How to Create New Jobs Now—and Why
October 13
2:09 pm
Job fair attendees in New Orleans, Louisiana. (Photo by Mario Tama/Getty Images)
By David Moberg
Even if they sometimes hesitate to call it a second stimulus, more progressive politicians and policy analysts are talking about the need for strong, new federal action to create jobs.
Despite the effects of the stimulus legislation–which has created or saved as many as 250,000 jobs a month since April, layoffs continue and job openings are declining. Last Friday, the Labor Department announced there were 6.3 job seekers for every job opening in August, up from 6.0 in the previous month.
Many analysts–and even the White House–recognized in February that the original version of the $787 billion American Relief and Recovery Act was inadequate even before it was trimmed and watered down, and the problem of joblessness is greater than expected.
The House has voted to extend unemployment benefits in states with high unemployment, and the Senate is moving to pass a broader version. That not only helps the growing ranks of the jobless but also increases demand for goods and services.
There now seems to be growing interest in a new temporary jobs tax credit for employers that would roughly offset social security payroll tax costs of new hiring. Although backed by former Labor Secretary Robert Reich and the progressive Economic Policy Institute president Larry Mishel, it could appeal to some conservatives as a tax cut—but not Wall Street Journal editorialists.
They cite criticism of such a tax credit by liberals as doing nothing to create demand for products that would merit new hiring. But Mishel argues it could encourage employers who are hesitant but thinking about hiring.
Center for Economic and Policy Research economist Dean Baker would link a payroll tax credit for all workers to employers reducing their hours of work but at the same pay, thus creating demand for new employees. (Reich also suggests simply a one-year payroll tax holiday for the first $20,000 of income–a tax cut for workers and employers that would be skewed to help lower-income workers.)
Mishel, like all liberal analysts, proposes an extension of the safety net–unemployment insurance, access to health insurance, and food stamps. He and Reich also advocate more aid to state governments. “Helping state and local governments avoid job cuts is as effective as creating new jobs,” Mishel testified to a house Ways and Means subcommittee last week. Reich proposes using existing authority under the stimulus legislation and the Troubled Asset Relief Program to create a single state aid fund.
Mishel recommends increased infrastructure spending–which may be slow to kick in, but will still be needed since high unemployment is likely through early 2011. And he proposes funding for public service as “a direct and cost-effective way to create jobs.” A staple of Democratic anti-recession policy proposals since FDR, public service job creation has received little attention in this downturn.
Worries about the cost of these programs or increases to the deficit are misguided. High joblessness creates huge deficits in production, income and taxes, and failure to spend to create jobs is more costly in human and social losses than the deferred bill for stimulus programs that so far have been half the size needed.
But legislators should get the biggest employment bang for stimulus bucks. Currently, the least effective—an employer tax credit for hiring—seems more likely to win support than more effective measures like aid to states, public service jobs, or a social security holiday for reducing worktime.
Posted by David Moberg · economy government jobs · + share/save
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Guest Opinion
Economic solution
The solution to the economic problem is simple but
It it is difficult to explain. We live in the fantacy that our economy is mercantile when in fact we live in an industrial society with an industrial economic system. These two systems are as differnet as night and day, or baseball and football. The trouble is that the industrial economy is made to follow the rules of the mercantile system and therefore our economy is a mess. Suppose that you went to a baseball game and the umpire and refereess went by the rules of football, what kind of a game would it be ? Right, a mess and so is our economy. The answer is simple, treat our economy as it really is, an industrial economy. In an industrial economy that is allowed to operate with its own rules and with its own institutions everyone would be rich and affluent.
In the meantime, we can do a few simple things that will make the dual system work until the full industrial society comes into its own. These are stop-gap methods so bear with me. First, the fuel that runs the economy is consumer dollars in the hands of individual citizens, not investment dollars given as bailout money to banks, corporations, manufacturing companies or financial institutions. Without consumption there is nothing in which to invest and once the economy is going investment money comes out of the woodwork like Niagra falls. So, we have to infuse ready cash into the hands of the buying public. The government, both the state and federal, should issue money or credit to the middle and lower classes, increase and extent indefinitely unemployment benefit checks, increase Social Security and money should be given to all those who bought sub-prime mortgages and could not afford them to pay their premiums so that they can own their homes and live in them. and give everyonr ten thousand dollars to spend.
To prevent inflation a government agency should be set up to threaten any company that raises their prices with an audit. The Industrial economy has no inflatoion because it is based on distribution rather than trade or buying and selling.
Where the money is coming from to fund this infusion of money to the general public is the difficult part to expain. Because our economy is a dual mixture of both the mercantile and the industrial ssystems they interact such that a credit has accumulated over the years well into the hundreds of trillions of dollars that can be used. Money to pay for this does not have to be borrowed nor taxes raised In fact the deficit can be erased and treasury notes paid off.. The truth is that every time the government tries to balance the budget or erase the deficit it causes a recession. In an indust5rial economy all money earned as wages and salarary has to be spent in consumption to equal production. Whenever money is saved or income taxed that takes consumer dollars away from the full consumptipon of production it puts a brake on economic activity and prevents economic growth. This causes fits and starts in economic growth known as the business cycle.
Money in the Industrial Economic System is not backed by gold but by the goods and wealth it produces. It has a two step cycle, it goes out and it comes back. You get paid and you spend it, and the money comes back to your boss and he cancels the debt. You get paid money you created by working. You created your own money which your boss issues tto you, When it comes back it is cancelled
The void between production and available consumer dollars can be made up by issuing availablle credit dollars, based on thhe void, to consumers which I said before runs into the trillions. . I give a full account of how the void occurs and what to do about it to fix the economy and make us all rich.and prosperous in my just published book, “Revenge at High Tor,.” a dramatic novel that explains how the industrial economic system works and is available at http://www.amazon.com.
Charles H. Seitz
628 Topsfield Road
Hatboro, PA 19040-4513
(215) 675-5524
.(JavaScript must be enabled to view this email address)
http://www.voicenet.com/~chseitz
Times awastin’! While you are sitting , the country is going to Hell. We need to act now. We need to get money to consumers fast. Start with the unemployed and then those too poor to afford the subprime mortgages they bought and give them money to cover their premiums so that they can own and live in their houses.Give money to collges and universities to cover tuition. Then give everyone a thousand dollars a month for sppending. This will take us out of the doldrums and put us back in business with full employment and a prosperous economy. The money is there. Trust me. Just write it off. In the meantime stop the Federa Resrve bank from issuing invstment money to banks and corporations. Ask Walter Williams, the columnist for the Intelligncer newspaper. He will tell you it is wrong and causes inflation. Check his commentary wednesday September 9th. What President Obama and Congress are doing will not stimulate the economy but cause inflation and make matters worse.
As I have discovered and told you before: There are two economic systems each with their own money. There is too much mercantile investment money and not enough industrial consumer money, which is the fuel that runs the economy. There is a shortage of that fuel. We need more consumer dollars to give to the people to spend. There is plenty of money there to spend but you do not see it. Let me open your eyes and illuminate it. The industrial systeem is different from what you know and you will think it very strange. It is not like mercantile capitlism at all. In the industrial system the paycheck you get for working is a loan and has to be paid back by spending it all on Friday at the retail store. The money you get as wage or salary goes out and comes back and when it does your boss cancells the debt. Money in the industrial system does not circulate, it has a two step cycle.
When people save and put part of their paycheck in the bank in their savings account which is later invested and the cycle is never completed and creates a credit the government can spend to stimulate the economy and when they pay income taxes the amount of money available for spending in consumption is reduced and this is the amount that can be spent and just written off. It is equal to the total wages paid out minus what is available for consumer spending. That is howmuch the government can in fact must spend. . Over the years it amounts to hundreds of trillions of dollars. This money is available to fuel the economy. However, non should be given to pay for anything like entitlements or budgets or pork. The fuel will pump up the economy and the economy will provide the money through normal channels. They will get their money through their ususual sources. And there will be plenty because the economy wll be prosperous once again.
Now, if you don’t spend this money, it is like getting a loan from the bank and not paying it back. You are now in big trouble. In the mean time inflation has to be kept under control, maybe a temporary price freeze or a threat of a public audit if they should raise their prices. The consumer dollars fuel money should be fed to the people slowly with an eye on how fast the econmy is pmped up. At some point everyone could receive a thousand dollas a month to spend and when full economy becomes sufficient ease off to the current displacenent in available consumption..
So, while you guys are taking your time, time is awastin’! You are like Nero fiddling away while Rome was burning. . Don’t be like Nero, hurry up and get some money out to the people. Right away! First make unemployment benefits payaments unlmited and possibly doubled. Then give money to those who bought sub-prime mortgages they could not afford to cover their premiums so that they can own and live in their houses. Then give money to colleges and universities to cover all tuition costs. Now you are ready to give everyone a thousand dollars a month to spend in consumption. This should stimulate the economy. OKAY ? and don’t be like Nero and fiddle while rome burns.
Charles H. Seitz
628 topsfield road
Hatboro, Pa 19040-4513
(215) 675-5524