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John Maynard Keynes on unemployment (the famous burying jars of money observation)

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Kurt_and_Hunter Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Dec-03-09 03:08 PM
Original message
John Maynard Keynes on unemployment (the famous burying jars of money observation)
Edited on Thu Dec-03-09 03:59 PM by Kurt_and_Hunter
If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.

http://cepa.newschool.edu/het/texts/keynes/chap10.htm

The point is that the government can always address unemployment. There are better and worse ways to do so, but when push comes to shove even the absurdist step of burying jars of money is better for the whole community, not just the specific unemployed, than doing nothing.

If we can unilaterally increase GDP through government borrowing (as was just demonstrated in Q3) then why is it so awful to unilaterally and directly decrease unemployment through government borrowing?

There are a zillion ways for a government to address unemployment, as long as one is not terrified of being called a socialist.

___________________

A Tangent: Paul Krugman noted on ABC's THIS WEEK that Germany had the same output crash we did but without nearly the unemployment problem because the German government pays troubled businesses to not fire people. That may be preferable to letting people get laid-off and then giving them unemployment checks, insofar as it keeps a whole business infrastructure up and running. (We essentially did that with GM, but with most businesses it seems we would prefer shuttered windows and people on a temporary dole to keeping an unprofitable business around for the diffuse good it does the whole community by being in existence. A coffee shop provides jobs and also provides coffee and a place to read the paper. And rent for the landlord. And money for sellers of paper cups. The counter-argument is that such an approach is unfair to better-run coffee shops, which it is. As always, it's a matter of priorities. I would not propose paying troubled businesses to keep people employed in good times, but in an employment crisis it's an interesting approach.)

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Kurt_and_Hunter Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Dec-03-09 03:11 PM
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1. The unrecc'ing crew is so awesome. Take that John Maynard Keynes, ya' douche-bag!
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eleny Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Dec-03-09 03:17 PM
Response to Reply #1
2. K&R
Maybe over time this thread will get out of a hole. Mine from last night about how Ray Taliafierro was disappointed with Obama's decision to escalate in Afghanistan was like a battle of the recs and unrecs. It managed to sustain 8 recs. Here's to hanging in there!
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Kurt_and_Hunter Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Dec-03-09 04:59 PM
Response to Reply #2
6. I have a secret admirer.. If I posted that Anne Frank deserved better than she got
it would have one unrec before anyone could have possibly read it.
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QC Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Dec-04-09 03:37 PM
Response to Reply #1
9. You should try to work something about pit bulls into this post.
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spiritual_gunfighter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Dec-04-09 08:02 PM
Response to Reply #1
12. Keynes hates Obama as much as we do didnt you know that! n/t
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phantom power Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Dec-03-09 03:22 PM
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3. Digby once wrote a really interesting post about "the value of ideas laying around"
The idea was that the GOP understood the benefit of keeping your ideas out there, so that when problems arose, your ideas were the ones "laying around" for people to pick up on.

We are in a classic scenario for Keynesian solutions to economic recovery, but nobody ever made sure those ideas were laying around. Clearly, our fearless leaders can't get their heads around it.
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Kurt_and_Hunter Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Dec-03-09 04:10 PM
Response to Reply #3
5. good observation
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Norrin Radd Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Dec-03-09 03:25 PM
Response to Original message
4. kr
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Kurt_and_Hunter Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Dec-03-09 09:02 PM
Response to Reply #4
7. ...
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Kurt_and_Hunter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Dec-04-09 03:27 PM
Response to Reply #7
8. ...
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treestar Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Dec-04-09 07:39 PM
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10. Somebody has to buy the coffee
It would take no fear of being called a socialist, because it would be socialism, to give the $$ to whoever would buy the coffee.

Paying GM to stay afloat and make cars doesn't make as much sense and giving people money to buy cars. The people may stay employed, but they are making cars and someone has to be able to buy them. Though that could be the people whose jobs were saved by bailing out other companies.

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Kurt_and_Hunter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Dec-04-09 07:50 PM
Response to Reply #10
11. Consider this...
I know what yo are saying and my first blush is, "Just give the workers the damn money and let them have a day off."

But... (this is a round number hypothetical sort of thing)

Imagine if unemployment benefits were exactly 1/2 of wages. A company pays ten people $20K/year. If the company vanishes the government pays the combined workers $100K/year. (ten times $10K) If the labor market is bad enough the government is on the hook for the whole amount because nobody will find a new job.

If the government gave the company $100K/year (during an employment crisis) to not go out of business then the workers get twice as much money ($20K) and a hole is not torn in the surrounding economy. And the community doesn't have a boarded up store-front.

As a use for the same $100K, keeping the unprofitable business going is compelling.


Some workers might prefer to not work at all and get $10K and I can understand that all day. But the effect on the overall community, and most workers, is much better in the second scenario.
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boppers Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Dec-04-09 08:16 PM
Response to Original message
13. So, where does the goverment get the money for the bottles, without causing inflation?
Maybe I'm missing the point, but this solution of "keeping people employed" didn't work too well in the USSR. Sure, everybody had "work", but as far as life priorities go, keeping jobs around (even bad jobs that accomplish very little), doesn't seem that great... it seems to me that there's a balance to be struck, between people having "work", and people having rewarding lives.
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Kurt_and_Hunter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Dec-04-09 08:29 PM
Response to Reply #13
14. Make work is not at all ideal.
But it is better than mass unemployment.

Ideally you want people in real, productive jobs.

But having too many people out of work drags down everything. (Including the wages of all employed people.)

As for inflation... it is one of many priority-variables to be balanced. Sometimes it's a problem. Other times we work to create it and fail (like right now)

We just printed 8-10 trillion new dollars over the last 12 months yet there is no Social Security COLA this year.

(I hope nothing in this reply seems flippant. I know some of the sentences seem like sound-bites. Someone better educated than I can probably offer a good explanation.)
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