October 2009

The Obama administration is creating material for comedy with its absurd “jobs created or saved” claims. Our Vice President Joe Biden is always good for a laugh and should be featured more prominently on the recovery.gov website where the administration’s propaganda is posted. It is funnier if we can look at it as a comedy site.

The numbers keep changing by the credibility of the claims is consistently zero: nearly 650,000 unverifiable jobs have been created or saved:

So while the administration was way off on its 30,000 jobs claim, it is now expecting the American public to believe that its 650,000 jobs claim is accurate. And VP Joe Biden takes it even farther in claiming that in reality over 1 million jobs have been created. Perhaps Biden subscribes to the old theory that the bigger the lie the more likely people are to believe it. Already though, several errors have been found in the administration’s new numbers which are basically the same types of errors in the initial 30,000 jobs claim.

Beyond the errors, as it did with the Cash for Clunkers program, the administration is not taking into account jobs that would have been saved or created even without the stimulus package. But simply using the administration’s figures shows just how costly and efficient the stimulus has. To date, $215 billion of the stimulus monies have been spent. That means it has cost approximately $336,000 to create or save each of those 640,000 jobs. Given that most of the jobs have been in education, that seems kind of high since most teachers and administrators do not make anything close to $336,000 per year.

Even if the administration meets its goal of creating or saving 3.5 million jobs by the end of next year, those jobs will come at a cost of approximately $225,000 each. According to Biden though, the stimulus is “operating as advertised,” so inefficiency was apparently a part of the plan all along.

Hugh Hewitt summarizes the ridiculous nature of the claims and the lost opportunity here:

Jobs “created or saved” is already recognized as a laugh line in an era of 10% unemployment, and the politically toxic combination of amusement and bitterness at the spin deepens every time the president or one of his representatives uses it.

The truth is that nearly a trillion dollars that could have been used to generate jobs via robust tax cuts was instead largely wasted. The president could have done many many things with a trillion dollars. What he chose to do was pass out political payoffs. The only lasting thing he has created with the stimulus is scorn for the phrase “created or saved.”


Hillary the Diplomat?

October 31, 2009

What advice is Secretary of State Hillary Clinton giving Pakistan? Is it on how to deal with Islamofascist terrorists? No. First she tells them that she doesn’t believe that Pakistan doesn’t know where al-Qaeda leaders are:

Al-Qaeda has had safe haven in Pakistan since 2002… I find it hard to believe that nobody in your government knows where they are and couldn’t get them if they really wanted to.

The she lectured Pakistan on tax policy:

“At the risk of sounding undiplomatic, Pakistan has to have internal investment in your public services and your business opportunities.

“The percentage of taxes on GDP is among the lowest in the world… We (the US) tax everything that moves and doesn’t move, and that’s not what we see in Pakistan.”

Diplomatic she isn’t, but she may have pointed out a previously unnoticed virtue of Pakistan when it comes to taxation.


National pressure from conservatives against Republican congressional candidate Dede Scozzafava has succeeded. The DIABLO (Democrat in All But Label Only) candidate suspended her campaign for a special election in New York district 23. Good. It looks like Conservative Party candidate Doug Hoffman will win, but even if the Democratic candidate were to prevail, the local Republican party will have an opportunity to vet a better candidate for the regular election next year.


Now even New Gingrich has finally endorsed Hoffman. He announced his support on Twitter with the following message: “Scozzafava dropping out leaves hoffman as only anti-tax anti-pelosi vote in ny 23 Every voter opposed to tax increases support doug hoffman”


Honduras 1, Clinton 0

October 31, 2009

It looks like Honduras has won its four month standoff against its Chavez-supported deposed president Manuel Zelaya and the US State Department. An agreement has been reached that in exchange for letting Zelaya petition the Honduran Supreme Court and Congress for reinstatement, the US will lift the sanctions it imposed on one of Latin America’s poorest countries and will recognize the November elections for a new president. Zelaya is unlikely to be reinstated by the Honduran Supreme Court and Congress who expelled him in the first place when he tried to hold an illegal referendum on changing the Honduran constitution to allow him to run for re-election. It is nice to see the good guys winning against the US State Department and Secretary of State Hillary Clinton.

Still the Hondurans will have to exercise caution during the next few weeks writes Otto Reich, a former assistant secretary of state for the Western Hemisphere:

The bigger danger is Chavez, who is not constrained by scruples, decency or financial limits. Chavez will try to put his ally Zelaya back into office, even for a few weeks prior to the transfer of power, and preferably before the presidential election in November, so as to intimidate the opposition and claim a victory of sorts. The U.S. must do al it can to prevent the Venezuelans and their enforcers the Cubans from interfering.

{ 1 comment }

The Obama administration now claims to have “create or saved” 640,000 jobs with $158 billion in stimulus funds. This works out to about $250,000 of taxes and/or debt per job. Of course, the idea that the government can measure “saved” jobs is complete BS. Think of it this way: if I employ 10 people and I lay off 2, I could claim that I have “created or saved” 8 jobs since I did not lay off the other 8 people. Or, more modestly, I could claim that I “saved” three jobs because at some point I considered laying off 5 instead of 2 people.

It gets worse: not only does Obama take credit for some made up number of jobs saved, the entire stimulus bill just diverted $250,000 per job “created or saved” from the private economy. So, let’s say a job actually created has total payroll costs of $50,000. In order to create this job, the Obama administration took the funds for five equivalent private sector jobs out of the economy. Since the consequences of this diversion are not directly visible, it is hard to state the precise impact on the economy. It could be that five private sector jobs were destroyed to create one stimulus job. Or 100 people each cut their spending by $2,500 each thereby affecting a number of businesses. The combined effect of $158 billion withdrawn from our national economy is very real, but impossible to describe since it depends on how millions of people react to the government’s policy.

The point is that the administration is only reporting what is seen (jobs created), adds a little hocus pocus (“jobs saved”) and completely leaves out the effect of borrowing or stealing (sorry, I mean taxing) $158 billion. Frederic Bastiat wrote about the invisible effects of government action over 160 years ago in the essay “That Which is Seen, and That Which Is Not Seen“:

In the department of economy, an act, a habit, an institution, a law, gives birth not only to an effect, but to a series of effects. Of these effects, the first only is immediate; it manifests itself simultaneously with its cause – it is seen. The others unfold in succession – they are not seen: it is well for us, if they are foreseen. Between a good and a bad economist this constitutes the whole difference – the one takes account of the visible effect; the other takes account both of the effects which are seen, and also of those which it is necessary to foresee. Now this difference is enormous, for it almost always happens that when the immediate consequence is favourable, the ultimate consequences are fatal, and the converse. Hence it follows that the bad economist pursues a small present good, which will be followed by a great evil to come, while the true economist pursues a great good to come, – at the risk of a small present evil.

Bastiat illustrates this effect with several examples. He tells us about the seen and unseen consequences of a broken window to illustrate what is not considered when we only look at the directly observed benefits of a government action:

Have you ever witnessed the anger of the good shopkeeper, James B., when his careless son happened to break a square of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact, that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation – “It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?”

Now, this form of condolence contains an entire theory, which it will be well to show up in this simple case, seeing that it is precisely the same as that which, unhappily, regulates the greater part of our economical institutions.

Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier’s trade – that it encourages that trade to the amount of six francs – I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen.

But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, “Stop there! your theory is confined to that which is seen; it takes no account of that which is not seen.”

It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented.

Let us take a view of industry in general, as affected by this circumstance. The window being broken, the glazier’s trade is encouraged to the amount of six francs; this is that which is seen. If the window had not been broken, the shoemaker’s trade (or some other) would have been encouraged to the amount of six francs; this is that which is not seen.

And if that which is not seen is taken into consideration, because it is a negative fact, as well as that which is seen, because it is a positive fact, it will be understood that neither industry in general, nor the sum total of national labour, is affected, whether windows are broken or not.

Now let us consider James B. himself. In the former supposition, that of the window being broken, he spends six francs, and has neither more nor less than he had before, the enjoyment of a window.

In the second, where we suppose the window not to have been broken, he would have spent six francs on shoes, and would have had at the same time the enjoyment of a pair of shoes and of a window.

Now, as James B. forms a part of society, we must come to the conclusion, that, taking it altogether, and making an estimate of its enjoyments and its labours, it has lost the value of the broken window.

When we arrive at this unexpected conclusion: “Society loses the value of things which are uselessly destroyed;” and we must assent to a maxim which will make the hair of protectionists stand on end – To break, to spoil, to waste, is not to encourage national labour; or, more briefly, “destruction is not profit.”

We should all read Bastiat and apply his observations to judging the actions and demagoguery of politicians when they “break windows”.

{ 1 comment }