$30B IT Stimulus Will Create Almost 1 Million Jobs

itif writes "This report takes a look at how many jobs you get if you invest $10 billion each in three different IT infrastructure projects — broadband, health IT and the smart grid. It argues that if you are going to be spending billions on a stimulus package, investing in 'digital infrastructure' creates more jobs than physical infrastructure (e.g. roads and bridges) in the short-term, and you get a whole host of other benefits in the long-term."

Comments

Bad economics

[Joey Vegetables]

You will get NO net jobs. Every penny spent on a "stimulus" must be taken from taxpayers, either directly or indirectly, either now or in the future, and that penny will NOT be spent creating jobs elsewhere. At best, you are taking away future jobs to support current ones, or, to state exactly the same thing in different terms, you are borrowing from the future to support unsustainable lifestyles now . . . which is exactly what got us into this mess to begin with.

Re:Bad economics

[DragonWriter]

You will get NO net jobs. Every penny spent on a "stimulus" must be taken from taxpayers, either directly or indirectly, either now or in the future, and that penny will NOT be spent creating jobs elsewhere.

If every use of money (including taking it in cash and stuffing it in a mattress or lighting it on fire) were equally effective at creating jobs, this argument might be relevant (except that the relevant thing isn't that every penny must be taken from taxpayers now or in the potentially-infinitely-distant future, but that every penny must be taken from some other use right now, whether its in the form of taxation or borrowing from someone who has money and would use it for something else if they weren't lending it to the government.)

Of course, not every use of money is equally effective at creating jobs, and even moreso not every use of money is equally effective at creating jobs within the US economy, so its pretty clear that changing how money is used by either taxing or borrowing money that would be used for one purpose if it were not taxed or borrowed and applying to a different purpose can create more (or less, depending on the uses the money is taken from and the uses it is put to) jobs than would otherwise be the case, and even more certainly the case that doing so can create more jobs in the US economy than would otherwise be the case.

Re:Bad economics

[mc6809e]

If the $100 is spent now, and the multiplier effect takes place now then it's worth say, $100 x R.

If the $100 is simply saved, and spent at a future point then at that future point in time, $100 is still only worth $100.

The net effect of the future $100 would be delayed an additional time until it is actually utilized.

But even saved money gets spent by those that borrowed it from savers. There is very little money sitting idle.

All the government is doing here is diverting saved money that would be spent by borrowers in other parts of the economy and redirecting it to government projects.

It doesn't create jobs. It reallocates jobs.

Re:Bad economics

[Anonymous Coward]

People sitting around doing nothing is wasted capital. Even if you have to borrow to get them to do work, you have produced something greater than your investment.

The idea that the private sector would more efficiently allocate human capital is irrelevant in deep recessions. In these cases, the private sector is quite literally sitting around waiting for someone else to take the risks.

Re:Bad economics

[beanyk]

As someone who might be an H1B visa holder in the not-too-distant future, what's your problem with them? Is it that we didn't -start out- in the U.S., or that we might leave in the future, or that we're sending envelopes stuffed with cash back home in the mean time? While here, we're paying taxes and consuming locally bought (not locally produced, usually) products just like everyone else ...

Re:Bad economics

[ip_fired]

I think the majority problem that people have with H1B visas is that the H1B visa holders end up working for less than a similarly skilled US worker would normally ask for. As a result it is seen as having their wages pushed down for those who are already here in that particular industry.

So, when you come over as an H1B, don't settle for a reduced wage. Find out how much they are paying for someone with your experience in the area and then ask for that.

Re:Bad economics

[shaitand]

All of this pretends creating jobs is a magical and wonderful thing. In an ideal economy no jobs would be needed, machines would do the work and wealth would just be distributed to citizens who merely invested it in their choice of machine warehouses.

Net Value is what must be increased. Our economy has gone astray in a number of areas. A service-based economy is a great choice for a poor nation with limited resources because it is cheap to educated individuals to perform services. A service-based economy is great for banks which siphon off money as its exchanged, the more fluid money the better banks do and service is fluid as can be (banks don't increase net value). Refining and utilizing natural resources is what increases value. Clean a floor and get paid $100 and you've moved $100 around. After the fact you still have one floor and $100. Make a blanket and sell it for $100 and you've turned $20 of raw materials in $100 worth of raw materials leaving you with $100 and $100 worth of materials, or a net value gain for the nation of $80. When as a nation you have a largest pool of national resources in the world, this is the only way to go.

The U.S. shouldn't be investing in IP generating ventures, IP is artificial value that depends upon regulation to maintain its artificial scarcity. A scarcity that our competitors will not honor. The U.S. should be investing in its own manufacturing and resource infrastructure. Stop taxing the production and profits from materials that qualify for a "Made in the USA" tag and eliminate taxes on the pay of workers who make said products.

Re:Bad economics

[DragonWriter]

All of this pretends creating jobs is a magical and wonderful thing.

No, it is based on the fact that, in the real world, creating jobs is a good thing. Neither "magical" nor "wonderful" are relevant.

In an ideal economy no jobs would be needed

No, in an ideal world no jobs would be needed, but since such a scenario would not involve scarcity, it would arguably not even have an economy, which is a means by which limited resources are distributed.

machines would do the work and wealth would just be distributed to citizens who merely invested it in their choice of machine warehouses.

Certainly, there is some attraction to such a pure-capital economy (though I wouldn't call it ideal.) But its not the real world, nor is it something realistically attainable in the short term. Consequently, in the short-term, dealing with the actual consequence the actual recession has for actual people, creating jobs is a good things.

Inasmuch as it is possible for people to even begin to approach the kind of life they would have in your proposed pure-capital utopia, they need investable capital -- i.e., money to invest beyond that necessary to spend for self-maintenance. For most people that haven't inherited large sums of money or won the lottery, that means they need a job. So, even if we accept that what you propose is the ideal economy we should be striving for, we need people to have jobs now so that they could have capital to invest in the "machine warehouses" if those ever get built, or in real productive enterprises which actually exist in the interim.

Clean a floor and get paid $100 and you've moved $100 around. After the fact you still have one floor and $100.

You are presuming that a clean floor has the same value as a dirty floor, which is exactly the same mistake as assuming that a block of gold ore has the same value as the gold it could be refined into which has the same value as, say, the spacesuit helmet visor screen that could be produced from the refined gold.

Also, you have $100, and the person who paid you to clean their floor has a clean floor that used to be a dirty floor; and clearly, the clean floor is worth $100 more than the dirty floor to them, otherwise the exchange wouldn't have taken place.

Make a blanket and sell it for $100 and you've turned $20 of raw materials in $100 worth of raw materials leaving you with $100 and $100 worth of materials

Wrong. Make a blanket and sell it for $100 and you've turned some quantity of raw materials into $100 of finished product, leaving you with $100, and the person who bought the blanket with a product worth $100 to them. In either case, the person paying you has received something worth $100 to them, and given $100 to you.

If services didn't produce value, no one would pay for them.

It can't all be digital

[Ristoril]

The Internet isn't very useful if the delivery guy can't bring your ThinkGeek toys to you because the roads are broken.

Bad assumptions

[StikyPad]

On the other hand, upgrading roads and bridges keeps us from falling into sinkholes and ravines en masse.

At any rate, this is a false dichotomy, and there's every indication that Obama plans to focus on improving both forms of infrastructure.

Fix the roads.

[snarfies]

I quote from the report, bolding mine: "An additional $10 billion investment
in health IT in 1 year would create as many as 212,000 new or retained U.S. jobs for a year."

Similar wording is on the other two prongs as well. I stopped reading at that point. The report is therefore saying that investing 30 billion could result in ZERO "new" jobs, it will merely allow the retention of existing jobs.

BTW, what good will your retained job will do you little good when you can't drive to the grocery store to buy food to eat due to the bridge to the store having collapsed? I'd rather see the old-fashioned boring infrastructure fixed/updated before the new-fangled stuff.

Re:High numbers

[L0rdJedi]

The project after that would be sustained by the subscribers, and it could be sold for less money per month since Verizon doesn't have as much money to recoup.

Hahahaha! You think Verizon is going to sell the service for less just because they got some money from the government? Hahahaha! They will more likely keep the cost the same and the rest is profit (they'll make even more money faster). The cost to maintain the infrastructure will be the same anyway, so why would they lower the end cost? All a govt infusion will do is get the infrastructure built quicker.

Like many, I'd rather see physical infrastructure updated/maintained sooner than digital infrastructure. You can't even deploy the digital stuff if your physical stuff isn't in good condition.

And the flip side?

[booyabazooka]

Can we calculate how many jobs are lost as the indirect result of pulling $30 billion out of the economy via taxation?

Re:Love it!

[thermian]

Pretty soon they'll own your health care too. If you thought arguing with the insurance company was bad just wait until you get to argue with a bureaucrat instead. At least you can choose to do business with the insurance company......

Don't talk crap. I live in a country where the government controls the health service, and we have national health insurance that everyone pays.
You know what? It may not always be great, but its always there whenever you need it in an emergency, you can go for checkups without being afraid of your insurance premium going up, and you don't get stuck in a job you hate because you can't get new health insurance for a disease or illness you have developed.

Like I said, it isn't perfect, but compared to your system where its possible to have no health cover at all, its good enough.

Good for employment, bad for productivity.

[khasim]

If you really want to stimulate the economy, you have to spend the dollars directly to the wages (that is, massive government hiring).

Yep. The problem is that the government is (with a few exceptions) extremely bad at producing anything other than paperwork and hindrances.

In my opinion, the government SHOULD hire some more people ... who will determine which citizens belong to the group that will spend the MOST money on legal, local services and start pumping the cash into that segment.

It's easier for the local pizza place to hire more cooks and delivery people if there is additional demand for pizza delivery due to the locals having more pizza money available.

Whereas is you just give the pizza store owner additional cash, he's not going to expand his business. There won't be additional demand for him to service.

Focus on funding the demand and let the supply grow itself.

Re:Good for employment, bad for productivity.

[serviscope_minor]

Yep. The problem is that the government is (with a few exceptions) extremely bad at producing anything other than paperwork and hindrances.

Why oh why oh why do people keep modding thus utter bullshit as insightful. It isn't it's an ignorant meme repeatedly spread by people with a bizarre faith in business.

Example of there the government produces something worthwhile: the road network. They produced it, and it basically works year in, year out and the country would fall to pieces without it. In many countries, governments run a significant fraction of the school system as well.

Example of big business failing miserably: Enron, the current financial crisis.

So, frankly, anyone spouting this miserable gibberish are unable to muster even the weakest powers of observation of the world around them today, never mind historically. In some cases, the government can do a better job, in some cases they foul up. In some cases businesses do a better job. In some cases they foul up.

Remember the current stink happened because the government stopped being a "hinderance" and let the businesses do what they wanted. Look where that landed us.

Re:Good for employment, bad for productivity.

[tweek]

The current stink happened because the government didn't get out of the way enough.

It injected itself in private business affairs through things like the housing market.

This Keynesian bullshit that's been going on since FDR is going to just continue to fuck us.

Having the government artifically prop-up the economy only leads to bubbles and busts like we're seeing now.

Re:Good for employment, bad for productivity.

[arth1]

A few good examples of the governments doing a heck of a better job than the private companies that took over due to populist conservatism:

• British Railways. Look at the shambles the UK rail transit system is in now.
• Postal services of multiple countries. The costs to the end users have gone up, and the quality of service has gone down the drain. I have to send presents to relatives overseas through registered FedEx, because the privatized mail system can no longer be trusted to deliver anything.
• Energy providers, like formerly government owned hydroelectric plants. The cost to consumers have skyrocketed, while the safety guards that were in place are no longer there, and people get affected by outages because redundancy and backups are cut to the bone to save costs.
• Water. Look up the Cochamba water riots, and what happened when the municipal water supply was privatized.
• Internet. When governments and government funded education ran the show, peering was a given, and alternative routes would always exist. These days, all the eggs are put in the cheapest basket, and peering is just another way to squeeze the lemon -- if you don't pay our stock holders, we won't carry your traffic. The result is a more expensive service that doesn't auto-repair itself anymore. When a cable breaks, suddenly most of a country or continent is without Internet access, despite all the other cables that connects it.

Capitalism and consumerism is all about delivering the lowest quality product the market will accept at the highest possible price they will pay. You don't get quality that way.
Or, to put it in other words, if Stonehenge had been built on contract, it wouldn't have lasted 40 years, and definitely not 4000.

Sometimes we need officials who don't have a vested economical interest in profitability, but can spend a little extra to get a better product or service. Especially in the products and services that a government can provide.

I think it's time we saw more nationalization of what's important, not privatization. Leave the non-important stuff to capitalists and market forces, but not what really matters. Cause to a true capitalist, their wallet will always matter more than your welfare.

Re:Good for employment, bad for productivity.

[elefantstn]

Every single one of your examples is, not coincidentally, a privatization where the government granted a monopoly or oligopoly to providers. It should not be surprising that a private company with no competition is as corrupt and inefficient as a government.

I think it's time we saw more nationalization of what's important, not privatization. Leave the non-important stuff to capitalists and market forces

'Importance' has nothing to do with it -- availability of competition does. For goods like internet access, we can improve quality by loosening corrupt, good-ol-boy licensing/franchising deals that lock customers into Comcast-or-dialup. For goods like train service, it's probably not feasible.

Food, though, is certainly more 'important' than either of those two, and every instance of nationalized food supply seems to result in famine.

Digging Holes

[colganc]

Dig more holes faster please. Thanks for taking my hard earned rewards for work and giving it to someone else. I really appreciate it government.

Private Roads, the libertarian achilles heal.

[coryking]

Just once, I've love to hear a die-hard libertarian explain how privatized roads would work. Just once. I'm not talking highways either, I'm talking arterials, residential roads, etc. And don't cop out and point to tiny road networks found in gated communities. Tell me how you'd have a privatized road system on the scale of say, New York or LA.

And if your answer is "it would be impossible now", explain how you could, from scratch, create a privatized road network that would then give birth to a city of that size.

For extra credit, explain if it is nessicary to create a standard for signs, lighting, turn signals, mirrors, cross-walks and such. If it is, explain how this would be legislated and if it is not legislated who would regulate such things.