The “Stimulus” That Actually Costs Jobs
When does an economic “stimulus” actually cost jobs?
When all it does is stimulate the unsustainable growth of hopelessly flawed government programs, obviously.
That, in a nutshell, was the message delivered today by Gov. Mark Sanford, S.C. Policy Council President Ashley Landess and nearly a dozen fiscally conservative lawmakers.
“Nationally renowned economists predict massive job losses if South Carolina accepts stimulus funds and we will still find ourselves in this position facing cuts or tax increases in two years,” said Landess, whose organization unveiled a detailed report pertaining to the bureaucrat bailout monies today.
Specifically, the report showed between 24,000 and 35,000 lost jobs in South Carolina as a result of this “economic stimulus” plan, which come to think of it would make it an “anti-stimulus” plan.
Or an economic “hindrance” plan.
Incidentally, one of the report’s authors is a longtime hero of ours, Dr. Arthur Laffer.
He’s the guy who came up with the “Laffer Curve,” which shows how excessive government taxation actually limits revenue growth, due to the fact that it’s stifling economic activity.
Laffer thinks Washington’s bureaucrat bailout is going to do plenty of stifling here in S.C. – and we have no reason to doubt him.
Seriously, look around you. The only people bitching about Sanford not taking this money are government bureaucrats – a bunch of ineffective noodninks who are flat out lying to people and callously frightening teachers with layoff threats while their cash stockpiles grow larger.
Wait … did we just make that argument a little too effectively?
Why yes, yes we did.
Actually, Laffer, Landess and Sanford did – as they’ve been doing for years.
Growing government – whether in fat times or lean – doesn’t grow the economy, people.
It just grows more government.
Duh.
WEB EXTRAS:
SC Policy Council Website
Comments
By Not Sayin', Just Sayin' on March 31st, 2009 at 2:01 pm
This stimulus reminds me of the stimulative effect caffine has: a brief, sudden burst of good feeling followed by a depressing crash.
By chris on March 31st, 2009 at 2:20 pm
Sanford is awesome…Those who critisize him usually are uneducated people who just repeat the rhetoric of the socialist(neo-cons and dems) majority in government. I hope we can find a few more patriots in our government(ron paul..jeff flake..judge Napolitano)before our great country is gone for good
By Tim on March 31st, 2009 at 2:21 pm
This is also the same Laffer who predicted the housing bubble would never burst, and he would appear to be the only “economist” in the world to say the stimulus will destroy jobs. Not even the Republican idiots in Congress went that far. The fundamental flaw in your and Laffer’s argument is that government spending takes money out of the private sector and keeps it from being spent. We’re in a recession because the credit markets have dried up and the private sector doesn’t have money to spend. The government is the only entity big enough to get the failed free market moving again.
By Snead on March 31st, 2009 at 2:50 pm
“When does an economic ’stimulus’ actually cost jobs?”
When it’s evaluated by a guy who predicted there wouldn’t be a recession and the housing bubble would be fine.
They should’ve just let you write the report, Will. Probably would’ve been cheaper.
By James Wood, Clemson 12 on March 31st, 2009 at 3:38 pm
Fitsnews Sucks. This news site produces some of the least professional articles I’ve ever read. Is a high schooler producing this? I’m a pretty fiscal conservative and I think mark sanford and myself would gladly tell this news source to go F*** themselves. How in the heck did fitsnews win an award? This is a joke and I will never visit this website again. Learn how write better and don’t use 5th grade language.
By Craig on March 31st, 2009 at 4:05 pm
Wow reading tim and Snead’s comments, I cna see that the tax and spend libs of the 60s and 70s are back in vogue. Laffer would be the guy who designed the policy that cleaned up the mess the tax and spenders created in the 60s and 70s.
By Pat Hendrix on March 31st, 2009 at 4:08 pm
Hee, Dr. Laffer, the Pied Piper of crack pot supply-siders everywhere. Perhaps his report will be as spot on as his brilliant critique of the housing market.
By chris on March 31st, 2009 at 4:23 pm
Like I said …SNEAD!!!!!…Learn somthing before you comment.
If you are given stimulus money and it mandates you to start new positions that dont exist.Then 2 years later that money is gone.Where does the money for those jobs come from?????
You either GREATLY increase taxes or you cut those jobs…which would be job lose DUH!!!!! I dont want my taxes raised for jobs that arent necessary…There re already too many of those now.No wonder this country is in such bad shape..The majority of people have been dumbed down so much they cant understand the simplist facts
By Darth on March 31st, 2009 at 4:38 pm
It costs jobs when teh “shovel ready” projeks hire more illegals than norte americanos that won’t do “those jobs” building infrastructure, like the Jimbo Clyburn bridge from somwhere to the swamp on the other side of the lake…
The money that ought to go into INS enforcement goes to the 51st state, South Texas, aka Mehico! You don’t need to be Henry McMaster to recognize that isn’t Schafer’s place on I-95 in the corridor of hypocrisy… (what was the Dillon County school district’s surplus, more or less than seven figures?)
By Anna on March 31st, 2009 at 5:05 pm
Im so sick and tired of people thinking that other peoples problems dont effect us!!!!!! thats why were in this damn recession in the first place its time for people to believe in reciprocity!!! of course the stimulus package will create jobs..why would the obama administration do something that wouldnt help ,the experts that work with the federal government are far more sophisticated than any average bloggger.We all invest our money into this country not just the middle class!!!! so isnt it the governments responsibility to invest in us when times get hard?
By Pat Hendrix on March 31st, 2009 at 5:46 pm
Chris, not sure that holds water. If you government, for instance, paid to have high-speed rail built form Columbia to Charleston, that would, you know, create jobs. Once the economy begins to pick up after this weak period, then the market will have recovered enough to sustain business that were helped during the previous years. This isn’t about creating new jobs at DNR or DHEC, it’s about providing a cushion in a weak period of growth.
By Mab on March 31st, 2009 at 6:14 pm
Recession is when your neighbor loses his job.
Depression is when you lose your job.
Recovery is when Obama loses his job.
[Author unknown]
By Pat Hendrix on March 31st, 2009 at 6:18 pm
The main cost in goods and services produced is in labor and labor is a wasted asset. Labor lost can never be regained. And when you have unemployment as high as SC, it’s critical to get that potential to work. This isn’t digging a hole and filling it in to keep hands busy or having extra people mill around in the DMV, it’s about putting idle labor to use to build needed infrastructure – roads, bridges, schools, high-speed rail, etc. Eventually the economy will turn around and the market will pull in the labor previously utilized for infrastructure construction. The Great Depression saw the exact same scenario. Today you can see the bridges, buildings, dams and airports constructed during the depression still being used.
By Statehouse Watcher on March 31st, 2009 at 6:26 pm
Anna: “Isn’t it the government’s responsibility to invest in us when times get hard?” Sugar, where do you think the government gets the money to “invest in us”?
By Are We Really Having this Conversation? on March 31st, 2009 at 7:11 pm
@Hendrix: “it’s about putting idle labor to use to build needed infrastructure – roads, bridges, schools, high-speed rail, etc.”
Holy cow…do you really believe that? Go read the stimulus package. NOT ONE DIME of what Sanford is refusing to take goes for infrastructure. ZIP. ZILCH. You got sold a bill of goods, buddy, and our new President is the one peddling it. This money is for school programs and health care. No new jobs. Period.
“The Great Depression saw the exact same scenario. Today you can see the bridges, buildings, dams and airports constructed during the depression still being used.”
The spending of which you speak made the Depression worse, not better. The War ended the Depression. How about that for an economic plan?
Seriously, do they teach history anymore? Back when they did, they taught that those of us who failed to learn it were doomed to repeat it.
My prediction: the next shoe to drop will be protectionism — thus follwoign Smoot-Hawley. The Japanese and Germans are getting ready to object to the bailout of GM because it is a hidden tariff: putting Toyota and BMW at a competitive disadvantage. Same thing the euors have been syaing about Boeing for years. A trade war will follow, and we will go deeper into recession.
Please, for the love of God and Country, would somebody please read their history books.
By Gillon on March 31st, 2009 at 8:52 pm
StateHouse Watcher: In a democracy the people choose those who govern them and provide the money through taxation to run that government. If the government then “invests” in them as, e. g. through a stimulus package, they are simply returning the money to the people. It is not lost or sent out of the country, as for example the ten billion dollars a month we are spending in Iraq. We are spending American taxpayer’s money on Americans and at a time when many need temporary help. How can anybody argue with that, except maybe those who are fortunate enough not to need a helping hand? Obviously, SC, with the 2nd highest rate of unemployment, and with one of the fastest growing rates of unemployment, needs help. The Federal government is offering that help. Turning it, or some of it, down makes no sense at all.
By Jennifer on March 31st, 2009 at 11:07 pm
Econ lesson time: Government doesn’t “create jobs.” It re-distributes wealth. It literally takes money from some taxpayers and gives it to others, period. So, you aren’t creating jobs. Job creation is about a company that starts up based on a need for something, then provides it at a profit. That company pays its employees, and pays its suppliers and its taxes and its service providers, etc. Money is multiplied, and when the products are good and in demand, there is more revenue to pay more people to create more jobs. Not so in government. Government takes tax dollars from companies and citizens, leaving them less money to do all the things that grow the economy, to pay for one “stimulus” worker in a short-term job.
Think about it…when the money is gone in two years, we’ll have a major spike in unemployment because all those dollars will be gone and there will not have been any long-term jobs created with those dollars, nor anywhere for the unemployed to go to work. Stimulated jobs go away. And then everyone pays more.
By Marvin on March 31st, 2009 at 11:14 pm
Dr. Snead: Feel free to evaluate Laffer’s reports and explain in detail why his methodology is flawed, and what the proper way to calculate economic impact would be.
Dr. Tim: Can’t believe you said the government is the only big enough entity to get the free market moving. Damn, that was a stupid statement! Capital is dried up precisely because government has overspent and overborrowed and taken money out of the private sector, which is barely private anymore because so much of it has been subsidized by government. When businesses are irresponsible, they need to absorb the costs and not pass along to taxpayers. But our House Speaker and Senate Finance Chairman think all of us should assume the risks of “venture capitalists” and crazy clusters….wonder why SC has such high unemployment? Look no further than the Statehouse for the answer.
Dr. Pat: Oh, Geez. High speed rail? You cannot be serious in this state that we are going to spend money on something that big a waste. Again — you could hire a few workers to do some infrastructure projects. But please explain what happens when the money dries up and those people are out of work. Hint: there are no jobs for them because the private sector had to spend more of its available capital to pay for the government workers to build its infrastructure instead of its own. There is no “market” to pull the workers in.
All of you government employees or lobbyists: The New Deal didn’t end the Depression, it made it worse. In fact, during the Depression, new excise taxes were imposed that shifted more the tax burden onto the middle class. The recovery came about from the renewed trade with US allies during the War — the exchange of actual goods and services. That’s the only real economic stimulator.
The Policy Council report is cause for alarm, and we better pay attention and start demanding some radically different behavior from the legislature, and fast. Or we will be in even worse shape in two years.
By watching marshall on March 31st, 2009 at 11:14 pm
simply put, this guy,sanford, is the biggest doofus, wankerhead to ever be elected to an office of this magnitude… what the hell does this guy do all day?
By Red Bank Bar on April 1st, 2009 at 5:46 am
folks is still morally and intellectually bankrupt, channelling Herbert Hoover. As a partisan democrat, I like it. Repugnants will never be a Congressional majority in our lifetimes keeping up this sort of plutocratic nonsense.
Expecting Laffer to offer anything of any value on this economy is like expecting folks to tell us how to decrease domestic violence.
By B on April 1st, 2009 at 6:52 am
The government is wasteful. Terribly so.
I would rather have them send BIG checks to people at random than to attempt these grand plans. They simply are not capable of pulling it off without huge waste and fraud.
By Sam on April 1st, 2009 at 6:53 am
Ashley Landiss is a godess.
By Snead on April 1st, 2009 at 9:47 am
“Dr. Snead”
Shit, I like that.
Marv, I wouldn’t waste my time reading something written by a guy who said there wouldn’t be a recession. Why waste my time? I might as well read SC blogs; their predictions have the same 50/50 probability.
By Pat Hendrix on April 1st, 2009 at 10:54 am
“Are we really having this discussion”
The issue was over the entire stimulus plan, not the simple set aside. My earlier point remains unchallanged.
On to your next point:
I am an historian and anyone that beleives that the Great Depression was prolonged by the New Deal is so idealogically blind that they are unwilling to confront the stubborn facts.
From 1929 to 1933 when the Republicans had the presidency and the Congress, GDP dropped by 25%, personal dropped from 90 billion to 50 billion, 20% of banks had failed, and unemployment was 25%. Industrial output was halved.
New Deal begins in 1934 and the economy grows by 10.8%, 8.9% in 1935, 13% in 1936 and 5.1% in 1937 (the year the New Deal was scaled back because of deficits). In the same period unemployment goes from 25% to under 10% and economy has recovered to pre-Depression levels.
http://www.huffingtonpost.com/hale-stewart/the-great-depression-pt-i_b_154730.html
Now having looked over these facts, explain to me how this made the Depression worse? You need to stop listening to Limbaugh and Amity Shales pushing this silly revisionist history that’s grounded in nothing more than wishful thinking and bad ancedotes.
Here’s a great review of the Conservative myth maker, Shales, on the New Deal:
http://www.tnr.com/booksarts/story.html?id=82c53220-7594-4ece-a136-a3b2f54243ec
By BC on April 1st, 2009 at 11:26 am
First, economics is a social science that is applied on a daily basis and must be checked and evaluated often to test the balance. Second, the free market system works great only when it is working. All industries are connected by either direct or indirect means which affect the other at some point. How about some of you answer this question, what would have happened if President Obama stepped into the Oval Office and did nothing? Lets assume that he even went as far to veto the entire American Recovery and Reinvestment Act from the moment it hit his desk. What would many of you say then? What would happen to the entire economy overnight? How about that 1.3 trillion dollar deficit that the Bush Administration left for the Obama Administration to find a way to fill. Learn your history, the previous administration will either leave a strong nation with growth and prosperity or a gaint mess for the next administration to fix (in which they are many times praised or blamed for the previous one). Now I want to hear some real thoughts in the answers…none of that Fox News or Rush rhetoric. Also, if you present a figure you should be able to source it. Oh…the 1.3 trillion dollar deficit is from the Congressional Budget Office in Washington, D.C. This information is public knowledge and it clearly indicates that this amount is from the previous administration effective December 31, 2008.
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