Brad DeLong Says Fix the Jobs

This is part of the series highlighting supporters of pro-jobs policies. An updated list of supporters can be found here.

Brad DeLong has been strongly saying that America needs to fix the jobs. He warned in 2012 that the longer the unemployment crisis goes the harder it will be to fix. He used the example of the Great Depression stating:

“By that point (winter of 1933), a great deal of unemployment had become long-term unemployment, which had two consequences. First, the burden of economic dislocation was borne unequally. Because consumer prices fell faster than wages, the welfare of those who remained employed rose in the Great Depression. Overwhelmingly, those who became and remained unemployed suffered the most.

Second, reintegrating the unemployed even into a smoothly functioning market economy would prove to be very difficult. After all, how many employers would not prefer a fresh entrant into the labor force to someone who has been out of work for years? The simple fact that an economy had recently undergone a period of mass unemployment made it difficult to recover levels of growth and employment that are often attained as a matter of course.

Devalued exchange rates, moderate government budget deficits, and the passage of time all appeared to be equally ineffective remedies.”

He more recently worries that the slow recovery has hurt America and its productivity capabilities. He believes that the recovery is bad enough to say:

“So, unless something – and it will need to be something major – returns the US to its pre-2008 growth trajectory, future economic historians will not regard the Great Depression as the worst business-cycle disaster of the industrial age. It is we who are living in their worst case.”

In 2011, DeLong criticized America’s politicians because their “continued focus on the long-run funding dilemmas of social insurance is sucking all of the oxygen out of efforts to deal with America’s macroeconomic and unemployment crisis.” He goes on to say that there is an cheap solution to taking on the current economic crisis, because any debt incurred by the government today would incur a real annual interest rate of 1% and that any improvements and projects taken will generate enough increased economic activity to pay for the debt incurred. He states that:

“In other words, taxpayers win, because the benefits from the healthier economy would more than compensate for the costs of servicing the higher national debt, enabling the government to provide more services without raising tax rates. Households win, too, because they get to buy more and nicer things with their incomes. Companies win, because goods and workers get to use the improved infrastructure. The unemployed win, because some of them get jobs. And even bond investors win, because they get their money back, with the interest for which they contracted.”

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