Saturday, January 12, 2013

Government Job Creations Works but is Difficult

The Evil Black Economist Team has long been in favor of government creating jobs for the unemployed. Job holders learn, skills, pay taxes, are happier, have better self esteem and use less government support. The government should be the "employer of last resort". In the US the federal government created jobs during the depression. All jobs have some make work component. Restocking a return, fixing an error and preventing a mistake. However, some jobs have a much larger make work component, Lots of municipal jobs can be classified as make work jobs. Jobs such as police, fire, security guard, homeland security, armed forces and litter collection add little to no true value to the economy. Other jobs like social worker have a medium sized make work component. A good test is when the job is complete at the end of the day: was anything created. Was anything lasting built. If the answer is nothing is built, nothing was created, no one was educated nor road constructed then it is a make work job. Our definition of a make work is a job with no tangible output. Or a job that prevents harm to people and property. Having said all that, we are in favor of make work jobs. Make work jobs are the most efficient use of resources by society while yielding the greatest overall happiness. Once society agrees to pay unemployment insurance to the unemployed and income support to least fortunate in society, one must ask what is the best way to spend the money. giving the money as a gift or letting people earn it. Clearly, helping people earn the money is a better choice. Developing such a program is incredibly difficult, complex and expensive. The benefits (higher taxes, skills, crime reduction) do not accrue to entity paying the bills. It also requires a level of long term thinking that many government entities cannot handle. It sustained political support. The Labour Party of the United Kingdom came to a similar conclusion when it created the future jobs fund October 2009. The fund, which subsidized jobs for young people was a response to a very high youth unemployment rate in Britain. The program was cancelled by the Conservative government recently because of austerity. Here is a recent report analyzing the cost-benefit of the program. Impacts, Costs and Benefits of the Future Jobs Fund. The Guardian has a story summarizing the report which says the fund generated a positive return of 7750 British Pounds per worker in the program.

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