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July 10, 2003

Funding Jobs Creates Jobs, Doh!

It's so crazy, it just might work.

Stimulus Should Focus on Jobs says this column in the New York Times, rather than on stimulating consumer spending:

There are better alternatives. One is to concentrate government stimulus in areas that produce a high number of well-paying jobs. These include capital spending and many federal and state programs, from education and health care to transportation infrastructure.
By contrast, consumer spending in general is less likely to create as many good jobs. Thus, stimulating consumption through individual tax cuts is not the best tonic for these times.

And at least some economists have done calculations on which kinds of spending on which jobs yield the best results. From a study by Harvard's James Medoff:

Private investment in durable goods did especially well, Mr. Medoff found, creating a reasonable number of jobs on average but ones that pay especially well. Thus, more capital investment is an excellent way to create good jobs.

But the nation's spending on education programs did even better. It created many more jobs per dollar spent, and they paid fairly well, if not as well as jobs derived from capital spending. Government health care spending also produced many well-paying jobs. Other government spending programs conducive to good job growth were for highways, water and air facilities, and police and firefighters. Military spending also added good jobs, but not at an equivalent rate.

The weakest job-creating spending on average was consumption itself, which is exactly what is driving the economy today.

Oh yeah-- and can you blame Bush for the economic results we are suffering:

Mr. Medoff updated the study to find out what the quality of jobs has been in the current administration. He finds that the score, combining number of jobs with quality, has declined almost as rapidly in this administration as it did in the first Bush administration. On average, over the course of the Clinton administration, the score rose.

So forget the mindless rhetoric about "stimulus"-- let's see some more talk about jobs, jobs, jobs.

Posted by Nathan at July 10, 2003 09:40 AM