You are invoking the famous, often-misunderstood fiscal policy outlined by Keynes. Here is the often-paraphrased text from The General Theory of Employment, Interest, and Money Book 3 Ch.10 Section VI [1]:
"Pyramid-building, earthquakes, even wars may serve to increase wealth, if the education of our statesmen on the principles of the classical economics stands in the way of anything better...If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing."
Keynes was specifically referring to a community in which the aggregate propensity to consume (spend) is much closer to 1 (spend 100% of wages) than 0 (save 100% of wages):
In actual fact the marginal propensity to consume seems to lie somewhere between these two extremes, though much nearer to unity than to zero; with the result that we have, in a sense, the worst of both worlds, fluctuations in employment being considerable and, at the same time, the increment in investment required to produce full employment being too great to be easily handled.
If Keynes were observing the situation today in the US, he would probably posit that the marginal propensity to consume is closer to 0 for the US as a whole, as "the increase of employment will tend, owing to the effect of diminishing-returns in the short period, to increase the proportion of aggregate income which accrues to the entrepreneurs, whose individual marginal propensity to consume is probably less than the average for the community as a whole." I.e. the rich have a much lower marginal propensity to consume than the poor, so when wealth accretes at the top, the velocity of money slows, and the economy slows.
He would also argue that because we are at the "natural rate of unemployment" of 5%, that government public works "may become a more doubtful proposition as a state of full employment is approached. Furthermore, if our assumption is correct that the marginal propensity to consume falls off steadily as we approach full employment, it follows that it will become more and more troublesome to secure a further given increase of employment by further increasing investment."
The point? We shouldn't be afraid to take a "job creation" stance when necessary - in times of widespread unemployment, when wealth is distributed more equally and the average propensity to consume is closer to parity. But it should be viewed as a tool that needs to be properly used WRT fluctuating economic and political circumstances.
I don't understand how the example of burying money in mines and then covering it in garbage in order that people would dig them up increases wealth - if anything that is negative wealth creation.
> It would, indeed, be more sensible to build houses and the like;
This is the branch of thinking that should be extended. What exactly should fiscal stimulus _actually_ be building? THAT is the interesting discussion.
We've ruled out burying bottles with banknotes. So, seriously now, what is a truly productive thing for the government to buy?
New water systems? Repaved and widened highways? A super fat information backbone which reaches into every city and town in the nation? What?
Is there ANY category of spending -- ANYTHING AT ALL -- that can put American workers back into a position of global competitiveness?
Every artifact decays. Every quanta of decay is an opportunity to build. This will always be true.
Human artifacts were built to serve our way of life. Yet our way of life has heretofore been driven by a desire to dominate nature. Science has widened our view, now we know that a complex living biosphere is rare and precious, which implies we should attempt to live with a minimum of artifacts and minimum population, with the primary ambition of the remaining population to ensure the long-term survival of the biosphere, both on earth and beyond earth. I envision a garden planet with several major university cities, unobtrusively integrated with the natural world, and a Spacer community that is also colonization/research focused, but also tasked with protecting the Earth from stray objects.
This is a new "way of life" with new priorities, new beliefs, and new rules. It is no small task to get there from here. But I believe it can be done and moreover, even small steps in that direction would be greatly beneficial to us all, especially in the long-term.
I don't think a 1940s economist would recognize our 5% number as real. By "reforming" welfare in the 90s, we dumped millions on the disability rolls and our of the workforce permanently.
"Pyramid-building, earthquakes, even wars may serve to increase wealth, if the education of our statesmen on the principles of the classical economics stands in the way of anything better...If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing."
Keynes was specifically referring to a community in which the aggregate propensity to consume (spend) is much closer to 1 (spend 100% of wages) than 0 (save 100% of wages):
In actual fact the marginal propensity to consume seems to lie somewhere between these two extremes, though much nearer to unity than to zero; with the result that we have, in a sense, the worst of both worlds, fluctuations in employment being considerable and, at the same time, the increment in investment required to produce full employment being too great to be easily handled.
If Keynes were observing the situation today in the US, he would probably posit that the marginal propensity to consume is closer to 0 for the US as a whole, as "the increase of employment will tend, owing to the effect of diminishing-returns in the short period, to increase the proportion of aggregate income which accrues to the entrepreneurs, whose individual marginal propensity to consume is probably less than the average for the community as a whole." I.e. the rich have a much lower marginal propensity to consume than the poor, so when wealth accretes at the top, the velocity of money slows, and the economy slows.
He would also argue that because we are at the "natural rate of unemployment" of 5%, that government public works "may become a more doubtful proposition as a state of full employment is approached. Furthermore, if our assumption is correct that the marginal propensity to consume falls off steadily as we approach full employment, it follows that it will become more and more troublesome to secure a further given increase of employment by further increasing investment."
The point? We shouldn't be afraid to take a "job creation" stance when necessary - in times of widespread unemployment, when wealth is distributed more equally and the average propensity to consume is closer to parity. But it should be viewed as a tool that needs to be properly used WRT fluctuating economic and political circumstances.
[1] https://www.marxists.org/reference/subject/economics/keynes/...