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In the US, this debate over a new stimulus program points to a radical change in the economies of developed countries since the 1930’s.

In its last vote of 2009, the House narrowly passed the bill, 217-212, without a single Republican supporter.

Democrats tick off the job prospects from the House bill’s $75 billion in infrastructure and public sector spending: tens of thousands of new construction jobs, 5,500 more police officers, 25,000 additional AmeriCorps members, 250,000 summer jobs for disadvantaged youth, 14,000 part-time jobs for parks and forestry workers.

It may be, though, that the republicans’ doubts are realistic.

The job creation issue is complicated. Much of the money in the House bill goes to programs that may stimulate the economy but don’t appear to directly put people to work.

There’s $41 billion to extend unemployment benefits for six months and $12.3 billion to extend a health insurance subsidy for people who have lost their jobs. There’s extension of a child tax credit for poor families, $23.5 billion to help states cover Medicaid costs and $23 billion so states can support some 250,000 education jobs over the next two years. An additional $2.8 billion goes to clean water and environmental restoration projects.

Even the investment in “shovel-ready” highway and bridge projects may not immediately translate into a reduction in the nation’s 10 percent unemployment rate.

It looks to me that the recipients of this new stimulus are government supported projects that probably already have plenty of people available to provide some extra services without hiring new workers.

Dan DuBray, spokesman for the Interior Department’s Bureau of Reclamation, said “Projects in Reclamation are much akin to planes waiting on the taxiway waiting to take off.”

The difficulties point to one of two things, either Keynesian style stimulus programs are no longer viable for modern economies, or the US government is diverting funds towards programs that support the wealthy rather than those in need.

Conspicuously absent from the House plan were President Barack Obama’s proposals to attack unemployment through tax credits for small businesses that create jobs and for homeowners who make their dwellings more energy efficient.

A job-creating tax credit for small businesses has support among some Democrats in the Senate, even though critics fear it may be too complex to work.

It may be that Keynesian policy is no longer viable, but I am afraid also that I do not trust the motivation of the American lawmakers.

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6 Comments

  1. People were changed fromed old days.As we got so many new inventions around us,such as microwave,washing machine,PC etc., we tend to act lazier and lazier……moreover, heavy machinary also took some places of labor forces which means the stimulus package is getting harder and harder to motivate people to work than the old days.Somethin’ new is what nowadays workers pursuing.From my narrow point of view, Get some bonus on scientific or enginnering research might worth a bet.
    Futhermore, to inject those big money into job training program would also work as well,the biggest global educational orgnization — New Orient, is one of the most successful example for education industry,the business worth billions.

  2. ….from my point, first,i want to say that the FE(full empolyment)does not mean everyboby get the job, it means that the labour demand equel to the labour supply, when the salary is decreased, the labour supply is less than the labour demanded. also the increased welfare makes people less intentive to work. the goverment spending is only changable part of AD, however the lower consumption and lower investment provent the AD from shifting up.
    so, the highway and the bridge are the examples of the goverment spending. if they not focus on the consumption and the investment, AD would not shift up, the real GDP will not increase. if the AD shift up, the increasing GDP will lead a little bit inflation, the increasing inflation would lead more investment, also to create more jobs.

  3. Government intervenes into the labour market and creates more job positions to reduce the unemployment rate. Obviously, it is a kind of policy that Kesian economists support. I heard that such stimulus packages is more efficient during financial crisis and great depression. But,nowadays,who knows whether it is suitable or not? Maybe it is unnecessary for some firms to have extra labours.Besides, though higher unemployment benefit can make some poor citizens’ life better, it will cause frictional unemployment as well. Because unemployed workers might become less willing to work, thus shifting the AS of labour to the left.

  4. Government intervenes into the labour market and creates more job positions to reduce the unemployment rate. Obviously, it is a kind of policy that Kesian economists support. I heard that such stimulus packages are more efficient during financial crisis and great depression. But,nowadays,who knows whether it is suitable or not? Maybe it is unnecessary for some firms to have extra labours.Besides, though higher unemployment benefit can make some poor citizens’ life better, it will cause frictional unemployment as well. Because unemployed workers might become less willing to work, thus shifting the AS of labour to the left.

    • Sorry!! I made a mistake!I post my comment twice!!…

  5. using the keynisian stimulis to motivate the labour force,goverment are really intelligent.If you ask me whether the stimuli will be effective,I would have to say “a little but not completely”.


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