Mark Goldes

Employment, Interest and Money: Considering Rowe and Fama on Stimulus

A Human Investment Tax Credit program was designed to generate 3 to 6 million new jobs and encourage between 1 to 4 million men and women to become self-employed.

Curing unemployment without creating inflationary pressures is clearly feasible if we view the economy from new perspectives and adopt appropriate tools and policies.

A few decades ago a program of employment tax credits was suggested in a pair of reports prepared for the Commerce Department. A new 2009 Report, that can be downloaded at aesopinstitute.org, without charge, enlarges on but in no way contradicts the earlier studies. It includes a new and different economic analysis.

Overfull rather than merely full employment may prove possible. Overfull employment, defined as 2% unemployment, was achieved during World War II.

The 1977 job tax credit program, which adopted a few of the recommended incentives, generated almost a million private-sector jobs; twenty percent of all new jobs created that year. It resulted in more jobs in less time than any prior legislation. Only a third of businesses were aware of the little-publicized tax credits. A mere third of those eligible utilized them. The White House opposed the job tax credits and they were not much publicized.

If promoted with all of the suggested incentives, the nation might have met the original goal of generating three to six million new jobs and encouraging one to four million people to become self-employed. The following year the program was gutted and became the much less effective targeted jobs-tax credit.

The tax incentives in the Human Investment Tax Credit program have been updated in the 2009 Report and can be voted into law. That should be a first order of business for the new Administration and Congress.