Sometimes, I doubt our commitment to Sparkle Motion

June 8, 2010 9:45 AM

Make Work^[1,2,3] or: How I Learned^[4,5] to Stop Worrying^[6] and Love Deficit Spending^[7,8,9] (during a general glut at the zero bound) -- When I was a kid, if I was sitting around the house and complained I didn't have anything to do, my mom would always respond the same way. "I'll find something for you to do," and she would. It was make work, she was finding something for me to do on the spot to cure my unemployment problem...

If you look around the city or countryside with the same eye that my mom looked around the house, you will find many, many things that need to be done, things of high value to residents in the area. There's a whole backlog of useful things that people could be put to work on, and with unemployment so high and interests rates (i.e. the required return on spending) so low, it would be a good time to pursue these projects vigorously.

posted by kliuless (33 comments total)

Krugman has been banging on this drum: 1, 2, 3, 4 (all good posts). It reminds me a little of the runup to the Iraq war, when Krugman was like the only guy in the elite levels of the mainstream media and everyone else was running off the cliff. Which is actually pretty worrisome.
posted by delmoi at 9:52 AM on June 8, 2010 [2 favorites]

This reminds me of the efforts to end the depression. The first big push was means-tested out the ass- they wanted to make damn sure that you really, truly needed the aid and that they weren't giving any money to shiftless layabouts- and it failed miserably. The sequel to that, the Works Public Administration, was premised on the notion of "fuck it, let's just make work". So you'd go in, and rather than demand you prove you needed help, they'd ask, what can you do? You're a plumber? Hey, we're building some new buildings, go put in the plumbing. You're a writer? Here's a stipend, go report on conditions for us. You can work a camera? Head on out to Oklahoma and take some pictures of the dust bowl. You're good at being a manager? We've got an office we're putting together, come in Monday and meet your new staff. You can't do anything? We're building a new building, show up tomorrow and start doing some general labor. And since the focus was on putting people to work rather than on saving money, a lot of the buildings built by the WPA are still around because they were overbuilt- after all, you're trying to spend money, so why not make the walls extra-thick?
posted by Pope Guilty at 10:04 AM on June 8, 2010 [29 favorites]

If you are interested in the idea of a job guarantee, you should check out Bill Mitchell's blog. You can see a recent post about a jobs guaranteehere. In fact, Mitchell (an economics prof in Australia) also has some great posts about why the U.S. government cannot ever "run out of money."
posted by wuwei at 10:05 AM on June 8, 2010

The US spent its way out of the last recession. Look how well that turned out.

The G20 just told Geithner and Krugman to go fuck themselves.
posted by unSane at 10:07 AM on June 8, 2010

Yes, exactly. We have plenty of work to do and plenty of people and resources to apply to it. "Free time I don't want to fritter away" should not be a problem.
posted by DU at 10:11 AM on June 8, 2010

Most states' fiscal years start July 1st; given continued low tax reciepts more pain is likely around the corner, barring more federal aid...
posted by Esteemed Offendi at 10:11 AM on June 8, 2010

the long national nightmare that started in 1932 is almost over.... the bathwater is ready.
posted by ennui.bz at 10:13 AM on June 8, 2010

given continued low tax reciepts more pain is likely around the corner

Oh yeah, and that's the other thing. The government is poor but there doesn't seem to be any end of rich people and corporations. BRING BACK FAIR TAXES
posted by DU at 10:15 AM on June 8, 2010 [8 favorites]

I was planning a hike across the North Cascades decades ago and went over the trail maps with the rangers there. They showed me the reliably findable trails -- created by WPA crews in the Depression using hand tools, and said those were consistently still going to be there when I tried to use them.

They warned me not to rely on finding trails that were made after World War II and said don't believe the maps -- those were made using dynamite, and it fractured the rock far deeper into the slope than needed just to make a trail -- and so over the next twenty years, most of those newer trails had disappeared, as the underlying rock slid off the side of the mountain.

Overbuilt? Not necessarily. Maybe built to last by people watching their own work.

Conservation, reuse, and building for the ages doesn't increase the Gross Domestic Product.

Every time you throw something away and replace it with new, that does increase the GDP.
posted by hank at 10:17 AM on June 8, 2010 [9 favorites]

Just paying attention to our infrastructure would be nice. Rail and roads. Our sagging electrical grids. Bad bridges. Water and sewage. Better public transportation. I'm not suggesting high-speed bullet trains crossing the country or anything, although I would not be opposed to more modern and reliable designs for nuclear power plants getting pushed out — a few in each state.

The fact that I have had to memorize the locations of major potholes in my drive is bad enough. My power goes out, a lot, and can remain out for a while. I reflexively drive out for dry ice if the power is down for more than four hours. My tapwater is hard enough that I could convincingly stage a proof of my divinity by walking across it.
posted by adipocere at 10:18 AM on June 8, 2010 [3 favorites]

It's the kind of thing that I expect wouldn't ever go over in a popular sense, but I really appreciate places like Germany and Israel where post-Gymnasium folks have to spend some time in service to their country before they pursue the next steps in life.

Not that it would fix unemployment, but I'm saying...well, I think overall it would be good.

I don't expect that sentiment to go over well here, though.
posted by TomMelee at 10:23 AM on June 8, 2010 [2 favorites]

Not to derail the thread, but I can't believe how vacuous the language in those Harvard Business Review posts is:

Today's capital stocks aren't enough to power the shift from mere business to betterness...
20th century capital isn't fit for 21st century prosperity...
Facebook's ongoing problems with privacy can all be traced back to a lack of ethical capital — and it is that lack that makes Facebook less than revolutionary...
It's the story of reconceiving, redefining, restructuring, revolutionizing, and recalibrating yesterday's economic institutions...

But this one's my favorite:

The vast majority of America has faced austerity for the last decade, too. Japan's been under austerity for two decades. To Asia, Latin America, and, of course, long-suffering Africa too, the bitter taste of austerity is all too familiar. Next stop for Austerity: America.

Writing like this isn't a communication tool, it's a substitute for thought.
posted by twirlip at 10:41 AM on June 8, 2010 [6 favorites]

. . . after all, you're trying to spend money, so why not make the walls extra-thick?

Was it Keynes who said that for recession-spending, we may as well pay workers to dig a big hole and bury millions of dollars of cash, then pay them to dig it back up again?
posted by Think_Long at 10:46 AM on June 8, 2010 [2 favorites]

I went looking and it looks like the WPA I was thinking of was the Works Progress Administration. Check out this blog entry for an excellent essay on the topic.
posted by Pope Guilty at 10:49 AM on June 8, 2010

Pope Guilty: That's a great find. Only dispute I really have with the essay is this one: Hicks seems to think that taxes pay for spending. That may have been true when the US was on the gold standard, but it isn't true today, since we have a fiat currency.
posted by wuwei at 11:07 AM on June 8, 2010

There was a story in the newspaper recently regarding how state employees wouldn't be getting pay raises for the third year in a row. Next year, they actually face pay cuts. Predictably, the comments section was full of, "Boo hoo, cry me a river!" and the like.

This is America. The only respectable jobs are those that involve making already wealthy people even wealthier and blowing up brown people in a desert somewhere. If you're a real go-getter, you find a way to combine the two. Civil service? That's for losers.

If you make me wait next time I try to renew my driver's license, though, there'll be hell to pay...
posted by Kumbaya in E Minor at 11:08 AM on June 8, 2010 [5 favorites]

I wonder if WPA 2.0 will have a place for us skilled FarmVille players?
posted by msbutah at 11:08 AM on June 8, 2010 [2 favorites]

Hicks seems to think that taxes pay for spending. That may have been true when the US was on the gold standard, but it isn't true today, since we have a fiat currency.

Would you recommend doing a web-based search for information on a Texan politician?
posted by Pope Guilty at 11:48 AM on June 8, 2010

Pope Guilty: Nope. I am not a Paulist. Unlike the Paulists, I am not a fan of the gold standard because it leads to increased economic instability and subjects national currencies to outside domination.

I'm much more interested in what Randall Wray refers to as Modern Monetary Theory.
posted by wuwei at 12:35 PM on June 8, 2010

Was it Keynes who said that for recession-spending, we may as well pay workers to dig a big hole and bury millions of dollars of cash, then pay them to dig it back up again?


Yeah, because who needs roads, bridges, libraries, and public improvements? Might as well dig an effing hole in the ground, amirite?
posted by emjaybee at 1:19 PM on June 8, 2010

emjaybee, the point is that any spending, even as futile and dumb as paying people to bury and dig up money, is a good thing.
posted by Pope Guilty at 1:26 PM on June 8, 2010

Well right now we're paying about 4.6 million people to look for jobs that don't exist via unemployment benefits; digging holes would at least improve people's physical health.
posted by Zalzidrax at 1:58 PM on June 8, 2010

Zalzidrax:
Exactly. All the jobs search programs and retraining, don't address the fundamental issue of a jobs shortage.

The economist Hyman Minsky pointed this out 40 years ago , when he criticized LBJ's war on poverty for focusing on training and job search. Rather, the government should have directly created jobs.

You can read the abstract of a paper on this discussion here, or read the entire paper [warning, PDF] here.
posted by wuwei at 2:32 PM on June 8, 2010

All right, all right, but apart from better sanitation and medicine and education and irrigation and public health and roads and a freshwater system and baths and public order... what have government programs ever done for us?
posted by kyleg at 2:38 PM on June 8, 2010 [5 favorites]

Might as well dig an effing hole in the ground, amirite?

To be sure, Keynes was making an economics joke.
posted by dhartung at 5:54 PM on June 8, 2010

The US spent its way out of the last recession. Look how well that turned out.

Actually, this isn't even true. We grew our way out of the last recession as Bill Clinton and the Internet turned billions in deficit into billions in surplus. At the time, deficit hawks were whinging that we were going to be putting our children's children's children into debt forever if we didn't make way more extreme cuts than Clinton made and if we raised taxes on the rich. We got rid of the deficit entirely in the 8 years of that administration with the internet etc.-- and turned it into surplus.

Then, we had the supposedly fiscally conservative W., who spent us into a nightmare with 2 wars.

So, why should we believe the deficit hawks now that more spending is going to fuck us? They-- many of whom got bailed out themselves-- are crying that we need to save money now that it will go to anyone but the rich. We can't afford to help the unemployed, build schools, do healthcare. We can afford to bail out banks-- but after the rich are sure they are getting theirs, it's time to cut because any more spending is unsafe and might kill the economy. Cry me a river-- do proper stimulus and stop lying.
posted by Maias at 5:58 PM on June 8, 2010 [1 favorite]

Maias, it's the running of a government surplus that caused the economy to slow down. This is because of the basic accounting identity that governs national accounts. When the government runs a surplus, that means that there is a deficit in the private sector, and vice-versa. This is because there is a limited pool of money in the system. You can read more about this at the well respected blog, Naked Capitalism.
posted by wuwei at 7:34 PM on June 8, 2010

Watch me have all kinds of respect for the economic acumen of anybody who talks about "fiat money" as if it weren't a settled debate. I'll start any moment now.
posted by Pope Guilty at 7:57 PM on June 8, 2010 [1 favorite]

I can see that someone isn't reading the links. What a surprise.
posted by wuwei at 8:01 PM on June 8, 2010

When the government runs a surplus, that means that there is a deficit in the private sector, and vice-versa. This is because there is a limited pool of money in the system.

What's hilarious is the fact that a lot of these so-called 'deficit hawks' now were actually warning about dire consequences if the surplus got too big. But obviously a government surplus is in a sense wasted money. EXCEPT FOR the fact that we still had a huge national DEBT in the trillions of dollars. Once the DEBT was paid down, that would have been the time to spend down the DEFICIT. The government, even after the end of the clinton administration was still paying a big part of it's budget as interest on the debt.

But what the current "deficit hawks" really wanted was a situation where the government stopped paying billions to rich people in the form of interest payments, and having the government need to kowtow to 'bond mercenaries'

And of course they were worried about a situation where the government would take in a surplus each year and then make investment decisions with all the extra cash. They also wanted the money spent on tax cuts and not social programs.
posted by delmoi at 4:37 AM on June 9, 2010

Wow, good news Bernanke warns congress NOT to cut spending. Looks like sanity may be catching on.
posted by delmoi at 12:18 PM on June 9, 2010

Delmoi: there really isn't a reason to worry about paying down the debt with the surplus. We can do that via account credits at the Fed. The USG doesn't require debt issuance (except b/c of legal restrictions) to pay interest payments on the debt or retire debt.
posted by wuwei at 10:28 PM on June 9, 2010

Austerity is stupid, stimulus is dangerous, lying is optimal, economic choices are not scalar
Blueprint America: Dubuque's Move From Gambling to Green Lab
posted by kliuless at 5:00 AM on June 21, 2010