Wednesday, August 31, 2011

A Good Question

Russ Roberts asks a good question here.

Which is best for stimulating the economy?  1) If you have a bunch of unemployed carpenters, drop a bomb on a big city (evacuate the citizens first and put them up in rental homes), then employ the carpenters to rebuild that city.  2) Just give the unemployed carpenters the amount of money they would have earned working, but don't destroy the city.  3) Figure out why there are so many unemployed carpenters, then address that.

Many Keynesians argue that number 1 is the best idea.  Roberts, and I, disagree.



26 comments:

Bre Hart said...

I dont agree either. That sounds just plain dumb. You're purposely destroying a city just to have to pay to rebuild it. Some sort of project that needs carpenters should be developed and in the long run figure out what the problem is with carpenters and their unemployment. - Breanna Hart

Timothy Swonger said...

Bombing a city doesn't just magically make money appear, so I think that unemployed carpenters should earn unemployment compensation until they can find work. Or, better yet, the unemployed carpenters could research new products that are high in demand, use their skills to create those products, and sell them for a profit. The carpenters could also just look for a new profession altogether.

Danielle Verdin said...

Bombing the city isnt a magical fix. It just puts the unemployed back to work temporarily but then once the city is back to the way it was the unemployed and again unemployed but if we were to just give them the money that is another temporary thing what are they suppose to do in the long run when the money is gone.

Torie Fuller said...

I agree with you. Destroying the city will create work for the carpenters and equalize the rest of the work force by everyone having to rebuild with what little resources and money is left. The other option would be people leaving the city to an already established city which would hurt the destroyed cities economy. Giving the unemployed carpenters pay would be a short term solution but any pay without work done will not be good for the economy of the city. The best solution would be for the carpenters to find jobs that have similar skills as a carpenter as well as figuring out why carpenters are unemployed and how to fix this problem.

Lauri Hess said...

I disagree with Russ Roberts. The unemployed carpenters need to learn another trade or find some other type of work.

Michael Garrison said...

I think Roberts' argument was that there shouldn't be this many unemployed carpenters in the first place.

Andrew S. said...

Russ Roberts looks at both Keynes' and Hayek's ideas that the only ways out of depreresssion is either through over spending or by actual production. Yet i question weather the third option proposed here is more viable in our current economic dynamic. The First question posed was dropping a bomb on a city good for helping unemployed carpenters survive. Obviously the answer is no as the resulting turns in demand would cause more harm then good, even though with a chance to rebuild, most cities would be greatly improved. The second was to just give the carpenters the money. I also think the answer is no, most people enjoy the satisfaction of getting paid for a job well done and not to receive "charity from others." Economist generally believe in the principle of the invisible hand. So if so many carpenters are unemployeed there must be a reson for it.

Has the United States economy been so artificially inhanced by our tampering with the nature of the economy, that now, the only way for it to right its self is to have the invisible hand drop a metaphorical bomb on our economic city causing its ultimate destruction. Quite possible, even though that would be difficult, maybe, we could take ques from our current economy and realize some fatal flaws. Allowing us to, once again, prosper.

Nikki said...

So, as I read further down Robert's article, 'Kyle' had made the point I was thinking all along. Rather than create work in the exact fields where we are experiencing unemployment, why not offer ways for those people to change careers? Robert's discussed giving $100,000 as a charity to the carpenter, versus creating temporary work which has trickle effects on other things. The idea of providing resources for the unemployed to educate themselves in other lines of work, those in demand, would serve a better purpose, in my opinion. Carpentry will never be an extinct service sector, but you have to balance the supply with the demand. Naturally it will fluctuate as money begins to be spent, and when money gets hoarded again. Ultimately, the right approach certainly can't be to destroy something which functionally already exists, only to rebuild it as it was to stimulate cash flow. The need will diminish again, and you'll be left in the same predicament you're in today.
~Nichole Uselton~

Erick Holzhausen said...

There are numerous problems with the first idea of destroying the city to create jobs for the unemployed carpenter. In the article, he talks about how it would have no value because it is a "repair". I agree with his point because it would cost a ridiculous amount more to carry out plan 1. You would lose money on destroying the city in hopes of meeting the carpenter's salary needs. In point 2, I think it would be a waste because it completely goes against the theory of "supply and demand". Like Andy said, it is all about the "invisible hand" and how we should let it play out on its own. We the people, and government, can intervene at times to make positive changes in our economy but we can also make it worse by making changes. The economy is kind of like mother nature. It has been around for a really long time and has cycles on how it performs. If we were to go and mess with the temperatures around the world we could cause drastic changes in the reaction of the weather. There would be more natural disasters and things of that nature. I would support idea number 3. This sounds like the most effective approach to the problem. By identifying the problem you can then form a hypothesis and take the best approach in fixing the problem at hand.

Ahmed AL Hassan said...

Ahmed AL Hassan:

Well, I think if we destroy the whole city and rebuilt it gain, that would take so much effort and then so much time to develop the city. On the other hand, giving the unemployed carpenters amount of money every month without working is not fair for other people. So, I would think that figuring the reason for unemployed carpenters and help find a solution is the best way to think about this issue.

From my point of view, I would look at the first option which is destroying the city as the immediate solution that would take under consideration!!

Andrew Schadegg said...

I believe the first option is the best. If you look at it from a different standpoint other than dropping a bomb on a city and destroying. Natural disasters occur all the time where a city or town doesn't even have the choice. Their town is destroyed and everyone has to work to re-build it whether they were employeed or unemployeed. It also stirs up skilled workers from all other areas to come and have opportunity to work and practice their skill. I think that re-building a destroyed city doesn't only consist of unemployed carpenters but would really include thousands of professionals and planning that would be positive for any communities future.

Arianna Findlay said...

I think that purposely demolishing a city is a temporary fix to one problem, and a beginning to several other problems. I don't think just handing the carpenters money is anything more than a temporary fix either. Obviously a good way to solve a problem is to figure out why it is a problem to begin with. I think finding out why there are so many carpenters out of work is necessary. Also, I think carpenters could easily perform in other lines of work with the skills they possess from their experience as a carpenter. Maybe those less passionate about carpentry could try other jobs. This could decrease the amount of unemployed carpenters.

Faith Evans said...

I also disagree with option number (1). Think about all the funds it will take to destroy the city, pay for evacuated citizens housing, food, etc. What about the citizens who temporarily lose their jobs due to the bombing? I would argue option (3) as the best solution. If you are in a field where work is scarce maybe you then consider other skills that you have and how to use those skills for employment.

Amy said...

i think they should just figure out why so many carpenters are unemployed and address that before giving out charity checks or destroying the city.

KristinK said...

I can somewhat see both sides but I would have to agree with the second option more because if you destroy the city then yes, the unemployed carpernters will have jobs again but then everyone else who had a job in that city would become unemployed and that would be a bigger issue than the initial. Yet, if we gave them free money due to the circumstanes the next umemplyed group would want the same treatment, and it would just snowball from there I feel. I believe there has to be a happy-medium somewhere in all this to solve the situation.

Keith Kaczocha said...

I don't agree that destroying the city by dropping a bomb on it is going to solve any long term problems that exist. I think that option three is the real solution. Figure out why there are so many unemployed carpenters and deal with that situation. I think that these carpenters need to look into other forms of employment. There are alot of options out there like trade schools they could attend and take on another trade that would be more available in that city. If work just isn't available there are plenty of other cities in the United States to find work and make them a productive part of society. -Keith Kaczocha

Mary Beth Renz said...

I definitely do not think that dropping a bomb on a big city would be the best idea. It might be a decent idea for a temporary fix, but would not help in the long run because the problem of unemployed carpenters would surface again. In addition, just handing the unemployed carpenters money would not be a good idea either in that it would only help temporarily. The third option would be the most obvious and realistic it seems. Why are carpenters not moving on to another job if there is no demand for them? The carpenters could use their skill set to find other jobs or develop new set of skills. The unemployed carpenters are doing nothing to stimulate the economy. If they worked other jobs, and do something productive, then the economy would be better off and would be circulating money which is good for the economy.

Shirley Paris said...

I believe it is best to help the carpenters find jobs or train them to learn more skills. You should not destory a town to provide work that is just silly. Those who are affected by the destruction of there homes would be devestated.

Possibly the reason for so many unempolyeed carpenters could be that at one time building things was a huge profitable market. Im not saying it has gone away, just that technology and times have evolved to better more effecient ways of building. Some of the carpenters may not know how to use these new technologies and that could be a reason they are unemployeed. Maybe also, the demand for new homes and buildings are not as greatly needed as before. Once again that is why i think we should help train the unemployeed carpenters in other skills.

Zachary Hall said...

The production level of the "unemployed carpenter" would be much higher if the carpenter were to take his abilities to another field. The idea of destroying something in order to create production seems like a quick answer to a temporary problem. The bigger problem of having too many carpenters in an economy that doesn't have the demand for carpenters would still exist.

Eng Hong Sin said...

I think that number 1 is the best way. In our real life, some countries already proved the statement. One of the example is Japan. Japan was destroyed in World War II. However, the economy in Japan grow rapidly. It becomes the most developed nation in Asia. Number 2 is not a good way as giving the unemployed carpenters the amount of money is just like donating the fund to them. The carpenters will slowly forget their jobs and fully depend on the funds. Eventually, it will not stimulate the economy. For the last statement, we might not utilize the resources, which is the carpenters.

Chris Yang said...

First off, dropping a bomb on a city for no reason to make jobs is not economical correct. And I do not think that giving the carpenters unemployment would stimulate the economy at all, that will only encourage them to keep doing what they are doing and not find ways to contribute to the economy. I think the best way would be to figure out why so many are unemployed and to address it and discuss the problems and try to resolve them.

C'Anne Reichert said...

I agree that options #1 &#2 are not the correct solution. Option 1 is a temporary fix that forces us to spend our money on something we shouldn't have to spend our money on; forcing other industries to suffer because we are no longer able to spend our money there. Option #2 is a terrible option because it offers no incentives for the unemployed carpenters to want to get a job. Option #3 is the best option because in order to get the unemployed carpenters back to work, one would need to take a look at the current situation and realize that there isn't a demand for them. In this case they should find a job in a different field that has a higher demand. The logical carpenter would realize that there isn't a demand for his profession and that the industry is flooded with too many carpenters, and therefore his best option is to exit the industry and acquire a new skill and a new job.

C'Anne Reichert said...
This comment has been removed by the author.
Madeline Newton said...

I do not agree with #1 either, like Roberts said it does not address the actual issue of too many carpenters and not enough work. Destroying something intentionally or by natural disasters will only temporarily easy the problem still not even eliminating the real issue as stated TOO MANY CARPENTERS for the industry when the work is not in high enough demand.
Yea charity is a great idea, but so is world peace, and lets be honest IT WILL NEVER HAPPEN. We cant just give unemployed money over and over again hoping jobs will become available and free money will solve the issue, because this then creates an "offset" and i will go put my lazy ass in a job where i know unemployment is increasing and collect "charity" i.e. unemployment insurance.

Melinda Spitzmiller said...

I don't think destorying a city will fix the problem of unemployed carpenters. This would just be a temporary fix. What will they do once all the repairs have been made blow up the city again? It is better to find out the problem and find a perminant solution. What needs to be done is to find out if carpenters are in demand, if they aren't they need to think about relocating to where work is needed. Or they may want to think about changing careers. For those too old to change careers, they should receive some type of unemployment until business picks up again.

Vickie Snell said...

I feel that option 3 is the best solution for stimulatng the economy. If we can figure out why are there so many unemployed capenters, we can find solutions. All of the other options seems to be too costly.