Economy

Stimulus Roundup

by Ryan Young on September 16, 2010

in Economy, Stimulus to Nowhere

Most people doubt Congress’ ability to spend money wisely. The stimulus has given them some proof:

-$800,000 for an African genital-washing program.

-$700,000 to create computer software that can tell jokes.

-$40,000 for ten trash bins.

-$1.6 million to irrigate a golf course inTexas.

-Thousands of dollars to replace – twice – a sidewalk “that doesn’t front any homes or businesses, and leads into a ditch”

-300 truckloads of oyster shells.

Bonus non-stimulus spending: “[T]he Census spent $23,000 on a totem pole in Alaska. Census representative Hector Maldonado says the agency thought it was a great idea. The plan was to increase participation in Alaska, but despite the totem pole, participation dropped in the state by two percent from the last census.”

Study: Cash for Clunkers Didn’t Work

by Ryan Young on September 13, 2010 · 1 comment

in Deregulate to Stimulate, Economy, Stimulus to Nowhere

A new NBER working paper from Atif Mia and Amir Sufi finds that the Cash-for-Clunkers program didn’t work. Here’s part of the abstract:

We find that the program induced the purchase of an additional 360,000 cars in July and August of 2009. However, almost all of the additional purchases under the program were pulled forward from the very near future; the effect of the program on auto purchases is almost completely reversed by as early as March 2010 – only seven months after the program ended. The effect of the program on auto purchases was significantly more short-lived than previously suggested. We also find no evidence of an effect on employment, house prices, or household default rates in cities with higher exposure to the program.

In other words, cash for clunkers didn’t change how much people spent. It only changed when they spent. Sales were higher than normal during the program, and lower than normal after.

As the data come in, they are proving what theory predicts: fiscal stimulus doesn’t work. President George W. Bush tried Keynesian stimulus in 2001. It didn’t work. He tried again in 2003. It didn’t work then, either. President Obama’s stimulus programs aren’t faring any better. It’s time for a different approach.

You Can’t Make This Up

by Ryan Young on August 13, 2010

in Economy, Stimulus to Nowhere

$150,045 of stimulus money is being spent to restore a bridge that doesn’t connect to any roads and ends in an 8-foot drop.

Stimulus backers claim that the project created 1.9 jobs. That’s $78,971.05 per job created. That’s not a very good deal. Especially considering that no jobs were created on net, because that $150,000 was taken away from somewhere else in the economy.

Without the stimulus, that money would have been spent in other ways. Given that most jobs cost less than $78,971 to create, it may well be that the bridge restoration project meant fewer jobs were created than if the government had just left the money where it was originally — your pocket.

Friday Regulation Roundup

by Ryan Young on May 7, 2010

in Deregulate to Stimulate, Nanny State, Regulation

Some of the stranger governmental goings-on I’ve dug up recently:

-Since 1960, it has been illegal to fly a kite in Schaumburg, Illinois.

-If you are a tree in need of help, the federal government has a Tree Assistance Program.

-$18,881 of stimulus money spent on a single sign in Wyoming.

-Concerned about your fecundity? Consult the federal government’s Reproductive Health Drugs Advisory Committee.

-Northern Arizona University spends $75,000 in stimulus funds to install electronic sensors to see if students skip class. (hat tip to The Wall Street Journal‘s Kim Schatz)

-In Alabama, it is against the law to sell artificially colored potatoes.

-Need help with your math homework? Consult the government’s North American Numbering Council.

-In Yukon, Oklahoma, it is illegal for a patient to pull a dentist’s tooth.

Friday Regulation Roundup

by Ryan Young on April 23, 2010

in Deregulate to Stimulate, Regulation

Some of the stranger governmental goings-on I’ve dug up recently:

-It is illegal to deface milk cartons in Massachusetts. The punishment is a $10 fine.

-If you aren’t quite sure about the definition of “children’s product,” a proposed regulation would clear that up. Here’s a small sampling: “A determination of whether a product is a ‘children’s product’ will be based on consideration of the four specified statutory factors as further described in the discussion and examples provided in this interpretative rule.”

-The federal government has an Advisory Committee on Immunization Practices.

-The government spends $23m per year on the National Agricultural Library.

-Wondering what the prevailing consensus is surrounding trailer homes? Check out the government’s Manufactured Housing Consensus Committee.

-Stimulus money is being used to replace peoples’ mailboxes – in some cases against their will.

-Eat your vegetables: The federal government has a Dietary Guidelines Advisory Committee.

-Seasteaders take note: the federal government has an Outer Continental Shelf Policy Committee.

-$110,000 in stimulus money was spent on an industrial-grade, automated pizza oven.

-It is illegal for a 9th grader to have a mustache in Binghamton, New York.

How Wisely Is Stimulus Money Being Spent?

by Ryan Young on April 7, 2010 · 2 comments

in Economy, Stimulus to Nowhere

Not at all, to be honest. For starters, the very notion of stimulus violates basic economics. Taking money out of the economy and then putting it back in has no net effect. But it gets worse. Much worse.

When that money is put back into the economy, it goes to the weirdest places — $3.4 million is going to Florida to build a tunnel under U.S. Highway 27, so turtles can cross safely. A fish hatchery in South Dakota is getting $20,000 for new light fixtures. $50,000 is being spent to resurface a tennis court in Bozeman, Montana.

And so on.

These boondoggles aren’t getting nearly enough press. To help fill the vacuum, the good folks at Citizens Against Government Waste have put up a new website, MyWastedTaxDollars.org. Click on over and check it out. The best feature is an interactive map that shows just how unwisely stimulus funds are being spent all over the country.

Stimulus is worse than a zero-sum game. It is actively harmful. It is government saying that it knows how to spend your money better than you do; stimulus is the ultimate act of hubris. Kudos to CAGW and MyWastedTaxDollars.org for providing hundreds of examples of why government hubris should be replaced with government humility.

Will the Jobs Bill Create Any Jobs?

by Ryan Young on March 18, 2010

in Deregulate to Stimulate, Economy, Employment, Politics as Usual, Regulation

Over at the American Spectator, I explain why it won’t, but a deregulatory stimulus would. Main points:

-Anything that Washington giveth, it must first taketh away from somewhere else. The jobs bill is a zero-sum game.

-When government borrows more, less investment capital is left over for the productive sector.

-Taxes will have to be raised later to pay for today’s increased borrowing.

-Deregulation is a better approach. The biggest obstacles to job creation and economic growth are all in Washington.

Stimulus Spending Helps the Few, Hurts the Many

by Ryan Young on February 22, 2010

in Economy, Stimulus to Nowhere

Here is a letter I sent recently to The New York Times:

February 17, 2010

Editor, The New York Times
620 Eighth Avenue
New York, NY 10018

To the Editor:

Michael Cooper’s article, “Stimulus Jobs on State’s Bill in Mississippi” (February 16, page A1), lists several people who have directly benefited from the stimulus package.

The article names none of the roughly 300 million people directly hurt by that same stimulus package. The money that pays for Roshonda Bolton’s factory job was taken away from other people. They would have spent that money in other job-creating ways.

The stimulus doesn’t actually create jobs. It rearranges them. The best possible result is no net effect. Stories touting jobs saved or created by government are at best incomplete.

Ryan Young
Warren T. Brookes Journalism Fellow
Competitive Enterprise Institute
Washington, D.C.

Not-so-Happy Stimulus Anniversary

by Ivan Osorio on February 17, 2010 · 1 comment

in Agenda for Congress, Deregulate to Stimulate, Economy, Employment, Labor, Regulation

The Obama administration and its allies are trying their hardest to put a happy face on the first anniversary of the the gargantuan $787-billion stimulus bill — officially named the American Recovery and Reinvestment Act of 2009. President Obama claims that the Act helped “save” 2 million jobs, while Ross Eisenbrey of the union-backed Economic Policy Institute (EPI) argues that the stimulus has worked because jobs are being lost at a slower rate than before the Act was enacted. (It’s worth noting that EPI has a direct line to the administration: Vice President Joe Biden’s chief economic adviser, Jared Bernstein, was chief economist at EPI before joining the administration.)

If Eisenbrey is trying to lower expectations, he certainly succeeds. However, he doesn’t succeed in proving that the stimulus was a success. First, he provides no hard numbers, only the “[m]onthly change in payroll employment.” Things getting worse at a slower pace doesn’t mean that things are about to get better. Jobs are still being lost. Once you’re a hole, you don’t need to keep digging as fast to go much deeper.

Second, Eisenbrey argues that because the rate of job losses slowed down after the stimulus was enacted, then the to the stimulus should go the credit. Yet coincidence in time doesn’t prove causation. The proposition that the rate slowed down despite the stimulus — and would have turned around even faster without it – is just as valid an assertion.

However, once you get beyond mere assertion, the numbers hardly put the stimulus in a good light. Elizabeth MacDonald, of Fox Business, provides a useful summary of the jobs situation:

* The unemployment rate has increased since the stimulus bill was enacted, by +1.5% to 9.7%, from 8.2% in Feb 2009.

* The number of people who are unemployed increased by 2.1 million, from 12.71 million in February 2009 to 14.8 million in January 2010.

* The number of states/federal districts with an unemployment rate of 10% or higher increased from Feb 7, 2009 to December 17, 2009 (latest data).

* Payroll employment decreased by 3.3 million (132.823 million in Feb 09; 129.527 million in Jan 2010). Private payrolls are at levels not seen since 1999.

* The construction sector lost 810,000 jobs (6,435,000 in Feb 2009/5,625,000 in Jan 2010).

* The manufacturing sector lost 837,000 jobs (12,377,000 in Feb 2009/11,540,000 in Jan 2010).

* Employment in the federal government (excluding the Post Office) increased by 113,200 (2.068 million in Feb 09 / 2.181 million in Jan 2010). The number of federal, state and local employees is now about twice the number in US manufacturing jobs.

* Most jobs supported by the stimulus so far are public employees.

Even worse, as Veronique de Rugy of the Mercatus Center points out, “unemployment in the government sector accounted for 5.9% of the increase in the economy’s total unemployment which has occurred in the past year.  In contrast, job losses in the non-agricultural private sector have accounted for 81.3% of the total increase in unemployment.”

With more union members now working for government bodies than for private businesses, it’s no wonder organized labor’s allies are so intent on defending the stimulus, while the rest of us pay the tab.

For more on public sector unions, see here and here.

For how to deregulate to stimulate, see here.

Grading Obama’s First Year

by Ryan Young on January 22, 2010

in Deregulate to Stimulate, Economy, Politics as Usual, Regulation, Stimulus to Nowhere

CEI released a comprehensive report card this week on the Obama administration’s first year in office. My contribution is below; the full report card is here. Take a look.

C- Office of Management and Budget – Peter Orszag, Director
Grader: Ryan Young, Journalism Fellow

Spending and deficits are far higher than under President George W. Bush, himself a big spender. But Obama can’t be given all the blame. The bailout and stimulus spending programs that caused much of the fresh red ink got their start under Bush. In a potentially positive regulatory development, the number of pages in the Federal Register decreased from 79,435 in 2008 to 69,676 in 2009. Of course, the contents of those pages matters more than how many of them there are. And on that front, the new administration is business as usual.

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