CBO estimates that ARRA’s policies had the following effects in the first quarter of calendar year 2012 compared with what would have occurred otherwise:
– They raised real (inflation-adjusted) gross domestic product (GDP) by between 0.1 percent and 1.0 percent,
– They lowered the unemployment rate by between 0.1 percentage points and 0.8 percentage points,
– They increased the number of people employed by between 0.2 million and 1.5 million,
– They increased the number of full-time-equivalent jobs by 0.3 million to 1.9 million. (Increases in FTE jobs include shifts from part-time to full-time work or overtime and are thus generally larger than increases in the number of employed workers.)
So depending on how you do the calculation, the fall in unemployment may have been as low as 0.1 percentage point and the cost per job as high as $4.1 million. If, on the other hand, you take the best outcome, the fall in unemployment was 0.8 percentage points at a cost of $540,000 per job. And if you’d like to split the difference, it’s about $2.5 million for a fall in the unemployment rate of 0.4 percentage points.
Of course, beyond that, which they do not report, the American economy has had by far the worst recovery since World War II with no genuine end in sight.
Textbook Keynesian economics is such nonsense. John Stuart Mill 160 years ago could write that the demand for commodities is not demand for labour, meaning that buying things creates no value, meaning that public spending to raise employment cannot work. Keynesian theory is the economic equivalent of applying leeches, almost a perfect description of what Keynesian economics is actually about.
http://catallaxyfiles.com/2012/05/31/th ... et-office/
My contribution:
Whatever the numbers, even if they are a quarter of those in the article, paying money to fudge employment stats is a short term fix. Unless they are productive jobs with a long term future, the jobs will be gone as soon as the stimulus dries up. It's easy to create these fake jobs.. just pay someone stimulus money to do things that otherwise wouldn't need doing. The free market, sans taxpayer money, is the ultimate arbitrator of whether a job is sustainable or not.
In this vein, here is my proposed jobs programs using stimulus money:
Department of window smashing.. employs tens of thousands nationwide who go around smashing windows. Stimulates the window industry. Increases demand for glass productions, increases employment for window fitters, transport companies and home depot. Everyone wins.
An extreme example, but you get the point. Apart from the necessary public sector jobs, a government's role in job creation is to foster the best social and economic environment possible for private enterprise to employ people. Not to pay people to do jobs that nobody has any need for, that wouldn't get done without taxpayers largess.
I think Keynsian economics has done a lot of good, but the 'borrow indefinately to spend ones way out of a crisis without addressing the fundamental issues' attitude is extremely naive.
90% of borrowed stimulus money should go to infrastructure, where it benefits the economy in the long term. The other 10% should go towards research grants.
