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01/31/2010

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Jake

Many of Obama's policy proposals (not to mention the very fact that he got elected to the White House) are a testament to the ignorance of the large segment of the electorate who are too young to remember how bad things were under Jimmy Carter. Back in the late 1970s and even into the early 1980s, the government experimented with so-called "targeted job tax credits" for employers who chose to hire unemployed people. For the most part the jobs did not outlast the time period that employers had to keep the new hires on the payroll in order to earn the tax credits.

Seamus Brennan

Interesting point about the relative ease with which employers in the United States can terminate workers to cover losses. Europeans and Asians certainly enjoy a more generous work environment. Not sure if I agree with your theory about workers quitting their jobs to hold out for higher wages at a later date. Most workers think in the short run since they are faced with credit card payment, mortgages and putting food on the table.

st

Small business not equal to innovation. US currently holding most promise land for high tech: The best technology by sectors, US rank 57% in Telecom (out of 100% with the best technology in the field), 70% in semiconductor, 87% in software, 85% in biopharmaceuticals, and 56% in clean energy. (source business week 2008 Dec). The problems are: (a) the hi tech not create enough sustainable jobs (more of bubble and bust hype). (b) current venture capital model (not say the early years of Apples and Microsoft time) flip and demand of 300% return on ipo are not the long term investment and job creation type (MBA school should take some blame). US got creative talents, but not solid investment in development and utilization, except Gov funded agencies, such as NASA. Just look who dominated the solar cell technology? Where was it invented? The long term investment of electrical hybrid car would never occur in US. The cost benefit analysis conducted by the MBAs would killed it many times more. The US business is short sighted. increase shareholder value every quarter was taught by business school all over the country. (Plus GE share were flipped every 13 days.... does not create any stable shareholders that could be interested long term value).... Unless the fundamental focus of the business changed, there is no fix. Not enough money can solve the problem. (I am sure there are already game plan in the works to take some of the cream off the small busi program... I would not surprise if many small business just pop out in time to take funding and vanished right after the funding runs out).

Tim Bartik

Professor Becker:

Many of your comments might be applicable to some version of employer tax credits, but are not applicable to President Obama's proposal given its specific design features.

For example, Obama's proposal does not provide any incentive to fire some employees and replace them with unemployed workers because: (1) the credit is based on net employment increases since a base period; (2) the base period is 2009; (3) the credit is based on any net employment increases and is not tied to hiring workers who are unemployed. Your comment is applicable to a quite different proposal, by Senators Schumer and Hatch, which is a hiring credit for the unemployed.

As always, the devil is in the details.

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