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To: CalculatedRisk who wrote (35711)	8/22/2005 6:21:42 PM
From: Tommaso	Read Replies (1) \| Respond to of 116555

Lots of goverment make-work projects in the 1930s had lasting good effects. The Civilian Conservation Core lodged young men in tents, fed them, and paid them a little, and built walking trails that are in use till today, among other things. The Federal Writers' Project produced wonderful guide books to individual states. Artists were hired to do murals in public buildings, maybe some statues. Things that are continuing commitments in other countries flourished in the depths of the Depression. Yes, the loss of human output and potential through 25% unemployment was a disaster and it really would have been better to have some people getting paid to do totally useless things. Right now a lot of money and food stamps just get handed out. >>>Comparing Keynes exaggeration of how to stimulate the economy to the "broken window" theory is lunacy. One is intended to spur fiscal stimulus (correctly), the other is bad economics.<<< Excellent point.

To: CalculatedRisk who wrote (35711)	8/22/2005 7:03:36 PM
From: Elroy Jetson	Respond to of 116555

I would explain the Keynes approach in a slightly different way. When unemployment is 35%, it is better to create employment through a non-market method and create some value, even if that value is less than the nominal value paid for the labor, than it is to lose those labor hours. Labor hours not utilized are lost permanently, just like an un-sold airline seat. I think Keynes would argue against hiring unemployed labor to produce something known to be of worthless value - say moving a pile of sand from here to there with tweezers and then back again. His arguments which seem to proceed along these line were essentially a plea to "prime the pump" by mailing everyone a check, made acceptable to the audience of his day. Personally, I think mailing everyone a check to "prime the pump" destroys more stimulus in the long run than it creates in the short run. .

To: CalculatedRisk who wrote (35711)	8/22/2005 7:45:26 PM
From: Elroy Jetson	Respond to of 116555

After think about Keynes for a bit, I think it would be better to speak for myself than for Keynes. Free market people would likely claim that when labor rates fall sufficiently, profitable use for the unemployed labor will be found. But the experience of the Great Depression seemed to contradict this. Additional jobs were not available at any price due in part to reduced demand, but mostly due to a loss of confidence in the future. In a situation where large amounts of labor are being lost due to a "1930s like" break-down of the market function -- I would say that creating a non-market employment scheme, to produce something of value to society, is both beneficial and certainly preferable to mailing everyone a check. I suspect in today's world Keynes would just mail everyone a check like Bush did. After that's spent, you're worse off than you were before. .