Did Dana Milbank's Mother Tell Him "There’s Not Much More That Government Can Do to Boost Jobs in the Short Term?"

June 21, 2011

That’s what Washington Post readers must have been thinking when they saw Milbank’s line:

“The truth is that there’s not much more that government can do to boost jobs in the short term.”

Since this is so obviously counter-factual and there is nothing in the article to support the statement, one must assume that this is the sort of truth that gets passed on in the family that is never supposed to be subjected to critical evaluation. Of course as a practical matter, there is an enormous amount that the government can do to create jobs.

The government can spend money. People work for money, meaning that government spending will create jobs. The government can also have more tax cuts or credits. If these tax breaks go to low and moderate income people, then they will spend money. This will create jobs. The Federal Reserve Board can deliberately raise the rate of inflation, thereby lowering real interest rates and reducing debt burdens. This will also lead to more spending and more jobs. The government could also push down the value of the dollar which will increase net exports. This will also create more jobs.

And, the government could provide incentives to employers to shorten workweeks as an alternative to layoffs. The German government has used this practice so successfully that its unemployment rate is lower today than it was at the start of the downturn, even though its growth has been slower than in the U.S. Furthermore, this path can actually be done at the state level by the governors who are the focus on this article.

So, there is a great deal that the government can do to boost jobs in the short-term, contrary to what Mr. Milbank’s parents apparently told him when he was growing up.

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