Wednesday, 24 July 2013

“Make work” is not the solution for Detroit.

Stephanie Kelton (associate professor at the University of Missouri-Kansas City) claims make work schemes are a solution for bankrupt cities like Detroit.
I doubt it.
There is certainly a place for schemes like the WPA that operated in the US in the 1930s, or “make work” or “temporary subsidised employment” or "workfare" (take your pick of descriptions). However the idea that WPA type schemes are the best solution for Detroit is bizarre.
What Detroit needs primarily is more REGULAR JOBS. Indeed in the UK for most of the time since WWII, governments have tried to shift jobs from low unemployment areas to high unemployment areas with a variety of measures like incentives for firms setting up in high unemployment areas and restrictions on factory or office building in low unemployment areas. And the US has similar fiscal transfers between richer and poorer regions. That’s the best solution for Detroit.
Having done that, there is of course no harm in Detroit having its fair share of WPA type employment.
But I don’t mean to criticise Stephanie Kelton in person. Far from it. : she advocates Modern Monetary Theory (like I do). Plus I agree that WPA schemes in some shape or form are desirable. So basically I agree with much of her thinking.
I’m treating her “Detroit” article as an unusual slip up.

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