Former Clinton Secretary of Labor, Robert Reich, thinks deficit spending on infrastructure is a panacea for unemployment:
Let me say this as clearly and forcefully as I can: The federal government should be spending even more than it already is on roads and bridges and schools and parks and everything else we need. It should make up for cutbacks at the state level, and then some. This is the only way to put Americans back to work. We did it during the Depression. It was called the WPA.The Sandwichman sympathizes with Reich's sentiment. But why can't a university professor and ex-Secretary of Labor rise above cracker-barrel wisdom and deal with real facts on the ground. The fact is the unemployment rate among 16-24 year olds is already nearly 20 percent and the underemployment rate, including discouraged job-seekers and economic part-timers is over 30 percent. That's three-zero -- thirty percent.
Not all the unemployed are qualified construction workers.
In fact, it's likely a relatively small proportion are. Even if they were, it's not likely that building all the roads, bridges, schools and parks WE NEED would require enough labor to employ them all... unless you're going to opt for those eight-person crews with one shovel. And another catch is that those infrastructure projects will also require the services of people whose skills and credentials are already in short supply -- thus creating bottlenecks.
No, spending even more on all those public works projects is not such a brand-new, fabulous, fool-proof panacea. Ahem. Did you know the patron saint of fiscal stimulus, John Maynard Keynes, didn't exactly have the house of pancakes bottomless coffee pot of government spending in mind?
Don't take my word for it. Read Lord Robert Skidelsky's "Keynes: The Return of the Master." Everybody else is. Even at the OECD. But even Skidelsky is being a bit coy in the latest book. He says, "Over time... the high-investment policy should yield to the encouragement of consumption through redistributing income from the higher to the lower-saving section of the population. This should be coupled with a reduction in the hours of work." That's a lot vaguer than what Keynes actually wrote and also much vaguer than what Skidelsky wrote about Keynes a decade ago.
The bottom line is that Keynes's ultimate solution for unemployment now is WORKING LESS and not "spending more". Maybe Keynes was wrong, eh? But in that case the burden of proof is on the advocates of more stimulus to show why Keynes was wrong or at least to honestly acknowledge that what they propose is NOT what Keynes advocated.