We Must Put America Back to Work

by Allen W. Smith / January 22nd, 2010

is, today, in an economic crisis far worse than most of us realize.
People are anxiously waiting for hard times to end and prosperity to
return again, just as they wait for winter to end and spring to begin.
But it doesn’t work that way. The seasons of the year are a fairly
predictable natural phenomenon. The business cycle is not. The economy
is manmade, and the business cycle is highly dependent on the behavior
of individuals, business units, and government. At the beginning of
2010, the unemployment rate was 10.0 percent with 15.3 million American
workers officially classified as unemployed. Since the recession
started two years ago, more than 7 million workers have lost their
jobs, and most economists do not see a speedy recovery in the
foreseeable future. Instead, they see a lengthy period of high

The costs of prolonged high unemployment can be enormous, both in
terms of the personal suffering of unemployed individuals and their
families, and in terms of lost production for the nation. The human
suffering from long-term unemployment is just as real as the suffering
that results from a natural disaster such as Hurricane Katrina. But the
victims of high unemployment, spread all over the nation, are not
nearly as conspicuous as the victims of Katrina. There is no way for
the media to bring the plight of the unemployed into our living rooms
in the same way that they portrayed the suffering that resulted from
Katrina. But prolonged unemployment can contribute to homelessness,
hunger, mental depression and even an increased rate of suicides. In
economic terms, historians have estimated that the dollar cost of the
Great Depression of the 1930s was greater than the cost of World War
II. They estimate that the dollar value of the lost production during
the 1930s would have been a large enough sum to cover the cost of a new
house, and several new cars, for each and every American family during
the decade.

The Great Depression was essentially a series of recessions. Before
the economy fully recovered from each recession, it would plunge into a
new recession. This pattern continued for a full decade. Could we be in
for another decade of economic stagnation? We could, if we just sit
back and wait for the economy to heal itself. During the first two
years of the Great Depression, President Hoover vetoed every piece of
legislation enacted by the Congress to speed up economic recovery.
Hoover argued that if we would just leave the free market system alone,
it would restore balance and bring about economic recovery without any
meddling by government. But he was wrong.

Our economy has been severely damaged by the events of the past 18
months, and we must take strong actions to get the economy back on
track. Consumer demand, which has been the engine for most economic
recoveries in the past, is likely to remain weak indefinitely, and
business investment is usually derived from consumer demand. The weak
consumer and investment demand must be offset by increased government
demand, if the economy is to experience a speedy recovery. There is
nothing more wasteful than allowing able-bodied men and women, who want
to work, to remain unemployed through no fault of their own. There is
much work that needs to be done in America. Our aging infrastructure is
in urgent need of updating. How many more bridges will have to collapse
before we wake up to the near-crisis state of our roads and bridges?
Also, we need to be developing alternative transportation systems and
alternative energy sources. There is more than enough work, that
urgently needs to be done, to employ everyone who wants a job. I am not
talking about government jobs. I am talking about government investment
in the future of America that could result in millions of private
sector jobs. Bids would be taken from private contractors on the
various local projects, and the winning bidders would then hire local
workers to do the work.

To those who argue that we cannot afford a major jobs program at
this time because of the high budget deficits, my response is that we
cannot afford not to tackle the unemployment problem. There is no
possible way to make a very big dent in the deficit without a strong
economic recovery. As much as I deplore the huge budget deficits and
the skyrocketing growth in the national debt, I believe that, at this
point in time, we must place a higher priority on ending the recession
and restoring the economy to full employment than on deficit reduction.
However, the two goals are not mutually exclusive. The high
unemployment rate is a major factor in the high budget deficits that
the nation is now running. When unemployed workers return to work,
income tax revenue increases at the same time that government spending
for unemployment compensation goes down. Therefore, reducing
unemployment has the effect of also reducing the deficit.

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