Economics

Creating Jobs or Making Work?

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President Obama says the $787 billion American Recovery and Reinvestment Act, which he signed today, "will create or save 3.5 million jobs." That works out to roughly $225,000 a job, which seems pretty pricey, especially since many of these jobs are temporary. (Let's put aside, for the time being, the question of whether the jobs will materialize during or after the recession.) The 835,000 or so projected jobs in bridge and highway construction, for instance, will last only as long as the projects do. Likewise the 500,000 jobs in energy-related projects such as weatherizing homes and modernizing the electricity grid, and the 375,000 jobs in environmental projects such as installing water systems and cleaning up pollution. (These estimates are all from a New York Times summary.) And the public-sector jobs "saved" by the stimulus package will be funded for just a few years. So unless a lot of these positions are paying six-figure salaries, this does not seem like a very good deal, job-wise.

That's where Obama's secondary justification comes in. The central idea of the stimulus plan, he said last week, is "to put Americans back to work doing the work America needs to be done." These are "not just any jobs"; there are "jobs that meet the needs we've neglected for far too long, jobs that lay the groundwork for long-term economic growth; jobs fixing our schools; computerizing medical records to save costs and save lives; jobs repairing our roads and our bridges and our levees; jobs investing in renewable energy to help us move towards energy independence." In other words, these are jobs that are totally worth doing on their own merits, because they will deliver benefits that exceed their costs. Regardless of the economy's condition, according to Obama, this money would be well spent.

As I noted last week, that position seems to be at odds with Obama's claim that he wouldn't be spending all this money if it weren't for the recession. That's plausible when it comes to temporary relief like unemployment benefits and food stamps, but it does not apply to all the spending he says is necessary to "meet the needs we've neglected for far too long." The beauty of Obama's dual argument is that he can say the stimulus package is all about putting Americans back to work and then, when challenged on the question of whether this is an efficient way to do that, he can say all the work needs to be done anyway. Conversely, when challenged on the question of whether all these projects are really worth the money being spent on them, he can cite the jobs they "create or save" as a backup justification.

If the projects really were cost-effective, of course, there would be no need to cite the jobs they create. And if creating jobs were an end in itself, as Obama often seems to think it is, there would be no need to find projects that are worth doing because of the public benefits they deliver. In fact, it would be better to throw money around willy-nilly so as to maximize job creation, in which case we surely could get more than 3.5 million jobs for $787 billion.

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  1. With the magic word “Obamarama”, I summon the spirit of Chris Kelly, so that I may command him to STFU already.

  2. Thanks, American Taxpayer, for the $15 million my county is getting to do a walking path on an old rail line. It has been talked about for ages, but no one wanted to put their money where there mouth was. Possibly because every resident is already within five minutes of some kind of trail, etc.

  3. will create or save 3.5 million jobs.

    For how long?

    Reporters never ask that question.

  4. You mean it’s going to cost money ???

    I thought he was just going to stand up there and hold his arms out straight and jobs were going to shoot out of his fingertips. I was all for that.

    This kind of sucks.

  5. I thought he was just going to stand up there and hold his arms out straight and jobs were going to shoot out of his fingertips. I was all for that.

    Yesterday I saw an excerpt from a compilation of children’s requests of their dear leader. One kid asked for Obama to make it rain candy.

    They grow up so fast, don’t they?

  6. In related news, finally some change I can believe in:

    In California, lawmakers worked Tuesday to pass a budget. The state faces a $42 billion deficit, and 20,000 layoff notices were set to go out to state workers.

  7. In fact, it would be better to throw money around willy-nilly so as to maximize job creation, in which case we surely could get more than 3.5 million jobs for $787 billion.

    A few changes in the first half of that sentence could be changed a little, but this should be the rallying cry for those who are more skeptical of government largess.

    But this is only the first step….ha ha. These next few years may be interesting, anything is better the the depression of the last couple.

  8. With the passing of the stimulus there are a lot of people that benefit from this, but also a lot of people that do not.

    I found this video that talks about the winners and losers of the stimulus passing.

    http://www.newsy.com/videos/u_s_winners_losers/

  9. Now, let me offer the American side of things. A look at the billions that L.A. wants shows projects whose main beneficiaries will be IllegalAliens, and some of those jobs will almost certainly be done by IllegalAliens. If we’re going to have make-work jobs, the better solution would be to encourage them to return home over time. Yes, they’ll spend less but they don’t make enough now to have that much of an impact. That would reduce the projects that “needed” to be done (such as school construction) and it would help ensure that IllegalAliens aren’t able to take stimulus jobs from U.S. citizens.

    I encourage other patriotic Americans to go to a public appearance by a stimulus bill supporter and ask them this question on video. We need to do the job that the MSM (and Reason) refuse to do.

  10. Thanks, American Taxpayer, for the $15 million my county is getting to do a walking path on an old rail line.

    Why does anyone need money to create a path? Paths get created by people using them.

    The only difference is the relative width and amount of muddiness. Oh, the horror of walking along a path naturally formed by the passage of many feet …

    I seriously doubt our ancestored worried much about the maintenance of foot-paths.

  11. It would make sense to take a bunch of projects that would make sense to do in the next ten years or so and do them all now when labor is cheap and available. It’s just frustrating that allowable level of scrutiny keeps getting shifted down.

  12. Hey LoneWhacko,

    Shut the fuck up!

  13. Wow, that was nice, I haven’t gotten to do that yet…

  14. Later this summer, after our treasury bonds stop moving at the rate we’ve become accustomed to, most of this proposed spending will be exposed as the cargo-cult styled feelgood fantasy that it is. Then the real decisions will have to be made.

  15. Why does anyone need money to create a path? Paths get created by people using them.

    I honestly don’t think I’ve ever read a more poetic summation of how markets work. Seriously, thank you for that.

  16. Obama’s point, which Jacob probably could have come up with himself if he’d spent, I don’t know, 17 seconds thinking about it, is that his jobs program is a two-fer, stimulating the economy and doing things that need to be done.

    Now, I don’t believe that a lot of what Obama says here is true. A lot of what will be done won’t need doing, and will only function as a stimulant to the economy. But Obama probably does believe that most of it does need doing, but that, in ordinary times, it would not be wise to borrow massive amounts of money to accomplish them.

    All of this, as I say, Jacob probably could have figured out for himself, given about 17 seconds of cogent thought. But at the current time, “Reason” writers are far more interested in misunderstanding than understanding. A little more intelligent criticism, a little less petulance never hurt anyone.

  17. I guess the pre-emptive STFU failed, huh?

  18. Marc you impudent fool! Can you stop the sun from setting? Can you travel in time?

  19. Great headline.. “make work” indeed. In Henry Hazlitt’s book, Economics in One Lesson, he described a whole raft of idiotic regulations introduce by FDR during the great depression.

    For example, the teamsters in New York lobbied so that all visiting truck drivers would have to hire a local New York truck driver to sit beside them for navigation.

    “Various locals of the painters’ union imposed restrictions on the use of sprayguns, restrictions in many cases designed merely to make work by requiring the slower process of applying paint with a brush.”

    “various cities the electrical union required that if any temporary light or power was to be used on a construction job there must be a full-time maintenance electrician, who should not be permitted to do any electrical construction work. “

  20. Hazel, Hazel, Hazel: Get with the times! Don’t you realize that everything must be accessible by those in wheelchairs, the blind, etc.? If a footpath is defined by those with feet, then you have a discriminatory footpath. And it’s probably racist and sexist as well, if you think about it. Duh.

  21. I honestly don’t think I’ve ever read a more poetic summation of how markets work. Seriously, thank you for that.

    Hopefully that was sarcastic. Learn what a UseTrail is, why one might do harm, other uses for trails besides carrying living beings, why one shouldn’t CutAcrossSwitchbacks, and so on and so forth. Also, let us know how many bulldozers you own.

    Libruhtarian: n., someone who’s never actually had to figure things out or do things; see ComicBookStoreEmployee for related terms.

  22. Kelly has a point.

  23. The only jobs the stimulus bill can “save or create” are those of people employed by programs it funds. Projects that would have been canceled otherwise, or new projects and new hires. Let’s ignore “multiplier effect” nonsense. moreover, project cancellation doesn’t necessarily mean job loss for the contractor’s employees, especially if they are unionized. They mgiht have been pulling in a paycheck anyway.

    It would be an interesting exercise to try to track those jobs and see what the actual numbers turn out to be. Is the stimulus really putting significant numbers of otherwise unemployed people to work? or is it just sending money to union workers who would have remained employed anyway?

  24. OLS: I grew up in a rural area. There were, in fact, many completely unmaintened footpaths that were perfectly servicable without the need for someone to come in and lay down gravel. The fact that city dwellers can’t seem to figure out that you can MAKE a trail just by walking on the same spot repeatedly mystifies me.

  25. Alan V.,

    And 17 seconds of thought would have led us to believe Obama was going to take federal financing for his campaign along with the restrictions that come with it; going to call off DEA raids on medical mj dispensaries; going to ensure transparency in the way the bailout money is spent and in his administration in general; etc.

    However, in those instances that 17 seconds of thought would have misled us, because Dear Leader later went back and showed us that we were reading things into his quotes that were not there in black and white. So one can be forgiven for sticking to a literal interpretation.

  26. I’ve forgotten. At what point did it become the function of the federal government to “create jobs”?

  27. Oh,my. Did you just wake up from a 200 year nap?

  28. we surely could get more than 3.5 million jobs for $787 billion

    From nuns, even.

  29. jobs fixing our schools;

    Yes, another layer of educrats is just what we need.

    Seriously, at what point do people start noticing the Soviet model doesn’t work any better for schools than anything else? We’ve taken our most important job and assigned it to our least competent institution.

  30. Bush may have started out claiming the (mistaken) mantle of Keynesian economic stimilus. But Obama & Congress (D) have turned it into something else entirely.

    This $800 billion “package” has far more to do with jamming the Environmentalist Agenda down our throats, than any other single thing. It’s the one and only consistent theme you can find in it. This is what Obama means when he says this “work” is worth doing in its own right. Even if it kills us.

    Of course you realize, the reason Clinton’s first stop was Asia, is that they’re going to make a belated attempt to get China converted to our Carbon Conscience Religion. And try to get them hugging trees too. Because even Obama has to admit that if the Chinese aren’t on board with it, our imposing carbon taxes on ourselves will do little of nothing to slow the problem down (assuming you believe the problem is predominantly man-made which I do not).

    But China will summarily hug a tree (because it feels good), while rejecting carbon taxes, because they’ve got at least half a brain between them over there. At which point Obama & Friends will declare that it doesn’t matter, the US is just going to have to slit its own wrists and pay the carbon penance gods anyway.

    [Side note: what I’d love to see, is the Chinese begging us not to do all this environmentalist bullshit to ourselves. Because without the US market, Chinese economic growth is going to slow way way down and the Chinese know it. Sure there’s a huge trade deficit but what are the Chinese going to do, other than accept US debt as the place they deposit their earnings? There’s nowhere else to go with a bank roll that big.]

    And just wait, when the “Bailout Stimulus” is done and over, they’ll be socializing medicine right behind it. Western Europe, here we come. I expect Thoreau and a few others will be pleased, though the rest of us may not be.

    Historically the US economy has somehow managed to grow faster than the government could dream up ways to kill it. This time around I’m not seeing how that could possibly happen. Because the real economic consequences of all this shit is going to be settling in just about the time we start getting a real swell in the retiree wave.

  31. Seriously, at what point do people start noticing the Soviet model doesn’t work

    They aren’t going to notice. Results aren’t half as important as their “ethical standards”.

  32. Ugh – I feel sick. I cant find a thing to disagree with in the last few posts…

  33. “Obama’s point, which Jacob probably could have come up with himself if he’d spent, I don’t know, 17 seconds…”

    I agree with Alan. This guy is demogoguing the crisis to push through an economic plan under the guise of a stimulus package.

  34. And the public-sector jobs “saved” by the stimulus package will be funded for just a few years.

    Well, they will be firmly entrenched in the baseline, and will be funded indefinitely.

    But, the large point is, these are almost by definition not productive jobs. As public sector jobs, they are a drag on the economy, not a driver of the economy.

  35. Government cannot create any job or any money- it takes these things from the economy. But facts be damned, here we go again with the cheery prediction that each government make-work dollar will be magically transformed into $2.50 because of some mystical “multiplier effect”.

    Reminds me of the story of two drunks walking down the road together. One has a dollar bill and the other has a big jug of wine. And when one of them gets thirsty he hands the dollar to the other, and gets the jug in return. And so they walk along, swapping the same jug back and forth for the same dollar, but assuring each other ” how rich we’ll be when we wake up!”

  36. Don’t forget to deduct the jobs lost when GM & Chrylser down size and close factories (or are those off the book job loss’)…So we’re creating millions of jobs but demanding that the auto industry re-structure and by definition become more efficient by eliminating jobs)…my heads really really hurts now, or is that just a symptom of change I can believe in?

  37. The Extispicator | February 17, 2009, 5:49pm |

    “I thought he was just going to stand up there and hold his arms out straight and jobs were going to shoot out of his fingertips. ”

    and here I thought they would shoot out from a different place altogether, (and they still might and wouldn’t that be a show?).

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