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An Idea for the Economy that will Freak Out a lot of People

186 points by knowtheory 15y ago

deleted 15y ago
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nhangen 15y ago
I disagree that the Republicans and Tea Party can be tied together in the same / - but also that their sole method for fixing the economy is lowering taxes. Regardless, the answer isn't jobs, but transitioning people from being skilled in trades that no longer matter, and becoming skilled in modern trades, such as programming, design, etc.
groby_b 15y ago
Completely flawed. Objections in the first 2 minutes: 1) Companies don't really need cash, currently. 2) This is easily gamed. (Hire people for the minimum amount of time, fire again) 3) It excludes major sources of employment - the majority of gross job gains comes from companies with less than 50 employes. 4) Jobs worth creating require qualifications. People are not interchangeable cogs, you would need to create jobs that actually fit unemployed people.
bennesvig 15y ago
Why not just adopt something like the Fair Tax where business would pay significantly less taxes. Wouldn't that be just as good, if not better than doling out money to companies who "promise" to hire?
- jbri 15y ago
  Basically half the article is stating that generically cutting corporate taxes doesn't actually create jobs.
knowtheory 15y ago
Other nations have sovereign wealth funds which invest in companies and build up business and investing acumen. Instead, America is trying to destroy any expertise or knowledge that the government has, and keep anyone with experience out of government (look at the ridiculous confirmation battles over the past 5 years). The problem is that our current politics won't let the US government act on societal principles, or on business principles. The US Government is so hobbled that it can't act to succeed.
- Cushman 15y ago
  The problem is that our current politics won't let the US government act You could pretty much stop right there.
  - daniel_solano 15y ago
    Some people would argue that's a good thing: that a government that does nothing is less harmful than a government that does too much.
    - knowtheory 15y ago
      Oh yes, if your car is stalled on train tracks while a train is coming, it's much better to do nothing than something. [Edit: lest someone thinks i'm being needlessly flippant; The US has to do something about the federal debt. That is not in question. Democrats and Republicans all agree on this. There are external actors who will act and events that will take place if the US does not deal with it's debt (for instance, a downgrade by 2+ rating agencies). So there is no question about whether we must act or not. We must act. It is merely whether we will try to cut our way to prosperity (ha), or whether we will try to actually balance our books while trying to preserve as much of our society as possible.]
    - gyardley 15y ago
      Right, because we're lousy at deliberately creating solutions to complex problems - there's always unintended consequences, which often cause problems worse than the ones being solved. The real way to solve complex societal problems is through many small-scale experiments, not a single top-down proposal imposed by a central authority. Tim Hartford's TED talk on this is well worth watching: http://www.ted.com/talks/tim_harford.html http://www.ted.com/talks/tim_harford.html
      - knowtheory 15y ago
        I don't think i'm clear on what you mean. What sort of processes do produce good solutions to complex problems? And if you can outline such a process, what prevents a government, or a polity (i'm more than happy for citizens to do stuff rather than the government) from performing the processes that do produce good solutions?
doctoboggan 15y ago
I hate to be cynical but I give this a near zero chance of happening. I do think its a good idea though.
- knowtheory 15y ago
  When someone says "x could never happen", i always want to ask "what would have to change for x to happen". If congress has to act on this, yeah i think it's DoA, regardless of how good of an idea it is. But why couldn't the Federal Reserve do this? Why can't the Obama administration who's still sitting on a pile of stimulus money team up with the Fed to do this? Grants + loans? The Fed absorbed a huge amount of weird shit (assets like houses and such) in the aftermath of Lehman Brothers collapse. I would be interested in what they would have to change to set something like this up.
  - seats 15y ago
    Seems like a modern equivalent of the FDR work programs. What did it take for him to pull it off? EDIT: http://en.wikipedia.org/wiki/Works_Progress_Administration http://en.wikipedia.org/wiki/Works_Progress_Administration Looks like the executive branch should have enough power to do this on its own.
    - knowtheory 15y ago
      Well, i think a key difference is that the Works Progress Administration directly employed people (as far as my understanding goes). http://en.wikipedia.org/wiki/Works_Progress_Administration http://en.wikipedia.org/wiki/Works_Progress_Administration The difference in what Cuban is suggesting is that he's just asking why the government can't loan directly to businesses to hire.
      - seats 15y ago
        Right, but that's why I'd say it is a modern take on it. It actually makes the program more like an opportunistic specialized VC/investment bank combo.
donnaware 15y ago
Mark Cuban for president
chefsurfing 15y ago
Why not? If the Chilean government can do it, I imagine government(s) in the US can make it happen. Maybe it could start in smaller cities and towns. The missing part it the meme and forward thinking. http://www.startupchile.org/ http://www.startupchile.org/
- podman 15y ago
  Funds like this already exist. New York City has the NYC Entrepreneurial Fund: http://www.nycedc.com/FinancingIncentives/Financing/NYCEF http://www.nycedc.com/FinancingIncentives/Financing/NYCEF
smokeyj 15y ago
Cuban says big companies are not cash poor. I wonder how many of these have foreign funds that just won't import it because of the tax hit they'll take. If you want to create jobs, how about companies under 10 years pay zero taxes. Zero costs to incorporate, and all licenses are free. No costs to access secondary equity markets, and access to an entrepreneurship courses. I don't think they want that many jobs tho, might shake things up. Cuban is just trying his hand at central planning and it's not well engineered. Considered the market needs to flush itself of some of these mid to upper sized companies. Some just exist because their stock maintains, while costing society valuable talents and resources. Just something to consider.
- seats 15y ago
  >> If you want to create jobs, how about companies under 10 years pay zero taxes. Zero costs to incorporate, and all licenses are free. No costs to access secondary equity markets, and access to an entrepreneurship courses. I don't think they want that many jobs tho, might shake things up. Actually Mark Cuban suggested this as well - http://blogmaverick.com/2008/07/28/how-to-jumpstart-the-economy-tax-free-small-businesses/ http://blogmaverick.com/2008/07/28/how-to-jumpstart-the-econ...
- prostoalex 15y ago
  The overlap of cash-rich companies and companies older than 10 years old is pretty slim. For someone like Microsoft its cheaper to to issue debt in the United States (hey, AAA rating is hard to come by nowadays http://www.businessinsider.com/microsoft-low-bond-yields-thirty-years http://www.businessinsider.com/microsoft-low-bond-yields-thi... ) than transfer the cash from Ireland to the US.
- guelo 15y ago
  God it pisses me off how easily corporations can infect people with their propaganda. Some tax dodging assholes are lobbying corrupt politicians to let them slide on paying their taxes and now all of a sudden a bunch of people like you are talking about what a big problem it is that all these poor multinational conglomerates can't get a hold of their tax dodging money. It's sickening. Can I ask you where you were made aware of the money repatriation issue?
jswinghammer 15y ago
Jobs are a means not an end. I've never worked at a job to work at a job. I work at a job to provide for my family and for my other goals in life. This sort of top down thinking is just toxic. It seems so great and tidy until you actually try to implement it and then you realize that your level of ignorance was greater than you could have possibly imagined. You can't solve a debt problem with more debt and you can't solve a jobs problem by just creating meaningless jobs. The only jobs that are sustainable are the jobs that produce something that other people actually want. The whole idea of the price system is that we're given signals about the best ways to serve other people in society. The price system in financial and real estate markets is completely insane and basically non-functioning. We're all suffering with these zombie banks we've created for ourselves. The real question shouldn't be how to create jobs but rather how to create a society where needs can be met by entrepreneurs and businesses. We've all seen that when people are having their needs met then jobs end up being created by the businesses that form in the process of meeting those needs.
- knowtheory 15y ago
  As far as I understand it, Keynes's broad point was that even the straw man of creating jobs just to create jobs is better than the alternative of rampant unemployment (where people rely on charity and public works, and still don't contribute to GDP). That said Keynes's primary point was that governments should invest and spend money wisely to do stuff the private sector can't or won't do. ====================================== You and I can agree that we'd love to live in a world where people pursue employment due to interest and/or a drive to make the world/economy better. That's not the world we live in, and I don't know how we get there from here. Lastly, markets are manipulable and are manipulated, and governments aren't the only actors doing so.
  - cma 15y ago
    This assumes that the downsides of labor (monotony, debilitating or fatal injury (particularly in the case of much-touted "shovel-ready" projects)) don't count. If the end product of the artificial jobs minus those downsides provides less individual and social utility than simply paying the worker a stipend, we should go with the stipend and forget the work.
Xlythe 15y ago
This would put a large amount of money in the hands of a small group of people. Money that isn't theirs, yet they get to decide where it goes. If the payout justifies it, corporations will hire lobbyists or set up backroom deals. There will be a huge influx in demand for essentially free money, meaning the paperwork to go through will be enormous. Shell Corporations that meet the requirements will sign up in addition to their actual corporation. And by setting minimum requirements (Especially 10yrs, 100workers), you end up targeting corporations who already have money in the bank. It's the uprising corporations that spend their revenue on expansion, that take out loans to rent a bigger office.
justinsb 15y ago
This already happens: if you're a corporation promising to create jobs, you can negotiate with government for tax breaks. I believe Twitter negotiated with San Francisco city government to get their payroll tax breaks by threatening to leave the city. Datacenter construction tends to get property tax breaks from local government. If you're talking about locating a car factory in a country, much bigger incentives are to be had. Twitter: http://latimesblogs.latimes.com/technology/2011/04/twitter-gets-6-year-payroll-tax-break-from-san-francisco-board-of-supervisors.html http://latimesblogs.latimes.com/technology/2011/04/twitter-g... Datacenters: http://www.computerworld.com/s/article/9217259/Apple_Google_Facebook_turn_N.C._into_data_center_hub http://www.computerworld.com/s/article/9217259/Apple_Google_... Ford Tax Breaks: http://www.huffingtonpost.com/2010/05/24/fords-to-invest-135-milli_n_586941.html http://www.huffingtonpost.com/2010/05/24/fords-to-invest-135...
monochromatic 15y ago
I see a whole lot of conclusory statements in this article. Why should I take your word for a single one of them?
steins 15y ago
Facepalm. I normally love Mark Cubans blog, but this is a terrible idea. If a company cant afford to keep employees it shouldn't hire them. This would be almost as bad as the bailouts were. This would send inflation skyrocketing. What happens to all of those small companies that don't have the connections or legal know-how to get the government money? They go out of business because they would not be able to afford the new inflated cost of hiring. What happens to the people who can barely scrape a living out of their current wage when the inflation this would cause sends food prices sky rocketing?
- knowtheory 15y ago
  Would it send inflation skyrocketing the way that the stimulus sent inflation skyrocketing? :P Because if you look at the data, current inflation doesn't seem to be out of line with inflation prior to the 2009 economic collapse: http://www.fintrend.com/inflation/inflation_rate/CurrentInflation.asp http://www.fintrend.com/inflation/inflation_rate/CurrentInfl... More to the point, the whole point of borrowing to invest, is that if done successfully, your business grows in a sustainable manner, and you can continue to pay that person money for the business you have built. This is how business loans are supposed to work. You start with nothing, you get a pile of money, you build something that will earn that money back, and hopefully have built a stable company in the mean time that will continue generating wealth even after the terms of the loan come due. This shouldn't seem foreign on a startup and entrepreneurship site.
  - Anechoic 15y ago
    >Would it send inflation skyrocketing the way that the stimulus sent inflation skyrocketing? :P From what I've read, inflation isn't a problem in the current economic climate because even with the increased money supply, no one is actually spending any money (or more accurately, most consumers don't have the money to spend) so there is no reason for prices rise since demand is low. I have no idea how Cuban's idea would affect inflation. Of course this is HN, so for all the knowledgeable people out there, please correct me if I'm wrong.
    - 15y ago
Alex3917 15y ago
How about 10,000 X-Prizes, each with a 10M or so prize. That seems much more sensible. Everyone who wanted to compete for a given prize could register with a transparent prediction market, which would give investors an easy way to get to know the different people competing in each category.
- robryan 15y ago
  I like this idea, I think pushing the boundaries of tech can create more opportunities in the long run past just the prizes aspect. I think the key to the prizes is also that they should be in areas that could realistically be economically viable going forward.
- beambot 15y ago
  I really like this idea. It's sort of like a decentralized and transparent DARPA, only it can extend beyond defense. The contests could be a mix between incremental efficiency improvements as well as "pie in the sky" ideas. If coupled with a strong mentoring program per contestant, you could also target STEM education.
- nl 15y ago
  How does that fix employment? It might be a highly efficient way of developing new technology, but prizes don't immediately generate large amounts of new employment. Think about it: most X-Prize-type competitions rely on the intelligence of a few highly skilled people, and even then only a few of them will actually win. The other teams generally make a loss, and so have to rely on "investors" to pay the bills. To fix employment you need to employ 10,000 ex-auto workers, who at best have some machinist skills if you are lucky. Then you need to do it ten more times. Then ten more. Then you need to do the same for the construction industry, for hospitality and for agricultural workers[1][2]. What's more, you need to do this fast - in months, not years. I cannot imagine anyway to structure a X-Prize to do that. [1] See the unemployment rates by sector: http://www.bls.gov/news.release/empsit.t14.htm http://www.bls.gov/news.release/empsit.t14.htm [2] To be fair, the hospitality industry will probably pick itself up once employment improves in other sectors so you might only need to generate a few 100K jobs instead of a million.
rmason 15y ago
What he is proposing was already tried by the Michigan Economic Development Corporation. Politicians from both parties loved photo ops where some entrepreneur was creating jobs, especially in a distressed area in exchange for state money. Even if all the promised jobs never got created. Then it got to the point where a con man showed up who never intended to create any jobs. http://record-eagle.com/opinion/x908934006/Editorial-MEDC-outdoes-fiasco/print http://record-eagle.com/opinion/x908934006/Editorial-MEDC-ou...
chailatte 15y ago
Here's another wild thought. Do nothing. Let the bankers steal from the middle class. Let federal reserve steal more money from its citizen. Let the government accumulate more debt. Let the jobs go overseas. Let inflation run rampant. Let people go deeper and deeper into housing/student debt. Let small businesses die. In fact, encourage it. Why? because the current system/society, as it stand, is dying body that cannot be healed. It is too old. Too lazy. Too morally corrupt. Too broke. Because common citizens will wake up one morning. They will be out of a job. They will be losing their house. They will be in massive debt. And they will not be able to afford even the most basic food/gas. Then they will be truly angry. Not angry as in chatting about it online. Angry as in massive protests in the capitals. Angry as in shutting down major websites. Angry as in rioting. Angry as in burning down houses. Angry as in everywhere. Only then will there truly be changes.
- simonsarris 15y ago
  I think this is eerily synonymous to the good old "we should just throw out the codebase and rewrite from scratch" scenario. Just as tempting and probably just as reckless, I think.
- Anechoic 15y ago
  >Only then will there truly be changes. I suspect that the changes you would see under your scenario are closer to 1789 than 1787.
- jodrellblank 15y ago
  Why? because the current system/society, as it stand, is dying body that cannot be healed. It is too old. Too lazy. Too morally corrupt. Too broke. Who cares about 300 million citizens suffering through a total economic collapse, as long as The System improves? It should be encouraged, they should sacrifice themselves willingly to the idea of a better System.
- Jach 15y ago
  There would be changes, sure, but they'd be done through the "criminal outrage of the mob, led by leaders who [would be] either unscrupulous, deluded, or both." What changes are you hoping for? Are you hoping for a Star Trek-esque future of no money and people working, if they want, for the betterment of themselves and humanity? I don't think the technology is there, but I'm told we could feed and house the whole human population several times over if we made that a goal. What definitely is not there is the culture and society. I have no confidence that an outraged mob of US citizens would effect anything much better than the current system, but perhaps I'm just too pessimistic and haven't seen enough opposing evidence. Of course, I am very tempted to see 'what happens' if we just let everything continue on the path of destruction. Follow your suggestions, vote for a Trump/Palin/Bachmann trio of president/v.p./secretary of state (not necessarily respectively), etc.
owyn 15y ago
This idea will never work, but on top of that his "rules for entry" are totally silly. Just take a glancing look at this data and you can see that his criteria should be inverted http://www.census.gov/econ/smallbus.html http://www.census.gov/econ/smallbus.html There are ~6M firms in the USA but only ~90K with revenues of 100M+ so his pool is very small to start with. Firms with 100+ employees count for 1.8 percent of employment and capture 65% of total payroll and something like 2/3 of total revenues. I think ANY company that is pulling in 100M in revenue has probably got things figured out already. The vast majority of employers in this country are small firms so why not try to help small guys turn into bigger guys. So I think if anything, there should be more investment in firms with less than 100 employees, less than 100m in revenue and less than 10 years old.
- MatthewPhillips 15y ago
  The point of restricting the pool was partially as a filter for gaming/con. I agree though that this pool might not need it.
jerf 15y ago
I'm just completely at a loss as to what this says. Companies are flush with cash. The government can't figure out how to spend money productively. So, we're going to have the government borrow more money to give it to companies that don't need it, using its incredible inability to allocate capital to decide which of these companies to allocate capital to? If the government can't productively allocate capital and companies have enough, why, in the terms of this post, exactly is it such a bad idea to have the government stop borrowing all the available capital and let the companies start allocating it instead? (I italicize some words to emphasize that it is the internal issues with the logic of the post I am questioning. I may strongly disagree with it, but I am well aware of the liturgy for Keynesianism.)
- knowtheory 15y ago
  1) The government is literally awash in cheap credit. Good businesses, when credit is cheap, borrow and invest. If you think this is a bad idea, please explain if it is because you do not believe the government should act as a business does (and for what reasons), or because you think that you should not borrow when your interest rates are low. 2) If you dislike Cuban's target for investment (fixing unemployment, the purported goal of the Tea Party and GOP), then please, by all means, pick a different avenue by which the government could make a return on investment.
  - Anechoic 15y ago
    >pick a different avenue by which the government could make a return on investment. A WPA-type program to improve transportation, energy and communications infrastructure. Lot's of jobs across many sectors, from professional to artistic to skilled & unskilled labor, most of which can be in the private sector (contractors/contracting firms).
    - anamax 15y ago
      > A WPA-type program to improve transportation, energy and communications infrastructure. We tried that and can't do it today. Instead, we piss away large amounts of money and don't build infrastructure. Policy recommendations should account for reality, not "if we do this right".
shawndrost 15y ago
yeah we're already doing that
Lambent_Cactus 15y ago
"The Republican/ Tea-Party approach to job creation is to cut taxes. The theory being that more money in the pocket of individuals will cause people to spend more money in the economy thereby creating more jobs. Nope. Not happening. Why ? Because individuals have too much debt. Any money they get goes to pay credit cards, student loans and for the smart and fortunate into savings. Individuals now have debt = to about 119pct of income vs historical levels of .17pct in the 40s, 55pct in the 50s , 65pct in the 60s and a high of 133pct in 2007)." This is clearly wrong. Never mind cutting taxes, that's much too indirect. New plan - the government borrows as much as it can at negative real interest rates until it bids those rates back down to 0. Then it just mails checks to every American. Some will spend the money (probably with great efficiency! They know what they need!), but most will use it to pay down debts. This is a feature, not a bug. The debts that Americans owe have positive, and in some cases substantial, real interest rates. Bam! You have just accomplished to biggest interest rate arbitrage play in history.
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cyrus_ 15y ago
The conversation we really should be having involves answering these three questions: 1. What work could be done that would create a better world for us? 2. Why isn't this work being done? Is it regulatory paralysis? Insufficient coordination amongst stakeholders? Are the rewards difficult to capture by the people doing the work? Are there not enough people with the requisite skills? 3. Can we stimulate or coordinate the private sector to organize labor and capital to get this work done? If not, why not? If you've thought about these questions for a while, it is absolutely shocking to listen to the economic debate going on around us today. We have two camps who are both way off -- some people (e.g. the author of the blog post) assume that throwing money at anyone who asks for it will work, but it doesn't (they just waste it). Others think that letting people keep the money they have previously earned and staying outta the way will work, but it doesn't (they just hold on to it or waste it). I don't know what the solution is.
- acslater00 15y ago
  I'm 100% with you. I'd quibble with the phrasing of "create a better world for us", since I think that lends itself to very mushy, subjective notions of "good" rather than "economic good", but you're absolutely right. The problem is not, "how do we create more GDP" (forever and ever and ever) it's "is there demand which is not being met by supply." At the core, that's what a recession is. The answer is clearly yes in some industries (health care comes to mind) and is clearly no in other industries (real estate and retail comes to mind). You can't just will an economy of 300m people to a certain state. If people spent more time thinking about optimal long term outcomes and then spent their time removing impediments to those outcomes, instead of pretending like there's some magic incantation that is simply being _blocked_, we'd be having a much more productive national conversation right now.
guelo 15y ago
> The problem for the Democrats is that the government hasn’t shown that they can earn a positive or even a break even return on their spending. How do you calculate the return on health care for old people, or school lunches for kids, or clean water in your faucet, or adding a lane to a congested highway?
nhebb 15y ago
Charles Gasparino has a similar idea. US companies have about $1 trillion parked overseas that will be taxed at 35% if transferred back to their US operations. His idea is to let them transfer the money tax free, on the condition that they use 25% of the funds to hire workers. and grow US operations. that may sound like corporate welfare, but the truth is that those companies are not going to bring that money back anyway.
JeffffreyF 15y ago
Great idea. Liars and thieves would kill it. They kill all the ideas that can work, until liars and thieves are under control nothing will change.
gallerytungsten 15y ago
The process Mark Cuban describes already goes on all the time at the state level. States routinely give giant tax breaks and other financial goodies to companies that promise to build a plant, create jobs, or otherwise invest in the state economy. The problem right now is that this system is generally highly political, unfair, and non-transparent. Cuban implicitly identifies this problem with his idea that the decision-makers should have not made political contributions for five years. Additionally, states routinely fail to put an enforcement mechanism in place, and they're shocked, just shocked, when they discover they've been fleeced.
acslater00 15y ago
This is a good idea from a "look, i'm being counter-intuitive" sense. But it will not work. There's a reason the federal government can borrow at 0% short term and my hypothetical auto parts manufacturing company can't. I am a default risk; the federal government is not. IRL, banks essentially borrow at 0% from the federal reserve. They do exactly what Cuban is suggesting the federal government do. They have lots of money. Their mission is to lend that money to businesses who will "create jobs" with it. They price those loans at an interest rate which The problem right now is that not enough businesses see good investment opportunities that justify taking out a loan at rate X, and not enough banks see businesses who are not so risky that they can justify making the loan at a price they would pay. We're in equilibrium, but it's a lowish one. At the margin, we can increase some of that activity by either (a) making the loan cheaper for business or (b) making the risk lower for the bank of (c) both. In this case, the federal government acts as a guaranteeing middleman between a bondholder (the "bank") and a business. Because the bondholder doesn't have to worry about a business default, the lending takes place at essentially 0%. So this plan boils down to having the federal government guarantee loans to businesses, only instead of saying, "I'm guaranteeing a private loan to a business," they're going through the process of actually initiating the loan themselves (with a website?? please.) The idea of federally guaranteed loans is not new. Organizations like Fannie Mae and Freddy Mac literally do exactly that; subsidize loans to achieve some kind of social good (in that case, home ownership). The problem is that -- unsurprisingly -- people default, and the programs end up going hundreds of billions of dollars in the hole. And then the taxpayer is on the hook. And that's, kind of what we want to avoid here. More oddly, Cuban is making the assumption that not only should the federal government subsidize the loan, they should originate and (probably) administer it, which only makes sense if you believe the federal government has a better eye for businesses that will actually succeed and "create jobs" (I suppose) than the many thousands of banks that do this professionally. Color me skeptical. Yes, money is cheap. But disintermediating the entire corporate paper industry is not a solution here.
- knowtheory 15y ago
  This is by far the clearest response to the core of what Cuban is aiming at, and thanks for that. I am interested in drilling down deeper on your comment about Fannie & Freddy. I don't view their failure as a criticism of the idea of loaning for the public good. I definitely view their failure as a lack of oversight combined with perverse incentive structures and a truly mind-boggling denial on the risk of loans. But what befell Fannie and Freddy also blew up Wall Street. So the deeper underlying question is if there are people out there who are better at assessing loans who the government could use as intermediaries for taking advantage of the low credit available to the gov? (yes that's predicated on this being feasible at all in the first place, which i don't take for granted)
itissid 15y ago
I dont mean to hijack this post but I think granting citizenship to non citizens living here for sometime, provided they buy a house, would be a great way to raise real cash instead of printing and borrowing and cash for clunkers. There would be a lot of people willing to spend some serious money to get a citizenship in the US. And giving it to only a certain category of people who have stable jobs for a certain period of time here can address the immigration and job killing issue.
tomjen3 15y ago
Great he wants to make it even more difficult for small businesses to compete. Anyway the reason to cut taxes isn't to create jobs, but because taxing anymore than what is required to fund basic government services is immoral.
- icebraining 15y ago
  Why isn't taxing enough to fund basic government services immoral too? EDIT: And how do you define 'basic'?
jpr 15y ago
Yeah, stupid, ignorant and dangerous ideas tend to freak people out...
gosub 15y ago
I'd like to see a serious discussion about the possibility that western economies reached their maximum capacity for employment. Probably the level of production for goods and services will hit a plateau (even if we increase the number of products to infinity, we don't have the time to consume all of them, so the market will reject them), while the productivity (production per unit of workforce) naturally tends to increase. I think there are serious sociological implications.
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NHQ 15y ago
How is idea different from taking "short term debt for long term project", which he assails up front? The money is short term debt; the job, we hope, is long term--presuming best case scenario where the program operates as planned, and creates jobs that don't evaporate. I don't know logics, but that doesn't seem like a natural good conclusion, when the positive negates the whole.
jaekwon 15y ago
Face palm. Yes, let's have the business of government be exactly that of venture capital / angel investment. The government is bankrupt because special interests and incompetence makes it an unprofitable business. I'm actually glad that the federal reserve is relatively immune and separate from the government. That way maybe we won't have a catastrophic failure when the government finally becomes illiquid.
retube 15y ago
> if you can borrow money at a negative rate you should borrow as much as you can True, but the treasury can't borrow at a negative rate. Actual yields are positive [1]. So called "real" yield is the actual yield minus a forward inflation component as implied by the TIPS (Treasury Inflation Protected Securities) curve. All this means is that the return you earn on owning the bond is _likely_ to be less than what inflation is projected to be. And from the Govt perspective, they will still be paying back more than they borrowed (yields are positive) but that the payback is likely to be devalued to a "real" value less than today's value. http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield http://www.treasury.gov/resource-center/data-chart-center/in...
jseliger 15y ago
The problem with a lot of armchair economists is that they get stuff wrong. I left this comment on Cuban's site: "Plus our federal government loves to hire people." This isn't true. As <a href="http://www.data360.org/dsg.aspx?Data_Set_Group_Id=228>this http://www.data360.org/dsg.aspx?Data_Set_Group_Id=228>th... data set shows</a> (and it's similar to data I've seen in civics textbook, the number of non-Census federal employees has stayed more or less constant for decades. If you want to know the biggest portion of future federal debt, look for Medicare entitlement spending. Back to HN: the other problem is that merely "hiring employees" isn't the same as productively using employees. He's deploying a variation on the broken windows fallacy.
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reubenyeah 15y ago
Something similar to this was actually attempted in the UK as a programme called the future jobs fund. It didn't really work and the jobs that were created disappeared when they stopped receiving the money and all the jobs were fairly menial.
ojosilva 15y ago
Here in Spain, and in other countries I've lived in (Europe and South America), there's something called a Savings Bank (http://en.wikipedia.org/wiki/Savings_bank http://en.wikipedia.org/wiki/Savings_bank): a non-profit, regional/local state controlled bank. Good folks put their money in them and the savings bank invests it back into the economy for public good, social and cultural projects, and job creation - doing precisely what the OP suggests. But savings bank are being dismantled in Spain now, and in many places like Brazil 10+ years ago. Why? Because politicians need money for their campaigns. Politicians control these savings bank. Eventually the savings bank money makes into the ruling parties friends pockets and financial supporters. Or into senseless investments, investments a private bank has a much lower probability of making since private banks have shareholders and higher stakes that make them much more accountable for their actions. Government should not lend money directly. That's what banks are for. Government should not replace the private sector. Ever. Government already has enough resources to incentive the job market: tax cuts for companies that hire new people. Deregulation of the market. Interest rates. Money printing. Hiring public workers. Starting public projects. Declaring wars in foreign countries. Creating jobs with loans is currently available anyway: companies can show a plan to banks and investors, so they can decide to grant the loan or not based on things like risk and profitability for both parties. Risk aversion and accountability is something that Government overlooks considerably. Private loaning and investing is a very flexible system: the company may then chose to use the money to cut down on its work force, replacing people with robots. That's great, because it makes companies more competitive. That's more important down the road. Lending money, as the OP suggests, to companies so that they can just go out and hire is reinforcing a negative behavior: become less productive first, then see if you can catch up. That's just creating a country of sweat shops. Recessions can actually be a positive thing for the economy when good, functioning companies (who have cash flowing) have better choice to hire great people (who became suddenly jobless). So don't inflate the job market artificially and mess it up for the well-managed companies and deserving people out there.
gavanwoolery 15y ago
Creating jobs is good, but why put this in the hands of the government? You (Cuban) have already argued they are too bureaucratic and wasteful in organizing any of their sectors. Cut taxes. Tax cuts give VCs, banks, and other lenders/investors more money to invest. Tax cuts also make employment cheaper for everyone (since they get taxed less, you can pay less and they will still get as much money). And they will invest in the things they think are going to be most successful, which I would argue the government would not be good at doing. Stop giving the government money. They have already proven they do not spend it well, and they create more debt than value that they add.
csomar 15y ago
You don't need money to create jobs. I'll give you a scenario: Imagine Mark and Adison, two neighbors. Both are living happily and have 10 hours a day of free time. Mark can plant trees, while Adison can do house decoration. Both of them are idle. Both of them are jobless. Why? Because Mark can't plant trees, he doesn't have a land. Adison had already done decoration for his home. One day Adison comes to Mark and suggests that he does home decoration for him. In return, Mark will plant some trees for Adison. Trees are like a long term investment for Adison and house decoration is an improvement in the living standard of Mark. Now both of them are working full time. No money is required. For the economy, the living standard of the population had increased. Did we require money? No! So what's wrong? It's not about the money. We need to enthusiast people with a fair, free and open system and they'll start working.
- dhume 15y ago
  So Mark's gone from having an uninspired house interior and no way to pay the bills to having a nicely-decorated house and no way to pay the bills. Directly trading one luxury for another doesn't help when what you need is a way to feed yourself, pay the rent, heat the house, etc.
  - csomar 15y ago
    What I said is >> Both are living happily and have 10 hours a day of free time. Forget about the bill and currencies. These are abstraction layers we made to make small exchanges possible and fast.
tybris 15y ago
Dig a hole and fill it up. Our economy is saved! What the government needs to get better at is extract money from the economy in a way that creates, rather than destroys economic value. This is what almost every business does, why can't the government?
jules 15y ago
Imagine this scenario: Once upon a time the total money in a country was $1. Then the guy with the $1 put it in the bank. The bank lent the money to another guy, and that guy then owed $1.10 to the bank after interest. That guy happened to be a car dealer, and the bank owner bought a $0.10 car from him for the interest he earned. Everyone is happy. Now imagine this scenario: Once upon a time the total money in a country was $1. Then the guy with the $1 put it in the bank. The bank lent the money to another guy, and that guy then owed $1.10 to the bank after interest. That guy happened to be a car dealer, and some other guy bought a car from him for $0.10. That guy got the money by lending it from the bank. After a couple of years of this stuff, through interest, the total money owed to the bank was $2. So the interest these people have to pay in total is $0.20 that year. There is no way that all money can ever be paid back to the bank, unless the bank owner spends a lot of money. If the bank owner spends say $0.10/year, the total money owed to the bank is bound to increase. Everyone is now a debt slave to the bank. People are going to have to default on their debts, there is no other possibility, because there simply isn't enough money in the world to pay back the bank. Is it possible that we are in scenario #2?
hootmon 15y ago
Its a shame the tools in charge of this mess have adopted the tea party mindset no doubt acquired through addiction to Faux News and the Faux News echo chamber. Take note, Hacker News seems to be turning into teaparty News, and all it takes is for a few more teaparty articles to show up in the first page, and i am out of here. Odious debt, morons, look it up.
iwwr 15y ago
Any money they get goes to pay credit cards, student loans and for the smart and fortunate into savings. What's wrong with THAT?
f1gm3nt 15y ago
This is a good idea, but will never work. First of all the requirements wouldn't work. You would be investing in companies that would hire a ton of people only to lay them off after a project. You would have better success by finding businesses that would hire and retain people. These won't be a company that has been around 10+ years. Those companies would put this money to better use. Also it would be a crazy bet to give money to any business that has only been in business for a short time. If you're really looking to freak people out, put your presidential candidates on American Idol and see who gets the votes. Why not just make a push for a resource based economy? Not THAT would really freak out a lot of people. Good article :)
Symmetry 15y ago
We could just borrow money to buy foreign debt, lowering the value of our currency to help our export center. Basically doing the same thing we always complain about China doing to us. We could probably earn a profit even if some of the countries we end up investing in default.
mdonahoe 15y ago
We need a better vision than "everyone must be employed." Something more specific than "Win the future", and ideally something most people can believe in. It seems like an implicit goal is world peace. The US spends a ton of money on defense, but the problem is our current methods involve lots of killing. It's hard to feel good about mass murder. I think we should still spend tons of money on defense, but just explicitly give more money to non-lethal technology. We should be very clear that our goal is world peace and come up with very specific subgoals we want to see.
DanielBMarkham 15y ago
I like the creativity here, but the naivete is a bit much. Very strange that I should make that observation about Cuban, but there it is. We already have this incredible sophisticated and involved system for creating jobs -- its called the startup market. Each year, tens of thousands of folks come up with ideas to do things people want, and that always means creating a job, if only for the founders. Each year folks invest, or not, and those folks get a shot at succeeding. So we have tens of thousands of highly-motivated folks putting their own lives and money on the line to make jobs. How could this possibly stack up against BigCorp getting subsidies to create busywork? The Tea Party used to be non-partisan, at least in theory. Probably never really were, though. But there's a critical non-partisan meta point that you have to acknowledge before you spin off with a bunch of creative top-down ideas: we've been here before. Every time there's an economic problem people come out of the woodwork with all sorts of totally awesome ideas. Some of these work, some don't. The only difference between these implemented ideas and the startups I mentioned is that these ideas are huge things and we can only do a few at a time as a nation. I think this creative problem-solving is great, but you have to face facts: been there, done that. Whatever we do, we have to have a system that continues to let us come up with and fund these ideas when we need to. Running huge deficits and debt loads over 100% of GDP doesn't let us do that. [insert argument about how I exaggerate when exactly we become limited in our options, but note that at some point even the hardiest Keynesian must realize that the time has arrived.] So debt arguments are not necessarily about philosophy for how to run the economy and create jobs, they can be about the simple ability to do so. If you ask me, we need to talk about policies that are going to create millions of failures from the bottom-up, all trying to build things to help folks. Not trying to pick among the hundreds of great ideas for the top 3 or 4 that we then throw hundreds of billions of dollars at. It might feel great all rallying around one or two cool ideas, but this is a numbers game. We need to play it intelligently.
- RockyMcNuts 15y ago
  Naive is pretty much what I thought. The organization he describes is called a 'bank' - the government could just tell banks they will guarantee loans properly underwritten based on X criteria that correlate to number of new jobs created. Starts to sound awfully like Fannie and Freddie, which made sense when there was no national banking or mortgage market, but tens of thousands of banks with no access to capital. But later they become pure rent-seeking bureaucracies monetizing an implicit Federal guarantee doing nothing a national bank wouldn't do. (not blaming Fannie/Freddie for the crisis although they didn't help matters, and based on bank behavior banks arguably would have done an even worse job). Could be creating a monster that never goes away and distorts the market. Cuban's proposal is also paralleling oil policy in the 70s - deregulate 'new' oil and put a 'windfall profits tax' on already discovered oil. In theory it promoted drilling - in fact it also promoted game-playing to launder 'old' oil into 'new' oil. Similarly, this would be limited to employers who can navigate the paperwork, and it would make economic sense to use this for projects they would have done anyway or somehow laundering existing jobs into 'new' jobs by transferring work to new entities. Good idea to study why people aren't hiring and provide appropriate incentives to reduce the costs and risks of hiring. The payroll tax holiday was a good idea to reduce cost of employees; extra deductions for training programs to increase productivity, maybe tax credits for hiring long-term unemployed. The more broad-based and the less paperwork the better. I'm not sure the reason companies aren't hiring is related to access to credit. There are labor economists who spend their lives on these problems, Cuban should probably talk to some of them, they might have a lot of ideas, some of them might even be politically feasible, and make sense to a business guy like Cuban who can get support for them.
yaix 15y ago
Why 100 employees? Why 100mm turnover? What are all these random values about? Any science in it, or just a guess? There are and have been all kinds of stimulation policies in Europe. If you are looking for ideas, have a look at which of them where successful and which were not. For example in 2008/09, the German gov't paid companies a part of wages if they abstained from laying off people. Was a win-win a year later. The companies saved money because they did not need to re-hire tons of employees when the economy recovered, and the gov't saved money on all kinds of welfare expanses they could avoid paying. There are many other such programs around, some successful, many not. But it would probably be better in the hands of the US states and not the federal gov't.
adammichaelc 15y ago
When are smart people going to stop falling for central planning? How can a person believe that any central power can accurately plan for more than a few others? In any economy, millions of individual buy/sell decisions affect the system. One central committee will never be able to mimic that complexity and then accurately plan for it. PS to the OP. I wouldn't say it's high taxes that are hurting jobs as much as it is stifling regulations. Our system is basically a 200 year-old Windows computer that has had its kernel and registries tweaked and changed so much that the machine is slow and a pain to use. Not to mention the malware (think lobbyists)... If we could re-boot from source in the US and just end most regulations jobs would come back more quickly than any other scheme. Or perhaps we just need a new OS.
jgervin 15y ago
One issue, companies that meet your requirements really aren't innovating or releasing new products. If they are, a overwhelming majority will be investing in short-term micro growth, like building a new bridge. We actually have this system in place, VC's, Incubators and Angels. They verify opportunities and fund them. Startups are our future, whether you like it or not. And yes many will fail, but those that don't will provide long-term macro growth. The biggest winner in about 10 years will be DST, they get it. If the government wants to solve this issue lend capital to startups directly or via VC's, Incubators, Angels, or whatever. Maybe only lend it to those seeking C rounds to verify a companies stability and to prevent a bubble.
chrismealy 15y ago
Another edition of "Let's pay attention to what the rich man says."
maxwin 15y ago
This assumes that China and the rest of the world are idiots. By borrowing more and more money and devaluing it, US is gradually losing one thing :trust which is very important for the US economy.
T_S_ 15y ago
tl;dr Wage subsidy in the form of credit extended to established companies. No benefit to you, HNers. Remember green jobs? They aren't happening. So here's an alternative. Cut sales and income tax. Impose heavy carbon tax (enough to get gas to $10 gallon in 7 years). Impose carbon-linked tariff on imports. No subsidies to energy research, only to verifiable carbon sequestration. The realignment needed to adjust to that will be very US-labor intensive. And people will feel great about meeting the challenge of fixing the world's biggest externality. Some of us will anyway.
TheCondor 15y ago
Are there enough good people to hire? Not that many years ago tech companies were hiring every H1B they could because there weren't enough local talent. The more I think about it, the solution might make the problem worse in the near term but I think the solution is to clean the slate so we can start over with a new playing ground to make our compromises on. Let's make a flat tax for all businesses and then a flat tax for all individuals, price it to balance the budget and put a 5 year holiday on new tax law. Then in 5 years we can start making our compromises again and recomplicate the tax code to let companies game the system and try to coerce culture changes and what have you. In the mean time, all businesses pay x% and all individuals pay y% on all income, period. Perhaps graduate the tax for incomes below $50k, maybe. And perhaps instead of 5 years, we do it until the AAA rating is restored or the debt shrinks to some number or something. Just radically simplify it all. I'm just tired of all the unintended consequences and how complex the tax code is. I can't see how we can make it better by trying stuff like this and it seems easy to game without some sort of oversight. (Could you hire your 3 year old and give them a salary no the government's dime? Could you hire a bunch of people for really cheap wages and skim?)
lkrubner 15y ago
The USA has suffered a loss of $2.8 trillion in GDP that the USA could have but chose not to have: http://krugman.blogs.nytimes.com/2011/08/11/the-waste/ http://krugman.blogs.nytimes.com/2011/08/11/the-waste/
itiztv 15y ago
kool
itiztv 15y ago
kool

186 points by knowtheory 15y ago

deleted 15y ago

[deleted]

I disagree that the Republicans and Tea Party can be tied together in the same / - but also that their sole method for fixing the economy is lowering taxes. Regardless, the answer isn't jobs, but transitioning people from being skilled in trades that no longer matter, and becoming skilled in modern trades, such as programming, design, etc.

groby_b 15y ago

Completely flawed. Objections in the first 2 minutes: 1) Companies don't really need cash, currently. 2) This is easily gamed. (Hire people for the minimum amount of time, fire again) 3) It excludes major sources of employment - the majority of gross job gains comes from companies with less than 50 employes. 4) Jobs worth creating require qualifications. People are not interchangeable cogs, you would need to create jobs that actually fit unemployed people.

bennesvig 15y ago

Why not just adopt something like the Fair Tax where business would pay significantly less taxes. Wouldn't that be just as good, if not better than doling out money to companies who "promise" to hire?

jbri 15y ago
Basically half the article is stating that generically cutting corporate taxes doesn't actually create jobs.

knowtheory 15y ago

Other nations have sovereign wealth funds which invest in companies and build up business and investing acumen. Instead, America is trying to destroy any expertise or knowledge that the government has, and keep anyone with experience out of government (look at the ridiculous confirmation battles over the past 5 years). The problem is that our current politics won't let the US government act on societal principles, or on business principles. The US Government is so hobbled that it can't act to succeed.

Cushman 15y ago
The problem is that our current politics won't let the US government act You could pretty much stop right there.
- daniel_solano 15y ago
  Some people would argue that's a good thing: that a government that does nothing is less harmful than a government that does too much.
  - knowtheory 15y ago
    Oh yes, if your car is stalled on train tracks while a train is coming, it's much better to do nothing than something. [Edit: lest someone thinks i'm being needlessly flippant; The US has to do something about the federal debt. That is not in question. Democrats and Republicans all agree on this. There are external actors who will act and events that will take place if the US does not deal with it's debt (for instance, a downgrade by 2+ rating agencies). So there is no question about whether we must act or not. We must act. It is merely whether we will try to cut our way to prosperity (ha), or whether we will try to actually balance our books while trying to preserve as much of our society as possible.]
  - gyardley 15y ago
    Right, because we're lousy at deliberately creating solutions to complex problems - there's always unintended consequences, which often cause problems worse than the ones being solved. The real way to solve complex societal problems is through many small-scale experiments, not a single top-down proposal imposed by a central authority. Tim Hartford's TED talk on this is well worth watching: http://www.ted.com/talks/tim_harford.html http://www.ted.com/talks/tim_harford.html
    - knowtheory 15y ago
      I don't think i'm clear on what you mean. What sort of processes do produce good solutions to complex problems? And if you can outline such a process, what prevents a government, or a polity (i'm more than happy for citizens to do stuff rather than the government) from performing the processes that do produce good solutions?

doctoboggan 15y ago

I hate to be cynical but I give this a near zero chance of happening. I do think its a good idea though.

knowtheory 15y ago
When someone says "x could never happen", i always want to ask "what would have to change for x to happen". If congress has to act on this, yeah i think it's DoA, regardless of how good of an idea it is. But why couldn't the Federal Reserve do this? Why can't the Obama administration who's still sitting on a pile of stimulus money team up with the Fed to do this? Grants + loans? The Fed absorbed a huge amount of weird shit (assets like houses and such) in the aftermath of Lehman Brothers collapse. I would be interested in what they would have to change to set something like this up.
- seats 15y ago
  Seems like a modern equivalent of the FDR work programs. What did it take for him to pull it off? EDIT: http://en.wikipedia.org/wiki/Works_Progress_Administration http://en.wikipedia.org/wiki/Works_Progress_Administration Looks like the executive branch should have enough power to do this on its own.
  - knowtheory 15y ago
    Well, i think a key difference is that the Works Progress Administration directly employed people (as far as my understanding goes). http://en.wikipedia.org/wiki/Works_Progress_Administration http://en.wikipedia.org/wiki/Works_Progress_Administration The difference in what Cuban is suggesting is that he's just asking why the government can't loan directly to businesses to hire.
    - seats 15y ago
      Right, but that's why I'd say it is a modern take on it. It actually makes the program more like an opportunistic specialized VC/investment bank combo.

donnaware 15y ago

Mark Cuban for president

chefsurfing 15y ago

Why not? If the Chilean government can do it, I imagine government(s) in the US can make it happen. Maybe it could start in smaller cities and towns. The missing part it the meme and forward thinking. http://www.startupchile.org/ http://www.startupchile.org/

podman 15y ago
Funds like this already exist. New York City has the NYC Entrepreneurial Fund: http://www.nycedc.com/FinancingIncentives/Financing/NYCEF http://www.nycedc.com/FinancingIncentives/Financing/NYCEF

smokeyj 15y ago

Cuban says big companies are not cash poor. I wonder how many of these have foreign funds that just won't import it because of the tax hit they'll take. If you want to create jobs, how about companies under 10 years pay zero taxes. Zero costs to incorporate, and all licenses are free. No costs to access secondary equity markets, and access to an entrepreneurship courses. I don't think they want that many jobs tho, might shake things up. Cuban is just trying his hand at central planning and it's not well engineered. Considered the market needs to flush itself of some of these mid to upper sized companies. Some just exist because their stock maintains, while costing society valuable talents and resources. Just something to consider.

seats 15y ago
>> If you want to create jobs, how about companies under 10 years pay zero taxes. Zero costs to incorporate, and all licenses are free. No costs to access secondary equity markets, and access to an entrepreneurship courses. I don't think they want that many jobs tho, might shake things up. Actually Mark Cuban suggested this as well - http://blogmaverick.com/2008/07/28/how-to-jumpstart-the-economy-tax-free-small-businesses/ http://blogmaverick.com/2008/07/28/how-to-jumpstart-the-econ...
prostoalex 15y ago
The overlap of cash-rich companies and companies older than 10 years old is pretty slim. For someone like Microsoft its cheaper to to issue debt in the United States (hey, AAA rating is hard to come by nowadays http://www.businessinsider.com/microsoft-low-bond-yields-thirty-years http://www.businessinsider.com/microsoft-low-bond-yields-thi... ) than transfer the cash from Ireland to the US.
guelo 15y ago
God it pisses me off how easily corporations can infect people with their propaganda. Some tax dodging assholes are lobbying corrupt politicians to let them slide on paying their taxes and now all of a sudden a bunch of people like you are talking about what a big problem it is that all these poor multinational conglomerates can't get a hold of their tax dodging money. It's sickening. Can I ask you where you were made aware of the money repatriation issue?

jswinghammer 15y ago

Jobs are a means not an end. I've never worked at a job to work at a job. I work at a job to provide for my family and for my other goals in life. This sort of top down thinking is just toxic. It seems so great and tidy until you actually try to implement it and then you realize that your level of ignorance was greater than you could have possibly imagined. You can't solve a debt problem with more debt and you can't solve a jobs problem by just creating meaningless jobs. The only jobs that are sustainable are the jobs that produce something that other people actually want. The whole idea of the price system is that we're given signals about the best ways to serve other people in society. The price system in financial and real estate markets is completely insane and basically non-functioning. We're all suffering with these zombie banks we've created for ourselves. The real question shouldn't be how to create jobs but rather how to create a society where needs can be met by entrepreneurs and businesses. We've all seen that when people are having their needs met then jobs end up being created by the businesses that form in the process of meeting those needs.

knowtheory 15y ago
As far as I understand it, Keynes's broad point was that even the straw man of creating jobs just to create jobs is better than the alternative of rampant unemployment (where people rely on charity and public works, and still don't contribute to GDP). That said Keynes's primary point was that governments should invest and spend money wisely to do stuff the private sector can't or won't do. ====================================== You and I can agree that we'd love to live in a world where people pursue employment due to interest and/or a drive to make the world/economy better. That's not the world we live in, and I don't know how we get there from here. Lastly, markets are manipulable and are manipulated, and governments aren't the only actors doing so.
- cma 15y ago
  This assumes that the downsides of labor (monotony, debilitating or fatal injury (particularly in the case of much-touted "shovel-ready" projects)) don't count. If the end product of the artificial jobs minus those downsides provides less individual and social utility than simply paying the worker a stipend, we should go with the stipend and forget the work.

Xlythe 15y ago

This would put a large amount of money in the hands of a small group of people. Money that isn't theirs, yet they get to decide where it goes. If the payout justifies it, corporations will hire lobbyists or set up backroom deals. There will be a huge influx in demand for essentially free money, meaning the paperwork to go through will be enormous. Shell Corporations that meet the requirements will sign up in addition to their actual corporation. And by setting minimum requirements (Especially 10yrs, 100workers), you end up targeting corporations who already have money in the bank. It's the uprising corporations that spend their revenue on expansion, that take out loans to rent a bigger office.

justinsb 15y ago

This already happens: if you're a corporation promising to create jobs, you can negotiate with government for tax breaks. I believe Twitter negotiated with San Francisco city government to get their payroll tax breaks by threatening to leave the city. Datacenter construction tends to get property tax breaks from local government. If you're talking about locating a car factory in a country, much bigger incentives are to be had. Twitter: http://latimesblogs.latimes.com/technology/2011/04/twitter-gets-6-year-payroll-tax-break-from-san-francisco-board-of-supervisors.html http://latimesblogs.latimes.com/technology/2011/04/twitter-g... Datacenters: http://www.computerworld.com/s/article/9217259/Apple_Google_Facebook_turn_N.C._into_data_center_hub http://www.computerworld.com/s/article/9217259/Apple_Google_... Ford Tax Breaks: http://www.huffingtonpost.com/2010/05/24/fords-to-invest-135-milli_n_586941.html http://www.huffingtonpost.com/2010/05/24/fords-to-invest-135...

monochromatic 15y ago

I see a whole lot of conclusory statements in this article. Why should I take your word for a single one of them?

steins 15y ago

Facepalm. I normally love Mark Cubans blog, but this is a terrible idea. If a company cant afford to keep employees it shouldn't hire them. This would be almost as bad as the bailouts were. This would send inflation skyrocketing. What happens to all of those small companies that don't have the connections or legal know-how to get the government money? They go out of business because they would not be able to afford the new inflated cost of hiring. What happens to the people who can barely scrape a living out of their current wage when the inflation this would cause sends food prices sky rocketing?

knowtheory 15y ago
Would it send inflation skyrocketing the way that the stimulus sent inflation skyrocketing? :P Because if you look at the data, current inflation doesn't seem to be out of line with inflation prior to the 2009 economic collapse: http://www.fintrend.com/inflation/inflation_rate/CurrentInflation.asp http://www.fintrend.com/inflation/inflation_rate/CurrentInfl... More to the point, the whole point of borrowing to invest, is that if done successfully, your business grows in a sustainable manner, and you can continue to pay that person money for the business you have built. This is how business loans are supposed to work. You start with nothing, you get a pile of money, you build something that will earn that money back, and hopefully have built a stable company in the mean time that will continue generating wealth even after the terms of the loan come due. This shouldn't seem foreign on a startup and entrepreneurship site.
- Anechoic 15y ago
  >Would it send inflation skyrocketing the way that the stimulus sent inflation skyrocketing? :P From what I've read, inflation isn't a problem in the current economic climate because even with the increased money supply, no one is actually spending any money (or more accurately, most consumers don't have the money to spend) so there is no reason for prices rise since demand is low. I have no idea how Cuban's idea would affect inflation. Of course this is HN, so for all the knowledgeable people out there, please correct me if I'm wrong.
  - 15y ago

Alex3917 15y ago

How about 10,000 X-Prizes, each with a 10M or so prize. That seems much more sensible. Everyone who wanted to compete for a given prize could register with a transparent prediction market, which would give investors an easy way to get to know the different people competing in each category.

robryan 15y ago
I like this idea, I think pushing the boundaries of tech can create more opportunities in the long run past just the prizes aspect. I think the key to the prizes is also that they should be in areas that could realistically be economically viable going forward.
beambot 15y ago
I really like this idea. It's sort of like a decentralized and transparent DARPA, only it can extend beyond defense. The contests could be a mix between incremental efficiency improvements as well as "pie in the sky" ideas. If coupled with a strong mentoring program per contestant, you could also target STEM education.
nl 15y ago
How does that fix employment? It might be a highly efficient way of developing new technology, but prizes don't immediately generate large amounts of new employment. Think about it: most X-Prize-type competitions rely on the intelligence of a few highly skilled people, and even then only a few of them will actually win. The other teams generally make a loss, and so have to rely on "investors" to pay the bills. To fix employment you need to employ 10,000 ex-auto workers, who at best have some machinist skills if you are lucky. Then you need to do it ten more times. Then ten more. Then you need to do the same for the construction industry, for hospitality and for agricultural workers[1][2]. What's more, you need to do this fast - in months, not years. I cannot imagine anyway to structure a X-Prize to do that. [1] See the unemployment rates by sector: http://www.bls.gov/news.release/empsit.t14.htm http://www.bls.gov/news.release/empsit.t14.htm [2] To be fair, the hospitality industry will probably pick itself up once employment improves in other sectors so you might only need to generate a few 100K jobs instead of a million.

rmason 15y ago

What he is proposing was already tried by the Michigan Economic Development Corporation. Politicians from both parties loved photo ops where some entrepreneur was creating jobs, especially in a distressed area in exchange for state money. Even if all the promised jobs never got created. Then it got to the point where a con man showed up who never intended to create any jobs. http://record-eagle.com/opinion/x908934006/Editorial-MEDC-outdoes-fiasco/print http://record-eagle.com/opinion/x908934006/Editorial-MEDC-ou...

chailatte 15y ago

Here's another wild thought. Do nothing. Let the bankers steal from the middle class. Let federal reserve steal more money from its citizen. Let the government accumulate more debt. Let the jobs go overseas. Let inflation run rampant. Let people go deeper and deeper into housing/student debt. Let small businesses die. In fact, encourage it. Why? because the current system/society, as it stand, is dying body that cannot be healed. It is too old. Too lazy. Too morally corrupt. Too broke. Because common citizens will wake up one morning. They will be out of a job. They will be losing their house. They will be in massive debt. And they will not be able to afford even the most basic food/gas. Then they will be truly angry. Not angry as in chatting about it online. Angry as in massive protests in the capitals. Angry as in shutting down major websites. Angry as in rioting. Angry as in burning down houses. Angry as in everywhere. Only then will there truly be changes.

simonsarris 15y ago
I think this is eerily synonymous to the good old "we should just throw out the codebase and rewrite from scratch" scenario. Just as tempting and probably just as reckless, I think.
Anechoic 15y ago
>Only then will there truly be changes. I suspect that the changes you would see under your scenario are closer to 1789 than 1787.
jodrellblank 15y ago
Why? because the current system/society, as it stand, is dying body that cannot be healed. It is too old. Too lazy. Too morally corrupt. Too broke. Who cares about 300 million citizens suffering through a total economic collapse, as long as The System improves? It should be encouraged, they should sacrifice themselves willingly to the idea of a better System.
Jach 15y ago
There would be changes, sure, but they'd be done through the "criminal outrage of the mob, led by leaders who [would be] either unscrupulous, deluded, or both." What changes are you hoping for? Are you hoping for a Star Trek-esque future of no money and people working, if they want, for the betterment of themselves and humanity? I don't think the technology is there, but I'm told we could feed and house the whole human population several times over if we made that a goal. What definitely is not there is the culture and society. I have no confidence that an outraged mob of US citizens would effect anything much better than the current system, but perhaps I'm just too pessimistic and haven't seen enough opposing evidence. Of course, I am very tempted to see 'what happens' if we just let everything continue on the path of destruction. Follow your suggestions, vote for a Trump/Palin/Bachmann trio of president/v.p./secretary of state (not necessarily respectively), etc.

owyn 15y ago

This idea will never work, but on top of that his "rules for entry" are totally silly. Just take a glancing look at this data and you can see that his criteria should be inverted http://www.census.gov/econ/smallbus.html http://www.census.gov/econ/smallbus.html There are ~6M firms in the USA but only ~90K with revenues of 100M+ so his pool is very small to start with. Firms with 100+ employees count for 1.8 percent of employment and capture 65% of total payroll and something like 2/3 of total revenues. I think ANY company that is pulling in 100M in revenue has probably got things figured out already. The vast majority of employers in this country are small firms so why not try to help small guys turn into bigger guys. So I think if anything, there should be more investment in firms with less than 100 employees, less than 100m in revenue and less than 10 years old.

MatthewPhillips 15y ago
The point of restricting the pool was partially as a filter for gaming/con. I agree though that this pool might not need it.

jerf 15y ago

I'm just completely at a loss as to what this says. Companies are flush with cash. The government can't figure out how to spend money productively. So, we're going to have the government borrow more money to give it to companies that don't need it, using its incredible inability to allocate capital to decide which of these companies to allocate capital to? If the government can't productively allocate capital and companies have enough, why, in the terms of this post, exactly is it such a bad idea to have the government stop borrowing all the available capital and let the companies start allocating it instead? (I italicize some words to emphasize that it is the internal issues with the logic of the post I am questioning. I may strongly disagree with it, but I am well aware of the liturgy for Keynesianism.)

knowtheory 15y ago
1) The government is literally awash in cheap credit. Good businesses, when credit is cheap, borrow and invest. If you think this is a bad idea, please explain if it is because you do not believe the government should act as a business does (and for what reasons), or because you think that you should not borrow when your interest rates are low. 2) If you dislike Cuban's target for investment (fixing unemployment, the purported goal of the Tea Party and GOP), then please, by all means, pick a different avenue by which the government could make a return on investment.
- Anechoic 15y ago
  >pick a different avenue by which the government could make a return on investment. A WPA-type program to improve transportation, energy and communications infrastructure. Lot's of jobs across many sectors, from professional to artistic to skilled & unskilled labor, most of which can be in the private sector (contractors/contracting firms).
  - anamax 15y ago
    > A WPA-type program to improve transportation, energy and communications infrastructure. We tried that and can't do it today. Instead, we piss away large amounts of money and don't build infrastructure. Policy recommendations should account for reality, not "if we do this right".

shawndrost 15y ago

yeah we're already doing that

Lambent_Cactus 15y ago

"The Republican/ Tea-Party approach to job creation is to cut taxes. The theory being that more money in the pocket of individuals will cause people to spend more money in the economy thereby creating more jobs. Nope. Not happening. Why ? Because individuals have too much debt. Any money they get goes to pay credit cards, student loans and for the smart and fortunate into savings. Individuals now have debt = to about 119pct of income vs historical levels of .17pct in the 40s, 55pct in the 50s , 65pct in the 60s and a high of 133pct in 2007)." This is clearly wrong. Never mind cutting taxes, that's much too indirect. New plan - the government borrows as much as it can at negative real interest rates until it bids those rates back down to 0. Then it just mails checks to every American. Some will spend the money (probably with great efficiency! They know what they need!), but most will use it to pay down debts. This is a feature, not a bug. The debts that Americans owe have positive, and in some cases substantial, real interest rates. Bam! You have just accomplished to biggest interest rate arbitrage play in history.

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cyrus_ 15y ago

The conversation we really should be having involves answering these three questions: 1. What work could be done that would create a better world for us? 2. Why isn't this work being done? Is it regulatory paralysis? Insufficient coordination amongst stakeholders? Are the rewards difficult to capture by the people doing the work? Are there not enough people with the requisite skills? 3. Can we stimulate or coordinate the private sector to organize labor and capital to get this work done? If not, why not? If you've thought about these questions for a while, it is absolutely shocking to listen to the economic debate going on around us today. We have two camps who are both way off -- some people (e.g. the author of the blog post) assume that throwing money at anyone who asks for it will work, but it doesn't (they just waste it). Others think that letting people keep the money they have previously earned and staying outta the way will work, but it doesn't (they just hold on to it or waste it). I don't know what the solution is.

acslater00 15y ago
I'm 100% with you. I'd quibble with the phrasing of "create a better world for us", since I think that lends itself to very mushy, subjective notions of "good" rather than "economic good", but you're absolutely right. The problem is not, "how do we create more GDP" (forever and ever and ever) it's "is there demand which is not being met by supply." At the core, that's what a recession is. The answer is clearly yes in some industries (health care comes to mind) and is clearly no in other industries (real estate and retail comes to mind). You can't just will an economy of 300m people to a certain state. If people spent more time thinking about optimal long term outcomes and then spent their time removing impediments to those outcomes, instead of pretending like there's some magic incantation that is simply being _blocked_, we'd be having a much more productive national conversation right now.

guelo 15y ago

> The problem for the Democrats is that the government hasn’t shown that they can earn a positive or even a break even return on their spending. How do you calculate the return on health care for old people, or school lunches for kids, or clean water in your faucet, or adding a lane to a congested highway?

nhebb 15y ago

Charles Gasparino has a similar idea. US companies have about $1 trillion parked overseas that will be taxed at 35% if transferred back to their US operations. His idea is to let them transfer the money tax free, on the condition that they use 25% of the funds to hire workers. and grow US operations. that may sound like corporate welfare, but the truth is that those companies are not going to bring that money back anyway.

JeffffreyF 15y ago

Great idea. Liars and thieves would kill it. They kill all the ideas that can work, until liars and thieves are under control nothing will change.

gallerytungsten 15y ago

The process Mark Cuban describes already goes on all the time at the state level. States routinely give giant tax breaks and other financial goodies to companies that promise to build a plant, create jobs, or otherwise invest in the state economy. The problem right now is that this system is generally highly political, unfair, and non-transparent. Cuban implicitly identifies this problem with his idea that the decision-makers should have not made political contributions for five years. Additionally, states routinely fail to put an enforcement mechanism in place, and they're shocked, just shocked, when they discover they've been fleeced.

acslater00 15y ago

This is a good idea from a "look, i'm being counter-intuitive" sense. But it will not work. There's a reason the federal government can borrow at 0% short term and my hypothetical auto parts manufacturing company can't. I am a default risk; the federal government is not. IRL, banks essentially borrow at 0% from the federal reserve. They do exactly what Cuban is suggesting the federal government do. They have lots of money. Their mission is to lend that money to businesses who will "create jobs" with it. They price those loans at an interest rate which The problem right now is that not enough businesses see good investment opportunities that justify taking out a loan at rate X, and not enough banks see businesses who are not so risky that they can justify making the loan at a price they would pay. We're in equilibrium, but it's a lowish one. At the margin, we can increase some of that activity by either (a) making the loan cheaper for business or (b) making the risk lower for the bank of (c) both. In this case, the federal government acts as a guaranteeing middleman between a bondholder (the "bank") and a business. Because the bondholder doesn't have to worry about a business default, the lending takes place at essentially 0%. So this plan boils down to having the federal government guarantee loans to businesses, only instead of saying, "I'm guaranteeing a private loan to a business," they're going through the process of actually initiating the loan themselves (with a website?? please.) The idea of federally guaranteed loans is not new. Organizations like Fannie Mae and Freddy Mac literally do exactly that; subsidize loans to achieve some kind of social good (in that case, home ownership). The problem is that -- unsurprisingly -- people default, and the programs end up going hundreds of billions of dollars in the hole. And then the taxpayer is on the hook. And that's, kind of what we want to avoid here. More oddly, Cuban is making the assumption that not only should the federal government subsidize the loan, they should originate and (probably) administer it, which only makes sense if you believe the federal government has a better eye for businesses that will actually succeed and "create jobs" (I suppose) than the many thousands of banks that do this professionally. Color me skeptical. Yes, money is cheap. But disintermediating the entire corporate paper industry is not a solution here.

knowtheory 15y ago
This is by far the clearest response to the core of what Cuban is aiming at, and thanks for that. I am interested in drilling down deeper on your comment about Fannie & Freddy. I don't view their failure as a criticism of the idea of loaning for the public good. I definitely view their failure as a lack of oversight combined with perverse incentive structures and a truly mind-boggling denial on the risk of loans. But what befell Fannie and Freddy also blew up Wall Street. So the deeper underlying question is if there are people out there who are better at assessing loans who the government could use as intermediaries for taking advantage of the low credit available to the gov? (yes that's predicated on this being feasible at all in the first place, which i don't take for granted)

itissid 15y ago

I dont mean to hijack this post but I think granting citizenship to non citizens living here for sometime, provided they buy a house, would be a great way to raise real cash instead of printing and borrowing and cash for clunkers. There would be a lot of people willing to spend some serious money to get a citizenship in the US. And giving it to only a certain category of people who have stable jobs for a certain period of time here can address the immigration and job killing issue.

tomjen3 15y ago

Great he wants to make it even more difficult for small businesses to compete. Anyway the reason to cut taxes isn't to create jobs, but because taxing anymore than what is required to fund basic government services is immoral.

icebraining 15y ago
Why isn't taxing enough to fund basic government services immoral too? EDIT: And how do you define 'basic'?

jpr 15y ago

Yeah, stupid, ignorant and dangerous ideas tend to freak people out...

gosub 15y ago

I'd like to see a serious discussion about the possibility that western economies reached their maximum capacity for employment. Probably the level of production for goods and services will hit a plateau (even if we increase the number of products to infinity, we don't have the time to consume all of them, so the market will reject them), while the productivity (production per unit of workforce) naturally tends to increase. I think there are serious sociological implications.

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NHQ 15y ago

How is idea different from taking "short term debt for long term project", which he assails up front? The money is short term debt; the job, we hope, is long term--presuming best case scenario where the program operates as planned, and creates jobs that don't evaporate. I don't know logics, but that doesn't seem like a natural good conclusion, when the positive negates the whole.

jaekwon 15y ago

Face palm. Yes, let's have the business of government be exactly that of venture capital / angel investment. The government is bankrupt because special interests and incompetence makes it an unprofitable business. I'm actually glad that the federal reserve is relatively immune and separate from the government. That way maybe we won't have a catastrophic failure when the government finally becomes illiquid.

retube 15y ago

> if you can borrow money at a negative rate you should borrow as much as you can True, but the treasury can't borrow at a negative rate. Actual yields are positive [1]. So called "real" yield is the actual yield minus a forward inflation component as implied by the TIPS (Treasury Inflation Protected Securities) curve. All this means is that the return you earn on owning the bond is _likely_ to be less than what inflation is projected to be. And from the Govt perspective, they will still be paying back more than they borrowed (yields are positive) but that the payback is likely to be devalued to a "real" value less than today's value. http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield http://www.treasury.gov/resource-center/data-chart-center/in...

jseliger 15y ago

The problem with a lot of armchair economists is that they get stuff wrong. I left this comment on Cuban's site: "Plus our federal government loves to hire people." This isn't true. As <a href="http://www.data360.org/dsg.aspx?Data_Set_Group_Id=228>this http://www.data360.org/dsg.aspx?Data_Set_Group_Id=228>th... data set shows</a> (and it's similar to data I've seen in civics textbook, the number of non-Census federal employees has stayed more or less constant for decades. If you want to know the biggest portion of future federal debt, look for Medicare entitlement spending. Back to HN: the other problem is that merely "hiring employees" isn't the same as productively using employees. He's deploying a variation on the broken windows fallacy.

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reubenyeah 15y ago

Something similar to this was actually attempted in the UK as a programme called the future jobs fund. It didn't really work and the jobs that were created disappeared when they stopped receiving the money and all the jobs were fairly menial.

ojosilva 15y ago

Here in Spain, and in other countries I've lived in (Europe and South America), there's something called a Savings Bank (http://en.wikipedia.org/wiki/Savings_bank http://en.wikipedia.org/wiki/Savings_bank): a non-profit, regional/local state controlled bank. Good folks put their money in them and the savings bank invests it back into the economy for public good, social and cultural projects, and job creation - doing precisely what the OP suggests. But savings bank are being dismantled in Spain now, and in many places like Brazil 10+ years ago. Why? Because politicians need money for their campaigns. Politicians control these savings bank. Eventually the savings bank money makes into the ruling parties friends pockets and financial supporters. Or into senseless investments, investments a private bank has a much lower probability of making since private banks have shareholders and higher stakes that make them much more accountable for their actions. Government should not lend money directly. That's what banks are for. Government should not replace the private sector. Ever. Government already has enough resources to incentive the job market: tax cuts for companies that hire new people. Deregulation of the market. Interest rates. Money printing. Hiring public workers. Starting public projects. Declaring wars in foreign countries. Creating jobs with loans is currently available anyway: companies can show a plan to banks and investors, so they can decide to grant the loan or not based on things like risk and profitability for both parties. Risk aversion and accountability is something that Government overlooks considerably. Private loaning and investing is a very flexible system: the company may then chose to use the money to cut down on its work force, replacing people with robots. That's great, because it makes companies more competitive. That's more important down the road. Lending money, as the OP suggests, to companies so that they can just go out and hire is reinforcing a negative behavior: become less productive first, then see if you can catch up. That's just creating a country of sweat shops. Recessions can actually be a positive thing for the economy when good, functioning companies (who have cash flowing) have better choice to hire great people (who became suddenly jobless). So don't inflate the job market artificially and mess it up for the well-managed companies and deserving people out there.

gavanwoolery 15y ago

Creating jobs is good, but why put this in the hands of the government? You (Cuban) have already argued they are too bureaucratic and wasteful in organizing any of their sectors. Cut taxes. Tax cuts give VCs, banks, and other lenders/investors more money to invest. Tax cuts also make employment cheaper for everyone (since they get taxed less, you can pay less and they will still get as much money). And they will invest in the things they think are going to be most successful, which I would argue the government would not be good at doing. Stop giving the government money. They have already proven they do not spend it well, and they create more debt than value that they add.

csomar 15y ago

You don't need money to create jobs. I'll give you a scenario: Imagine Mark and Adison, two neighbors. Both are living happily and have 10 hours a day of free time. Mark can plant trees, while Adison can do house decoration. Both of them are idle. Both of them are jobless. Why? Because Mark can't plant trees, he doesn't have a land. Adison had already done decoration for his home. One day Adison comes to Mark and suggests that he does home decoration for him. In return, Mark will plant some trees for Adison. Trees are like a long term investment for Adison and house decoration is an improvement in the living standard of Mark. Now both of them are working full time. No money is required. For the economy, the living standard of the population had increased. Did we require money? No! So what's wrong? It's not about the money. We need to enthusiast people with a fair, free and open system and they'll start working.

dhume 15y ago
So Mark's gone from having an uninspired house interior and no way to pay the bills to having a nicely-decorated house and no way to pay the bills. Directly trading one luxury for another doesn't help when what you need is a way to feed yourself, pay the rent, heat the house, etc.
- csomar 15y ago
  What I said is >> Both are living happily and have 10 hours a day of free time. Forget about the bill and currencies. These are abstraction layers we made to make small exchanges possible and fast.

tybris 15y ago

Dig a hole and fill it up. Our economy is saved! What the government needs to get better at is extract money from the economy in a way that creates, rather than destroys economic value. This is what almost every business does, why can't the government?

jules 15y ago

Imagine this scenario: Once upon a time the total money in a country was $1. Then the guy with the $1 put it in the bank. The bank lent the money to another guy, and that guy then owed $1.10 to the bank after interest. That guy happened to be a car dealer, and the bank owner bought a $0.10 car from him for the interest he earned. Everyone is happy. Now imagine this scenario: Once upon a time the total money in a country was $1. Then the guy with the $1 put it in the bank. The bank lent the money to another guy, and that guy then owed $1.10 to the bank after interest. That guy happened to be a car dealer, and some other guy bought a car from him for $0.10. That guy got the money by lending it from the bank. After a couple of years of this stuff, through interest, the total money owed to the bank was $2. So the interest these people have to pay in total is $0.20 that year. There is no way that all money can ever be paid back to the bank, unless the bank owner spends a lot of money. If the bank owner spends say $0.10/year, the total money owed to the bank is bound to increase. Everyone is now a debt slave to the bank. People are going to have to default on their debts, there is no other possibility, because there simply isn't enough money in the world to pay back the bank. Is it possible that we are in scenario #2?

hootmon 15y ago

Its a shame the tools in charge of this mess have adopted the tea party mindset no doubt acquired through addiction to Faux News and the Faux News echo chamber. Take note, Hacker News seems to be turning into teaparty News, and all it takes is for a few more teaparty articles to show up in the first page, and i am out of here. Odious debt, morons, look it up.

iwwr 15y ago

Any money they get goes to pay credit cards, student loans and for the smart and fortunate into savings. What's wrong with THAT?

f1gm3nt 15y ago

This is a good idea, but will never work. First of all the requirements wouldn't work. You would be investing in companies that would hire a ton of people only to lay them off after a project. You would have better success by finding businesses that would hire and retain people. These won't be a company that has been around 10+ years. Those companies would put this money to better use. Also it would be a crazy bet to give money to any business that has only been in business for a short time. If you're really looking to freak people out, put your presidential candidates on American Idol and see who gets the votes. Why not just make a push for a resource based economy? Not THAT would really freak out a lot of people. Good article :)

Symmetry 15y ago

We could just borrow money to buy foreign debt, lowering the value of our currency to help our export center. Basically doing the same thing we always complain about China doing to us. We could probably earn a profit even if some of the countries we end up investing in default.

mdonahoe 15y ago

We need a better vision than "everyone must be employed." Something more specific than "Win the future", and ideally something most people can believe in. It seems like an implicit goal is world peace. The US spends a ton of money on defense, but the problem is our current methods involve lots of killing. It's hard to feel good about mass murder. I think we should still spend tons of money on defense, but just explicitly give more money to non-lethal technology. We should be very clear that our goal is world peace and come up with very specific subgoals we want to see.

DanielBMarkham 15y ago

I like the creativity here, but the naivete is a bit much. Very strange that I should make that observation about Cuban, but there it is. We already have this incredible sophisticated and involved system for creating jobs -- its called the startup market. Each year, tens of thousands of folks come up with ideas to do things people want, and that always means creating a job, if only for the founders. Each year folks invest, or not, and those folks get a shot at succeeding. So we have tens of thousands of highly-motivated folks putting their own lives and money on the line to make jobs. How could this possibly stack up against BigCorp getting subsidies to create busywork? The Tea Party used to be non-partisan, at least in theory. Probably never really were, though. But there's a critical non-partisan meta point that you have to acknowledge before you spin off with a bunch of creative top-down ideas: we've been here before. Every time there's an economic problem people come out of the woodwork with all sorts of totally awesome ideas. Some of these work, some don't. The only difference between these implemented ideas and the startups I mentioned is that these ideas are huge things and we can only do a few at a time as a nation. I think this creative problem-solving is great, but you have to face facts: been there, done that. Whatever we do, we have to have a system that continues to let us come up with and fund these ideas when we need to. Running huge deficits and debt loads over 100% of GDP doesn't let us do that. [insert argument about how I exaggerate when exactly we become limited in our options, but note that at some point even the hardiest Keynesian must realize that the time has arrived.] So debt arguments are not necessarily about philosophy for how to run the economy and create jobs, they can be about the simple ability to do so. If you ask me, we need to talk about policies that are going to create millions of failures from the bottom-up, all trying to build things to help folks. Not trying to pick among the hundreds of great ideas for the top 3 or 4 that we then throw hundreds of billions of dollars at. It might feel great all rallying around one or two cool ideas, but this is a numbers game. We need to play it intelligently.

RockyMcNuts 15y ago
Naive is pretty much what I thought. The organization he describes is called a 'bank' - the government could just tell banks they will guarantee loans properly underwritten based on X criteria that correlate to number of new jobs created. Starts to sound awfully like Fannie and Freddie, which made sense when there was no national banking or mortgage market, but tens of thousands of banks with no access to capital. But later they become pure rent-seeking bureaucracies monetizing an implicit Federal guarantee doing nothing a national bank wouldn't do. (not blaming Fannie/Freddie for the crisis although they didn't help matters, and based on bank behavior banks arguably would have done an even worse job). Could be creating a monster that never goes away and distorts the market. Cuban's proposal is also paralleling oil policy in the 70s - deregulate 'new' oil and put a 'windfall profits tax' on already discovered oil. In theory it promoted drilling - in fact it also promoted game-playing to launder 'old' oil into 'new' oil. Similarly, this would be limited to employers who can navigate the paperwork, and it would make economic sense to use this for projects they would have done anyway or somehow laundering existing jobs into 'new' jobs by transferring work to new entities. Good idea to study why people aren't hiring and provide appropriate incentives to reduce the costs and risks of hiring. The payroll tax holiday was a good idea to reduce cost of employees; extra deductions for training programs to increase productivity, maybe tax credits for hiring long-term unemployed. The more broad-based and the less paperwork the better. I'm not sure the reason companies aren't hiring is related to access to credit. There are labor economists who spend their lives on these problems, Cuban should probably talk to some of them, they might have a lot of ideas, some of them might even be politically feasible, and make sense to a business guy like Cuban who can get support for them.

yaix 15y ago

Why 100 employees? Why 100mm turnover? What are all these random values about? Any science in it, or just a guess? There are and have been all kinds of stimulation policies in Europe. If you are looking for ideas, have a look at which of them where successful and which were not. For example in 2008/09, the German gov't paid companies a part of wages if they abstained from laying off people. Was a win-win a year later. The companies saved money because they did not need to re-hire tons of employees when the economy recovered, and the gov't saved money on all kinds of welfare expanses they could avoid paying. There are many other such programs around, some successful, many not. But it would probably be better in the hands of the US states and not the federal gov't.

adammichaelc 15y ago

When are smart people going to stop falling for central planning? How can a person believe that any central power can accurately plan for more than a few others? In any economy, millions of individual buy/sell decisions affect the system. One central committee will never be able to mimic that complexity and then accurately plan for it. PS to the OP. I wouldn't say it's high taxes that are hurting jobs as much as it is stifling regulations. Our system is basically a 200 year-old Windows computer that has had its kernel and registries tweaked and changed so much that the machine is slow and a pain to use. Not to mention the malware (think lobbyists)... If we could re-boot from source in the US and just end most regulations jobs would come back more quickly than any other scheme. Or perhaps we just need a new OS.

jgervin 15y ago

One issue, companies that meet your requirements really aren't innovating or releasing new products. If they are, a overwhelming majority will be investing in short-term micro growth, like building a new bridge. We actually have this system in place, VC's, Incubators and Angels. They verify opportunities and fund them. Startups are our future, whether you like it or not. And yes many will fail, but those that don't will provide long-term macro growth. The biggest winner in about 10 years will be DST, they get it. If the government wants to solve this issue lend capital to startups directly or via VC's, Incubators, Angels, or whatever. Maybe only lend it to those seeking C rounds to verify a companies stability and to prevent a bubble.

chrismealy 15y ago

Another edition of "Let's pay attention to what the rich man says."

maxwin 15y ago

This assumes that China and the rest of the world are idiots. By borrowing more and more money and devaluing it, US is gradually losing one thing :trust which is very important for the US economy.

T_S_ 15y ago

tl;dr Wage subsidy in the form of credit extended to established companies. No benefit to you, HNers. Remember green jobs? They aren't happening. So here's an alternative. Cut sales and income tax. Impose heavy carbon tax (enough to get gas to $10 gallon in 7 years). Impose carbon-linked tariff on imports. No subsidies to energy research, only to verifiable carbon sequestration. The realignment needed to adjust to that will be very US-labor intensive. And people will feel great about meeting the challenge of fixing the world's biggest externality. Some of us will anyway.

TheCondor 15y ago

Are there enough good people to hire? Not that many years ago tech companies were hiring every H1B they could because there weren't enough local talent. The more I think about it, the solution might make the problem worse in the near term but I think the solution is to clean the slate so we can start over with a new playing ground to make our compromises on. Let's make a flat tax for all businesses and then a flat tax for all individuals, price it to balance the budget and put a 5 year holiday on new tax law. Then in 5 years we can start making our compromises again and recomplicate the tax code to let companies game the system and try to coerce culture changes and what have you. In the mean time, all businesses pay x% and all individuals pay y% on all income, period. Perhaps graduate the tax for incomes below $50k, maybe. And perhaps instead of 5 years, we do it until the AAA rating is restored or the debt shrinks to some number or something. Just radically simplify it all. I'm just tired of all the unintended consequences and how complex the tax code is. I can't see how we can make it better by trying stuff like this and it seems easy to game without some sort of oversight. (Could you hire your 3 year old and give them a salary no the government's dime? Could you hire a bunch of people for really cheap wages and skim?)

lkrubner 15y ago

The USA has suffered a loss of $2.8 trillion in GDP that the USA could have but chose not to have: http://krugman.blogs.nytimes.com/2011/08/11/the-waste/ http://krugman.blogs.nytimes.com/2011/08/11/the-waste/

itiztv 15y ago

kool

itiztv 15y ago

kool