Power And Dollar

Obama, How Much Per Job?


Obama’s message in the first presidential TV press conference was straight forward.  Who was he talking to?  Sure we all want get going with the recovery.  Where is the problem?  If there were not problem, Obama would not have been talking.  Can the TV appearance be credited for the Senate passage?  Hardly. 


Stimulus (by now, it should be stimuli) bill got going because 3 Republicans voted with the Democrats.  Nancy Pelosi is having the no-compromise stand.  However, the margin in the Senate is 2 Republican votes.  Nancy Pelosi may actually get hurt at the end.  Republicans have no problem with sinking since they are sinking a Democrat president.  The remaining Republicans got fairly safe seats.  Even if there is a backlash against Republicans, they felt they got their seats firmly.  House Republicans’ attitude is the proof.  Senate Democrats understood this fully.  That’s why Senate Majority Leader Reid says “the differences are minor”.  They are minor only when you want to compromise.  Reid is basically telling Pelosi to get it over with.  


Was Obama talking to Nancy Pelosi?  Or Senate Republicans?  Does public opinion carry weights on the Senate Republicans?  Hardly.  May be to someone like Palin who has national inspiration.  For the Senate Republicans, it cannot be appealing, at least not for another one and a half year when the midterm election is up or Republican primary is up.  So, could Obama be trying to build public support against Pelosi?  That would be an entertaining idea. 


$838B to create how many jobs?  The up side says 3.8M jobs.  Let’s say 4M.  So, we will spend $209,500 per job creation.  And let’s round it down, say 209K or even 200k per job and take the general rule of thumb that another $20 is needed for payroll tax and benefits.  We are looking at $174k per job (round down again).  What kind of job are these, actually?  And I guess $174k / job is okay because they are not $500k executive pay?


Gary Becker (1992 Nobel and right wing) gives the lowest multiplier so far I have read, below 1.  Let’s take that multiplier as half of 1.5 (the consensus he claims).  We are looking at 0.7.  In that case, the actual $ per job creation is $130k per job creation.  Does it make you wonder if you want to drop you current job and take one of these 4M jobs that are to be created by the government?


Yes, this is very cynical.  That is very inefficient.  That is exactly the point of the Senate Republicans.  Here is the however.


However, what is the cost of inaction?  How little is “just enough” for recovery?  This is not a typical recession.  A lot of this recovery is related to confidence: consumer confidence and investor confidence.  Any kind of stimulus of this magnitude cannot really afford a staged approach.  The stimulus has to be big enough to create a reverse shock effect to ignite activities.  The problem with staged approach is each new stimulus actually reinforces the perception that “We are doomed. We have tried so many times and we failed.  Give it up.  We should not try it again.” 


So you may agree to Senate Republican’s message.  However, can you afford to err on the “right” side?  Or would you rather err on the left side?



February 10, 2009 - Posted by | banking, Current Events, 美國, Democrats, obama, opinion, politics, Regulation, Republican, wordpress-political-blogs

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