lifting the "economy" off the mud instead of towing it out

Discussion in 'Economics' started by Sanaz3, Jul 21, 2010.

  1. Sanaz3


    So I am thinking now that the governments are shelling out unemployment benefits (in Canada it's 55% of your last salary) while people are out of the job and doing nothing, why not pay them the remaining 45% on top of the 55% and instead have people working. Being on unemployment benefits, people do not actually contribute to the economy in any way I can imagine. But if instead, the Government picked up the full bill and paid 100% of salaries to companies, which start hiring the unemployed people who are currently receiving benefits. So this plan won't cost companies a penny but will help them expand their businesses and services rather than shrinking them as it's the case right now. This would stimulate the economy and spending and after 1-2 years, when the revenues and profits have picked up and the economy is back on track again (I am not sure if it was on track before:cool: ) the program would come to an end.

    After the program ended, the governments could get up to 50% of their money back through new increased corporate+ individual income taxes for only those who received the 100% benefits. The difference is, right now governments are paying out around 50% of salaries while the receiver is NOT working, but with the new stimulus program, they will have paid the same amount (pay 100% now, get 50% back in the future) while people have been working.:)
  2. Government labor/work projects compete with private business for the same job.

    If simple jobs were assigned to the unemployed, private companies reliant on Government contracts would reflect equivalent job losses. Therefore, unemployment and benefits would remain unchanged, except project costs increase and quality decline.

    The only jobs the unemployed can do without negatively impacting the economy is something not already done. Like collecting trash on the side of highways. And jobs not already done have little impact on the broader economy since if they were critical or profitable, private business would already be doing it.
  3. Sanaz3


    So you are basically saying that the 'unemployed', if re-employed, would negatively impact the economy!??? Is that what you mean?
  4. Yes.
  5. How about we just shoot all the stupid people? That ought to lower the unemployment rate.

    Sanaz. you're first.
  6. :eek: :eek: :p
  7. There is an element of taking over the private sector work (crowding out) however there is no reason people cannot work for a living. What is wrong with getting people to collect trash. It might not increase output but it makes things nicer.

    They could do social work etc too. I think working in old peoples homes is the best idea with an ageing demographic. Remember the ageing population is a new thing so the private sector would not have competition. Therefore it would not hinder jobs.
  8. Sanaz3


  9. Municipal trash collection is done by private firms or city workers. If you're talking highway pick-up, sure.

    Health services - specifically for the elderly - is one of the few growth industries we've got left. It's easy to see how millions of new care-takers would crowd out the need for private retirement homes and insurers, seeing as "the Government" would do it for "free". Why pay 40K a year for a nursing home, when a 30-something gen-x'er visits them twice a day? It's a catch 22.

    The best solution is to pay minimum benefits for a limited period (12 months) baring a depression. The best solution for unemployment is to make benefits so unattractive, people will take whatever job they can find. And sure, make-work projects are fine, so long as competition doesn't exist with the private sector (or will exist, in the near future). But that makes it pretty limited.