Wednesday night President Clinton made a profound statement. It wasn’t the point he was trying to make – he was trying to show what a great economy it was he governed over and how many jobs he had created. The statement was that during his presidency many people moved off welfare and into work.
The interesting observation is that when people who had been on welfare most of their adult lives were forced to find jobs, the economy did better. It may just be coincidence, but I wonder.
Let’s say that there are two of us in the world. We each need food and shelter. If you grow enough food for you to eat and build your shelter, and I grow enough food for me to eat and build my shelter, we’re fine. If you’re better at building shelters and I’m better at growing food, I can grow extra food for you while you build my shelter, and we’re still fine.
If I decide to do nothing, however, leaving you to grow food and make shelters for us both, neither one of us will be as well off. Our shelters will be weaker and the amount of food we will have will be less.
Even if food is taken from you and given to me, such that I can “pay” you for building my shelter with the food that was taken from you and given to me, there is still less “stuff” in the world. It does no good for me to be able to trade food for the shelter if the food was yours to begin with. We’re just moving goods around – nothing of value if being created. You might also decide that there is no reason to continue growing extra food and grow just enough for you.
Currently we have a lot of people out of work who are being paid without needing to create anything of value. This means that there is less value being created, meaning that there is less for everyone.
Maybe if instead of giving out unemployment checks, governments connected unemployed people with open jobs and/or had them do temporary jobs that were needed in exchange for pay, everyone would be better off. Maybe unemployed engineers could be given the job of designing a new bridge that is needed. Unemployed construction workers could then build that bridge. Unemployed accountants could track the expenses and prepare the payroll. Unemployeed administrative staff could create the project proposal,
These should not pay as well as private sector jobs, to encourage people to continue to look for jobs rather than just do government jobs forever, but it would both provide needed income during periods when people needed help and at the same time be creating something of value for the money. You’re spending the money anyway – why not get something needed out of it?
One trillion dollars after the stimulus, we don’t see much change. It is the hope that trying something else will work.
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