In Forstat er’s article he advocates for a Public Service Employment program oth

Question

In Forstater’s article he advocates for a Public Service Employment program otherwise known as theEmployer of Last Resort (ELR). What is this and are there any obstacles to its implementation? What does ELR have in common with the Lender of Last Resort (LOLR)? Are these designed to be permanent for those people/banks using these programs? Why do banks get a lender of last resort but workers do not get an employer of last resort?

The US government currently provides unemployment compensation for individuals that have lost their jobs by no fault of their own. Some recent numbers are: 2009 = $199 billion, 2010 = $155 billion, 2012 = $93 billion.  The decrease in unemployment compensationover these three years should not be surprising given that our economy has been improving in this time period. Thus, the government already spends on the unemployed in times of recession to keep the economy from going into a complete tailspin. What would the benefits be to using an ELR program instead of unemployment compensation?

Explanation / Answer

1.

ELR is a program funded by the government where all capable people but jobless in the society will get job at a minimum wage rate.

Obstacles: Implementing this policy is difficult, since assigning work for everyone might not be possible unless there is considerable amount of growth. A society has to create job opportunities first by undertaking various projects and then has to try implementing ELR.

LOLR: Country’s central bank acts as a LOLR, since it gives loan to all commercial banks of the country.

ELR is common with LOLR: People get job as when required through ELR and Banks get loan as and when required through LOLR.

LOLR is permanent, since this is a permanent unique feature of a central bank. ELR is not permanent, since this system could be misused by jobless people in the long-run. Moreover, ELR is short-term economic rescuer.

Banks get LOLR, because the central bank is anytime ready for this service. ELR is still not open to all. Therefore, workers do not get job as and when required.

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.