Euro-Zone … how to create 8 million new jobs

While balanced budgets ("Austerity" in current terminology) are the cornerstone of our monetary system and financial stability, there comes a time when one must take the bull by the horns. The Euro-Zone needs to create employment for eight million people, It cannot simply stumble along. It is generating the current account surplus that underpins more than 20% of the world's foreign trade and investment, it's eyes must turn inward and stimulate internal investment.

The quickest way to increase employment has been, and will always be, through the construction and civil engineering industries. To whit, the infra structure programs instituted with the Roosevelt new deal or the von Schleicher government or many other similar programs carried out throughout the world in the later 1930's.

I suggest that a series of "development-zones" be established throughout the Euro-Zone with at least three, possibly five, targeted to establish new cities. Cities of the twenty first century with households interconnected by gigabit fiber optic networks, with transport systems that are truly twenty firsy century, powered by green energy, designed by architects and town planners who understand the environment and culture of the area. 

Immediately I see hackles rise.

What about the Government deficits?

Well what about them?  There are 8 million+ people who need employment!

Consider

Portugal … 4.5 million unemployed … job vacancies 15.2 thousand … or 300 people for every vacancy.

Growth in employment can only come out of investment, and if the private sector do not want to invest then Government needs to force the pace! If this unemployment issue does not get resolved the political pressures created by economic migration will become unbearable, xenophobia will rule the day.

The Euro-Zone (collectively) would need to provide much of the funding, particularly during the initial phase of infrastructure development. Consideration could be given to the underlying land area of these development zones being used as security for the bond issues that would take place, Mechanics could be evolved for the ECB to monetise these bonds in an orderly fashion with a form of quantatitive easing directly targeted at employment creation.

Businesses could be encouraged to invest by providing incentives for companies or subsidiaries establishing in the development zones. The incentives could be in the form of a partial tax holiday ( up to 50% of tax payable for 10 to 15 years) dependent on the number of formerly unemployed, being employed by the company or subsidiary, as well as loan financing for plant and buildings. In this way the effect on individual countries would largely be positive with increased tax takings from formerly unemployed as well as the business activity that would arise.

With thought and planning, an idea along these lines would be a clear roadmap for eliminating the unemployment issue, as well as remove many of the pressures building up in society from economic migration. Quantatitive Easing (money creation through monetisation of government bonds) can only provide a real benefit to an economy if it is specifically targeted at creating an environment for development and investment.

 

 

 

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