Study: Obama Stimulus Bill created/saved 450k government jobs and destroyed/forestalled 1M private sector jobs

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    May 14, 2011 6:11 AM GMT
    http://web.econ.ohio-state.edu/dupor/arra10_may11.pdf
    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.
    Oops? Of course there are still many extremists who believe not enough money was spent.
  • Webster666

    Posts: 9217

    May 14, 2011 6:22 AM GMT
    Government jobs are what got a hell of a lot of people through the Great Depression of the 1930's.

    If we'd done the same thing, on the same scale, during the current George W. Bush Great Depression, our economy would be booming and unemployment would be below 4%.

    Instead, the government waits.

    And, the business community waits.

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    May 14, 2011 6:30 AM GMT
    Webster666 saidGovernment jobs are what got a hell of a lot of people through the Great Depression of the 1930's.

    If we'd done the same thing, on the same scale, during the current George W. Bush Great Depression, our economy would be booming and unemployment would be below 4%.

    Instead, the government waits.

    And, the business community waits.



    Er no. Government regulation and the rise in taxes were what caused the Great Depression to be as bad as it was (restrictions on prices and trade). In fact, Christine Romer's (who was hired to be the CEA chair under Obama and is a widely acknowledged expert on the Great Depression) research pointed out that tax increases had a 3x more negative effect than what was offset by increased spending.

    This study shows that at least in this case, stimulus spending not only didn't help, but hurt and killed more than double the number of private sector jobs that were saved in the public sector. You would propose that even more should have been spent by the government.

    So if I understand your logic - if at first spending doesn't work, we should spend a whole lot more?
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    May 14, 2011 12:25 PM GMT
    riddler78 said
    Webster666 saidGovernment jobs are what got a hell of a lot of people through the Great Depression of the 1930's.

    If we'd done the same thing, on the same scale, during the current George W. Bush Great Depression, our economy would be booming and unemployment would be below 4%.

    Instead, the government waits.

    And, the business community waits.



    Er no. Government regulation and the rise in taxes were what caused the Great Depression to be as bad as it was (restrictions on prices and trade). In fact, Christine Romer's (who was hired to be the CEA chair under Obama and is a widely acknowledged expert on the Great Depression) research pointed out that tax increases had a 3x more negative effect than what was offset by increased spending.

    This study shows that at least in this case, stimulus spending not only didn't help, but hurt and killed more than double the number of private sector jobs that were saved in the public sector. You would propose that even more should have been spent by the government.

    So if I understand your logic - if at first spending doesn't work, we should spend a whole lot more?


    I skimmed this study, but am not familiar enough with regression analysis to dive and argue against it. That said, based solely on the narrative, I'm not convinced that there thesis is supported by the data. It seems like they're claiming causation when all there is is correlation.
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    May 14, 2011 1:17 PM GMT
    riddler78 saidEr no. Government regulation and the rise in taxes were what caused the Great Depression to be as bad as it was (restrictions on prices and trade)...


    The regulation you're referring to is Smoot-Hawley Tariff. Put in place in 1930, by REPUBLICANS to PROTECT American Business, but only deepened the recession.

    Reality is...The Great Depression started because the stock market crashed...,which was caused by speculators. It was prolonged because the banking system failed. People's money was gone. The republicans let the free market solve the problem, but for 3 years nothing happened. People had nothing. No jobs. That is why Roosevelt got elected in 1933.

    The current 'Great Recession" has the same roots. Bush rode the housing bubble from 2002-06. Housing values increased 25% a year. Homeowners saw their net worth explode and took out equity loans like crazy. Working stiffs fancied themselves as financial wizards, and rewarded themselves with new BMWs, luxury cruises...and other things they otherwise couldn't afford. People traded up into bigger homes filled with luxury features.

    But it was all built on phony money. Now we're paying for the 8 year drunk.

    Today, almost 50% of mortgages here in FL are under water. You're nuts if you think these people will spend money. Their net worth is decimated. They spent money based on phony gains, so now they're older and poorer. Psychologically, they feel very poor. Nobody is spending money now...that's why unemployment is high. A government program that puts money out into the economy with people most likely to spend it....that helps the economy, not hurt it.
  • rnch

    Posts: 11524

    May 14, 2011 3:02 PM GMT
    "you can prove ANYTHING with statistics!" ----Homer J. Simpson
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    May 14, 2011 6:10 PM GMT
    southbeach1500 said
    White4DarkerFL saidA government program that puts money out into the economy with people most likely to spend it....that helps the economy, not hurt it.


    Such a program would have to be massive. But there are two problems with that idea:

    1) The Federal government is bankrupt

    2) What you are proposing has failed in Cuba, North Korea and the Soviet Union. I don't think it's gonna work here... just a hunch.


    Incorrect.

    Federal government is NOT bankrupt.

    And the GI Bill and Roosevelt's post-Depression policies more than prove that Keynsian economics work. icon_rolleyes.gif
  • Teqkilla42

    Posts: 338

    May 14, 2011 7:10 PM GMT
    You can make statistics prove any point you want if your torture the numbers enough. icon_rolleyes.gif
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    May 17, 2011 12:49 AM GMT
    Except that the statistics in this paper do not allow them to make their conclusions, with their confidence intervals crossing 0. icon_lol.gif
    http://noahpinionblog.blogspot.com/2011/05/did-stimulus-really-destroy-million.html
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    May 17, 2011 1:03 AM GMT
    http://stoneglasgow.blogspot.com/2011/05/government-spending-vs-unemployment.html

    Unemp+vs+Spending.jpeg
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    May 17, 2011 1:13 AM GMT
    A commentator on that chart (which has absolutely nothing to do with the Ohio State paper, BTW):

    http://stoneglasgow.blogspot.com/2011/05/government-spending-vs-unemployment.htmlin a recession, gdp shrinks (and unemployment rises).

    let's pretend the government does nothing different in response to the recession. government spending as a percentage of gdp therefore goes up precisely because gdp shrinks.

    then all you've shown here is that a recession is a recession.

    that's why you'd want to see this in levels.
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    May 17, 2011 1:16 AM GMT
    q1w2e3 saidA commentator on that chart (which has absolutely nothing to do with the Ohio State paper, BTW):

    http://stoneglasgow.blogspot.com/2011/05/government-spending-vs-unemployment.htmlin a recession, gdp shrinks (and unemployment rises).

    let's pretend the government does nothing different in response to the recession. government spending as a percentage of gdp therefore goes up precisely because gdp shrinks.

    then all you've shown here is that a recession is a recession.

    that's why you'd want to see this in levels.


    Except that in many cases, government spending was a leading indicator. Not sure how you explain that one. Secondly, there are multiple studies that show that government spending in response to recessions happen far after they are even useful.
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    May 20, 2011 2:41 PM GMT
    http://critical-thinker.net/?p=646

    Now, the error bounds on these numbers are rather large. The 90% confidence interval on government jobs created or saved (i.e., the range within which the actual number is expected to fall, with 90% confidence) is 0 to 900,000 jobs, and the 90% confidence interval on private sector jobs destroyed or forestalled is 160,000 to 1,378,000 jobs. But the authors do claim enough precision to categorically state that there was no net increase whatsoever in private sector jobs. They also show that “[s]tate and local government jobs were saved because ARRA funds were largely used to off-set state revenue shortfalls and Medicaid increases rather than boost private sector employment.”

    What happened is exactly what the plan’s critics claimed would happen: that stimulus spending to create jobs comes at the cost of what that money could have done if left in the hands of private industry. Turns out that it cost approximately 2 private jobs for every 1 government job created.

    This was not an unforeseeable consequence; many warned of this. Whether this outcome was unintended or not is a matter of speculation.
  • rnch

    Posts: 11524

    May 20, 2011 2:53 PM GMT
    Webster666 saidGovernment jobs are what got a hell of a lot of people through the Great Depression of the 1930's.

    If we'd done the same thing, on the same scale, during the current George W. Bush Great Depression, our economy would be booming and unemployment would be below 4%.

    Instead, the government waits.

    And, the business community waits.



    the Whole World Waits.