Economists Jared Bernstein and Dean Baker are out with a
new bookon how to get the economy back to full employment. Today, Bernstein, a former White House economic adviser, has a post up at the
New York Timesoutlining five policy ideas to do just that.
Here they are:
- Less austerity. Bernstein argues that the deficit reduction the United States has taken over the past few years has held back the economy and better fiscal policy would help the economy immensely. On monetary policy, he believes it is way too early for the Fed to taper, but notes that “the Fed has been the only game in town trying to bring down unemployment for a good while now.”
- Reduce the trade deficit. Bernstein and Baker argue that policymakers have been focused on reducing the wrong deficit. They should look to attack the trade deficit instead. In a recent piece, Bernstein and Baker suggested that Congress either pass legislation imposing tariffs on currency manipulators, tax foreign U.S. Treasury holdings or prohibit other countries from purchasing Treasuries unless we can purchase their bonds as well.
- The government should be an employer of last resort. In conjunction with less austerity, the federal government should hire workers for certain subsidized jobs programs. As Bernstein notes though, this hiring should not be for useless projects. They should be “big-bank-for-the-buck” ones.
- More work-sharing. Instead of firing 20% of their workforce when demand drops by 20%, employers should instead cut a days work from all workers, saving the same amount on costs, but spreading the pain amongst a greater number of workers. The U.S. already has such a program in place, but Bernstein wants to increase participation in it.
- Increase infrastructure investment. While interest rates are extraordinarily low, the government should hire workers to repair our crumbling roads and bridges. These repairs would do more than put workers back to work. They would ensure that the physical infrastructure that every business in America relies upon are ready for decades to come.
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