Archive for the ‘Debt’ Category

Of course the stimulus “worked” — but that’s hardly the point

February 19, 2010 1 comment

New York Times analyst David Leonhardt states the obvious without addressing — conveniently for him and liberal defenders of Keynesian economics — at all the larger question of what might have worked better than the $787 billion stimulus bill.

Of course if you give states money tied to keeping teachers employed, those teachers will stay employed (those are some of the jobs the stimulus “saved”). And of course if you give a business money, tying those funds to keeping people on its payroll (more jobs saved, saved, saved!) or adding people to it, that brand of stimulus will certainly stimulate.

So, to deny that the stimulus worked on the grounds that it didn’t create or save a single job in this way would be stupid (sorry, Sen. Brown). And to argue that the stimulus failed — as it certainly did — because it didn’t work as well or as cheaply as another approach would have, you’d have to understand economics. And since most Republican politicians are themselves economic boneheads, worsened by the fact that they don’t know how to communicate, all they can do is look like retards when they talk about the stimulus bill.

Yes, the stimulus bill created and saved jobs — perhaps millions of them, just as all these economists say. So the important question to answer now, as we look back — and it’s a question Leonhardt didn’t even raise in his piece, much less answer — is simple: at what cost? At what cost, both in real terms and in opportunity costs, did this monumental, some would say historic, spending package create jobs? A quick look at the website about in December estimated that the jobs saved and created by the stimulus in the state of Tennessee had totaled close to 10,000. Impressive, right? Right. Unless you divide the told stimulus dollars spent in Tennessee by the number of jobs that funding created/saved and find that we went into massive debt (which we’ll have to raise taxes pay back) to spend $235,000 on each of those Tennessee jobs. One more time: $235,ooo per job! That’s a helluva pretty penny. We could have given each of those 10,000 government-saved Tennesseans, say, $70,000 checks and said, “Good luck finding work,” and still had enough leftover to triple the jobs saved/created to 30,000. Do most economists agree not just that the stimulus created/saved jobs, but that this was a pennywise way to do it? I’d like to talk to the economist who thinks so, because I’m guessing there are about 300,000,000 Americans who’d beg to differ.

I’m trying to come up with an analogy that fits. Work with me here. Say the president gave you a brand-new Lexus to get you from New York to your home in LA. You’re thinking, “Sweet; I’m in! Five days’ time, gas money, and the risks of driving 2,300 miles are worth it to get a new car!” But then you’re told you don’t get to keep the car; it’s just a way to get you where you need to go. Either that, or you keep the Lexus but you’re responsible for the payments upon your arrival. All of a sudden, you’re thinking to yourself that a plane ticket might be the better way to go; all of a sudden, that drive doesn’t feel so romantic and five days on the road not so efficient a way to spend your time. But you don’t have a choice; the president is here to save the day for you and get you home. And now you’re going to complain about inefficiency? About not taking a plane instead? You’re going to say “this doesn’t ‘work’ for me”? The president has words for you: “It worked.”

So, what’s the plane ticket, then, in terms of the stimulus? Tax cuts. Certainty. Regulatory streamlining. Giving all business owners — and not just a select, pet few you’ve selected for aid based on political factors — what they need to boost the economy: more of their own damn money to spend growing their businesses.

Liberals love to lampoon these simple ideas for their simplicity and they like to call them “tired” and “old,” as if whether something works is purely a function of its complexity or novelty. But they’re tired and old because they work well and they’ve stood the test of time — time, and time again, and they work better than taking money from one sector of the economy and giving it to another … and at a fraction of the cost in a fraction of the time. Kinda like taking a plane from New York to LA for just under $400 and in less than 5 hours, instead of driving that kickin’, expensive Lexus for five days. But hey — you’d get to drive through Tennessee and — who knows? — maybe you’d meet a Tennessean on whom the president spent nearly a quarter of a million dollars to get him his $13-an-hour job pumping your gas.