February 6th 2009
Obama’s Job Projections And Hockey Sticks
Barack Obama is quite confident – if not particularly specific – about the number of jobs his stimulus package will create. Today, he told a crowd in the White House East Room (with a sleepy Paul Volcker nodding off in the background):
“But broadly speaking, the package is the right size, it is the right scope, and it has the right priorities to create 3 to 4 million jobs, and to do it in a way that lays the groundwork for long-term growth.”
Which is it? Three million jobs? Four million? It could spell quite a difference to a million or so Americans who would like to get back to work.
The answer is simple: No one knows. Of course no one knows! Did you ever think for even a minute that any of the grandiose projections about the stimulus were based in fact? They are not. They are based on this:
Yes, it’s Dr. Michael Mann’s famous hockey stick, the linchpin of all Warmie hysteria – and a bogus fabrication of nefarious computer modeling. Faulty modeling allowed Mann to create a global temperature scenario showing a supposedly true stupendous temperation increase concurrent with man-made pollution – but which failed to show earlier hot and cold global climate shifts.
Obama’s job numbers are just more hockey sticks, the result of computer models running economic data predicated on a theory as suspect as anthropogenic global warming: the government spending multiplier effect. From TCS Daily:
With so many experts placing so much at stake on the basis of this theory, the multiplier must be a sound foundation for public policy, right?
Not exactly.
As economic journalist Henry Hazlitt stated in his 1959 book, The Failure of the ‘New Economics’, “There are, in fact, so many things wrong with the multiplier concept that it is hard to know where to begin in dealing with them.”
For starters, the amount of government spending is not taken into consideration when calculating the multiplier. As Hazlitt noted, “the amount of investment, as such, appears to be irrelevant to the mathematics of the multiplier or the reasoning on which it rests.”
Do you really think twenty dollars of government spending will have the same impact per dollar as $20 billion, or $20 trillion? Believers in multiplier magic do.
You might also get suspicious if you pause and think (something that’s all too rare) and ask yourself, if every dollar the government spends generates a buck fifty or three bucks, then why is the economy so trashed? Just like the global warming models that predict a warmer planet while we’re freezing our kiesters off, the multiplier models aren’t supported by on-the-ground evidence.
The TCS article runs through three reasons why the multiplier model is untrustworthy – to doesn’t consider lost opportunities, it is based on past behavior and human behavior changes, and it doesn’t consider the reallocation of resources that follows the completion of a gov-stimulated project – and in the end, you’re left scratching your head and wondering if the $800 billion package will generate even a million jobs … at $800,000 each.
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February 8th, 2009 at 2:23 pm
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