Economics

Stimulus Used to Stimulate Erroneous Zones

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Over at Bloomberg, Reason columnist and Mercatus Center economist Veronique de Rugy writes about the misdirection of stimulus funds:

With a few exceptions, the data show little correlation between the level of unemployment and stimulus spending. In fact, the opposite is true. The federal government has given far fewer stimulus dollars to states with high unemployment than it has to states with low unemployment.

Here is a chart that compares the five states with the highest and lowest unemployment rates and the amount of stimulus money per capita:

State          Unemployment Rate        Stimulus/capita

Nevada         14.3 percent                $561.55
Michigan       13.1 percent                $648.91
California      12.3 percent                $546.34
Rhode Island   11.9 percent             $164.83
Florida          11.5 percent                $475.67

Vermont        6.0 percent                 $522.42
New Hampshire  5.8 percent              $852.53
Nebraska       4.7 percent                 $591.17
South Dakota   4.4 percent               $1,084.73
North Dakota   3.6 percent               $1,059.95

…The Obama administration was wildly successful if its objective was to spend a lot of money in a short amount of time. Whether that money has done or will do anything for the people that need it most has proven far more elusive. As the saying goes, You can have it fast, you can have it good, or you can have it cheap—pick two.

Sadly, we did worse than that: We only got one.

Whole thing here.

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  1. Translation: “Ha! Ha! Ha! I’m a fuck you ’til you love it! Ha! Ha! Ha!”

  2. “My” congressional rep was bragging a few weeks ago about how much money she got the area — including stimulus funds directed this way. Not only did we get less per capita, but we might as well have never gotten it in the first place. The only projects she mentioned as stimulus funded involved tearing up perfectly good roads without potholes, cracks, or other wear (one of which I live less than a half mile from) and repaving them. You’d think if they were going to spend the money on roads, they could at least pick some that are a little beaten up.

    In short, Nevada didn’t deserve the money anyway. I can only hope that the other states at least sloppily ate their gubmint cheese rather than dumping it into the toilet ASAP.

    1. I’ve seen 3 projects near where I live. 1 involves redoing an intersection that was redone not 2 years ago. The second is a town beautification project which involves putting in pretty masonry sidewalks. The third is 4 laning a section of highway through very rural Kentucky where even if the population where 10x what it is, 2 lanes would more than suffice.

  3. Wouldn’t a cynical spin doctor say, ‘See! See! it worked!!! Now give us more money so we can spend $1k per capitia in California too!”

  4. “You’d think if they were going to spend the money on roads, they could at least pick some that are a little beaten up.”

    I’ve seen my roads go from shit condition to brand new with stimulus funds, and the changes are welcome. So to each his own.

    1. That’s really the problem, mrmagoo, it’s not “each to his own.” If one’s home had a long driveway in comparable disrepair to the average road, or someone had a buisness with a heavily used drive and parking lot with faded yellow lines, cracks, and a few shallow potholes, is that how someone would invest their own funds?

      The bottom line is that anti-stimuli has probably done more harm than good by prolonging the pain, distorting the shit out of markets, and pissing money away. The unhopey,unchangey truth of the matter is that a 14 Trillion dollar economy with 300+ million participants cannot be managed by 535 people, one man, and their respective cronies – most of which, including the president, don’t have any experince in the private sector. No matter your ideology, it’s just not possible. Government intervention and societal engineering just destabilize the economy.

      1. a 14 Trillion dollar economy with 300+ million participants cannot be managed by 535 people, one man, and their respective cronies

        You missed the most important part — the lobbyists. They make sure the money goes to the right sort of people.

        1. Well, they’re damn near interchangable, aren’t they? Literally and figuratively.

  5. MrMagoo,

    How do you like those new roads you didn’t pay for?

    This is all about which elected officials are best at earmarking and/or need something to campaign about for re-election.

    Sadly, people (perhaps even the short sighted mrmagoo) often think this is a sign of their officials doing a good job.

  6. It’s only difficult to understand when you view the stimulus as stimulating the economy rather than choice constituencies.

    1. The Dakotas are choice constituencies? You’d think for Dems, Michigan and California are better fits for core constituencies than either Dakota.

      1. I didn’t mean the states.

      2. Michigan and California reliably go Democratic. Obama needs to shore up his core constituencies in weaker Democratic states for the coming elections.

  7. Wait we got one of those? Which one? I thought the stimulus was backloaded, so it’s not even fast.

  8. I knew Rendell’s full-throated support of Hillary for President was going to come back and bite the commonwealth in the ass one day. We’re not going to get dick. Might as well be a red state.

    1. Oh, they gave you some dick alright! It’s just literal instead of figurative!

  9. The Obama administration was wildly successful if its objective was to spend a lot of money in a short amount of time.

    Not entirely true. A great deal of the money (on the construction type projects) has been obligated but not spent. It takes far too long to actually get through all the paperwork to spend money these days, thanks to various reforms. Shovel ready is really limited to things like resurfacing roads.

  10. If there’s one thing I’ve learned up here (in Washington) and I didn’t really need to come up here to learn it, is the only way to get Congress to balance the budget is to give them no choice, and the only way to keep them out of the cookie jar is to give them no choice, which is why ? whether it’s balanced budget acts or pay as you go legislation or any of that ? is the only thing. If you don’t tie our hands, we will keep stealing

    Read more at the Washington Examiner: http://www.washingtonexaminer……z0z2xtqtXx

  11. Erroneous zones?

    Worst double-entrendre ever.

    1. Well, perhaps; however, Dr. Dyer’s IP counsel shall be contacting both Nick and Reason

  12. Clearly the stimulus was effective, look at the relationship between unemployment and per capita spending. IN high spending states, people are working. See, we need to spend a lot more money, and on things that add no value. Its the only way.

  13. These figures reflect an institution known as the U.S. Senate. Because each state has equal representation, something VdR and Nick probably both know, getting a spending bill through the Senate means that a lot of the money will be doled out, not on the basis of need or population, but on the basis of equal shares for each state. Blame the framers, not Obama.

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  15. Since the real “mulitplier” is probably something like -0.2, this is probably a good thing.

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