With high unemployment, is it time to bring back the CCC, WPA, PWA, etc. ?

I would support this, but moreso than switching away from individual motorized transport is to completely renovate the American city. With high speed and light rail comes enormous costs, which can only be addressed through increasing population density. Any plans which will involve mass transit must recognize the US infrastructure and higher population density have mutually inclusive goals.

This would act to lower the cost of living to a certain extent, promote employment within the US, and generate a degree of social and economic stability.

I do totally agree that the employment acts of the New Deal are critical to the survival of the US and the Reagan administration ****ed up everything by promoting methods in which to generate short-term profits at the expense of the future. Not to mention the middle class. I don't know how many realize it, but the Great Depression actually was good for the US, as it promoted a system of economic stability which ensured the creation of the middle class. Before that, it was rich and working-class.

 

I agree with the goals, but how do you propose they are accomplished? The government rolls in, claims eminent domain, and starts building more high density housing? That seems unlikely.

Or, the government changes the incentives for urban/suburban sprawl- high carbon taxes (like Europe, and also political suicide), removing things like the tax deduction for mortgage payments (to help even the playing field between renting an apartment and buying a house in the 'burbs), and other stuff that I can't remember/don't know about? Zoning and property taxes could come into play (I don't really know how those affect how development goes), but those are local issues that the Federal Government could only help coordinate on, not take the lead on enforcing.

 

I agree, and I really wonder if the ****ing up that happened during the Reagan administration is irreversible. Nobody in Washington now seems to be willing to take any steps towards reversing the measures that were taken then, precisely because the measures were so popular due to the windfall they created for the upper class and for big business (who share ownership of our politicians). Nobody is willing to roll back the Reagan tax cuts, nobody is willing to start enforcing anti-trust laws again, nobody is willing to regulate the banks at pre-1980 levels, precisely because it would be political suicide. Just as no one is willing to create or encourage infrastructure that would be friendlier to mass transit or other forms of green energy, because it would be political suicide.

This statement is true of the health care debate as well, which is why the current bills passed by the House and the Senate are bandaids at best, they are certainly not reform: in order for real reform to happen in any area, someone, or several someones, have to be willing to commit political suicide. Given the fact that we continue to elect self-serving shills, often because we have no choice, I'm not optimistic.

 

No, they should implement regional land-use planning all across the US. It's currently only exercised in the Portland and Minneappolis regions. This would provide a means by which you can create positions of authority to take override any local planning that conflicts with the good of the region. It's what would reasonably allow for any large-scale projects to take off without fear of having one participating city to take advantage of the situation. If Chicago were to refuse to work with a high-speed rail project between New York and Minneappolis (For example) a regional council could step in and override their authority.

I've been told of projects done within individual states where huge projects were severely limited in practical use because one local community would use it to their advantage... at the expense of the region.

This isn't like generating a whole new method of land-use planning, but providing the power to override local planners if their decisions have a negative impact of the functionality of the region.

 

I'd be all for regionalism if it replaced some layers of existing government bureaucracy, not just added to it. Highly unlikely.

 

Everybody: The ****ing-up began long before the Reagan administration. The Reagan administration certainly had a lot of flaws, but the long-term decline of the U.S. cannot simply be placed on one administration. Things were heading in the wrong direction as far back as the late 60s at the very least. Keep in mind: Before the Reagan-era. . .

1. We let the Bretton Woods agreement fall apart incorrectly.

Our suspension and later removal of the dollar from gold in the early 70s can be considered a good thing, but the half-hazard method in which is was done created chaos on the foreign exchange markets and caused a tremendous, decade-long depreciation in the value of the dollar. The combination of easy monetary policy, a falling foreign exchange rate, the Vietnam War, and a global commodities shortage helped to accelerate and fuel nearly a fifteen year period of high inflation. The Reagan-era of dismantling unions and union rights was largely fueled by this period of high inflation. It is a well-known fact that unionization almost always makes inflation worse, so unions faced tremendous pressure as inflation soared into the double-digits.

2. We lost the steel industry to Germany and Japan.

The combination of mismanagement, the labor union strikes of the late 50s, and the shift of the canning industry--and others--towards the use of aluminum over tin-plated steel, and the ignorant belief that only the U.S. could make high quality steel opened the door for our foreign competitors to take away our market share. In brief, when the market froze-up because of mismanagement, strikes, a recession, and other factors, major industries quickly found alternatives to American-made steel--and they found them. The decline in the steel industry is one thee most often cited facts regarding the cause of the late 50s recession.

3. We lost the oil industry to OPEC.

U.S. oil production peaked in 1970. Dr. King Hubbert, a geophysicist, warned the industry leaders that the U.S. would soon experience a decline in oil production, and then become increasingly reliant on imports. He was laughed at. The ensuing period of rapid inflation during the 1970s can be partially attributed to OPEC's takeover of the oil market. Today we import some 70% of our oil from abroad.

4. We began to lose the auto industry to Japan.

General Motors was warned in the 60s by industry analyst that "the Japanese are coming," but they never listened. In addition, poor management practices and increasing union concessions during the 70s tied the hands of management at GM. Isn't there a saying of "If GM fails, the U.S. fails?" This process was well under way long before Reagan came in.

Now, all of that being said, Reagan made a lot of mistakes, economically speaking. His misunderstanding of the Laffer Curve is one of them. However, the problems that we are dealing with today have been in the making over the course of many Presidents, Federal Reserve Boards and Chairman, Congresses, and CEOs. I don't think it is accurate, nor fair, to suggest that it was Reagan who put us on the present course alone.

Jabbadabbado raises an excellent point about the need to modernize and create a newers transportation system. The Japanese and Chinese are so far ahead of us on this it is ridiculous. This is especially important in terms of the ability to transport cargo at high speeds, which they are already doing, and working making a hell of lot better. We're still essentially using a 19th century-era rail system.

 

There is definately something to this. Had these steps been taking maybe all those "shovel ready" projects could have actually been done instead of the funding going to other things.

 

Thank you!

I thought that now was the perfect time to discuss this again, with so many people demanding a Jobs Plan from President Obama that will directly hire the unemployed and put them to work improving our communities and infrastructure (the big/bold/visionary option). Maybe it will be in the President's speech to the Joint Session of Congress on Thursday, maybe it won't, but it's sure to be discussed or even demanded for some time to come.

Has anybody changed their opinions on this? I was surprised by how positively is was received when I first posted this back in 2009.

If you support it, what exactly would you like to see?

What are the pro's and con's of implementing this?

 

I still want to throw out my skepticism that infrastructure is the cure-all for our economic ills, just for the sake of discussion.

As I've pointed out before, it was an effective program in the 1930s and 40s because America lacked decent infrastructure at all, and there was plenty of room for growth. The America of the 2010s already has most of the infrastructure it needs, which is just in need of a facelift.

Is "upgrading" roads and bridges really going to create jobs to the extent that "creating" them would? For example, laying down a highway requires paying people to cut down trees, clear brush, lay prep-work, pave the road, mark it, etc - plus the actual design and engineering aspects. Upgrading the road requires much less work, much less time and probably fewer people - especially now with technology doing the jobs that people used to do. Same with upgrading a bridge. Its not the same as building a bridge from scratch. We have obviously seen that bridges in America are in need of repair, but the repairs are likely to require smaller, focus-driven groups of experts - its not something you're going to be able to hire tons of average Joes and Janes to do.

Furthermore, this is likely to only create rolling employment. In other words, once a project is complete, you will have people returning to unemployment (assuming this is done on a contract basis). Thus it may be hard to measure the effect it is having on the job market. Also, if these are part-time or contract jobs to work on repairs, then your workers wouldn't even count as "employed" according to BLS.

Alternatively, the government could hire people permanently, and have them move on to different projects once they have completed one. The thing is, again - upgrading a bridge and building a bridge is different. Maybe different parts of the bridge need repair, which require different skills from the workers. Is it really going to be possible to shepherd around people from one project to the next? What if the USA pulls a Japan and starts building infrastructure that isn't even necessary?

I will support this plan because its worth a shot, and something needs to be done for the long-term unemployed. But someone needs to address these issues, because they are serious and could dent the program's overall effectiveness.

On another note, I agree with Jabbadabbado that the USA's entire system of transportation is in dire need of change.

The problem is, there has been virtually no push for change and that will ultimately be necessary to force a paradigm shift away from cars and towards trains and ~socialist~ public transport. Obama couldn't have done it in 2009 even if he wanted to, because the necessary logistical, economic and political prep-work for that kind of change was nonexistent up to that point (not pointing any fingers here, just speaking truth). At best, he could start laying the groundwork for future presidents - but this kind of work is probably better carried out at the state and local level anyway.

Frankly, its going to take a massive, crippling energy crisis to create the kind of zeitgeist necessary to promote such ideas. And even then, our only examples of such systems (Amtrack, NJ Transit, etc.) are so poorly managed and operated that it undermines everything. We need systems that run as effectively as they do in Tokyo and Singapore - its amazing how well run Japan Rail is - with stations that don't become a wretched hive of scum and villainy. We're just too complacent right now, in far too many ways.

 

I mentioned this in another thread, but I was recently treated (heh heh, "treated," get it?) to a history of my town's sewer system. Our main sewer line is a surviving WPA infrastructure project. It still functions, more or less, but is in urgent need of upgrades. But like many other municipalities, we're under fiscal duress, and the chances of our being able to fund a major sewer upgrade are not good.

There are things we need big government for - particularly in times of fiscal crisis, and also at other times. The private sector isn't going to own and operate municipal sewer systems.

There's that new movie Soderbergh coming out this week - Contagion. A nice reminder that only the federal government can do what the CDC does. Defunding the CDC will likely prove a costly national mistake. Funding the suppression of dread diseases like tuberculosis, and sending out strike teams to Africa to help stamp out Ebola outbreaks - these kinds of public health activities protect our borders and would never be undertaken by the private sector.

 

I still want to throw out my skepticism that infrastructure is the cure-all for our economic ills, just for the sake of discussion.

It's a skepticism that isn't yours alone, GF...:

HERE

Obama plan may not be enough to fix jobs market. Short-term spending boost can't repair deeper damage, economists say

Even if President Barack Obama can win political support for a sweeping new government program to create jobs, he may have a tougher time providing more than a temporary, quick fix, say economists. The real problem, they say, is that households and governments are still recovering from the widespread damage done by a historic borrowing binge that will take years to repair.

You can't manufacture demand if you're going to look at demand from the same place as we always have gained demand, which is through the consumer sector," said Steven Blitz, senior economist at ITG Investment Research. That's because the consumer is tapped out. There is no mystery why Obama feels a need to act for both political and economic reasons. On Friday, the government reported a net gain of zero new jobs in August, leaving the national jobless rate stuck at 9.1 percent. Weak job growth in the private sector was entirely offset by government layoffs, mostly at the state and local levels. In the past three years, state and local governments have eliminated 671,000 jobs in an effort to balance their budgets.

Government job-creation programs have a poor track record. Many economists maintain, for example, that tax credits for new jobs often go to companies that would have hired without them. Infrastructure jobs are only temporary. And some business leaders argue that increased federal spending won't create long-term employment gains. The government, they argue, rarely invests as wisely as the private sector.

 

Not to mention that a big portion of the recovery from the Great Depression was the conversion of virtually every factory-type company into a defense contractor. We were pumping out GIANT quantities of war material from 1939 on; it wasn't just WPA/CCC/etc. That isn't feasible right now; the government doesn't have the money to spend on tens of thousands of planes and ships, nor to basically hire 8 million men and women to go join the armed forces. Additionally, the profit was spread around alot during WW2. There were lots of big contractors, (Lockheed, Boeing, Northrop amongst them, plus others that don't exist anymore) and a giant number of smaller contractors (as an example, alot of sewing-machine companies wound up making rifles and other small arms.) This no longer exists. There's still a wide variety of smaller contractors, but they basically exist to feed the giant industrial combines of Lockheed-Martin, Boeing, Northrop-Grumman, and British Aerospace Engineering, along with Colt Defense and Fabrique-Nationale.

 

Points taken, 44, but a few things:

It depends on how much you're willing to value a half of a percentage point drop in the unemployment rate. For example, if the economy is going to create jobs to the point where unemployment would stand at 8.4% by election day without further government stimulus, then the administration likely perceives that its worth it to throw a few billion into infrastructure so that the rate sits at 7.9% instead. Whether that is worth it will depend on who you ask. I remember Kimball once justified scorched earth opposition in early 2009 because it would prevent Republicans from sharing any of the blame if Obama's policies failed, help them take back power and stop Democrats from doing things he didn't support. By the same reasoning, I would rather see a second Obama term so that I can prevent Republicans from doing a myriad of things I will disagree with, so I'd support infrastructure spending even if it only meant unemployment would drop by 0.5%. I have no doubts that it'd create jobs, though I don't think the impact is going to be as large as some suggest.

Second, regarding the private sector investing better than the government. I hear this line a lot but its never backed up with specifics. How exactly does the private sector invest better? When? And how can we compare the two really? The private sector can do a miserable job, just look at how the Lehman shock erupted from investing in bogus housing assets.

 

You can't manufacture demand if you're going to look at demand from the same place as we always have gained demand, which is through the consumer sector," said Steven Blitz, senior economist at ITG Investment Research. That's because the consumer is tapped out.

This is a critical point, and absolutely true. I've argued this point elsewhere. The consumer is in the middle of a generational shift in spending habits and a multi-year deleveraging process.

It's axiomatic however that creating jobs creates consumers. When we talk about consumers being tapped out, we're not just talking about one thing. Part of it is revolving credit debt. Part of it is unaffordable underwater mortgages. And another part of it is unemployment and underemployment. The long term unemployed can't consume for the most obvious of reasons: they're unemployed.

And Roosevelt's New Deal programs were highly effective in dealing specifically with the problem of the long-term unemployed.

But I don't think a jobs program will work without a simultaneous program to deal effectively with the massive inventory of foreclosed and on-the-brink-of-being-foreclosed homes. The free market will take care of that problem on its own - but not quickly. I don't think we can afford to wait 5-10 years for the housing market to self-correct. Obama missed an opportunity to deal with the housing problem. His voluntary loan modification initiative was timid and half-assed, a near total bust. We needed something more aggressive and comprehensive. We still need it. We need to stamp out the robosigning catastrophe once and for all and put in place a comprehensive solution.

 

Second, regarding the private sector investing better than the government. I hear this line a lot but its never backed up with specifics. How exactly does the private sector invest better? When? And how can we compare the two really? The private sector can do a miserable job, just look at how the Lehman shock erupted from investing in bogus housing assets.

We've discussed some ideas here in the past. But one of the huge opportunities that was missed was to create long term growth in emerging technology fields. For example, back during one of the prior debates, I provided a link to a GOP Senator (although I forget his name at the momement, but it may have been Pat Toomey) who put forth the idea to give auto companies incentives to hire workers to design electric technology for hybrid cars. The focus of the incentives were supply focused, instead of consumer focused. So, instead of offering a $500 rebate to consumers who buy a hybrid, you give the money to the auto companies to increase production of hybrids themselves and make them competitive. Imagine if Ford Motor Company was given X amount of money to hire new designers to design the next generation hybrid car, or similar? Now, of course, this proposal has risks as well, such as what happens if no one buys the vehicles, and the artifical inventory grows? There's also the idea that the proposal is a bit like socialistic "planned ecomomies," which is a bit distasteful in the US. But it was an outside the box idea. It was a paradigm shift, no matter how small. of course, you'd also have to invest in other areas. Take the above, and also give money to the oil companies to switch over. You can't just make thousands of gas stations obsolete overnight, but you can switch them to becoming fast recharge electric way stations. Instead of filling up a tank of gas, you would plug in your car, and then go get your big gulp Dr Pepper. At the same time, incrementally increase gasoline taxes to wean people off of driving combustion engines.

What it was, wasn't more of the same "we'll put people to work by filling potholes..." Because while obviously, the GOP opposition party has political interests in tripping up the current administration, it's quite transparent to everyone that temporary, government driven programs such as fixing roads are just as politically driven. Which President wouldn't want to announce that tens of thousands of people will be working right up until the upcoming election, just in time to vote for him, even as everyone knows that once the popholes are filled, all those jobs will go away again because it doesn't address any long term issues

I also agree with Jabba's post here, in that solutions have to come from looking at a broad spectrum of areas, in the sense that they're all inter-related. Right now, the administration is only looking at snapshot issues in a non-unified manner, and the "shotgun" approach isn't working:

You can't manufacture demand if you're going to look at demand from the same place as we always have gained demand, which is through the consumer sector," said Steven Blitz, senior economist at ITG Investment Research. That's because the consumer is tapped out. This is a critical point, and absolutely true. I've argued this point elsewhere. The consumer is in the middle of a generational shift in spending habits and a multi-year deleveraging process. It's axiomatic however that creating jobs creates consumers. When we talk about consumers being tapped out, we're not just talking about one thing. Part of it is revolving credit debt. Part of it is unaffordable underwater mortgages. And another part of it is unemployment and underemployment. The long term unemployed can't consume for the most obvious of reasons: they're unemployed.

But I don't think a jobs program will work without a simultaneous program to deal effectively with the massive inventory of foreclosed and on-the-brink-of-being-foreclosed homes. The free market will take care of that problem on its own - but not quickly. I don't think we can afford to wait 5-10 years

 

Obama's proposal will include something for the housing market. The voluntary writedown program was a sham. Obama had a second slightly less golden opportunity to do something when the robosigning scandal first hit the national news.

But no one has ignored the housing crisis more studiously than Obama, up to now. The flip side of Republicans refusing to help average Americans if it also means helping Obama is that Obama also refused to help average Americans until the need to help Obama became critical.

 

I've agreed with you before Jabba about all this. However, I think Obama waited too long to do something as bold as a Newer New Deal.

Instead, he's going to throw 300-500 billion down a rat hole and say he's doing something about it. I almost think you need to go much bigger than that to be effective. Anything less is just a waste.

Where is the vision and boldness? I almost think you'd need to replace existing agencies with entirely new ones though to be effective.

 

I honestly don't think there will be much in it for housing tonight. But housing is one of those areas that I think government needs to get out of, unless it's finding a place for the homeless.