I look up from the blank computer screen. There, on my deck railing sits Faye of the Forest, painting her toenails.
“These are tough times,” Faye volunteers. “I’ve cut back on all the luxuries since tourists stopped taking my Hoosier Nature Safaris. It’s been over a year now since I guided a group through the forest, pointing out the wildflowers and ferns, identifying bird calls and explaining the function of an urban forest.”
“I’m sorry to hear this,” I say. “What are you doing about it?”
“What am I doing?” Faye asks indignantly. “Aren’t you a member of the economics priesthood? Don’t you have a ritual, an incantation that will end these national economic woes?
“Economics is not a religion with an ordained clergy,” I say. “However, most of us do know what’s needed, even though we disagree on how to get what’s needed.”
“What’s needed?” Faye asks as she begins to prepare her fingernails for an application of polish.
“Spending,” I begin. “An increased flow of money through the economy that encourages more production and more employment.”
“That’s exactly what we’ve been doing,” Faye asserts.
“Yes and no,” I say.
“Now that’s the definitive ‘maybe’ we’ve learned to expect from you,” she says.
“It’s not enough,” I say, “to increase the revenue of a business, a family or a local government. That money needs to be spent. If we cut taxes for businesses, there’s nothing to say they will hire more workers. They may just stash the cash in the bank.
“Send checks to every household and they pay off their credit cards. Where does that money wind up? In the banks. And if the banks don’t lend because few people want to borrow and those who do want to borrow aren’t people the banks want to lend to … the money sits idly in government securities, pushing interest rates still lower.
“People have to be hired to do valuable things with the money the government pumps into the economy. That money can’t be given to people or to businesses with the hope that they will use it. It has to be spent on activities that increase employment.”
“That means we should buy products made in America,” Faye says, concentrating on an errant cuticle.
“Not necessarily,” I disagree. “There are domestic transportation and retail jobs directly involved with imports and many indirect jobs as well. But what we need as a nation is a realignment of expectations.”
“You mean accepting a lower standard of living,” Faye says, glaring at me.
“No,” I say again. “We have to recognize the value of many unvalued jobs. Responsible caregivers and good teachers are worth more funding. More and better teachers (not necessarily School of Education grads) are needed. Many of the unemployed are reasonably educated and could be employed in schools as tutors. Yes, it may be for just a year, but the good they can do in that year can last for a generation. As a nation, the tragedy of unemployment is the idleness of useful people.”
“So what’s this realignment you’re talking about?” Faye asks.
“Let’s start expecting that every employable person will work and that there is no shortage of useful jobs to be done. Although there will be exceptions, we can’t afford to waste human capabilities. In July, we had nearly 10 million unemployed who were at least high school graduates. The average unemployed American has been looking for work for more than eight months. This is waste of the worst sort.
“That makes the government the employer of last resort. Isn’t that just like socialism?” Faye says in a guarded voice.
After a moment I say, “There’s your next job, working for Fox News.”•
Marcus taught economics for more than 30 years at Indiana University and is the former director of IU’s Business Research Center. His column appears weekly. He can be reached at [email protected].