Friday, June 1, 2012

How to Save the Global Economy: Hire Everybody

Through the 1930s, a young Ohio lawyer named Benjamin Roth kept a diary about the economic and social chaos he saw around him, chronicling the extreme uncertainty about the future that was affecting ordinary, middle-class Midwesterners. The striking thing to readers now is how many false dawns there were and how accordingly slow the authorities were to take action; they kept thinking -- hoping -- that the economy was about to improve. "When I started these notes it never occurred to me that the depression would last more than two years," Roth wrote in 1936. "We are now in the beginning of the seventh year and the road is not yet clear."

Measured by the length and depth of the downturn in global GDP, the current economic crisis is set to be even worse than that of the 1930s. As in the 1930s, governments in the United States and Europe must switch from doing the least they can get away with to avert immediate disaster to acting with enough commitment to the future that their citizens begin to believe in a brighter economic outlook. Above all, this means creating jobs -- perhaps even creating a modern equivalent of the Depression-era Works Progress Administration.

Unemployment breeds hopelessness. Whether it affects young people just entering the workforce or older people who will find it hard to get re-employed, it scars their prospects for the rest of their lives. As of November, 16- to 19-year-olds in the American workforce and adults seeking to re-enter it had nearly the same alarming unemployment rate: about 25 percent. Of course, it is best if private businesses start to create jobs for these people by growing -- but until they do, the government must step in. Read more......

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