Government Sponsored Jobs Program

Alright, lets start out by stating some important information

Lets say a nation has 10000 workers/consumers, and those workers/consumers circulate 10,000,000 dollars a year, that is 1,000 average dollars circulated per person.

Then lets say you decrease the amount of workers/consumers by 5000 (50%), then you have the same amount of dollars, but inflation happens because the nation loses 50% of its production.

Now lets say you increase the number of workers/consumers. Production goes up but money doesn't, and deflation happens.

Now lets say you add 1 worker/consumer, and 1000 circulated dollars a year. Production goes up and neither deflation nor inflation occur in an economy, thus increasing the GDP. This is the theory and logic behind my program for government sponsored jobs

When someone has a job, it is maintained by that person putting their money into the economy, and getting it back again through a paycheck.

The problem is getting to that point where we create one net job, and this program attempts to solve that problem.

So here it is. First, we have a government agency scout for significant unemployment in an area. When significant unemployment is found, Then that agency recruits unemployed workers. They then interview them to see if they have had any work issues like being unproductive, like a job interview. Then after workers are recruited the agency notifies various local businesses that a number of government sponsored jobs are available. government sponsored jobs are (in this case) jobs in the private sector that are paid for by the government. Then willing businesses apply to have those workers. After collecting a number of potential jobs the recruited workers can do from local businesses, the agency selects what they believe are the most productive job in the area. Next what happens is they tell who ever is in charge of the currency to print enough circulated dollars to be similar to that areas yearly minimum wage income multiplied by every recruited worker (and not put it into the economy just yet). Next the recruited workers are put to work and that agency pays them with that money. When the agency pays the workers enough dollars that circulate to equal yearly minimum wage, then the government raises taxes in order to pay for the government sponsored jobs in that area.

Wow, what a wall of text. Thank you for reading this far! State 2 steps in this plan, or give me respectful, reasonable feedback and I will like it and add a reputation point whether it's positive or negative. (hope that's legal)

So theoretically what is happening is that you are putting enough dollars to equal yearly minimum wage into that economy, immediately...ish... making a job with it that increases production to offset the added dollars to the economy. GDP is raised because more goods are produced at a lower price, and demand increases (hopefully).

So please give me respectful, reasonable feedback! I really do listen to it. If my plan is garbage, I want to be the first to know!

 

The use of wage subsidies is quite common. There is an economic rationale for it. Essentially it goes as follows: Human capital deteriorates relatively quickly. Rightly, or wrongly, firms will typically not employ those that have slipped into ‘long term unemployment’. An economic shock could then have negative long term consequences. A greater pool of long term unemployed is created and the equilibrium unemployment essentially gets ratcheted up. Government interventionism is then geared at stopping this from occurring.

My main problem with it is labour market segmentation. This can be simplified to ‘dual labour market segmentation’, an approach originating from sociology. In terms of the economics, that means there are two essentially separate labour markets. The secondary sector is characterized by the ‘poor jobs’, typically involving low wages with little job security. Workers in this sector will often experience periods of unemployment. In contrast, the primary sector is characterized by the ‘good jobs’, typically involving with high wages with at least a promise of some job security. This job security originates from the nature of the work. Much higher training levels are provided and this undoubtedly leads to higher costs from job turnover.

Given this segmentation, how would the government sponsored employment scheme operate? First, any involvement in helping secondary sector employment will be counter-productive. It will encourage the creation of these ‘bad jobs’, leading to long term problems: working poverty, low skills investments etc. We’re therefore left with some government assistance of the primary sector. There are, however, numerous problems. First, given we will be referring to high wage employment, it can be immensely expensive. This will guarantee greater distortionary effects from taxation. Second, of even more importance, the ‘primary sector’ is characterized by the replacement of supply & demand conditions with the ‘internal labour market’. Designing a scheme capable of eliminating ‘primary sector employment’ would be impossible. Understanding the ‘internal labour market’ for all workers involved is not going to be a possibility. These labour markets are specific to each individual enterprise. They are characterized by different human resource management techniques, involving different uses of wage distributions, hierarchies and human capital investments. The best we could achieve is a system ripe for abuse. We’d have to take taxes from the poor in order to protect high wages within wealthy firm.

 

Looks like you put a lot of thought into this, and I applaud your effort. However, there is a better way. Many of the greatest minds in economics believe that if we simply changed to a tax system which didn’t punish production or consumption, that involuntary unemployment would all but disappear. These great economists recommend using the land value taxation method as the primary means of funding government. Land value taxes do not discourage production and trade like other taxes do, they have no dead-weight losses. What you propose is basically a tweak to the system, and that has been tried for years and years. The only real change can come from overhauling the tax system and placing the burden of taxation on rents, where that burden cannot harm the economy and cause unemployment.

Here is a link to Progress and Poverty by Henry George, which explains why we are plagued with unemployment in the first place: http://www.henrygeorge.org/pcontents.htm

If you are smart enough to understand this book, it will open your eyes like no other book you have ever read before. I would recommend that you read the whole book, but if you are short on time at least check out chapter 17 (The Problem Explained), 22 (The Root Cause of Recessions), and 33 (The Canons of Taxation).

"Men like Henry George are rare, unfortunately. One cannot imagine a more beautiful combination of intellectual keenness, artistic form, and fervent love of justice. Every line is written as if for our generation." — Albert Einstein (1879 - 1955)

 

Georgism cannot understand the labour market. To suggest it has anything add to this thread is extremely silly

 

I'm kinda unhappy with this, it contains... feather-weight criticism. The one criticism I'm referring to is "What you propose is basically a tweak to the system, and that has been tried for years and years.". "tweaking the system" can refer to pretty much anything you do to the economy, including passing a new tax. And you basically rationalize why my program would fail with "anything has been tried, so don't try anything". Something like "Well in the year X president Y put in place this exact program, and it caused massive economic collapse. People had less money, less was produced, and a giant demon popped out of the white house and went on a rampage". (joking aside) This was not the criticism you gave me.

As for your new tax, I don't see how it could not discourage production/consumption (I wiki'ed it). How is it possible to take money from people with out reducing their income and thus reduce their consumption??

 

Oops, glitched double post (edited out the repeated message)

 

I find it rather amusing that the government would allow in so many immigrants, then turn around and try to sponsor a job program when there are not enough jobs for everyone. If there are not enough decent jobs available, wouldn't it make much more sense to subsidise wages and try to improve working conditions in the low level jobs that already exist, rather than trying to sponsor new jobs?

The whole problem in the first place was that, by bringing in so many immigrants, the USA turned formerly decent jobs into jobs that Americans were no longer willing to do. Just look out in places that have not received a large influx of immigrants, like Western Virgina or Tenessee. Americans are still bagging the groceries and mowing the lawns. You can see college age students behind the counter in fuel stations, and pretty 17 year old girls helping with construction teams on the side of the road. You will find elderly ladies behind the convenience store counters. What they lack in speed, they make up for in sweetness. The plain truth is that the high levels of immigration have been displacing both the young and older workers from the lower level jobs they traditionally filled. The youth unemployment, and the unemployment amongst senior citizens are shockingly high. Or go to Sweden (I am here right now). Plenty of beautiful Swedish women waiting tables and mopping floors (although things are starting to change in the big cities).

The notion that immigrants just do the jobs that Americans are unwilling to do is utter and complete baloney.
The conservative leadership is just a guilty for this flawed line of reasoning as the naively empathetic progressives, with hearts too big for their own good.

 

You're wrong here! The original land tax guff that he's supporting is originally from the 19th century; they haven't come out with anything original since. It quickly became irrelevant, as you'd expect with an evolving capitalist system that focuses on complex production involving skilled labour. Even Georgists (proper ones that actually publish in side-issues such as environmentalism) admit their relative unimportance.

 

I don't find xenophobia amusing, particularly as its completely reliant on non-economic rant as it ignores the productivity gains achieved through international labour mobility

 

Well my reasoning for this (which I just made up... go figure) is that if you payed one million dollars a year(I'm not saying that's what your advocating) to the recruited workers, they wouldn't produce enough goods to compensate. So a low amount of money is safer. However I do see a reasonable middle-ground. Workers need to be payed, for the most part,
the value of their good/service. So here is my amendment: after the worker has worked for a month on minimum wage, the agency tally's up the amount the extra goods created/services (served?) went for and replaces minimum wage with that value. Of course you would have to add that amount of circulated money or subtract (in worst cases) out of or into the economy and raise or lower taxes.This way you avoid always paying minimum wage, and if a low amount like minimum wage is assigned, then the worker should be able to apply to try another business. Also, if the worker has the right education, the agency could assign them to work some place that produces something of similar value that a lawyer, doctor, or an engineer produces.

Does that solve the problem?

Taxes will have their distortionary effects, but also remember the worker will spend that money and put it back into the private sector. And as long as that worker produces something of equal value to the economy, it won't cause inflation.

um... I don't quite get what you're saying here, it uses a lot of concepts my level of education didn't teach me. Could you please take a moment to explain each concept you use/generally dum it down? (I'm not stupid, I swear!)

 

I'm not quite sure how this relates to my program, are you saying we need to cut off immigration to solve unemployment? Well anyway it's not criticism to whether or not my program would work, it's just a rant against immigration, so I won't like or rep it.

Also, if, and only if, my program works we could employ anyone in the United States, we wouldn't have to worry about immigrants taking to many jobs. They would just add to our GDP.

 

The fellow is a xenophobe. He would be a traditional right wing racist in our politics. There is no economic content. There is only rant. If you take it seriously your education will suffer

 

Question for you: what do you think would happen if you added 1 worker/consumer, but kept the amount of dollars the same?

Also, falling prices caused by increased production (more supply) is not a bad thing at all. There is no reason to try and stop it. By GDP, are you referring to nominal GDP? Because I have my criticisms of both, but nominal GDP especially is in my opinion useless for measuring productivity.

 

The only way to do that is to tax the money out of the economy and use it to sponsor jobs. If you do that your not accomplishing anything because the extra taxes will just kill as many jobs as you create with government spending.

Also when there is deflation business can't adjust to it perfectly and they over-pay their workers and sell their goods for less then they're worth so they get damaged.

Well overall productivity will go up, is that a bad measure of a nations economy?

Now please tell me how you will think the program will work.

 

The criticism I would give you is that your proposed system cannot possibly create improvement. Your solution leaves the main problem (landowner rent collection privileges) solidly intact, and would in fact make the problem worse by introducing even more government intrusion into the marketplace.

Think of it like this, from an economical perspective the landowner is a parasitical leech, who contributes nothing to production (that is why his income is classified as unearned RENT). The producers of society are the host and it is those parasitical leeches which are making the host so sickly. Your system does nothing to remove those parasitical leeches, and if your proscription were to help matters in the least, it wouldn’t be long and those leeches would simply grow larger whereby they would extract even more of the hosts energy.

On the other hand, the system which I advocate would remove the leeches altogether, and the host (producers) would no longer have to support the parasites, and would grow in strength at an astonishing rate.

The “new” tax is not new at all, it was to be the soul source of federal government revenue according to the original constitution of the U.S. But then the parasitical landowners threatened to wage war against the Union if the federal government tried to collect the tax. The original U.S. constitution was replaced with a corrupted constitution so that landowners could get rich off the labor of others.

The land value tax doesn’t burden either production or consumption, so it can’t discourage them. The supply of land is fixed, so taxing its value, even at a 100% rate cannot reduce the supply, so it can’t create scarcity. The land value tax does reduce the consumption of large landowners, but as it replaces other taxes, it greatly expands the consumption of producers.

"Our ideal society finds it essential to put a rent on land as a way of maximizing the total consumption available to the society. ...Pure land rent is in the nature of a 'surplus' which can be taxed heavily without distorting production incentives or efficiency. A land value tax can be called 'the useful tax on measured land surplus'."—Paul Samuelson, Nobel laureate in Economics (1970)

 

And of course you’ll bring your lies to the table.

You know, because I have provided the information many times before, that land value taxation (as the primary revenue source) has the support of many of the greatest minds in the field of economics. Here is a snip from a letter advocating land value taxation:

Not only does the letter claim that those government activities can be paid for specifically from this tax, but it calls for the leftovers to be distributed equally to all citizens. More than enough!

Now let’s see who all signed the letter:

Now, there is a great mass of credentials on that there letter, four of those signatures are from Nobel Prize winning economists. So who is it exactly who supports your socialist system? A bunch of economic hack-jobs and nobodies … that is all.

 

It does burden the production/consumption because it would take money away from land owners that would spend it on goods and services or make those goods/services at a lower price. It would reduce the supply by charging businesses for the land they use to produce goods, increasing the cost of them, thus decreasing the supply. In order to successfully make this tax, it would have to take trillions from land owners, thus the economy, just like government takes trillions away from the economy through other taxes (not saying it's wrong). The transfer of tax weight would have to be a 1:1 ratio from everyone else to land owners, thus doesn't expand consumption of consumers or producers.

When you give me a criticism like "it leaves the land owner rent collection privilege solidly intact" you need to explain why it's an economic problem. From what I can see it would only be an economic problem if we weren't collecting enough tax money, but we do collect enough money. maybe you think it's a ethical problem? That land owners should pay taxes because they are taking the governments land? Well what is the point when they already do pay all other taxes? You could make a land rent tax but it wouldn't accomplish anything economically that other taxes do.

The land owner does contribute to production. The basic land owners are home owners, businesses, and government (Reiver will probably correct me on that ). Home owners (for the most part) have a job and produce things. Businesses produce things or make it easier to consume things (like a retail service) government... produces less for the economy... but it does do important services. Every land owner also pays taxes in some way.

The host, which I believe is government, don't produce much so you really can't call them producers. Or do you mean that businesses are the host... that wouldn't make sense so I doubt it.

The only leeches I can think of are people who abuse welfare and avoid taxes. But most land owners don't do that.

 

Thieves also spend money, and taxing thievery would reduce the amount that thieves could spend and consume, but like landowners, thieves are not producers, so their consumption must come from the production of others.

Remember that land is fixed in supply … so it is physically impossible for a tax to diminish that supply and create scarcity. Also, land value taxes do not make using land more expensive. That is because prospective users consider the tax liability before purchasing the land, and if that tax liability is high, they simply offer less in exchange for the land. That is the one side effect of land value taxation, it reduces the cost of buying land, so that is why it doesn’t increase the cost of production.

In order to understand what I am teaching, you will need to learn the concept of 'economic roles'. Economically, landowners are pure parasites, they produce nothing, and I know of no knowledgeable economist who disagrees with that.

Farmers are producers, but not all farmers are landowners, as they may rent their land.

On the other hand, not all landowners are farmers, or even businessmen, or school teachers; some landowners just walk to the mailbox everyday to collect the rent payments that are sent to them by producers.

Finally, yes, some landowners are also producers, as a farmer may own his own land, but in that case that individual is fulfilling TWO completely separate economic roles.

As to how these landowners are harming the economic system, that is simple, they reduce the rewards of true productive labor. If you want to maximize production you need to maximize the rewards producers receive; eliminating the taxes which burden production will help stimulate production through greater rewards.

 

Bored Dead, maybe this little story will help you understand why I advocate land value taxation:

Can you see how the economy of that town would be more prosperous if it didn’t have to give the “man in the South of France” so much of their local production?

 

No Revier, that isn't true. A xenophobe is someone who does not like a person from another country. There are many legal people in the US that are from other countries that contribute significantly. Illegals don't pay taxes and contribute little to the overall productivity calculation. So now we've created yet another Government bureaucracy to create jobs. Government is the definition of inefficiency. Government does not create jobs because those jobs have to be paid for. You see, you aren't willing to accept the fact that contraction may be inevitable.

 

There's no debate in it. He's a xenophobe and his whole reaction to economics is not one focused on economic rationality but on feeding his attitudes on race.

Of course they contribute to productivity. Its not tax dependent you know, else we'd have to conclude a lot of the rich are proper lazy so and so's.

You must therefore be anti-capitalist. Government is the key economic agent in capitalism after all

 

Same ole pathetic script. The single tax championed by George became irrelevant quickly. Georgist output has also been sidelined to rather boring secondary issues (thus the complete reliance of internet Georgist wannabes on parroting Long Dead George). It also continues to be extremely silly to refer to Georgism on a thread reliant on an understanding of labour. Georgism has nothing to say

 

Land isn't free, and it certainly wasn't free for that Frenchman. He had to produce close to 5,000,000 dollars worth of goods or services to buy that land himself. So he did produce something.

Yes it is fair to have the initial charge for buying the land because those who buy it can afford it, and the seller needs to get enough money back to pay for the land.

It's also fair to tax people on other things because government needs that money.

You are still ignoring the fact that instead of taking trillions from everyone, we would have to take trillions from land owners. Those people are businesses owners who own their own land, they would have to raise their prices to pay for the tax on their land. Those people are also home owners that own their land, who would have to pay rent to the government and reduce their consumption to compensate for their rent. Those people are land owners who own the land businesses and residents live/work on, the residents/business owners would then have to pay more rent to the land owner to pay for his or her land taxes, so less is produced do to the higher cost, and less is consumed do to the higher rent.

What your trying to say is that land owners happen to own land and are people who produce nothing. The only people who would fit into this category are retired people, and bums on the street who happen to own land. The retired people produced things their entire life, and that kind of bum is extremely rare.

There is no real way around my last argument, and if you ignore it, consider this discussion over.

 

Hey Reiver, you've been relatively quiet on the new plan after I amended it for you. Could you please tell me what you think of every part of this program? I would much rather discuss on-topic matters then the off-topic matters random people want to talk about.

 

Have you countered what I have said so far? The stuff on internal labour markets essentially destroys any simple wage subsidisation programme