Fuck its silent in here.......

[Oleg]

Maybe.

And many of the criticisms are valid. The program has had its flaws. But the attention they have received is wildly disproportionate to their importance. To hark back to another big government program, it's almost as if the lasting image of the lunar space program was Apollo 6, an unmanned 1968 mission that had engine problems, and not Apollo 11, the moon landing.

[morpheus]

Maybe not?   From Leonhardt's piece:

Just look at the outside evaluations of the stimulus. Perhaps the best-known economic research firms are IHS Global Insight, Macroeconomic Advisers and Moody's Economy.com. They all estimate that the bill has added 1.6 million to 1.8 million jobs so far and that its ultimate impact will be roughly 2.5 million jobs. The Congressional Budget Office, an independent agency, considers these estimates to be conservative.

What the CBO has actually said:

http://cboblog.cbo.gov/?p=433

That impact may be higher or lower than the reported number for several reasons (in addition to any issues about the quality of the data in the reports). First, it is impossible to determine how many of the reported jobs would have existed in the absence of the stimulus package.

(emphasis mine)

This doesn't sound like an unqualified endorsement.  This is the real problem with evaluating the stimulus.  The counterfactual - what would have happened if the stimulus were not passed - is unavailable.  Counting the number of jobs that stimulus money was spent on is a poor substitute, so we're stuck with econometric models.  I'm pretty sure Leonhardt picked those three sources because they all put a pretty strong multiplier on government spending in their models, an assumption that is certainly questionable (see Christina Romer's or John Cogan's work as examples; Cogan's estimates for the fiscal multiplier are something like 1/6th those of Mark Zandi's at economy.com).

In my quick research on this I found that Leonhardt basically recycled a 3-month-old NY Times "news" article.  http://www.nytimes.com/2009/11/21/business/economy/21stimulus.html?_r=1 (as a typical "Morph bashing the NY Times" aside, note the "Economists" versus "Republicans" or "conservative-leaning economists" language used.  Partisans vs. experts!)  I can find plenty of economists who think ARRA has done little or nothing to create jobs on a net basis; Don Luskin of TrendMacro Advisors, Woody Brock of SED, and Victor Canto of La Jolla come to mind immediately.  IMHO, the jobs "created" are simply shifted from one sector or region to another at best.  We see the job created but not the job that wasn't created.  Sort of like the broken window fallacy.

[Chuck to Chuck]

IMHO, the jobs "created" are simply shifted from one sector or region to another at best.  We see the job created but not the job that wasn't created.  Sort of like the broken window fallacy.

That argument has more merit as unemployment falls.  In a scenario of underemployment, it's hard to see where jobs are being shifted from.  It's not like there are, right now, a bunch of road construction workers who dropped Municipal Project A to take Federal Stimulus Project Z.

[morpheus]

IMHO, the jobs "created" are simply shifted from one sector or region to another at best.  We see the job created but not the job that wasn't created.  Sort of like the broken window fallacy.

That argument has more merit as unemployment falls.  In a scenario of underemployment, it's hard to see where jobs are being shifted from.  It's not like there are, right now, a bunch of road construction workers who dropped Municipal Project A to take Federal Stimulus Project Z.

The resources necessary to "create" those jobs come from somewhere.  Since the government does not have its own resources it must take them from somewhere else.

[Chuck to Chuck]

IMHO, the jobs "created" are simply shifted from one sector or region to another at best.  We see the job created but not the job that wasn't created.  Sort of like the broken window fallacy.

That argument has more merit as unemployment falls.  In a scenario of underemployment, it's hard to see where jobs are being shifted from.  It's not like there are, right now, a bunch of road construction workers who dropped Municipal Project A to take Federal Stimulus Project Z.

The resources necessary to "create" those jobs come from somewhere.  Since the government does not have its own resources it must take them from somewhere else.

That would be China and investor capital that is unable to find a better source of return (for the risk) than in government debt.

I thought "crowding out" was a Keynsian thing, you fucking liberal!

[morpheus]

IMHO, the jobs "created" are simply shifted from one sector or region to another at best.  We see the job created but not the job that wasn't created.  Sort of like the broken window fallacy.

That argument has more merit as unemployment falls.  In a scenario of underemployment, it's hard to see where jobs are being shifted from.  It's not like there are, right now, a bunch of road construction workers who dropped Municipal Project A to take Federal Stimulus Project Z.

The resources necessary to "create" those jobs come from somewhere.  Since the government does not have its own resources it must take them from somewhere else.

That would be China and investor capital that is unable to find a better source of return (for the risk) than in government debt.

I thought "crowding out" was a Keynsian thing, you fucking liberal!

It's just a fact.  At some point transferring resources from one sector to another (while paying the government middlemen) or borrowing from future revenue streams becomes counterproductive.  I'd guess we've passed that point.

By the way, China isn't even our top debtholder anymore.  They've been selling like crazy, spreading their sovereign debt risk around.  I don't blame them - I think US Treasuries are a fantastic short right now.  http://online.wsj.com/article/SB20001424052748704804204575069172269719754.html

[Chuck to Chuck]

At some point transferring resources from one sector to another (while paying the government middlemen) or borrowing from future revenue streams becomes counterproductive.  I'd guess we've passed that point.

Agreed.  If only we had leadership willing to risk their re-election to tell us that.

[Gilgamesh]

IMHO, the jobs "created" are simply shifted from one sector or region to another at best.  We see the job created but not the job that wasn't created.  Sort of like the broken window fallacy.

That argument has more merit as unemployment falls.  In a scenario of underemployment, it's hard to see where jobs are being shifted from.  It's not like there are, right now, a bunch of road construction workers who dropped Municipal Project A to take Federal Stimulus Project Z.

The resources necessary to "create" those jobs come from somewhere.  Since the government does not have its own resources it must take them from somewhere else.

That would be China Japan and investor capital that is unable to find a better source of return (for the risk) than in government debt.

I thought "crowding out" was a Keynsian thing, you fucking liberal!

Even though Morph already said it'd.

[Dr. Nguyen Van Falk]

IMHO, the jobs "created" are simply shifted from one sector or region to another at best.  We see the job created but not the job that wasn't created.  Sort of like the broken window fallacy.

That argument has more merit as unemployment falls.  In a scenario of underemployment, it's hard to see where jobs are being shifted from.  It's not like there are, right now, a bunch of road construction workers who dropped Municipal Project A to take Federal Stimulus Project Z.

The resources necessary to "create" those jobs come from somewhere.  Since the government does not have its own resources it must take them from somewhere else.

Isn't that the whole point, though?

Namely, that, as demand dries up in a recession, our economy winds up with a whole lot of unused capacity?

And that the goal of fiscal stimulus is to fill the demand gap (which isn't otherwise filling itself) and get all that surplus capacity chugging again?

[Chuck to Chuck]

Namely, that, as demand dries up in a recession, our economy winds up with a whole lot of unused capacity?

And that the goal of fiscal stimulus is to fill the demand gap (which isn't otherwise filling itself) and get all that surplus capacity chugging again?

The capital for that demand has to come from somewhere.  In this case, much of that capital is coming from outside sources.

Interestingly, the debt would be irrelevant were it held 100% by USA'ers.  See, if Morph buys a T-bill and Obama hires Chuck to dig a ditch, then taxes me and Morph and uses the funds to repay Morph, wealth is created and maintained internally.  Government has acted as a processing point.

If, instead, Li Muy Bai buys the same T-bill, only Chuck gets taxed and some of the wealth created is shipped overseas.

If we borrow and tax ourselves to repay ourselves, it's a paperwork clusterfuck.  If we borrow from others and tax ourselves to pay it back, we are losing wealth.

[morpheus]

IMHO, the jobs "created" are simply shifted from one sector or region to another at best.  We see the job created but not the job that wasn't created.  Sort of like the broken window fallacy.

That argument has more merit as unemployment falls.  In a scenario of underemployment, it's hard to see where jobs are being shifted from.  It's not like there are, right now, a bunch of road construction workers who dropped Municipal Project A to take Federal Stimulus Project Z.

The resources necessary to "create" those jobs come from somewhere.  Since the government does not have its own resources it must take them from somewhere else.

Isn't that the whole point, though?

Namely, that, as demand dries up in a recession, our economy winds up with a whole lot of unused capacity?

And that the goal of fiscal stimulus is to fill the demand gap (which isn't otherwise filling itself) and get all that surplus capacity chugging again?

At some point the action taken to fill the demand gap is ineffective because any transfer of resources done by the government has costs, whether it be to pay the government workers needed to administer the program (which affects the current period; could those people be doing something productive?), increased debt service due to increased borrowing (which affects this period and future periods), etc.  This is supported by some recent empirical studies (like the ones I mentioned) which have found that the fiscal multiplier is actually less than 1, and in some monetary environments it's negative.

[Slaky]

I hope you all get your gaps filled, right quick.

[morpheus]

Namely, that, as demand dries up in a recession, our economy winds up with a whole lot of unused capacity?

And that the goal of fiscal stimulus is to fill the demand gap (which isn't otherwise filling itself) and get all that surplus capacity chugging again?

The capital for that demand has to come from somewhere.  In this case, much of that capital is coming from outside sources.

Interestingly, the debt would be irrelevant were it held 100% by USA'ers.  See, if Morph buys a T-bill and Obama hires Chuck to dig a ditch, then taxes me and Morph and uses the funds to repay Morph, wealth is created and maintained internally.  Government has acted as a processing point.

If, instead, Li Muy Bai buys the same T-bill, only Chuck gets taxed and some of the wealth created is shipped overseas.

If we borrow and tax ourselves to repay ourselves, it's a paperwork clusterfuck.  If we borrow from others and tax ourselves to pay it back, we are losing wealth.

Of course, Obama, the tax collector, and the US Treasury employees who have to keep track of how much is owed all get paid in this instance, so it's not zero-sum.  There's a transfer of wealth to rent seekers from the productive classes, namely me (source of capital, and I get taxed on the return I earn from holding that T-bill) and Chuck (source of labor, gets taxed on his wages).

Also, who says I wouldn't have hired you to dig that ditch?  Why does Obama get to decide that ditch digging is the best use of Chuck's time from an economic productivity standpoint?  I might have hired Chuck to dig a hole instead of a ditch and paid less, on net, than the combined cost of Chuck, Obama, the Treasury, and the tax collector, so were there jobs created or not?  I'd say we don't know - the job might just have been simply transferred from one economic activity to another.  The Obama Administration would say yes.

[Chuck to Chuck]

Also, who says I wouldn't have hired you to dig that ditch?

Everyone.  You aren't in the ditch digging business.  That's why we have division of labor as explained by comparative advantage.

Why does Obama get to decide that ditch digging is the best use of Chuck's time from an economic productivity standpoint?

He doesn't.  I don't have to take the jorb.  I could pass on the job and relax and watch 80's TV shows and movies.

I might have hired Chuck to dig a hole instead of a ditch and paid less, on net, than the combined cost of Chuck, Obama, the Treasury, and the tax collector, so were there jobs created or not?  I'd say we don't know - the job might just have been simply transferred from one economic activity to another.  The Obama Every Presidential Administration would say yes.

Politician'd.

[MAD]

I hope you all get your gaps filled, right quick.

Elect Phil McCracken in 2012!