the days of what I call the "Field of Dreams" strategy--build a bigger GDP, and the jobs will come--should be over. It's a sensible strategy in many contexts, but it has two serious drawbacks in the present situation. First, it is working very slowly because firms are so reluctant to hire. Second, it is expensive--in the neighborhood of $100,000 of government spending or tax cut for each new job saved or created. America needs more jobs now, and because of the large budget deficit, we need them cheaper.
Read the whole thing. Thanks to John Taylor for the pointer.
Of course, I regard Blinder's estimates of the cost of job creation using spending or tax cuts as optimistic. But the news here is that he uses the "Field of Dreams" phrase to disparage the link between spending and employment. Next thing you know, he's going to start talking about PSST.
Blinder also is forthcoming about the doubts raised about his joint work with Mark Zandi on the effects of the TARP and the stimulus. He has to address a wide range of criticisms of macroeconometrics, so he barely touches on the issues that concern me the most. My criticisms are spelled out in my lost history paper.