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Notes to myself, possibly of interest to others.
-- Bill Northlich
Thursday, November 11, 2010
The Grantham version of the need for fiscal stimulus
It is intuitively obvious, at least to me, that if ﬁscal spending were directed only: a) to lower-skilled workers, b) when there is clearly an abnormal level of unemployment, or c) when you hire them only to do jobs with a high return to society, that we will all come out ahead and there is no ["crowing out via Ricardian] equivalence. Future debt commitments are paper; current useful jobs are real life. How can we possibly be better off when the unemployed who want to work are sitting idle and depressed, as their skills decay? Be serious! With a dreadfully deteriorated infrastructure and a desperate need for improvements in energy efﬁ ciency, there is certainly great potential supply of high societal returns waiting to be had on one hand, and an army of non-frictional unemployed ready to get to work on the other. [source]