(2009-11-13) Krugman Jobs Vs Gdp Policy

Paul Krugman says we need Public Policy to focus on jobs (UnEmployment), not GDP. The alternative would be policies that address the job issue more directly. We could, for example, have New Deal-style employment programs. Perhaps such a thing is politically impossible now - Glenn Beck would describe anything like the Works Progress Administration (WPA) as a plan to recruit pro-Obama brownshirts - but we should note, for the record, that at their peak, the WPA and the CivilianConservationCorps employed millions of Americans, at relatively low cost to the budget... Now, the usual objection to European-style employment policies is that they're bad for long-run growth - that protecting jobs and encouraging work-sharing makes companies in expanding sectors less likely to hire and reduces the incentives for workers to move to more productive occupations. Yes, correct. They delay actual adaptation - like the Japan-style bank-saving Bail-Out we chose. And crowd-out Disruptive Innovation, extending a Great Duration.

Just to be clear, I believe that a large enough conventional Economic Stimulus would do the trick. But since that doesn't seem to be in the cards, we need to talk about cheaper alternatives that address the job problem directly. Should we introduce an employment tax credit, like the one proposed by the Economic Policy Institute? Should we introduce the German-style job-sharing Subsidy proposed by the Center for Economic Policy Research? Both are worthy of consideration. How about encouraging Self Employment/Start Up/One Man Show (perhaps by unbundling Health Insurance from employers, duh)?

Jeffrey Sachs prefers

• increase exports through dollar devaluation and expanded government support for export financing, for example extended to credit-constrained low-income countries that want to purchase US-produced technology

• massive expansion of education spending and Job Training

• spur an investment boom in areas of high social return that are currently blocked by the lack of clear policies. The conversion to a low-carbon economy (Green-Tech) would create jobs in the short run, a more productive economy in the medium run, and US technological leadership in the longer run. The same is true with the overhaul of America's ageing Infrastructure at a time when cutting-edge technologies can dramatically improve the efficiency of resource use, the safety of the built environment, and the sustainability of our ecosystems.