What Would You Do With $90 Million a Day?

When I was in college, I recall an Introduction to Economics class and a lesson about the difference between a state-run economy and a free enterprise economy.  It was all theory, of course, and if it weren't for some new numbers released by the State of California, I might never have thought about that simple lesson again. 

 The professor was pointing out that our economies in the United States are a combination of both government subsidy and private wealth creation.  He said there are some jobs government is better off handling and there are others better left to private industry.  When I heard today that the State of California last year spent $90 million a day paying unemployment benefits to people who are out of work, I began to wonder if there might be a better way to use that money.

 According to the California Employment and Development Department, the state spent nearly $23 billion on unemployment benefits in 2010.  That's a record!  About 2 million out of work Californian's got that money and that averages to about $90 million a day.  The director of the CEDD said, “Those numbers are staggering and the need is undeniable.”  California was hit hard by the worldwide recession and joblessness here is a huge, and now we know, expensive problem.

 But, what if there was a better way, a more efficient way to use that taxpayer money to create jobs and really affect the lives of those people who desperately want to go to work?

 That question takes me back to that college economics class.  We got involved in a discussion that day about the role of government and the role of private industry and the professor helped us by playing a game of “what if”.    What if, he said, instead of tax money going to the government, it went to private industry to create jobs and put the unemployed to work?  Of course, I can't find my notes to that class anymore so I don't know what we decided, but in retrospect it might work.

 What if, instead of spending $90 million a day sending checks to people out of work, we find a way to select 90 small businesses a day in the state and send each one a million dollars.  In return for this windfall of cash, each business agrees to hire a group of people who have applied for unemployment benefits.  Those small businesses can then expand, or start new product lines, or put more workers on the job sites. 

 And then, we do it again everyday for a year in California.  Everyday another 90 small businesses get a million bucks and more people get off the unemployment rolls and start making paychecks and start paying taxes.  $90 million a day to pay unemployment benefits is a lot of money.  It is money that does not now directly create jobs, or buy a piece of equipment or pay for a service.  It goes to someone who is not working and needs it.  What they need more, however, is a job.  Finding a way to use that $90 million a day to get them one, that is the real challenge for all of us.  This is just one idea, if you have another one I would love to read about it on the KUSI Facebook page.





Categories: Becker’s Digital Notebook