Works Progress Administration

Jul 1, 2011

dictionary-150What is the WPA?

dictionary-150What is the WPA?

The Works Progress Administration provided jobs for unemployed people in the United States during the Great Depression and was responsible for building various infrastructure projects across the United States, such as LaGuardia airport. Other government organizations also existed that provided work to people during the Depression, such as the Civilian Conservation Corps and the Public Works Administration. However, no other program was as large or as extensive as the WPA. It ultimately employed millions of Americans who otherwise would not have been able to find jobs.

What's the significance?

The WPA provides an empirical example of the impact of a work program in times of economic recession. It has also become a lightning rod for contention between the right and the left. The right charges that it was inefficient and a "socialist" program. The left argues that it helped reduce unemployment from 25% to 10%, modernized our nation's infrastructure, and provided jobs for people who otherwise would have gone hungry. Many economists argue that we need to have a similar program today in order to reduce unemployment until the economy can pick up again.

Who's talking about it?

David Woolner gives a historical explanation of the impact of the WPA in forming the infrastructure that makes the U.S. what it is today and argues powerfully that we need it again...  Marshall Auerback draws a parallel between the unemployment crisis faced by Obama and the one faced by FDR and makes an argument for programs like the WPA that will help main street get off its feet... Mark LaFaur advocates for infrastructure and the programs that we should be investing in to support it... Lynn Parramore invokes the idea of government funded employment throughout an interview on MoneyWatch... Gray Brechin writes an article that gives an understanding of the large amount and lasting impact of WPA projects... Harvey J. Kaye goes through the ways that the right wrongly attempts to re-write the history of the New Deal and the WPA.

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ZIRP

May 13, 2011

dictionary-150What is ZIRP?

dictionary-150What is ZIRP?

ZIRP stands for Zero Interest Rate Policy, a method of stimulating economic growth by keeping interest rates close to zero. Under this policy, a central bank -- in the case of the US, the Federal Reserve -- maintains a 0% nominal interest rate. The US has been following this policy since the end of 2008. Japan is perhaps the most salient example, as its government followed this policy for a very long time.

What's the significance?

Once a country follows a ZIRP policy, the central bank can no longer reduce interest rates, one of its main tools for stimulating borrowing. Many economists feel that at this point monetary policy becomes ineffective. Some also worry that it isn't enough on its own and that fiscal policy, in the form of government spending on stimulus, is necessary. The policy also benefits banks by making borrowing from the Fed cheap, but harms savers by lowering their interest rates.

Who's talking about it?

Marshall Auerback points out that recent economic growth is not in fact due to ZIRP or QE2 as some believe... Mike Konczal and Arjun Jayadev did research showing that changing interest rates helped some economies out of recessions, but isn't a choice for the US currently... Joe Costello warns that ZIRP and QE undermine the value of money and are creating another bubble... Paul Krugman has repeatedly warned against adopting a ZIRP policy... Christopher Whalen points out the ways in which the Fed's ZIRP policy has failed, particularly for Main Street.

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