An Economic Plan to Generate Employment

The rising rates of unemployment have become a major concern of the developed economies this year. Different economists and political leaders are proposing several plans ranging from tax cuts for small business to large infrastructure spending by governments. A new plan is suggested here.

A grass roots approach is to encourage viable small businesses to grow and increase the number of persons they employ through subsidized government loans. In order to implement such an approach it would be necessary to define what a small business is. The number of employees engaged in any one business organization may define it. Thus a small business may be defined as one that has had at least five employees on its payrolls for at least three years but one that does not have more than fifty employees in any month over the previous three years. Some cut off figures for the definition need to be adopted arbitrarily in order to make the plan workable. The restriction of three years has been proposed here so that businesses do not make any quick adjustments to meet the criterion. Further it ensures a business has been in existence for at least three years and is therefore probably a viable one (as opposed to a new one that might not be viable). Many such businesses may have the potential to expand and increase the number of persons they employ if additional funds are made available to them at low interest rates. Some condition would have to be attached to ensure that the funds once disbursed result in increased employment. One such condition can be a sliding interest rate on the loan that reduces as the number of employees increase.

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An idea of encouraging small businesses to grow is that out of some of these would emerge the business leaders of future with new products, services and business models while some of the older businesses collapse due to their increasing irrelevance in a changing world. As the rates of unemployment decrease all areas of the economy will benefit. It is hoped that the new US administration of President Barack Obama will acknowledge EzineArticles as well as this author whenever such a plan is launched with or without modifications.

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