This is highly constructive if we increase aggregate demand from the bottom up-
Infrastructure revenue sharing, support of higher education, expanded basic research grants, offering federally funded $8 per hour jobs to anyone willing and able to work, payroll tax holiday, etc.
In sufficient size to restore output and employment in the remaining sectors.
I would not move to support the financial sector elements that mainly function as a brain drain from the real sectors.
The relatively ‘simple’ banking model of the almost distant past employed a moderately paid financial sector of moderate size that was more than sufficient to support relatively high levels of output and employment. For example, housing starts exceeded 2.5 million per year in the early 70’s with a population of about 215 million.
Financial Job Losses May Double to 350,000 by 2009 (Update1)
By Philip Lagerkranser
Nov. 21 (Bloomberg) — The bloodletting in the financial- services industry will accelerate in coming months, with job cuts doubling to about 350,000 worldwide by mid-2009, said Brian Sullivan, chief executive officer of search firm CTPartners.
Reductions on that scale would be equivalent to 20 percent of the global workforce at financial companies before the credit crisis began, said Sullivan, whose firm has worked with Citigroup Inc. and JPMorgan Chase & Co. Banks, brokerages and funds have eliminated about 170,000 positions worldwide.