ABSTRACT
The governments took inflation as a sign of excessive consumer spending and unemployment as a sign of underconsumption. In the first event they tended to raise taxes to skim off the excessive purchasing power, and in the second event they reduced interest rates or created extra employment in the public sector. Unemployment and poverty become a source of social isolation, corruption, racism, political instability, proliferation of crime and drug abuse, ill health, unhappiness, and a general deterioration of civilized modes of conduct. The multiplier effect of the newly created jobs on the generation of employment and incomes in the private sector must be estimated. The increased disposable income generated from new employment must be calculated with an eye to the tax revenue accruing to the state from new direct and indirect taxes and from the multiplier effect of new employment.
