich" tax was passed, cash started flowing into government coffers. Initially, people were happy. Money was handed out to government workers and the rich. It went to government workers in the form of jobs and pensions. It went to the rich via their factories receiving government contracts. The government became a large pool of money, but the problem was the fiscal management of that money. There really is no recirculation. In other words, the government policy, if you were a government bureaucrat, was to avoid having excess money. If you failed to spend your allotted funding, you risked losing it in the next budget.You would certainly not be recognized for being efficient. Business people, on the other hand, are rewarded for having excess money and are recognized for their efficiency.As this cycle of growing government spending continued, the demand for money increased and the "Tax the rich" idea was now being adjusted to include lower-income levels, down to the very people who voted it in, the poor and the middle class."“I disagree with the HUGE DEFICIT SPENDING, that our government is running.”Why?Why?…because I do not think USA is separate entity from the rest of the world. The rest of the world is watching us. Charging it on a credit, may lead to inflation, higher interest rates, lowering America's credit rating and many other problems. Then it wouldn't matter if the government finds useful activities for the unemployed.The whole economy will crash into the abyss. The living standard of the people on minimum wage provided by the government will be the same as those in Chile… …Set a (below market, if you prefer) wage and hire everyone that wants a job at that wage…Why I have a problem with that – It will suppress the growth of the wages in the private sector. Lets say private business-man will pay max $15 000 and government will pay for same work below market $14 000. Private business will hire someone for $15 000 and will never rise their wages on the premise, that if the employee wants a raise, he/she ALWAYS CAN QUIT and go find work as a government employee for $100 less…The private firm will always hire someone (not enough experience, just graduated from college, didn't want to move out of his hometown)for a $1000 dollars more if they need…“Funny thing – I went to the groceries store today” -There will always be a reason to blame something for a crisis…Point I wanted to make was, that people should trust their abilities and not wait for government to make decisions for them

  16. Correction -…Set a (below market, if you prefer) wage and hire everyone that wants a job at that wage…Why I have a problem with that – It will suppress the growth of the wages in the private sector. Lets say private business-man will pay max $15 000 and government will pay for same work below market $14 000. Private business will hire someone for $15 000 and will never rise their wages on the premise, that if the employee wants a raise,they can go to hell and if they do not like it – he/she ALWAYS CAN QUIT and go find work as a government employee for $1000 less…The private firm will always be able to hire someone on the place of the unsatisfied employees that quit(not enough experience, just graduated from college, didn't want to move out of his hometown)paying only a $1000 dollars more if they need…

  17. Casey Mulligan has more on how public spending has failed to target idle resources:http://caseymulligan.blogspot.com/2009/07/ill-timed-and-ill-targeted-stimulus.html

  18. Pavlina,only economists can believe in a world completely divorced from reality.A useful job is one where the output (goods or service) is valued by someone else sufficiently that they will exchange something they have for it. These jobs are self-sustaining and do not need a govt subsidy to continue. They may need some govt subsidy to get started e.g. a farmer might need a tractor and this would be a good stimulus.Most of the 'jobs' that the govt creates are not real jobs but a welfare for work program. No one wants to see people begging for food so this idea has merit. But to see these as jobs is misleading.However there are two costs. The first resources and the second money. If you build a bridge to nowhere – the labour may be free (because it would otherwise have gone to waste) however the steel and concrete had a real cost and are wasted. The second cost is money. Your argument is that the govt can simply print the money, which is true but only up to a point. If you print sufficient money rates for long term lending will rocket as lenders demand a rate of return that keeps them ahead of the inflation. In practice most lenders will refuse to lend for longer durations since they cannot predict future inflation. Pension funds and banks which hold longer duration bonds will find the value of their portfolios destroyed as demand for longer term bonds collapse.Whether the govt can print enough money to employ everyone without creating significant inflation is an open question. But to even go down that route is like walking towards the edge of a cliff with a blindfold on. If you fall off the consequences are much worse than staying where you were. Bernanke does not have an equation that tells him how much money he can print before the bond market collapses.