A Manhattan Project, or Marshal Plan to combat climate change.

I know the political obstacles, but if you can fantasize for a moment, it would be the answer to our problems.

1.  never buy anything on credit
   
2.  use it up, wear it out, fix it up, make it do
   
3.  avoid the stock market like the plague.

The core economic difference today, though, is that back then there was no manufacturing sector in the developing world which today facilitates labor arbitrage and therefore will prevent US-based manuifacturing from providing the employment-based growth in demand.  

A job guarantee program is one in which government promises to make a job available to any qualifying individual who is ready and willing to work. Qualifications required of participants could include age range (i.e. teens), gender, family status (i.e. heads of households), family income (i.e. below poverty line), educational attainment (i.e. high school dropouts), residency (i.e. rural), and so on. The most general program would provide a universal job guarantee, sometimes also called an employer of last resort (ELR) program in which government promises to provide a job to anyone legally entitled to work.

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Benefits include poverty reduction, amelioration of many social ills associated with chronic unemployment (health problems, spousal abuse and family break-up, drug abuse, crime), and enhanced skills due to training on the job. Forstater (1999) has emphasized how ELR can be used to increase economic flexibility and to enhance the environment. The program would improve working conditions in the private sector as employees would have the option of moving into the ELR program. Hence, private sector employers would have to offer a wage and benefit package and working conditions at least as good as those offered by the ELR program. The informal sector would shrink as workers become integrated into formal employment, gaining access to protection provided by labor laws. There would be some reduction of racial or gender discrimination because unfairly treated workers would have the ELR option, however, ELR by itself cannot end discrimination. Still, it has long been recognized that full employment is an important tool in the fight for equality. (Darity 1999) Forstater (1999) has emphasized how ELR can be used to increase economic flexibility and to improve the environment as projects can be directed to mitigate ecological problems.

Finally, some supporters emphasize that an ELR program with a uniform basic wage also helps to promote economic and price stability. ELR will act as an automatic stabilizer as employment in the program grows in recession and shrinks in economic expansion, counteracting private sector employment fluctuations. The federal government budget will become more counter-cyclical because its spending on the ELR program will likewise grow in recession and fall in expansion. Furthermore, the uniform basic wage will reduce both inflationary pressure in a boom and deflationary pressure in a bust. In a boom, private employers can recruit from the ELR pool of workers, paying a mark-up over the ELR wage. The ELR pool acts like a "reserve army" of the employed, dampening wage pressures as private employment grows. In recession, workers down-sized by private employers can work at the ELR wage, which puts a floor to how low wages and income can go.

Critics argue that a job guarantee would be inflationary, using some version of a Phillips Curve approach according to which lower unemployment necessarily means higher inflation. (Sawyer 2003) Some argue that ELR would reduce the incentive to work, raising private sector costs because of increased shirking, since workers would no longer fear job loss. Workers might be emboldened to ask for greater wage increases. Some argue that an ELR program would be so big that it would be impossible to manage; some fear corruption; others argue that it would be impossible to find useful things for ELR workers to do; still others argue that it would be difficult to discipline ELR workers. It has been argued that a national job guarantee would be too expensive, causing the budget deficit to grow on an unsustainable path; and that higher employment would worsen trade deficits. (Aspromourgous 2000; King 2001; See Mitchell and Wray 2005 for responses to all of these critiques.)

I'm as far from being an economics wonk as it is possible to be, so those with more expertise can - please! - weigh in; is this the kind of government spending that would make the most sense and provide the most benefit?

If every other company hired, his company would have more demand.  If he hired, he'd help create demand for some other company's products.

So, every company, by itself, is doing what it rationally should, with the end result being the worst possible one for the economy and all companies as a whole.

Since I don't expect the Fortune 500 to all get together and agree to each hire 1000 people, the game's referee (the government) must stop the game entirely and become the new player.