Posted by: Dirk | April 17, 2018

John Maynard Keynes: “I could create, I could afford” (Public Service Employment)

Here is a quote from John Maynard Keynes, writing in 1933:

If I had the power today I should surely set out to endow our capital cities with all the appurtenances of art and civilisation on the highest standards of which the citizens of each were individually capable, convinced that what I could create, I could afford – and believing that money thus spent would not only be better than any dole, but would make unnecessary any dole. For with what we have spent on the dole in England since the War we could have made our cities the greatest works of man in the world.

This insight – that the government, that we, can create and can afford is what should lead to better economic policy in the 21st century. My colleagues in the US at the Levy Institute have recently presented this:

Public Service Employment: A Path to Full Employment

Research Project Reports, April 2018 | April 2018 | L. Randall Wray, Flavia Dantas, Scott Fullwiler, Pavlina R. Tcherneva, Stephanie A. Kelton

Despite reports of a healthy US labor market, millions of Americans remain unemployed and underemployed, or have simply given up looking for work. It is a problem that plagues our economy in good times and in bad—there are never enough jobs available for all who want to work. L. Randall Wray, Flavia Dantas, Scott Fullwiler, Pavlina R. Tcherneva, and Stephanie A. Kelton examine the impact of a new “job guarantee” proposal that would seek to eliminate involuntary unemployment by directly creating jobs in the communities where they are needed.

The authors propose the creation of a Public Service Employment (PSE) program that would offer a job at a living wage to all who are ready and willing to work. Federally funded but with a decentralized administration, the PSE program would pay $15 per hour and offer a basic package of benefits. This report simulates the economic impact over a ten-year period of implementing the PSE program beginning in 2018Q1.

Unemployment, hidden and official, with all of its attendant social harms, is a policy choice. The results in this report lend more weight to the argument that it is a policy choice we need no longer tolerate. True full employment is both achievable and sustainable.

Given that the participation in the US economy is till below pre-crisis levels and we seem to be approaching the end of the boom, it might have to be recognized that private spending along is not enough to lift all boats, is not enough to give jobs to all those who want to work. It is a tremendous waste of human potential to let people be idle instead of making use of their imagination, their skills, their knowledge.
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