Comment of the Day: Quite Likely: Regional Policy and Distributional Policy in a World Where People Want to Ignore the Value and Contribution of Knowledge- and Network-Based Increasing Returns: "'Instead, the government is supposed to, somehow, via clever predistribution, rearrange the pattern of market power in the economy...
...so that the increasing-returns knowledge- and network-based societal dividend is predistributed in a relatively egalitarian way so that everybody can pretend that their income is just "to each according to his work", and that they are not heirs and heiresses coupon clipping off of the societal capital of our predecessors' accumulated knowledge and networks.
This quote implies that it's some pipe dream, but yeah, this is the obvious correct policy. The government needs to take every possible action to increase demand for labor everywhere in the country. And it can absolutely do this through clever redistribution by taxing the rich and spending the money on hiring people. There's plenty of vital work that needs doing by the public sector that has been neglected for decades. The stimulative effect of such a hiring program will also increase private hiring. And the increase in demand for labor that results will produce better wages and benefits in already existing jobs.
