Sunday, October 25, 2009

What would happen if all stimulus money was spent directly on creating government jobs?

In real life, there's obviously be too much political/ideological backlash, but let's just play with this idea.

The different levels of government cooperate to create a whole bunch of jobs in the positions where they're most likely to have use for them for long term, and they hire as many unemployed people as funding will bear to fill these jobs. If they can't find candidates with suitable qualifications, they either train them or give them full ride scholarships to go back to school, with a guaranteed job at the end. The jobs are all full-time Good Jobs, not contract hell, with decent salary, benefits, pensions, unionized if that's the standard, etc. The arrangement is that they will do their very very best to keep all these people employed for their entire careers; if their current position becomes redundant, they'll find them another suitable position, and train them if necessary.

So how would this affect the economy? Primarily, the consumer confidence of the people who get these new jobs would skyrocket. They would buy a house if they're into it and can find a suitable one at a price that's commensurate with their salary. They would buy a car if they need one. They wouldn't put off going to the dentist since they now have coverage. They wouldn't scrimp on groceries or haircuts or internet service or any number of everyday expenditures. So this would in turn help the housing market and the car market, as well as businesses like optometrists and hairdressers and coffee shops. If you've got enough confident consumers patronizing these businesses, the business owners and employees will themselves become confident consumers.

The big questions which I don't know how to calculate: 1. How many jobs would be created? 2. How many confident consumers are needed to restore the economy?

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