Tuesday, December 08, 2009

Government Spending to the Rescue

Congress passed a $700B bill to save our financial system last year. Alas, they can't seem to spend it, as banks would rather not have the funds than have the government as a partner. Of course, that just means the government will spend it elsewhere, because as economist Brad DeLong states, "At this point, anything that boosts the government's deficit over the next two years passes the benefit-cost test--anything at all." So Obama now Says TARP Funds Can Go Toward Cutting Deficit, Creating Jobs.

It's a shame so many think that government creates jobs. Sure, there is a level of overhead necessary in an economy, providing us with courts, roads, etc., but to think at our current levels of government, that deficit spending is a net positive is simply naive, and if it worked, Japan wouldn't have stagnated in the 1990's, and the ballooning government deficits of Western countries in the 1970's wouldn't have brought the great productivity slowdown that started around 1973.

Consider this boondoggle, spun charitably by my local public radio station:
A weatherization lab and entire energy efficient house at the school are used to teach a variety of weatherization techniques.

West said more than 130 people have been through Summit's new weatherization program. But just a couple dozen have landed jobs.

Abe Hassan, who runs a stimulus-funded weatherization training program targeting minorities in East St. Paul tells a similar story.

Hassan said 19 people graduated from his training program recently at Merrick Community Services but none of his students have found jobs using those skills.

$130 million over 2 years is geared towards green jobs, conflated with an extra minority objective. Very few real jobs--jobs that are from customers paying for services or products-- are created, but everyone can feel good about trying to help the environment, and persons of color. The boom field appears to be in green jobs minority training.

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