Famous economists agreeing with us — the first in an occasional series

Missed this when it came out, but Harvard economist Lawrence Katz published a jobs-proposal in the New York Times this past Tuesday that actually matches the scale of our jobs problem. Would I spend the money exactly the way he does to create jobs? Probably not. But, his proposed new jobs tax credit is much bigger than most others I’ve seen and calling for “at least several hundred billion dollars a year” in infrastructure spending for the next two years is, well, really serious. But, the plan is so naïve in the current political moment – he must not know anything about policymaking.

And, missed this too, but Paul Krugman makes the point that environmental regulations that incentivize businesses to undertake investments needed to meet their requirements can actually create jobs when the economy has lots of unemployed workers.

It’s a brilliant point, especially the ‘broken windows fallacy’ part. Of course I would think that – I made the same point (with the same ‘broken windows fallacy’ pooh-poohing) here. This paper found that the EPA’s “toxics rule” would create on the order of 100,000 jobs between now and 2015. Of course, the primary reason to enforce such regulations is not job-creation – that’s just a happy side-benefit during times of excess capacity – instead it’s the incredibly high benefit/cost ratio generally. But the jobs-terrain is where most opponents of regulations go, and, it’s wrong.

  • Repatriation for Jobs Creation. Why not use $$$ that already exists? Make it easier for corporations to bring that ~$1T home to USA. Tax free – as long as they INVEST it back into the business (hiring, building factories, etc) in the USA and within the next 2 years.
    After 2 years, a given (2011) profit dollar is taxed at 35/5=7% in 2013, then 35/5/7% in 2014, etc until 35% of the entire profit for the original year (eg 2011) has been paid. If the corp. invests it all in the meantime, the taxing stops. If they invest it all in the 1st 2 years it is tax FREE. WOW, talk about a stimulus!
    And this is not proposed as a special deal, it is a fundamental tenet of #RestoringTrueFreedom #RTF, a plan that balances the budget by 2017 and pays off our entire national debt by 2036 should we desire to do that. 
    Combined with the #RTF treatment of dividends (tax deductible ie tax free for the payer but taxed as regular income to the recipient), this could indeed enable corporations to run TAX FREE – as long as they either [a] invest their gross profit in the USA or [b] return it to the shareholders if they lack the vision to invest it.

    Let’s fund job creation this way, instead of raiding the payroll tax, which is an indirect attack on the Social Security and Medicare that belong to me.  
    What’s not to like? #RTF rocks!!!!!!

  • Trish

    Why is no one talking about the critical role that regulation plays in pricing on the supply side?  Regulations ensure that hidden costs are built into the cost structure of goods and services. Deregulation leads to improper pricing and misallocation of resources. We saw this in the financial industry when deregulation lead to the mis-pricing of credit risk. Poor regulation leads to shifting of costs to the future or unfairly to others who must seek compensation through costly legal means. Regulations play an essential and very pragmatic role in modern economies and we have been hoodwinked by those whose seek short term gain for long term pain. It is interesting that in systems theory, regulation in seen as an essential aspect of a sustainable system. Regulations do not destroy jobs, on the contrary they create economies that  are sustainable into the future.