Megan McArdle: Did the Stimulus Save Us? | Hacker News Reader

Megan McArdle: Did the Stimulus Save Us?

meganmcardle.theatlantic.com

23 pointscwan10 comments

The discussion also usually doesn't focus on the fact that the costs of the stimulus haven't been felt yet. It could just be higher taxes and higher interest rates. But it could also be that treasury bills are no longer purchased by foreign governments, and the shell game where the government essentially buys its own bonds will be harder to hide. That is much more serious problem than a crippled mortgage market. I'm looking forward to politicians justifying debasing the currency for "national security".

I just hope that the devaluation of the dollar doesn't coincide with the election of the first latino president. It would be funny as hell, but utterly unfair.

huh? Is that a joke about the predisposition for strong men in latin america, who often have devalued currencies? Many, many countries have experienced extreme inflation. Even the US in the 70s and early 80s was pretty extreme. http://www.usinflationcalculator.com/inflation/historical-in...

The joke had nothing to do with strong men. Everything to do with how devalued currencies in Latin America tend to be, and how many people in the USA are afraid that the growing Mexican presence will bring us poverty.

So if she's in favor of the stimulus, but then points out that it didn't do anything. Why did she say she was in favor of it? If the only thing it causes is higher inflation or taxes?

For a contrary view, see the facts: http://delong.typepad.com/sdj/2010/02/assessing-the-stimulus...

and: http://www.econbrowser.com/archives/2010/02/assessing_the_s....

There is something not discussed here, that I rarely see come up anywhere. Many of the places where stimulus money is available kept workers, started new projects, and even hired workers on the assumption that they would get stimulus money, or on the promise of that money. The power industry is spending lots of money, and keeping lots of workers on, based on money that is not actually spent by the government yet. The power of the stimulus goes far beyond the number of dollars currently spent.

For example see the large outlays lots of companies have put down on "Smart Grid" stuff.

How about quantifying this? How much did each of these jobs cost? Do you really think that the borrowed money wouldn't have created any jobs?

For example, we have stimulus-paid weatherization projects costing over $50k/house. That's economically stupid. We'd have been better off just throwing money out the window of passing cars.

I am not an economist, nor am I an exec or anything so it is all observations but:

1. When we talk about joint academic/industry projects we talk about numbers of dollars on the order of 1M and 10M not 10K and 100K.

2. Lots of conversation from various people along the lines of "we just hired some guys to get ready for FOA-xx" or "we picked up some guys to integrate with the new NERC requirements" where FOA-xx describes one of the many stimulus grants -- at the time many had not been awarded. Now that they have been "awarded" many companies are hiring people to do the jobs. The contracts w/ the gov't still arent signed, so this money is not actually listed as spent yet. I am personally involved w/ a couple of these, this is how it works.

3. Industry meetings/conferences have gotten bigger in terms of # of attendees. Many of the people selling software are new entries to the market.

As for:

* Do you really think that the borrowed money wouldn't have created any jobs? * I have no idea what you are talking about. I never said anything about borrowed money. Which borrowed money? Sure more money may have created more jobs, but at least in the power sector, even when credit was good and easy there wasn't this level of interest and job creation.

About your last statement I totally agree: money spent on something I don't like doesnt enter the economy, therefore cannot possibly be helping things. (actually thats unfair, you seem like the type susceptible to poe's law so heres a bit of help: that last sentence was sarcasm).

> 1. When we talk about joint academic/industry projects we talk about numbers of dollars on the order of 1M and 10M not 10K and 100K.

Pikers. The project that I'm talking about has already spent over $500M out of a $5B budget. http://abcnews.go.com/print?id=9780935

> Lots of conversation from various people along the lines of "we just hired some guys to get ready for FOA-xx"

Giggle. In other words, it's in the noise even for an anecdote.

We're spending around $800B so the overall effect better be massive or it's a waste.

> * Do you really think that the borrowed money wouldn't have created any jobs? * I have no idea what you are talking about.

The stimulous is being funded with a combination of borrowed money and printed money. The borrowed money came from somewhere. That somewhere is likely to have been producing jobs as well, jobs that won't happen because the money went into the stimulus. Unless the stimulus produces more jobs, it's a net loss.

> but at least in the power sector, even when credit was good and easy there wasn't this level of interest and job creation.

Which tells us that the jobs and interest are not driven by market value but by subsidy. In other words, you're being paid to do things that don't make economic sense.

That brings us back to weatherizing houses for $50k a piece. Yes, someone got a job, but do you really think that that's a reasonable way to spend money?

Or, are you arguing that "govt money" is special?

Surely you're not going to argue that money that goes into your pocket is special....

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