The Depression, FDR and Unemployment

In a recent NY Times article by an economics professor suggests:

Stimulate the economy, so the theory goes — get that economic engine humming — and it will provide plenty of rides for the unemployed, and good rides too, as healthy businesses expand. In addition, focusing on increasing the G.D.P. rather than on creating jobs is related to the notion that we need real jobs, jobs that are not make-work, jobs with a future. And there is something to this: We would not want to see teams of laborers with shovels at construction sites that could operate more efficiently without them ... So here’s a proposal: Why not use government policy to directly create jobs — labor-intensive service jobs in fields like education, public health and safety, urban infrastructure maintenance, youth programs, elder care, conservation, arts and letters, and scientific research?

Well I was in a used book store in Keen NH last week and saw volumes of books produced during the WPA period. There are thousands of guides, histories, recollections about various regions of the country done by people put on the dole to keep them working. The CCC built parks and hiking trails, and expanded the Federal Government influence in a controlled manner to all sorts of pristine nature areas. The books sitting there unused on the shelves reminded me of the true lack of productivity of such actions. It was the intellectual equivalent of digging holes and filling them in again.

As seems to be generally well known the work projects took men off the streets and put them to work but to a limited improvement in the economy. You see 1937 was a tough year, my father got out of high school, which he spent three years getting trough after a dozen years in an orphanage and since he was fluent in Spanish his job was a translator for an import/export firm. Some talent, in between going to college, and then it was $125 per year! and he watched the economy creep.

The answer is not as the good professor contends in my opinion, it is getting the entrepreneurial engine going again. Increasing capital gains, placing financial regulations on VC firms, increasing taxes, adding health care costs, and just plain uncertainty from Washington is the problem.

And yes, scientific research, perhaps my 40+ years in and out of MIT may have fogged my mind but do you not need some education to do that type of work? Arts and letters anyone can do, you just call it arts and letters, it has no basis in fact; elder care, if all of these people are out of work then perhaps they can take care of their own family. The solution is value creation not redistribution of the remaining income.