Paycheck Economics. But for one Google blog site, I could have coined a phrase. We have heard of lots of different kinds of economics: supply-side (aka “voodoo”), Keynesian, classical, macro or micro, Mercantilism, Marxist and Institutionalist among others.
I am proposing a new economics for our current world wide recession: Paycheck Economics. In short, it is time to do whatever is necessary to create more paychecks. For example: Bush and company gave out massive tax-cuts to the wealthiest Americans; we got huge job losses. That meant rising unemployment and fewer paychecks. That was a bad choice.
On the other hand, to help fight the recession, we did a stimulus. Tens of thousands of public servants, like teachers and firemen, kept their jobs. Good choice.
Without paychecks, people can’t buy goods and services. When people stop buying, businesses cut back. It is a downward spiral. When governments of all levels cut employees because their tax revenues fall, there are fewer paychecks, and the problem worsens.
FDR had this problem. They started make-work programs like the WPA to put the unemployed back to work. They wanted to “prime the pump”. A new federal subsidy program is supplying a major part of the salaries of new hires. (In some cases “rehires”.) Southern governors in particular are raving about this plan. A solar PV company just received a significant loan from the federal government to expand their production. Their product is much in demand and they expect to sell a lot of it and to double their work force.
Paycheck Economics does not require mystifying mathematical formulas; we only have to see if our actions produce more paychecks, or less. So when the stock market raves about productivity gains; take another look. This really means fewer people are needed to do the same work; again, fewer paychecks. This is a time to rethink the constant push for more efficiency. Giant combines can harvest millions of acres of monocrops, but smaller operations with more people will produce more paychecks, and also support farm communities and improve the ecology.
In these troubled times we need to rethink a lot of what we have been doing; Paycheck Economics might just help.