Why not chock-full employment?

Abstract

Needlessly high levels of unemployment are a contributing factor to a wide range of social ills, which would be substantially alleviated by driving unemployment to a low level of about 1.5 percent. This will require substantial increases in government deficits and debt.

Recent trends in the ratio of private profit-seeking invested capital to GDP have been steady or slightly downward, while the ratio to GDP of desired private asset holdings has been growing, leaving a gap that must be filled by a growing government debt if GDP is to grow rapidly to a full employment level.

The corresponding deficits are the means whereby the flow of income payments is enhanced, market demand increased, full employment is achieved and a corresponding expansion of private investment induced, leaving future generations to enjoy an enhanced heritage of capital in place and a more experienced work force. Meeting debt service payments from a prosperous economy will be less onerous than meeting current debt service requirements from an economy in the doldrums.

If inflation becomes a problem, it must be taken care of by methods that do not involve unemployment, such as the use of marketable gross markup warrants.