Creating Jobs — Spend More?

Abstract

The problem of unemployment is a two-sided one — it stems from problems on the demand side and on the supply side. Aggregate demand introduces short-term forces while the supply side is more likely to be to blame for medium- to long-term levels of unemployment. Therefore to try to tackle unemployment with a single policy would be like trying to repair a car with a single size of spanner. You would get some bits done, but fail miserably on others. Exactly the same will be true of unemployment, because it is not a single problem. There is long-term unemployment and short-term unemployment, there is regional unemployment, there is structural unemployment and so on. Each different form of unemployment requires a different solution. Some sort of unemployment strategy is required to encompass all the different approaches, and the strategy must cover demand- and supply-side policies.

If the Treasury were to fill old bottles with bank notes, bury them at suitable depths in disused coal-mines, which are then filled up to the surface with town rubbish, and leave it to private enterprise to dig the notes up again, there need be no more unemployment. (J.M.Keynes)