What about big government? What about rewarding people for not working?

What about big government? What about rewarding people for not working?

Some people on Facebook were talking about productivity, inequality and rewarding people for not working. Worries about the growing size of government were also brought up.

As much as I’d love to tackle inequality, right now we have a de facto policy that people should feel bad about not being able to get a job, or get enough hours at their current job(s), or be scared of losing their current jobs so they don’t spend as much money as they could.

In terms of the size of government as a percentage of GDP, we spend about as much as most Anglophone countries. This with automatic stabilizers (social security, unemployment insurance, etc.) on full bore during a depression (the recession has been over for a while, capacity utilization is still much lower than it could be, immiserating millions through a lack of work). Unlike our European counterparts, the debts the government has are ones that are below the inflation rate. Investors around the world are willing to pay the US government to hold their money. We’re ok for the time being.

As for rewarding people for not working, we reformed welfare back in the 90s. It’s now a temporary program. We don’t have any welfare queens. On the other hand, increasing the earned income tax credit or creating a negative income tax, creating a WPA-style jobs project, or simply having the feds give out interest free loans to states to hire back laid off teachers, police and firefighters would put more people back to work.

If we really want to go nuts, we can look at the fact that investors want to *pay* the federal government to hold their money for the next five years and use it to put people to work on public works projects. Repairing roads. Building rail capacity. Building and deploying renewable energy sources. Stuff that will be useful for years to come.

A lack of people willing to do hard work isn’t the problem here. There is no moral deficit in our workforce. There is a technical problem with our economy. And it’s solution is technical, not moral. We cannot save our economy by having people not work and telling them it’s their fault for not being hard workers.

Austerity at this moment in time makes as much sense as bloodletting a sick patient. And as we, the patient, become sicker and sicker, the solution of more austerity remains the policy recommended by hard headed “reasonable” people that want there to be a clear moral solution to our problems.

Our economy is like a car that has a dead battery. The wheels may be old. The transmission may make a funny noise. But it’s not moving because instead of paying $100 to replace the battery we tell our family to learn to walk so that their character improves.

This is not the solution to our problems. Putting people back to work is.