Tuesday, December 2, 2008

Random thought

Thinking about this and that a plan occurred to me. It's pretty simple, an obvious compromise, and I wonder if it hasn't been thought of before.

Has there ever been a plan during economic contraction wherein the government, rather than giving wages to people out of work (or in conjunction with), supplements the pay of those in work. This would allow employers to pay less than minimum wage without workers receiving less than minimum wage. It would free up employers to hire more people thus increasing productivity. Etc.

Seems like a good mix of not "rewarding" laziness, as the conservatives say and also not just letting the "free market" run it's magic which, well, anyone with a brain, knows isn't always the best way to keep the 12 year olds out of the coal mines.

I just came up with it this morning so I don't know for sure it's a good idea, but, any thoughts?


spencer said...

The problem is that simply hiring more workers won't necessarily increase productivity. If a business owner is already running his business at significantly less than capacity (if, for example, a high-end kitchen gadget maker could produce 15,000 units per month, but since Megan has cut back on her spending is only actually selling about 10,000 per month), where is the incentive to increase output? Investing in new workers or equipment would increase his capacity, sure - but it does not address the real problem, which is that nobody's buying shit. Demand would first have to rise to the point where the business would sell everything it could currently make before there would be any reason to expand the staff.

Sure, you *could* hire more people in anticipation of higher demand in the near future. But you'd probably need something a little more solid than "other businesses are going to make the same, mostly illogical decision to hire more people when they can't even move the product they already have on hand" to justify that decision.

Reducing expenses to business owners - whether that's in the form of a tax break or in the form of a more novel idea like this one - is not the solution for every economic downturn. It's a good idea in some situations, and utterly useless in others. I get the sense that we're currently looking at the latter rather than the former.

That's my off-the-cuff take on it, anyway. I hope it made more sense than Megan usually does.

NutellaonToast said...

Yea, I could see it going either way, though. If you did it for ALL businesses, and they ALL increased hiring and thus production, they would all then see an increase in demand as the workers they all hired sought to spend their new paychecks.

It seems to me like, during a recession, it all boils down to how we're going to give out all this government money. Conservatives say "give it to business to create jobs" and liberals say "Give it to the jobless so they spend, and create more jobs."

My position has always been that there's no real way of knowing which one would work, so I pick the latter seeing as how it's not, well, completely fucking heartless.

This alternate method just seems like a compromise in that it gives money to workers, but only if they're working. I have no reason to believe it'd be any more or less effective than anything else.

spencer said...

If you did it for ALL businesses, and they ALL increased hiring and thus production, they would all then see an increase in demand as the workers they all hired sought to spend their new paychecks.

Sure, but the problem is that any individual business owner would have no way of knowing if everyone else would actually hire anybody with that money, or just keep it for themselves. So what they would most likely do is sit on whatever money they got and wait to see what everyone else did. And the end result of that would be that nobody spends the money, and it's yet another gigantic Treasury giveaway that accomplishes fuck-all.

But like I said ... what makes for effective economic policy is highly dependent on the nature of the problem you're trying to solve. As far as Megan and her ilk is concerned, the situation is irrelevant. There is only one solution that is ever appropriate. Unfortunately for the rest of us, that solution almost never actually works, at least not for the people who need it.