Relearning What We Knew

BillyBlog on the costs of unemployment and the benefits of government work programs (via nc links):

One of the strong empirical results that emerge from the Great Depression is that the job relief programs that the various governments implemented to try to attenuate the massive rise in unemployment were very beneficial. At that time, it was realised that having workers locked out of the production process because there were not enough private jobs being generated was not only irrational in terms of lost income but also caused society additional problems, such as rising crime rates.
Direct job creation was a very effective way of attenuating these costs while the private sector regained its optimism. In fact, it took about 50 years or so for governments to abandon this way of thinking. Now we tolerate high levels of unemployment without a clear understanding of the magnitude of costs that that policy position imposes on specific individuals and society in general.
The single most rational thing a government could do was to ensure that there were enough jobs to match the available labour force.
In the growth period before the current crisis few countries had returned to the full employment states that they achieved in the Post World War 2 period up until the mid-1970s when the OPEC oil shocks led to a paradigm change in macroeconomic policy setting. The neo-liberal approach emphasised fiscal austerity to support an increasing reliance on monetary policy for counter-stabilisation.

He goes on to explain the reasons we have ignored what we've learned:

Neo-liberalism has also changed the way we think about unemployment. In the past we understood clearly that it arose as a result of a shortage of jobs.
However, in recent decades, we have been conditioned by a relentless (lying) press and government statements to perceive unemployment as an individual problem. So the unemployed are type-cast as being lazy; having poor work attitudes; refusing to invest in appropriate skills; and subject to disincentives arising from misguided government welfare support, and all the rest of the arguments that mainstream uses to obfuscate the social problem.
The focus in the public debate is to “blame the victim” and suggest that most are unemployable and prefer to live on welfare, where that support is available.
The overwhelming evidence from the informed research literature is that almost all the unemployed (when surveyed) prefer to work and are willing to take work if offered.
The overwhelming evidence from studies in most countries suggests that the unemployed are highly motivated to find work and are victims of a shortage of jobs rather than personal/individual deficiencies.
The dominance of the neo-liberal ideology led governments in most countries to have eschew the adoption of policies of direct job creation to reduce the rate of unemployment and to minimise these massive costs. Fiscal policy has became geared to the achievement of budget surpluses as some sort of token of prudent financial management.
After the release of the OECD Jobs Study, employment policy shifted from a demand-side emphasis (ensuring there were enough jobs) to a supply-side focus (active labour market policy) which targetted individuals with futile training programs divorced from a paid-work context and pernicious welfare-to-work rules.
While the governments were pursuing labour market deregulation and attempting to retrench the Welfare State in the face of persistent unemployment they were also deregulating financial markets. The lack of oversight of the latter is the fundamental reason we are now enduring the worst crisis in more than 80 years.

I'm not even going to go to the trouble of reviewing his assessment of the costs of unemployment because I think those are obvious.  To me, it is patently obvious that this is the perfect time for government investment in infrastructure.  The housing bubble burst destroyed the demand for construction jobs, putting large numbers of construction workers out of work, these workers could be reemployed, along with a large number of other jobless workers, and the work would be productive.  Our infrastructure is crumbling, so any investment will be net beneficial.  The ironic part is that we still have some infrastructure projects from the WPA in use, and these need repair and replacement.  How can we be ignoring this when so many people are out of work?  The idea that people who were previously employed don't want to work is cruel and insulting.  They have been out applying for jobs, and haven't been getting them.  Let's not let them sit, let's find them something to do.