Corporations wouldn't have that option as they wouldn't get any money unless they had hired someone. Individuals making their mortgage payments and credit card payemts is exactly what we need. It keeps the banks from having to take additional write downs, restores confidence in the credit markets as defaults drop and if people pay their debts off at an accelerated rate it just pumps liquidity in to the credit markets, no down side. Certainly even the frugal will spend more on discretionary items with a decent job than they will on unemploymnet!
You just don't get it, do you? It's over. The only real solution is to literally dismantle the monetary system and the polticial system. At best, states will secede and start from scratch, but I doubt it. What 4-8M jobs? From where? With what money? There is no real investment capital to create these jobs, it's all printed money, aka debt. There is no significant investment opportunity in USA to create jobs, there are some minor ones, but that's it. Have you even read the stimulus bill? Do you even have a clue where most to almost all jobs will come from? Federal Government. And considering that the Federal Government is broke, this is all going to mirror Soviet Union in the last few decades prior to its collapse.
The situation is not yet as dire as you imagine and judiciously applied stimulus (my view is creation of private sector jobs vs federal employment) will allow the business cycle to play out. Yes sytemic changes are needed, but they will be easier to make if we don't 1st get to price equilibrium without meaningful government support which is what we had in the 1930's and what we are in danger of experiencing now if we don't do something effective. The current stimulus is not effective and will need a round two at a minimumn, my much cheaper jobs proposal is far more likely to be, will not require a second round, and still leaves the Fed with a plenty of dry powder and keep the states from their shortfalls.
Yes, the $100-300K does make sense (and may even be a good deal). If all you want to do is pay someone 40k for doing nothing (i.e., pure welfare), then the cost is only 40k plus a bit of admin overhead. But if you want to hire someone at 40k to do something useful, then you also need to provide money to buy office space, buy factory equipment, buy raw materials, buy transportation of goods to the market, pay for R&D of products, pay for marketing the stuff created by this 40k employee, etc. That all adds up to revenue per employee and can be quite high relative to salary. To see if the govt figure is reasonable, just look at the revenue-per-employee figures for a well-run business. This provides a measure of how much money it takes to create the economic activity to create one job. For Wal-Mart (hardly a company that would be accused of wasting money on anything), the figure is $200,000/worker. That is, consumers need to pay Wal-mart 200k before Wal-Mart would hire another worker. For creating better-paying jobs, the figure is higher -- Cisco's rev./emp. is almost 600k. Thus, the govt figure is not out of line. I wish people had to take business economics in high school because they would be much better citizens if they understood the real costs of real things.
Clearly my mistake was majoring in economics and not in business economics. The ensuing 20 years as a businessman and employer seem not to have made much of a dent either Seriously though, thank you for your input, unfortunately the reported stimulus does little to create the economic activity you describe (I assume you have not read it as it bears no relation to your post) where as hiring 4M-8M would do exactly what you describe. In a normal cycle I agree, you would be correct but I think you will have to agree that what we are facing is far from normal and not caused by the normal boom bust of a business cycle. This is a temporary fix for a crsis of confidence in consumers and credit, just as the stimulus is. The people who have been laid off were doing work before they left, they weren't just sitting around doing nothing, infact many of my IT freinds complained of being worked harder than ever with each successive round of layoffs so I take issue with the work not being there. All companies have projects in their strategic plan that they can deploy if they are incentivised to do so. Those projects create economic activity, having 4-8M employed creates economic activity, and more importantly halts the downard spiral. I am not talking about welfare here. Also the job creation can be directed toward adding additional beyond soley to the corporate bottom line by additional tax breaks tied to certain transporation, utility, and digital infrastucture projects. Thus providing an incentive for companies to get people back to work and also incentivising work on new projects that need to get done.
solution: cut back on government spending and give people rebate checks like the $600 I got last spring, and $300 I got in the early 2000s guess what I spent every penny within a month.Make it $10000 this time. theres your solution.
It isn't a solution, it isn't even a band aid. The jobs programs works because it creates economic activity beyond just having people spend a hand out. Sure the hand out creates some economic activity when it is spent (we get that from the jobs solution I propose ) but none of the productive value and economic activity generated by the work, along with a whole host of other benefits enumenrated in previous posts that are not produced simply by spending a hand out.
Your solution is little different than what has been done. Banks have been given low cost capital for lending. But they are not lending. Businesses are declining in this economy, so why would they lend? Employers given low cost workers will still not hire as much as you think. Again, businesses are declining in this economy, so why would they hire?
Ok, well it's obvious you're too dense to understand what is up. If there is no private investment, there are no real jobs. Government printing money & debt will simply make matters worse, albeit a little illussion by a temporary stimulus. This is basic economics, or just common sense. If you have a business that has gone bad, why would taking out massive loans help? You can either live in reality or live in an illussion. The first choice will mean your survival & possibly prosperity, the second just makes you a sheep soon to be slaughtered. P.S. LOL at the business cycle. No such thing, it's just sad that people actually believe in such idiocy. It's just money supply flunctuations, nothing more.
We seem to differ as to the nature of and extent of the current crisis. You are talking about the long term problems that face the US, I am talking about a different animal entirely. Do I have all the answers? No. I am not a policy wonk but a businessman. Nevertheless the plan posted is the most effective I have seen propsed so far.