Crunching the numbers on the stimulus’ job impact
Posted on October 13, 2009 at 11:24 amEconomist Brad DeLong rips apart a Washington Post piece and offers up some basic math to help us get a better grasp on how spending trillions of dollars affects our daily lives.
That looks like a very good deal: buying an extra productive job for an American today at a cost of $2000 per year in higher taxes looking forward–particularly when you think that some of those extra jobs build up our productive capacity to make us richer in the future as well.
Mark Thoma follows up with some more perspective on the political dynamics of a crummy labor market:
I don’t understand why the left has allowed its hands to be tied be the GOP’s framing of the stimulus issue. Of course it’s a political non-starter if you don’t fight back and present alternative arguments. There are benefits to stabilizing the economy by shifting demand from the good times to the bad times even if it doesn’t affect future economic growth (one could even argue that slightly lower growth is an acceptable trade off for enhanced stability, but that too is a political non-starter). People need jobs, and we need to put the policies in place - whatever those are - that can provide them.
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2 Responses to “Crunching the numbers on the stimulus’ job impact”
We need local jobs for local people.
When we run out of oil, families and communities
will be much closer, the jobs will be much
closer, we’ll have lots of live music and
people going to bed when it gets dark.
Can’t wait.
Get in this century Panda… and the economist, DeLong is simply wrong. To wit: if $2000 were the total tab for a “productive job” that would keep someone employed indefinitely (I presume he means this), then he would have a point. But he fails to multiple the $2000 by each tax payer in the country and tally the number of “resulting” jobs. The answer cannot come close to the jobs created on average during each of the past 20 years. We’re talking about efficiencies and externalities (two concepts taught in basic Economics classes). And the evidence that even post-Keynesians agree shows these jobs created by so-called stimulus as not sustainable. What we’re left with is an economy strangled by higher taxes, more restrictive regulation, and capital being crowded out of the new-job generating private sector. I don’t know why our “leaders” keep ignoring these basic concepts of economics. Even Keynes admitted severe shortcomings in his theories shortly before his death.