Recently Post Keynesians have suggested that such a policy is available in the
form of a kind of permanent Works Progress Administration (Wray, 1998). Hyman
Minsky (1986) referred to this as government as ‘employer of last resort.’ Under such a
policy, the government would provide a Public Service Employment (PSE) job to anyone
ready and willing to work. As the economy expands (contracts), the private sector
demand for labour would increase (decrease), and the PSE sector would shrink (grow).
PSE workers would be employed in all kinds of social and public services that would
benefit the community. Elimination of long periods of unemployment would preserve
and potentially enhance labour productivity. The social and economic costs of
unemployment due to income insecurity and poverty would decline, and society would
experience a significant benefit in the form of less crime and other social problems
associated with unemployment. The effective demand problem would be solved by
maintaining aggregate income at high levels, but the PSE approach, unlike traditional
demand stimulus, would address the structural change problem as well (Forstater, 1998).
Instead of workers alternating between employment and unemployment, sectoral and
aggregate change would only alter the proportion of private and public sector
employment. PSE also can address environmental problems. Stimulating the private
sector to full employment would surely result in greater pollution and exhaustible
resource utilization, while PSE activities may be designed to pollute less and use less
fossil fuels.