Wednesday, October 7, 2009

Somewhat on the contrary

My interest in a jobs creation tax credit is also decidedly measured, largely in part of criticism like this ...

But critics of the idea argue that businesses hire based on actual demand for their products, and a minor subsidy for adding an employee will not make up for the collapse in demand across the broader economy.

“Why would a business hire a new worker?” Bill Rys, tax counsel to the National Federation of Independent Business, a small-business industry group, said. “They’re hiring because they need to do work. Unless you have work to do, it’s still an expense.”


This, as well, has long been a central component of my criticism of this really working as an effective jobs creation program. If there's no demand, there's no legitimate rationale to hire additional personnel to meet said demand.

However, if the administration was clever, they would consider combining the jobs creation tax credit with a a voucher program modeled after the successful one employed in Taiwan. Issuing a voucher in November - and requiring they had to be spent by, say, January 31 - would result in an assured increase in consumer spending, thus resulting in a bump in demand and a need to bring on additional workers.

Given that most economists concede the recession has bottomed out, a combination of policies like these can help offer a solid rebound that might occur much sooner than hoped.