Thursday, January 15, 2009

The stimulus plan: useful, but misses the point.

The House Democrats have released a first draft of their stimulus plan. It's a mix of relief (medicare/unemployment) and infrastructure investment. With current bond rates, those are good ideas; but what we will need most are employment projects and there's not a whole lot of jobs here. Most proposals are capital-intensive. It's a good idea to do capital-intensive infrastructure when rates are low; but that won't help most people in fear of losing their jobs.

What I would add to the program is jobs-related programs. Do things that aren't done now, at least not enough, which don't require much skill or physical prowess, and which pretty much everybody likes. My initial ideas would be cleaning public spaces (especially of grafitti), neighborhood patrols, landscaping, ecological restoration (wetland recreation, elimination of invasive species), and public art. Not only would this make the country a nicer place, those kinds of activities feel constructive to the worker and make for good temporary work where the pay needs to be low.

4 million people at $8/hour is 64 billion a year, which is smallish compared to this overall proposal or to the TARP. In addition to the direct benefits, if we make it clear that we *aren't* going to get depression-level unemployment then other stimulus proposal can be addressed level-headedly without the kind of panic that was used to shove through the TARP.


K T Cat said...

There is zero chance that the Democrats, who have been clamoring for endless increases to the minimum wage, would ever pass a bill that created $8/hour jobs.

The stimulus bill is pure pork. It's insanity.

FairEconomist said...

Double the wage and run it for two years and it's still only about 1/3 the cost of the proposed stimulus. We know a panicked populace will swallow outrageous proposals that are sold as "fixing the problem" - even when they don't. See Patriot Act, TARP 1. I don't agree with a "pure pork" assessment at all - we *do* need improvements to roads, bridges, water supplies, etc. - but regardless, unless the public is informed that there are far superior alternatives, this will sail right on through.

The proposal is very similar to Roosevelt's CWA and WPA programs, which are revered in America (and yes, he had the same wage issue - the unions threatened to strike, but backed down). Even Reagan spoke highly of them. Public pressure can get this in over opposing interests, just like in the '30s.