This is essentially the reason behind Keynesian stimulus, isn't it? Something's gotta bootstrap the recovery.

Exactly. Like in the 30s the government should step in and hire people. Companies can't do that in a recession/depression. However, the other side of Keynesian economics that's not as often cited is that during the good times the government saves up for the inevitable bad times - we haven't done that for a long time.

You'd need a New Deal [1] effort to do so, but both political parties in the US have no appetite [2] for that sort of legislative effort. It might happen if the quantity of suffering increases, but we're not there yet.

[1] https://en.wikipedia.org/wiki/New_Deal

[2] https://www.vox.com/2020/8/19/21375039/dnc-2020-democrats-pl...

I think the Dems would be open to a New Deal-like effort. They've got the Green New Deal proposal.

>Like in the 30s the government should step in and hire people

What does the government usually hire people to do in this situation?

In the 1930s, it was the PWA which built tons of long-lasting infrastructure including the Hoover Dam and many substantial other projects;

https://en.wikipedia.org/wiki/Public_Works_Administration

That was probably the best use of funds at the time since there was broad based unemployment among a largely unskilled population. This time around, it seems like it's mostly service businesses that are struggling so it's not so clear what the best use of labor would be..

In the 30s they hired people to build stuff. They hired artists to create public art as well - Woody Guthrie was paid to write songs, for example.

We definitely could do similar now. Lots of infrastructure needs updating. We could accelerate the move to green energy (like the Green New Deal proposal). We could also hire a lot of people to do contact tracing until the end of the pandemic - this could include folks to do datamining, etc.

I thought that in Keynesian stimulus/theory, the government, not the private sector, provides the recovery?

I think we're saying the same thing :)

The government provides money to people (how can change, new deal style job corps or stimulus checks, etc), and now they have money to spend in businesses, the businesses can hire more people, and there goes the flywheel again.

Yes. This is not something the private sector can or should do.

It’s much easier to give a company back money they already earned in the form of a tax cut than it is to expect a business to create new revenue out of thin air.

And what do you expect them to do with that money?

Why not? The Federal Reserve has been printing up their own money this year like there's no tommorow.

“To lend to a bank, we simply use the computer to mark up the size of the account they have with the Fed. So it’s much more akin, although not exactly the same, to printing money, than it is to borrowing.” --Former Fed Chairman Ben Bernanke

Employers could simply use the same Sorcery to supply digital jobs.

The Federal Reserve is not "employers".

The Ploy thickens! I get so excited about stories.