The Stimulus Seems to have failed

What exactly does "saved or created" mean, and how do you actually calculate such things?
 
Actually I did, but thanks for confirming that you don't know what it means either.
 
Paranormal Inquirer said:
Speaking of which, there goes the CBO now.
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LOL!

So the CBO says the stimulus "created or saved" up to 3.3 million jobs and boosted GDP by up to 4.5%. Let's take a closer look.

Actually what the report says is that based on the anectdotal reports from recipients (public sector employees with an incentive to over report success) and on the models used by the CBO (which are the same models used by private economic consultants none of which predicted the recession), the stimulus bill may have created some jobs.

Furthermore, GDP growth "after" this recession has been LESS than the historical average GDP growth following recessions where there was no stimulus. This (http://www.advisorperspectives.com/commentaries/aci_051010.php ) has a figure that shows that the average GDP growth for the first 3 quarters after recession ends has been well above the GDP performance following this recession in every single period since 1953. The recession in 1981-82 saw an average of 7.5% growth, for example. So this claim is just plain nonsense too. And note that the CBO does not even attempt, in its full report, to compare how the economy would have performed in the absence of the Stimulus Plan. So how in the world can the CBO make the above claims with any confidence whatsoever? It's can't. It's garbage in, garbage out. And the CBO is in the process of damaging it's reputation.

Here's what the former director of the CBO says about the latest estimate:

http://www.foxnews.com/politics/2010/08/25/stimulus-figures-questioned-amid-economic-team-firings/

Aug 25, 2010

… snip …

But Douglas Holtz-Eakin, former CBO director, said the CBO analysis cannot be taken "at face value."

The CBO report not only gives a wide range for stimulus impact in the second quarter of 2010 -- saying between 1.4 million and 3.3 million jobs were created or saved and economic growth was somewhere between 1.7 percent and 4.5 percent -- the models used are designed to spit out positive figures, he said.

"This is repackaging previous analysis at the request of Democrats in Congress," he told Fox News. "This is based on a computer model, and with computer models you get out what you put in, and the kinds of models that the CBO uses is one where the stimulus can't fail to work."
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The Wall Street Jounal put it this way:

http://www.unitedliberty.org/articles/6398-wsj-slams-obama-administration-on-stimulus

All of these White House jobs estimates are based on the increasingly discredited Keynesian spending “multiplier,” which according to White House economist Larry Summers means that every $1 of government spending will yield roughly $1.50 in higher GDP. Ms. Romer thus plugs her spending data into the Keynesian computer models and, presto, out come 2.5 million to 3.6 million jobs, even if the real economy has lost jobs. To adapt Groucho Marx: Who are you going to believe, the White House computer models, or your own eyes?
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And here's what the Washington Times notes:

http://www.washingtontimes.com/news/2010/aug/25/cooking-the-books-on-job-claims/print/

The Bureau of Labor Statistics household survey finds that since April, the total number of people employed has dropped by 495,000.

If that's the case, how did CBO arrive at 3 million jobs created? By counting the number of jobs funded by the stimulus, and then adding "the number of jobs that were created or retained indirectly as a result of recipients' increased income." In other words, each person who received one of the coveted "shovel-ready" jobs actually creates multiple jobs as he spreads around his government cash.

There's an obvious problem with this analysis. That money doesn't come out of thin air. It comes directly out of the pockets of people who earned it from hard work. That's why the jobs "created" must be balanced against the jobs that are lost. If government spending has a multiplier effect through which initial spending is respent, there is an equal multiplier that should be subtracted away as the money that Americans would have spent on their own is redirected to the government. Spending by government employees is no more valuable in creating new jobs than spending by any other workers.

Indeed, there is significant evidence that government spending during recessions (or any other period) has either no impact on total income or a detrimental impact. A 2002 International Monetary Fund report examined 27 developed countries that experienced recessions between 1971 and 1998. It found heavily indebted countries that increased government spending experienced slower growth.
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Or look at this another way. Even if you believe the Whitehouse's and CBO's ridiculous claim that 3.3 million jobs were created or saved … each job cost about $240,000! At 1.4 million jobs created or saved that would be about $600,000 a job! And if you use the true cost of the stimulus per the CBO (i.e., $3.27 trillion), then even with 3.3 million jobs that's almost a million dollars a job! Surely the private sector is more efficient than that? This is liberalism gone mad, folks. :D
 
Chris L said:
What exactly does "saved or created" mean, and how do you actually calculate such things?
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According to the report:
Various recipients of ARRA’s funds (most recipients of
grants and loans, contractors, and subcontractors) are
required to report, after the end of each calendar quarter,
the number of jobs funded through ARRA. The law also
requires CBO to comment on those reported numbers.
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And the CBO knows these people would not have been working otherwise because?
 
Chris L said:
And the CBO knows these people would not have been working otherwise because?
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It doesn't, but given the high level of unemployment we're seeing, it's a reasonable bet. There's already many more people who want jobs than would have them.

The mean duration of unemployment is up to 34 weeks according to the BLS, up from 25 weeks only a year ago. It doesn't take calculus to conclude that if I have to let 100 people go from my staff, most of them will not be working again quickly.

ETA: This is an example of the kind of ludicrous thinking I discussed in this post..

I claim that people who lose their job in a time of high employment would be highly unlikely to find another, precisely because there aren't enough jobs to go around. The opponents of the stimulus apparently argue that they'll get jobs delivering shoes for leprechauns or something. If there are so many jobs available that aren't funded by ARRA money,.... why aren't they being filled?
 
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t doesn't, but given the high level of unemployment we're seeing, it's a reasonable bet.
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So it's the "it could have been worse" argument. Nicely unfalsifiable.
 
If there are so many jobs available that aren't funded by ARRA money,.... why aren't they being filled?
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Obviously they aren't there, and probably won't be when the ARRA funds run out. So when those jobs are no longer "saved or created" do we get to include them in the "success" of the stimulus?
 
Chris L said:
So it's the "it could have been worse" argument. Nicely unfalsifiable.
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Not quite. It's the "it almost certainly have been worse, as evidenced by the following argument" argument. It's just as falsifiable as any other thought-experiment; present a rational argument that supports any other conclusion.

If you think that people currently funded by ARRA funds would still have their jobs without those funds, explain where the funds would have come from. If you think they would have had other jobs, explain where the funds supporting those jobs would have come from (making sure to explain why those jobs aren't available anyway....)

You can't.

The parallels between young earth creation and stimulus opposition are becoming more and more apparent. In the absence of a control universe, you can make any sort of ludicrous claim you like and claim that this claim hasn't been "disproven" or that the alternative is "not falsifiable."

But to do this requires that you ignore the fact that all the actual reason and evidence points towards the modest recovery we've seen being a direct consequence of the stimulus, the modesty of the recovery being a direct consequence of the fact that (as predicted at the time) the stimulus was too small, and the double-dip we seem to be falling into being a direct consequence of misguided and irrational opposition to further stimulus.

And it requires you further to avoid grasping with the actual content and resorting to cheap throwaway fallacies like "it's unfalsifiable." Which, of course, doesn't address the important questions -- "is it rational?" and "is it true?"
 
Chris L said:
Obviously they aren't there, and probably won't be when the ARRA funds run out.
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So you're acknowledging, then, that the CBO is correct in its assessment of the number of jobs saved or spent. Glad to see that.

So when those jobs are no longer "saved or created" do we get to include them in the "success" of the stimulus?
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An interesting conundrum. Would you rather have been unemployed since late 2008, or mid 2010? From the point of view of the participants, and of the economy as a whole, the money spent on the stimulus had the expected effect.

Of course, if you have a headache and take aspirin for it, your headache has gone away. If you stop taking aspirin and your headache comes back, that's not the aspirin's fault, is it?

From a purely actuarial standpoint, though,.... no. Since the ARRA "jobs saved or spent" are reported on a quarterly basis, once the funds run out, the employers will no longer be reporting them. So your little attempt to avoid discussing the actual effectiveness of the stimulus won't work either.
 
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