How would an Austrian respond to the claim “the stimulus created more jobs in states that received more benefits, therefore it worked”?
After all it was on borrowed money. Its such a simple question (I am libertarian) but my mind isn’t working right now.
It sucked away capital from other projects that would have served consumer demands better. In that sense, it is nothing but a loss.
Henry Hazlitt’s Economics In One Lesson covers this when discussing the “seen” and the “unseen”. It is very easy to see the seen (jobs from the stimulus), but it is very hard/impossible to see the unseen, or what otherwise would have occured had the stimulus not happened (the shoes that were not bought, the projects not started because of higher interest rates, the businesses/resources crowded out by government spending, etc.).
Like this:
Obama “Stimulus” Protected 450,000 Government Jobs, Destroyed One Million Private Jobs
In their new study, “The American Recovery and Reinvestment Act: Public Sector Jobs Saved, Private Sector Jobs Forestalled,”economists Timothy Conley (University of Western Ontario) and Bill Dupor (Ohio State University) present their empirical findings of the economic impact on employment of the 2009 Obama stimulus package of $787 billion, entitled the American Recovery and Reinvestment Act (ARRA). ARRA was passed based on Keynesian economic theory that claimed that massive federal spending would boost the economy of the Great Recession and create private-sector jobs. However, Conley and Dupor find the following:
Our benchmark results suggest that the ARRA created/saved approximately 450 thousand state and local government jobs and destroyed/forestalled roughly one million private sector jobs. State and local government jobs were saved because ARRA funds were largely used to offset state revenue shortfalls and Medicaid increases rather than boost private sector employment. The majority of destroyed/forestalled jobs were in growth industries including health, education, professional and business services. This suggests the possibility that, in absence of the ARRA, many government workers (on average relatively well-educated) would have found private-sector employment had their jobs not been saved. Searching across alternative model specifications, the best-case scenario for an effectual ARRA has the Act creating/saving a net 659 thousand jobs, mainly in government.
The masses are conditioned by generations of Keynesian propaganda to believe that employment is as such intrinsically good.
Lots of Henry Hazlitt love, what about Bastiat? That Which is Seen and That Which is not Seen. Just read that. It was much more entertaining for me to read, even though Hazlitt is the superior writer, Economics in One Lesson was kind of boring.
Thanks (especially for the study link). I’ve already read Bastiat and Hazlitt, but I guess I wasn’t thinking about how a fair proportion of the debt is financed by American businesses. But still, could some one argue that Chinese money was an addition to the US economy because it might not have been invested in capital here in the states?
Yeah, like $9,000,000 homes, or crappy Chinese goods. Without a stimulus, or a bailout the country definitely would have been plunged into a major economic depression. The amount of wealth the Federal Reserve has to pump into the economy just to keep it breathing is staggering.
After all, they are doing it for the major innovators and drivers Libertarians ejaculate over.
You say that like it’s a bad thing. The government policy of “kicking the can down the road” with regards to the business cycle is only going to lead, inevitably, to a far longer and more devastating depression.
Correction: the Federal Reserve does not pump wealth into an economy. If they did then I think even Austrians would support their actions. The Federal Reserve pumps in liquidity, and all it does in the long run is tend to lower wealth as opposed to where it would be without that extra liquidity.
There’s a good reason that Keynesians describe everything using hyperbole. If they used literal descriptions everything they say would appear anywhere from flat to absurd. Examples:
There happens to be a human cost to all of this. You along with the right-wing fascists like Paul Ryan are itching to strip millions of people of their healthcare, food security, jobs, and other safety nets that the majority of Americans support and have fought for. Doesn’t matter if millions starve to death.
Austrians = the new age Malthusians. There’s a reason why Austrian economics will always be in the reactionary corner.
what proof do you have? You see no human cost to currency devaluation? What job security are you talking about? The human cost and prevention of millions starving to death is precisely what most here would love to prevent., if only you would see.
Snob. There wasn’t a hyperbole in that statement. Without outside intervention the country was sunk. They should have used that money to bailout Main Street.
What a cultist.
Why would the country be sunk if failing banks went out of business? Why wouldn’t other smaller banks snap up their assets and hire their emloyees?
Calling Austrians fascists is the exact kind of hyperbole that you were called out on. We are not trying to strip people of their health care, food security, and jobs. Instead, we want to increase prosperity for all so that people can secure for themselves health care, food security, and jobs.
Do you even know what a Malthusian is?