June 27, 2010

A Mega High Ratio of Stimulus-Money-Spent-To-Jobs-Created But Did the Dire Economic Crisis Even Exist?

Monique Chartier

Marc Doughty of Pawtucket [H/T the "RISC-Y Business Daily Newsletter" - sign up here] has done the math that I had been meaning to get to:

At the bottom of the June 15 article ("Stimulus-funded jobs appearing") are numbers that should truly frighten anyone who still believes that the government is equipped to put the unemployed back to work.

For $46 million, the state essentially bribed 86 employers to open 270 positions, of which only 32 were filled from a pool of over 800 applicants. Some simple division shows that the cost per job created so far is over $1.4 million. Even if the program succeeded at placing every single qualified applicant, the cost would be over $225,000 per job created, which far exceeds any sort of reasonable return on investment for taxpayers.

It would have been far cheaper to place the applicants on welfare and pay for them to attend GED or community college courses for the duration of their unfortunate circumstances.

Programs like this one (with 4 percent success rates and massive costs financed by public debt) will postpone, not hasten, true economic recovery.

Encouraged by the first wave of such dubious spending launched by his predecessor, President Bush, President Obama insisted that we were justified in saddling future generations with large amounts of our debt because there was a dire economic downturn lurking that absolutely had to be averted by the creation of jobs via lots of government spending. (We're going to pretend for this discussion that much of the stimulus money didn't go to many, many other unrelated "projects".) Yet while all of this government spending was occurring, the vast majority of jobs maintained were in the private sector without a dime of stimulus money. The result has been that the economy continues to stink, though not crash. In fact, despite all of the wild spending (our debt will equal 97% of our GDP next year) Fed Chairman Ben Bernanke observed this week that

financial conditions have become less supportive of economic growth on balance

All that spending. Comparatively few jobs created. Was there ever really an economic disaster about to unfold as President Obama foretold?

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Hey, that's ME! I've been wondering when they'd get around to putting that in the paper!

Thanks for getting me up here, Monique!


Posted by: mangeek at June 27, 2010 2:34 PM

Well, at the end of the Bush era there were 700,000 jobs being lost per month. That would be about 10 million in a year.

Perhaps you don't consider that an economic disaster....let 'em eat cake, right? Problem is, in this country, we take care of people...so telling them to buck up and grin and bear it won't work out too well. If you think the Tea party "Revolution" was big, you can only imagine what might happen if we lost another 10-20 million jobs on top of what we already did.

No, the fixes are never pretty. As we all know from our fairy tales (didn't we really learn everything we needed to know?)....you cannot put humpty dumpty back together again, even with all the kings horses and all the kings men.

However, Monique, I honestly would fail to believe that even you......in all your ideological glory.....cannot understand the fix we were in! The look on GWs face after they told him "we're gonna lose this sucker" (our entire world economy) was a classic.

OK, so now we are positing that GW Bush and all his appointees, economic advisors, etc.......made a mistake? It's an interesting rewrite of history!

If GW did one thing right, it was finally trying to save one patient after he killed most of the rest of us.....

Posted by: Stuart at June 27, 2010 2:53 PM

lol, good job, Mangeek! You also made RISC's daily newsletter, which is where I spotted your letter.

Posted by: Monique at June 27, 2010 4:33 PM

"Well, at the end of the Bush era there were 700,000 jobs being lost per month. That would be about 10 million in a year."

Are we there yet?

"Perhaps you don't consider that an economic disaster....let 'em eat cake, right?"

Since you mentioned fairy tales, it is closer to historical fact that Marie suggested that they dine on "merde". "History is a fable agreed upon".

Posted by: Warrington Faust at June 28, 2010 3:10 AM

Since the news reports are now full of indications of another "Great Depression", or "Long Depression", it is particularly scary that the deficit has been run so high with "stimulus" and "bail outs".

Posted by: Warrington Faust at June 28, 2010 11:58 AM

The program to which you refer is a wage reimbursement with approved spending up to $47 million in RI. If 32 people are hired under the program, their wages need to be reimbursed. Any balance after 9/30/2010 will remain with the federal government.

Posted by: Brad at June 28, 2010 11:23 PM

Monique, it would be impressive if you would post a correction to your article.

Posted by: Brad at July 2, 2010 10:39 PM