Rooted in Reason: Nurturing the Seeds of Liberty


Unstimulated by maliab
August 31, 2011, 9:07 pm
Filed under: Economy | Tags: , , , , , , , ,

The President will be unveiling his new jobs plan next week.  (Though when seems to be in doubt, as Rep. Boehner has indicated that Wednesday isn’t good for him and Congress, what with the GOP presidential debate and the last minute-ness of it all, and the White House has indicated that they’re not in love with Thursday as a day–with some commentators speculating that they don’t want to compete with the first NFL game of the season.)  If presidential conversation about jobs could create employment opportunities, we’d be at about 0% unemployment right now.

But, of course, it doesn’t.  And it turns out that buying jobs with huge chunks of federal dollars doesn’t do much better.

As the Weekly Standard points out, a study of the hiring practices of firms who received stimulus funds reveals that the stimulus package created as much job poaching as job creation.  Yet more proof (if we even needed it) that Keynesian economic theory so loved by this Administration seems to crumble in the face of the real world practice:

The Mercatus Center at George Mason University has just released an important new study on the hiring practices of firms that used stimulus funds. It’s fairly comprehensive, based on over 1,300 surveys of managers and employees. There’s been very little good empirical data on the stimulus thus far, so the study contains a lot of valuable insights. Among the findings by authors Dan Rothschild and Garrett Jones:

Hiring isn’t the same as net job creation. In our survey, just 42.1 percent of the workers hired at ARRA-receiving organizations after January 31, 2009, were unemployed at the time they were hired (Appendix C). More were hired directly from other organizations (47.3 percent of post-ARRA workers), while a handful came from school (6.5%) or from outside the labor force (4.1%)(Figure 2). Thus, there was an almost even split between “job creating” and “job switching.” This suggests just how hard it is for Keynesian job creation to work in a modern, expertise-based economy: even in a weak economy, organizations hired the employed about as often as the unemployed.

Put simply, stimulus funds caused more job shifting than job creation. Another key finding? Union-friendly wage protections kill jobs:

Among organizations required to pay prevailing wages, 38.2 percent thought that they could have hired workers at wages below the Davis-Bacon prevailing wage (Figure 3) while another 17 percent were unsure. This meant higher costs for the federal government and fewer jobs created.

Of course, merely having your economic philosophy proved disastrously wrong doesn’t seem much of a hindrance to the Left.  Talk about the power of wishful thinking.

Advertisements

Leave a Comment so far
Leave a comment



Leave a Reply (Comments are approved by a moderator before they are posted.)

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s



%d bloggers like this: