Paul Krugman returns to his nostalgic yearning for the economic solutions of 75 years ago:
Seriously, what we’re looking at over the next few years, even with pretty good growth, are unemployment rates that not long ago would have been considered catastrophic — because they are. Behind those dry statistics lies a vast landscape of suffering and broken dreams. And the arithmetic says that the suffering will continue as far as the eye can see.
So what can be done to accelerate this all-too-slow process of healing? A rational political system would long since have created a 21st-century version of the Works Progress Administration — we’d be putting the unemployed to work doing what needs to be done, repairing and improving our fraying infrastructure. In the political system we have, however, Senator-elect Kelly Ayotte, delivering the Republican weekly address on New Year’s Day, declared that “Job one is to stop wasteful Washington spending.”
Okay, I’ll bite. What would a 21st-century version of the Works Progress Administration look like? One that would actually reduce unemployment, I mean. So few people are involved today in infrastructure building (unless he means something different by infrastructure than roads, bridges, dams, etc.) that while support for concrete and blacktop infrastructure might have secondary benefits, it will have very little direct impact on unemployment.
Over the last 40 years we have made a transition from direct production to indirect production in this country. Far, far fewer people working in manufacturing, fewer laborers, miners, farmers. Lots more people working in fast food, retail, business services. I think a re-balancing would be desireable and beneficial but it’s going to take decades.