(cc photo by Ezra Velazquez)
Annie Lowrey explores the waxing and waning stimulative impact of the 2010 Census:
This is far from the most efficient way to tally U.S. residents. Social scientists and small-government supporters argue that an extensive telephone survey supplanted with some physical counts would do the same job, perhaps more accurately, at a fraction of the cost. And many cost-saving technological advances have failed. In 2000, the Census let respondents answer over the Internet. In 2010, they did not. [...]
All that spending meant that the Census has a noticeable and measurable impact on the economy. Measured quarterly, the Census boosted annualized real and nominal gross-domestic product by 0.1 percent in the first quarter of 2010 and 0.2 percent in the second. It reduced GDP growth by similar amounts in the third quarter, even though, last month, Census still flushed $250 million of new government spending into the economy. And it knocked a few tenths of a percentage point off of the April and May unemployment rates, essentially preventing those rates from drifting higher.
The Census actually came in under budget, by about $1.6 billion. Commerce Secretary Gary Locke noted that part of the reason the Census went so smoothly was because of the higher-quality workforce it attracted: Due to the massive number of unemployed persons, the Census attracted more-qualified applicants for jobs. “That highly skilled workforce came up with efficiencies on their own and ideas that were then incorporated community-wide and then system-wide,” Locke said. He noted that a number of Census employees had canvassed for Obama.
This highlights one of the main problematic aspects of fiscal stimulus in general. When the economy is functioning healthily, you increase prosperity by finding more labor-efficient ways of doing things. Voicemail, cell phones, and email mean you don’t need as much administrative support staff to run an organization so the people formerly employed filling out little message cards go do something else with their time and overall production increases. But when your problem is an economy wracked by idleness and excess capacity and you’re trying to put people to work, this logic is turned on its head. The correct way to dig the foundation for a new building is to use a lot of machines. But if you’re merely trying to maximize employment to stabilize the economy, it’d be better to just rely on a huge number of guys with shovels.
It’s genuinely difficult for public officials to get the balance right on the fly, and the experience of 2009-2010 should only re-enforce our pessimism. In addition to everything else, politicians face intense and pressure not to “waste” stimulus money. This, however, pulls in two contradictory directions. On the one hand, a high dollars to jobs ratio looks like waste. But on the other hand, the only way to ensure a low dollars to jobs ratio in an advanced modern economy is to deliberately do things in an inefficient way. What’s really needed from fiscal policy for the next time is a much better and more robust set of automatic stabilizers—some planned-in-advance way of dealing with Unemployment Insurance and something to prevent tax hikes and layoffs at the state and local level.
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September 22nd, 2010 at 10:55 am
main problematic aspects of fiscal stimulus
Dude, would kill to fucking write “problems” like a normal person. It’s one thing to use “problematic” as an adjective. But “problematic” is not actually a noun in the English language; it’s douchebag academic jargon.
September 22nd, 2010 at 10:59 am
I’m hungover, and that last comment makes no damn sense. Matt does use it as a noun in the title, but not in the sentence I quoted.
September 22nd, 2010 at 11:09 am
No, Matt. You don’t look for inefficiencies to implemement. You look for things to do which were considered to be too inefficient to be done before. You dig the foundation with machines, then send the rest of those guys to do something intrinsically manpower-intensive, which would not be economically justified in other circumstances.
They should be fixing potholes and broke sidewalks. They should be building up and re-seeding embankments. They should be repairing and repainting park benches. They should be cleaning up areas where trash has been illegally dumped. There are a huge number of jobs that don’t get done because manpower is expensive.
We don’t need to find ways to make these jobs exist. We need to make ourselves accept that people should be paid a decent wage to do them.
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September 22nd, 2010 at 11:18 am
September 22nd, 2010 at 11:31 am
The “stimulus” from the 2010 Census is the hard-on that Republicans in state legislatures across the country will get
as they realize their gains this November will let them buttfuck the Democratic Party via gerrymandering for the next 10 years.
September 22nd, 2010 at 11:32 am
But if you’re merely trying to maximize employment to stabilize the economy, it’d be better to just rely on a huge number of guys with shovels.
This is a false dichotomy. As Njorl points out, the goal here is to use stimulus programs to fund meaningful and necessary work.
Also, Paulie: I wouldn’t worry if your comments don’t make sense. It’s your scatological/vitriolic tone that makes us all enjoy reading you so much.
September 22nd, 2010 at 11:33 am
Don sure does like to talk about ass-fucking…
September 22nd, 2010 at 11:43 am
Third try:
I live in an area that was crammed full of CCC camps during the Depression. If you travel through the state parks and forests today, you see tons of cabins and dams and tree stands put up by those crews. It’s all stuff people still use.
Interestingly, the locals have all come to valorize these projects and the young men who worked them. You can’t get through a county historical event without some mention of the greatness of the CCC and the value of its legacy.
But this is a staunchly and proudly Republican congressional district. I am not exactly sure where this disconnect comes from, but I do think these people choose to value the CCC not as a jobs program, but as a VALUES program. It set those damn city kids aright! It was all about CHARACTER. Hoodlums become boy scouts!
I am not sure they could be duped again. But I think so. As long as the jobs these people work involve backbreaking labor, comeuppance, mandatory money sent home (and ideally mandatory worship services), you could have your jobs… I mean… character program up and running by tomorrow.
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September 22nd, 2010 at 11:47 am
Infrastructure, please. Not just highway- and bridge-fixing, but high-speed rail, rehabbing for energy efficiency, etc. You could call the alternative social Darwinism, but it’s worse because it will be the luckiest who survive, not the fittest.
September 22nd, 2010 at 12:14 pm
In addition to everything else, politicians face intense and pressure not to “waste” stimulus money.
True. What this really points to is the need to dispense with democracy during severe downturns. My vote would simply be to hand the keys over the the Communist Party of China whenever GDP contracts for two consecutive quarters. We could choose another benchmark — say when we’ve had several quarters of trend-line growth or better — to resume elections.
September 22nd, 2010 at 12:46 pm
Yeah, but if you’re not “wasting” money, doesn’t that give you more money to use on useful stuff?
September 22nd, 2010 at 2:39 pm
“Yeah, but if you’re not “wasting” money, doesn’t that give you more money to use on useful stuff?”
Yes, but that is only a good thing if you use it. Saving money so you can immediately spend it on something else is fine. Saving money just to save it isn’t.
September 22nd, 2010 at 2:55 pm
I think I might see what Matt is going for now.
If your stimulus spending creates products that are worth more than you spent to make them, you are adding to deflation. You added more aggregate supply than aggregate demand. You need to make sure your stimulus projects are actually not profitable. You need to add more purchasing power to the economy than you add stuff to be purchased.
Ideally, you never need to worry about that. Private industry is supposed to scoop up every bit of potential profit there is. However, the banking situation at the beginning of 2009 was bad enough that a lot of profitable ventures could not be funded privately. If the government funded these directly or indirectly, they could have injected more value in goods and services than they injected money. That is deflationary.
Still, miniscule deflation is worthwhile if you are causing growth and cutting unemployment. You can do other things to counteract the deflation. Of course, you can only do that if you are willing to, which seems to be a big problem right now.