Introduction
The citizens’ employment should be one of the main concerns of the government as the quality of life depends on people’s level of life which may never be high when the citizens of the country are unemployed. There are a great many different opinions on how to increase employment and create satisfactory options for the work offers increase. At the same time, there is the other side of the problem which states that neither government nor different public and social policies have the power to boost employment. Thus, the main purpose of the paper is to support the fact that government and policies influence the boosting of employment and have a great impact on job offer rate.
Main arguments and assumptions
The movement that declares that “nothing could boost employment: not government spending, not tax cuts, not private business decisions to expand their capacity, not irrational exuberance on the part of entrepreneurs” (Norman, 2009, para 2) arouse in the 1920s – 1930s and was named “Treasure view”. The main idea of the treasury view is that unemployment was and there is nothing that could be done to change it, neither fiscal policies nor private investment could change the situation (Norman, 2009).
Eugene F. Fama (2009) tried to argue the Treasury view and to offer several ideas on how the intrusion of the government or other authorities may change the situation. Fama (2009) offers the formula PI = PS + CS + GS, where
- PI – private investment,
- PS – private savings,
- CS – corporate savings,
- GS – government savings.
The main suggestion highlighted in the article is that the investments and fiscal politics of different representatives of macroeconomic relations may influence the whole situation in the labor market and change it with the rise of necessity. Norman’s (2009) rejections of the plan should be of no attention as the fears are senseless. There is the general fear that in case of bankruptcy of one of the three greatest auto companies, millions of people will lose their working places.
The government regulates the situation with the policies and in case of the failure of one of the companies, it is not liquidated. So, the government regulates the working relations of huge companies and will not permit great changes in the world labor market (Silver, 2001).
Furthermore, the idea of savings and speculation as one of the ways to influence the macroeconomic world should be discussed. The importance to interpret the Treasury view from different perspectives opens new possibilities for the governments’ influence development. Loan-financed public expenditure is one of the schemes to improve the macroeconomic position and prove the importance and great influence of government policies on the employment rates (Peden, 1984). This action may be used when the savings of the country are widened and it can afford to loan some part to the world development.
There is one more proof of the government’s influence on employment. The possibility to regulate the tax policy is crucial. Taxes are great stimuli for many companies and if the situation is out of control, the government may easily cope with it via different regulations (Fama, 2009; Clausing, 2005).
Main policy implications
Krugman (2009) is still unsure of the modern government and its abilities. Naming the modern situation on the macroeconomic level “Dark Ages”, the author means that the government and policies they can create can influence the world situation greatly. Still, the government is unable to use the knowledge it possesses (Krugman, 2009). Some scholars state that the exchange operations and unexpected changes in the situation may influence the situation negatively (Treasury and Federal Reserve). The case is possible and it should not be avoided, still to calm down the situation and the governments’ loans and savings should be applied (Trevithick, 1992).
The problem of saving and investment was discussed by several authors, such as Trevithick (1992) and Krugman (2009). Thus, if one dollar is invested, the government is unable to use it. The main peculiarity of these studies is that the authors came to the conclusion that both authors agree that the investments should be equal to savings (Trevithick, 1992; Krugman, 2009). Only under these circumstances, the action is possible.
Conclusion
In conclusion, it should be mentioned that the attempts of some scholars to prejudice the social policies and government influence on the macroeconomic situation and as a result the employment situation in the country were useless. The government and the policies and regulations it offers may influence greatly the situation in the country. For example, the bankruptcy and tax policies were offered as examples of the great influence of the government on boosting employment. There are a great many reasons not to boost employment, still, it is not the focus of the discussion. The main purpose of the paper was achieved, it was proved that government and policies it created to have great impact on the country’s economy and, if to consider such powerful country as UK, on the world one.
References
Clausing, K. 2005. Tax Holidays (and Other Escapes) in the American Jobs Creation Act. National Tax Journal, vol. 58, no. 3, pp. 331-346.
Fama, E. F. 2009. Bailouts and stimulus plan. Fama/French Forum. Web.
Krugman, P. 2009. A dark age of microeconomics. The New York Times. Web.
Norman, M. 2009. Fama’s Fallacy, Take I: Eugene Fama Rederives the “Treasury View”. Guest post. Web.
Peden, G. C. 1984. The “Treasury View” on Public Works and Employment in the Interwar Period. The Economic History Review, New Series, Vol. 37, No. 2, pp. 167-181.
Silver, I. 2001. Public employee discharge and discipline. Aspen, Aspen Publishers Online.
Treasury and Federal Reserve foreign exchange operations. 1992. Federal Reserve Bulletin, 78(10), 738-742.
Trevithick, J. A. 1992. Old classical macroeconomics: Say’s law. In J. A. Trevithick, ed. Involuntary unemployment: macroeconomics from a Keynesian perspective. Harvester Wheatsheaf, New Jersey.