REAL Job Creation, REAL Prosperity

I listened yesterday to most of the debate between Sen. Richard Burr and his Democratic challenger Elaine Marshall. The two agreed on at least one thing: the need for more jobs.
But they differed, of course, on how that should be done. If I understand Burr and his Republican colleagues, government should reduce taxes and offer other incentives to business in order to encourage businesses to hire more workers. (Tell me if I am misconstruing their position.)
Unfortunately, this approach involves a vicious circle: Imagine that you are a business owner. You want to hire more people. But you can add employees only when your products are selling well, so well that your existing staff cannot keep up with the orders coming in. Then, when you foresee a continued high demand for your products, of course you will increase your payroll.
And why will your products sell better? They will sell better only because lots of unemployed people have gotten jobs and now have money to spend. In other words, people will buy your products only because you and thousands of other business owners have hired those people. People will buy things because they have jobs; they’ll have jobs only because people are buying things.
Are you, Mr. Small Business Owner, going to stick your neck out and hire, before demand for your products has increased? I think not. Will reduced taxes cause you to hire before demand increases? I think not.

Republicans oppose more government spending, thinking that more spending will mean more taxes, and taxes reduce the economic growth that will come if individuals and businesses keep more of their money. But if the scenario I’ve described above is correct -- and experience seems to confirm it -- then keeping tax rates low, if that also results in low economic growth, will mean reduced revenue for the government and increased deficits even as government expenditures are reduced. It’s a downward spiral.

To me, increased government spending -- if carefully planned and carefully monitored to minimize waste and fraud -- is the way to avoid both the vicious circle and the downward spiral. If the federal government (and state governments as well, for that matter) invests in public works -- primarily infrastructure improvement -- it can put hundreds of thousands, perhaps millions, of unemployed people to work. And unlike unemployment benefits, these projects would be producing things that would benefit the country for the next half-century or longer. Think “Hoover Dam.” Think “National Park System.” Think “Golden Gate Bridge.”
It’s a no-brainer:
1) We have millions of unemployed, ready and willing to start work.
2) Interest rates are at hitoric lows, so money borrowed for large projects would be cheaper than at any other time.
3) Our infrastructure needs are huge. Thousands of bridges need replacement or major repairs. Streets and highways are crumbling. Rail lines need to be improved or expanded. Our electric grid is a nineteenth-crntury patchwork. National parks are poorly maintained, in spite of -- and because of -- record crowds. Alternative energy -- solar generators and wind turbines -- needs a massive boost to start to free us from dependence on foreign oil. Work on any or all of these areas would provide benefits for the next fifty years.

And look at the cascade of benefits. Millions of formerly unemployed workers will be drawing paychecks. As they spend money -- first on debts and necessities and then on luxuries -- businesses can now afford to grow, putting even more people back to work. As more individuals and businesses pay more in taxes, federal (and state) revenues grow, and the federal deficit can be reduced and eventually eliminated.