Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Path: utzoo!linus!philabs!cmcl2!yale!decvax!cca!mirror!misc!inmet!nrh From: nrh@inmet.UUCP Newsgroups: talk.politics.misc Subject: Re: Unemployment shifting Message-ID: <117200087@inmet> Date: Fri, 19-Sep-86 18:47:00 EDT Article-I.D.: inmet.117200087 Posted: Fri Sep 19 18:47:00 1986 Date-Received: Sat, 11-Oct-86 07:20:34 EDT References: <15678@ucbvax.BERKELEY.EDU> Lines: 88 Nf-ID: #R:ucbvax.BERKELEY.EDU:-1567800:inmet:117200087:000:4307 Nf-From: inmet.UUCP!nrh Sep 19 18:47:00 1986 >/* Written 4:38 pm Sep 15, 1986 by lazarus@brahms.BERKELEY.EDU in inmet:talk.pol.misc */ >/* ---------- "Re: Unemployment shifting" ---------- */ >In article <1291@drutx.UUCP> dlo@drutx.UUCP (OlsonDL) writes: >>> = sevener >>>So when the United States suffered a 33% unemployment rate during the >>>Great Depression, you are going to tell me that the WPA projects, the >>>Civilian Conservation Corps, and other such projects *cost jobs*??? > >>Provided??? Are you saying that the Pres and Congress are the *source* >>of this wealth? Where did they get it? Did they generate it themselves? > >May be -- they used deficit spending! No -- if they could "generate" wealth, they wouldn't need to owe it (except short term). I suggest, in all good will and fellow-feeling, you talk with someone who knows a fair amount about economics before you talk more about this issue. >> >>Since government produces no wealth of its own, what wealth it has comes >>from the private sector via taxes. >This assumes what you wish to prove. >> >>Suppose it requires 1 unit of wealth to provide/maintain 1 job. So, for >What is the logic behind this model for jobs creation and >maintenance? (Other than the fact it 'proves' what you believe.) The logic is that a job consists of an agreement by an employer to pay an employee. The payment comes from somewhere: where? The employer. Why does he do it? Because the VALUE to him of having the work done exceeds its cost. But he can only agree to pay if he has the money to pay. Hiring someone is thus a form of "investment" (used in the non-technical sense); one invests in a job hoping for the performance of the job to generate the payoff. The money you invest is the measured in the "units of wealth to provide/maintain 1 job" mentioned above. >>10 jobs it would require 10 units -- not 9, not 9.826, but 10. >Unlikely even in your simplistic model. Have you heard about >economies of scale? (Or, conversely, the law of diminishing returns?) >This might explain why even inefficient govt. can generate more >jobs than it allegedly takes away. >[...] Err... It's quite true that 10 jobs might cost only 9 units. The problem is that you are looking at one level of organization (ultimate cost to employer) and he is looking at another (payment cost per employee). Stipulating that the two are not equal, it can go the other way too. Just for example, suppose that if you employ over a certain number of people, you start having to file certain reports to the government, so if you employ M employees at a cost of C each, the cost of adding one more worker can be (M+1)*C' where C' is the cost INCLUDING the new cost of paying for government form-filling. Since C' is typically greater than C 10 jobs might cost 11 units. If the government were uniformly more efficient at employing resources than private industry, you might have a case, but I think even most economically well-informed socialists will agree that it is not (their argument, as I understand it, is that the government is likely to be more humane). >>Unemployment was shifted from one person to another. >> >Somehow unemployment was reduced with public works, not only in the US >but Germany, Italy, etc. Did they do it with mirrors? Establish this proposition with controlled experiments, please. Hint: you can't. There's no question that SOME folks got hired -- but no way to measure how many therefore DIDN'T get hired (by the people taxed, or ripped off in other ways, so that their marginal benefit from hiring someone was now lower than the marginal benefit of keeping the dollars involved). Do public works projects really decrease unemployment? Certainly in one sense they do -- in the USSR it is illegal to have no job, and therefore there is *no* unemployment. Decreasing unemployment REGARDLESS OF COST by government use of resources means re-channelling money from the sources of wealth (people who were paid) to an agency which got the money only because it could forcibly take it from others. This last doesn't GUARANTEE the money will be used badly; but that governments resort to this tactic means they couldn't make the money in any easier way. I think it was Heinlein who said: "There are the Makers, the Takers, and the Fakers, no fourth catagory."