$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

[CTalkobt]

In a word, No.

If I borrow $100 now and put it to work now, that $100 will have a net effect of the $100 spent x the current multiplier (ie: I pay Paul, Paul pays the grocer, the grocer pays the mob boss, the mob boss pays the police comissioner, the police comissiner pays his bookie... but I digress).

So, borrowing $100 now is not the same as borrowing $100 in the future. The $100 now can be used to generate money that, in the future, will simply have never existed.

And you'll still be left, with the $100, somewhere in the system, unless it's been exported overseas. (joy)

Re:Bad economics

[Joey Vegetables]

But the future spending would have the "multiplier" as well. They cancel each other out. Read Hazlitt's "Economics in One Lesson" for more info (there is a free version online but I don't have the link handy ATM).

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

[CTalkobt]

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.

Re:Bad economics

[Shakrai]

The point of a stimulus is to take that cash from the people who are currently holding it and use it to try and get those millions of adults productive again.

Fixed that for you.

Re:Bad economics

[larry bagina]

if I borrow $100 and burn it, I've just multiplied it by zero! If I borrow $500,000 to buy a house, then default on the loan when the real estate market shits itself, I (or, more accurately, the bank) just multiplied your money .5.

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

[zappepcs]

That is exactly why I am disappointed that the stimulus packages do not come with a stipulation that all funds must be spent in the USA. They cannot fund overseas operations, outsourcing, shell companies that use outsourcing, or even H1B visa holders. All must be spent on/in the USA. While that has some possible down sides, I don't see them as outweighing the benefits.

Re:Bad economics

[LordKronos]

That's a pretty simplistic view. Better infrastructure can return it's cost by reducing costs in other sectors. Those other sectors, being more cost efficient, have a better chance at competing with other countries, which means more jobs for us, and less for them (and we don't count foreign jobs when figuring net).

In addition, there are a number of people who don't spend all of their money, but rather just hold onto a bunch of it. Having a better infrastructure can result in a wider variety of companies, services, and product offerings, which increases the chance that maybe something will catch their interest, so that's more money for the average person and a little less in their bank account. Now, granted that is technically a wash, but it will improve things for the people with less money, and the people with more money will be just as happy having their new shiny thing, so everyone wins.

Re:Bad economics

[MickLinux]

You are also forgetting that we are living in the bursting of the largest credit bubble in human history. So every dollar taken in taxes right now is *not* an additional expenditure now.

Rather, every dollar taken in taxes right now is a dollar that will not be spent in a different way, now.

Now, where that is nonapplicable, is in the fact that a lot of dollars are spent in "investment", and those dollars are evaporating at an amazing rate. In other words, if you leave the dollars with the rich, then they will disappear with no net benefit at all. On the other hand, redistributing them to new jobs gives a current net benefit.

But unfortunately, dollars spent in electronics basically are the easiest for the rich to cull from. Almost as easy is dollars spent in construction contracts (or any contracts). If you really want to stimulate the economy, you have to spend the dollars directly to the wages (that is, massive government hiring).

But all that is neither here nor there. Any number of theories about what *should* be done have nothing to do with what *will* happen.

Re:Bad economics

[Skreems]

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.

Not exactly. Borrowing for the wrong reasons is what got us into this mess. Borrowing for the right reasons (increase future earning potential) can more than offset the debt, leaving you with an income large enough to both pay back what you owe and have more to live on than you ever would have without that initial debt. It happens all the time at an individual and corporate level, this is just expanding it to the entire country. The key is having the discipline to pay back the debt once the increased earnings are realized, which so far very few incarnations of government have had the discipline to do.

Re:Bad economics

[Flavio]

If I borrow $100 now and put it to work now, that $100 will have a net effect of the $100 spent x the current multiplier

Right. And the multiplier has fallen below 1.0. The United States cannot print or borrow out of this mess, which is the point that the grandparent post was making.

It's not like the United States has a safe with trillions of dollars that can be distributed or invested in some central planning scheme. The trillions of dollars which are being offered represent money that the US government doesn't have.

Re:Bad economics

[MobyDisk]

Yes, but that is ok.

The purpose is to smooth out the bumps in the economic road. So borrowing from a future wealthier future where unemployment is low, in exchange for balancing out a recession, is a good thing. Too fast of an economy is dangerous too.

If only our politicians learned to save, then we could borrow from a pool of money from past good times, instead of borrowing from an uncertain future.

Re:Bad economics

[CannonballHead]

Hi, I'm Paul, I would like to be paid!

On a serious note, though... it's still true that if you tax to create something, you're not exactly creating wealth in such a way that you are able to now pay someone to do something... you're just taking money (a tax) in order to pay someone to do something else.

The point is that you aren't exactly creating a new job, you're almost ... splitting someone else's job. You're taking someone else's worked-for-money to pay someone else to work. Yeah, it's a "new job" but it's not creating a new income, it's taking it from someone else's income. Or many someone else's.

Either way, it's significantly different from starting a business and "creating jobs" that way. Now, if they do a stimulus where the money comes from other canceled projects, that might be nicer. In other words, more efficiently use existing revenue, not try to take more in an effort to give more.

Which reminds me of one other point. I take $100 from everyone. I pay the people that I had to hire to take the $100, and the huge organization that is now required to run this new operation. By the time I actually get around to paying the "new hired" people, how much of that $100-per-person do I have left? I've paid a bunch of superfluous people. In other words, I'm taking money, paying some un-necessary people, and finally getting around to paying someone else with it. The taxpayer is losing money on this deal while making more bureaucratic jobs. That's ... stupid.

Re:Bad economics

[plasmacutter]

Wrong. The mess we are in right now is a result of millions of people left unproductive because others are hoarding their cash. The point of a stimulus is to take that cash and use it to get those millions of adults productive again.

BINGO!

This is what most reaganites simply fail to grasp, but people who actually own their own businesses understand.

If you have a corporation, you use that corporation as a tax shelter. The higher the tax on your income, the less you will claim as an official salary from your company. That money stays WITHIN the company, and must be used in some way to avoid loss to taxes, which means investment (more credit for everyone), higher wages (more consumption->GROWTH), or more jobs (again, Growth).

What's more, those taxes taken from what they do claim don't affect their lifestyle, and the plan is to produce subsidized infrastructure.. for businesses! --They get all their tax money back indirectly.

I don't know of any competent business owner who would have a problem with the proposed policies.

By pushing down taxes on INCOME for the wealthy, reaganomics does nothing for the business OWNER.

Now, on the other hand. the executives who run but don't OWN large companies benefit a lot from these policies. Note how these types are the same types who create scandals like enron. Their motivation is not the health and well being of a company, but to siphon off as much in salary and bonuses as they can then cut loose before the collapse.

Obviously it's hard for those types to get rich if taxes on income over..say.. 1 million a year are in the 80%+ bracket.

Re:Bad economics

[DragonWriter]

But even saved money gets spent by those that borrowed it from savers.

It might. It might not. It particularly might not when, as is the case right now, deflation occurs, as $1 tomorrow becomes worth more than $1 today, so it makes perfect sense from the perspective of each individual spender to hold cash and defer spending, since cash then has a positive real rate of return.

There is very little money sitting idle.

Not only does hoarding result in money sitting idle, right now there is money outright being destroyed as banks just don't extend credit at all (at least, not in the quantities they have until recently), while they continue to accept deposits and payments on existing debt. Its not like the actual money supply is some fixed number based on the number of pieces of paper currency printed and in circulation; most money exists entirely as notations of account, and while reserve limits and similar regulations limit the amount of some forms of money that can be created, there is nothing that keeps the money supply constant.

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.

Even if this was true (which it is not, even if you refer to the world economy when you say "the economy"), that could still create jobs in as not all spending is equally effective at job creation. This is especially the case if you talk about creating jobs in the US economy, since the economy from which the US government takes money to spend when it borrows money is not exclusively the US economy.

It doesn't create jobs. It reallocates jobs.

No, it reallocates money. Whether or not it creates more jobs than would otherwise be the case depends on how efficient the use it puts money to is at creating jobs as compared to the uses to which the money would otherwise have been put. This is also true (and even more relevant) if you add "in the US" after each instance of "jobs" in the previous sentence.

Re:Bad economics

[nine-times]

By that logic, no expense of money will ever lead to a net creation of jobs-- since that money is always being taken out of something else somewhere else in the system. At best, you're taking away jobs from someplace else to support the ones you're "creating".

Of course, it doesn't really work out. Money can be spent on good things that improve the economy, or can be spent on stupid things that harm the economy.

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

[bennomatic]

Totally true. Imagine if the information infrastructure were so good and so pervasive that no IT workers needed to be in an office. It's true for many who work from their homes, but I'd bet we're at the tip of the iceberg.

Good info infrastructure leading to a 40-60% reduction in commuters would mean less need for the gov't to spend money on roads, less money that people would have to spend on cars and gas, and would create a resurgence in local economies, because people would spend more money at their local cafe, rather than the Starbucks downtown near their office.

Not to say there wouldn't be fallout. Lots of low-wage jobs support people who provide maintenance for those huge (suddenly worthless) office buildings, the satellite industry around road maintenance would see reduced growth at the very least, and the auto industry would likely suffer. Of course, they're doing that on their own. Maybe GM and Chrysler should start building bicycles.

Other positives, though, would include less stressed, more balanced, healthier people (it'd probably bankrupt the healthcare industry to eliminate 2 hours of commuting from so many peoples' days), and reduced dependence on foreign oil and similar reduction of CO2 emissions.

I'm not saying info infrastructure is the be-all end-all, but man, the possibilities are huge.

Re:Bad economics

[Lumpy]

$100 saved is $100 + interest earned on it - Inflation.

$100 kept in a box is $100 - inflation.

$100 invested is a gamble. It might be $10,000 in a few years or it might be $0 in a couple of weeks. you can not guarantee anything when it comes to money. that's how a lot of the problems we have today started. It all depends on the odds of the investment.

Re:Bad economics

[cayenne8]

"On a serious note, though... it's still true that if you tax to create something, you're not exactly creating wealth in such a way that you are able to now pay someone to do something... you're just taking money (a tax) in order to pay someone to do something else. "

Ok...how about instead. The US govt. just gives a tax vacation for the next year?? No taxes taken outta paychecks. I know many middle income people could really use that extra $20K-$30K a year. That way...it is targeted ONLY at taxpayers. They will have more money to spend/save/invest....let that stimulate the economy.

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

[garett_spencley]

"Absolutely! But, back in the 1990s there was a statistic that was floating about that indicated that 90% of all small businesses fail in the first five years. That's why bank, at that time, were loath to loan to a small business that had not been around for at least five years."

I'm a small business owner myself. In fact, this past year marked my 5 year mile-stone :) I understand this fact quite well.

First of all, lets use the appropriate terminology. We're not talking about money we're talking about credit. A creditor takes risk by lending capital to an entrepreneur and expects to collect interest. However, there is the very real risk that the loan may be defaulted on. Let's assume that happens. The creditor is definitely out the capital, but where did it go ? Again, we're being short-sighted by thinking of the poor creditor who made the bad risk and is now out the money and may even lose his job. However, the question still remains. Where did the money go ?

Did it vanish ? No.

It went to pay the wages of the business owner's employees. It went to pay for equipment and leasing and licenses. The money was put back into the system. The net effect on the economy is nil. You can make a point that in this case jobs were relocated, just as government relocates jobs. Yet my point was not that it doesn't happen in private industry. It happens all the time. My point was that government, despite all of it's power, does not have the power to alter the laws of economics and thus can not "create" jobs.

"Hell, even Alaska's famous "Bridge to Nowhere" created some jobs during construction. It actually created ONE real job that persists."

Here we go using that word "create" again. It did not create that job. If that woman is being paid by the government the tax payers are using money that they could use to hire their own hypothetical employee for their own hypothetical business. Every government dollar spent is a tax dollar taken. Every government job "created" is a job destroyed somewhere else. I'm not saying that this is always bad. There are services we demand of the government. We want to have our garbage collected and a fire department to put out our fires and for various reasons we've decided the government will do a better job of these tasks than private enterprise. The point is that these aren't jobs created. They've been taken from somewhere else and put where they are now. Whether or not they persist after the government cancels it's original program is irrelevant.

I have to assume that your point was that "sometimes the government makes choices that aren't so bad". That's certainly true but it's still like throwing darts at a dart-board while blind-folded and hitting the board sooner or later. The economy is complex and totally intertwined. Thinking that the government can somehow control it and get it to produce results that it wants is absurd. Economics is a social study of human behaviour. If we trust the government to control the economy we trust the government to control people and when you put it like that I don't think anyone would ever go along with it. Yet people do because they want a magic bullet to solve all of their financial troubles.

Re:Bad economics

[Austerity Empowers]

And a good amount of our economy and it's "health" is based on perceptions of the market versus actual value. So if you could effectively broker hope, you could actually drive positive change.

On the other hand if we believe that money given to corps is going to be spent overseas (and it will, as things stand today), and that the company you work for is big, bloated, inefficient, bogged down by a cross of greedy executives and misguided laws/standards that deserves to fail...then you're just flushing the money.

It's part of high school history..."What ended the great depression?" (in the US, for me) Some think FDR and his public works, some think industrial capacity increase for WWII, some think victory in WWII...some think just the act of winning it. My thought is probably the ability of the masses to align to, and achieve a common objective that could be agreed upon, something that took us out of the greed/fear rut we were in.

I don't think merely spending a money, even an epic amount of money, is itself going to unify what is a very divided nation. Something else needs to get going in the mean time, and we have to believe in it, however ridiculous it might be. Hopefully not a war...great engineering projects have sufficed in the past, not just in the recent past either. Something that stimulates many industries, and involves a wide array of people and that is...very expensive and requires the resources of a large nation (or the world, if we're bent on the "global economy" angle).

Re:Bad economics

[Tanktalus]

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.

But, but... that's not how the free market works, is it? If I can offer services (me) for less than someone else, why shouldn't I?

Re:Bad economics

[Curunir_wolf]

Paul Krugman wrote on this topic a bit ago:
http://krugman.blogs.nytimes.com/2008/12/22/bad-anti-stimulus-arguments/

Krugman? Seriously? That guy is still stubbornly refusing to acknowledge the failure of the philosophy that he has been espousing for years. You know, the one that created the economic mess we're in right now.

Why even when Keynesian economics has been proven a failure do people keep trying to claim it works?

Re:Bad economics

[tweek]

Keynes, is that you?

Maybe the reason the private sector is scared of the risks is because they're...risky?

Why, then, does it make sense for our government to take that risk.

The odds aren't really in the government's favor here.

Re:Bad economics

[FiloEleven]

You know what, though? If we pulled our troops out of Iraq and Afghanistan and the 130 other foreign countries where we have bases, and if we stopped spending money on things that blow up or have no other use except in the military, we probably would be able to afford some big tax cuts or infrastructure spending.

Much of the money that goes to fund our unnecessary wars is money that disappears. The goods that it purchases either do not exist after one use (bombs, bullets, missiles) or are so specialized as to be useless in our society (fighters, bombers, tanks).

Now, the way things are being run, by a political class that is completely out of touch with reality, such a sensible position is entirely unrealistic. But GP still has a point with a tax vacation - the government certainly does not limit its spending to its intake, and it's already between $10 and $50 trillion in debt depending on who you ask, so what does it matter at this point if we dig the giant hole a little deeper?

Re:Bad economics

[Mattsson]

It doesn't create jobs. It reallocates jobs.

Depends.
If you use the money on X instead of Y and X create exactly the same amount of jobs as Y, then it simply is a reallocation.
If X creates one more job than Y, then more jobs are indeed being created.

It's all about how to most wisely spend what is collected as tax.

Re:Bad economics

[CodeBuster]

While it is possible to approach investing in the same way that one approaches gambling the idea that Investing == Gambling is one of the most persistent and damaging ideas to enjoy wide currency among the non-investor classes of society. The definitions taken from the following article are instructive:

Investing is any activity in which money is put at risk for the purpose of making a profit, and which is characterized by some or most of the following (in approximately descending order of importance): sufficient research has been conducted; the odds are favorable; the behavior is risk-averse; a systematic approach is being taken; emotions such as greed and fear play no role; the activity is ongoing and done as part of a long-term plan; the activity is not motivated solely by entertainment or compulsion; ownership of something tangible is involved; a net positive economic effect results.

Gambling is any activity in which money is put at risk for the purpose of making a profit, and which is characterized by some or most of the following (in approximately descending order of importance): little or no research has been conducted; the odds are unfavorable; the behavior is risk-seeking; an unsystematic approach is being taken; emotions such as greed and fear play a role; the activity is a discrete event or series of discrete events not done as part of a long-term plan; the activity is significantly motivated by entertainment or compulsion; ownership of something tangible is not involved; no net economic effect results.

Re:Bad economics

[DragonWriter]

Right. And the multiplier has fallen below 1.0 [denninger.net].

The M1 multiplier (that has fallen below zero) is the ratio of the M1 meaure of money supply to the Adjusted Monetary Base measure. . It is fair to say it is something of a measure of the utility of policies that seek to stimulate the economy by increasing M1 (though even there it is limited, since even the Adjusted Monetary Base measure is just a different measure of money supply, not a measure of economic activity); it has little to do with either the velocity of money (the source of the "multiplier effect" being discussed in this thread, which is not the same thing as the "M1 multiplier" you point to; the "multiplier effect" relates to how often a particular dollar in the money supply is spent, not the ratio between two different measures of the money supply) or the ability of the government to stimulate by borrowing dollars from domestic and foreign holders of dollars and spending it in particular, focussed areas (since such policy does not rely on manipulate M1.)

The author of that piece attempts to confuse the issue by posting a different graph that shows a falling trend in how effective stimulative government deficit spending has been on average recently, and attempting to suggest, without any real reason, that the two graphs are directly related and indeed that the M1 multiplier graph says that the trend shown in the other graph is actually worse than it appears. This is not rational. The second graph does show a long-term problem, and particularly does show why, once this recession ends, the US government must, in the subsequent expansion, begin to pay down the debt or at least stop expanding the debt faster than the GDP during expansions, because if we keep deficit spending through expansions so that the debt:GDP ratio keeps going up, we'll soon reach the point where we can't use deficit spending to stimulate the economy when it is in recession. But, contrary to Denninger's alarmism, the M1 multiplier going below 1 doesn't indicate that the trend in debt utility shown in the second graph is worse than that graph actually shows. They are completely different issues.

Re:Bad economics

[idontgno]

Why, then, does it make sense for our government to take that risk.

Because governments are too big to fail!*

*With a few exceptions, like Denmark, 1813; most of Latin America circa 2004-2005; Iceland, right now...

Re:Bad economics

[plasmacutter]

I'd like to add that, even if the banks were lending money saved by others, they would not be lending it to the people who actually need it (as if they're keen to take on new debt now anyway).

Thus, the government taking over the distribution of that money is better for the economy, providing opportunities to earn rather than borrow money.

Re:Bad economics

[jbolden]

What risk? The government doesn't operate with the same risk portfolio as in an individual investor. If we ignore trade, because they have the power to tax all the money is really theirs. "Risk" to them doesn't exist, if they overestimate how much money is going from Paul to Peter they can move money from Peter to Paul instantly via. taxation.

Also they can create or destroy money at will (we have a fiat system) none of the individual players can do that.

Re:Bad economics

[jbolden]

How has Keynesian economics been proven a failure? Be specific please.

Re:Bad economics

[Flavio]

(...) or the ability of the government to stimulate by borrowing dollars from domestic and foreign holders of dollars and spending it in particular, focussed areas (since such policy does not rely on manipulate M1.)

The Fed's balance sheet was spent on the first bailouts, and the US is now printing money to cover the current bailouts. The government is manipulating M1.

The author of that piece attempts to confuse the issue by posting a different graph that shows a falling trend in how effective stimulative government deficit spending has been on average recently, and attempting to suggest, without any real reason, that the two graphs are directly related

You're confusing the issue by implying that they are not directly related. Manipulation of M1 leads to an even worse trend on the second graph.

The second graph does show a long-term problem, and particularly does show why, once this recession ends, the US government must, in the subsequent expansion, begin to pay down the debt or at least stop expanding the debt faster than the GDP during expansions

I love how people like yourself, Bernanke and Paulson concede under pressure that deficit spending is disturbing, but at the same time hold a Keynesian attitude of printing money to "stimulate" the economy.

There's only one correct attitude during a recession: liquidate bad debt and expose fraud. Deficit spending during a recession only drains money from healthy sectors of the economy.

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.

Not "punywage"

[Stile 65]

"punywage" is a bad tag for this.

This would also create jobs (at least in the short term) indirectly, as those who get the high-paying jobs directly related to this "stimulus" will demand additional production and services to fill their personal needs, which will create other jobs, and so on. In this way, each dollar invested in this infrastructure will actually be spent multiple times.

Of course, the way this is financed is inflationary and backed by the public debt, etc. etc. so in the long term, we'll have to pay all that back and then some.

A million jobs

[Profane MuthaFucka]

in INDIA. That's the part they left out.

Re:Or...

[Stile 65]

You mean $350 trillion.

350 million people times $1 million per person = $350 trillion.

Re:I have Animal Farm on the brain

[AioKits]

Not to worry my friend *sips koolaid* Four legs good, two legs better.

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.

brokenwindowfallacy???

[4D6963]

Who tagged it brokenwindowfallacy? It's no broken window fallacy. In the broken fallacy nothing is gained from breaking the window and replacing it. Here we invest into an infrastructure, to end up with something better you can make better business with. It's called an investment.

Re:brokenwindowfallacy???

[u38cg]

OK. Instead of breaking the shopkeepers window, you mug him, take his wallet, and use the contents to have another, extra, window put in his shop. Now he has an extra window to display his produce in and entice passers by. Is this good for him y/n?

Re:brokenwindowfallacy???

[nine-times]

Right. The old "war is good for the economy" line is more of an example of the broken window fallacy. Or rather, there's some kind of fallacy floating out there-- and I'm not sure whether it could be considered a "broken window fallacy"-- that "it doesn't matter what the economic activity is; any activity is good activity." That's the mindset that gets us into wars, or convinces people that borrowing money we don't have to buy crap we don't need is "good for the economy".

Building necessary infrastructure is a good counter-example to the broken window fallacy. Value is added into the system and good infrastructure actually improves economic conditions. It encourages investment, stabilizes operations, and allows businesses to operate more efficiently.

That's not to say we should build useless infrastructure for the sake of economic activity. The "bridge to nowhere" wouldn't provide value, and therefore it could be argued that it's an example of the broken-window fallacy. But ubiquitous broadband Internet (with speeds on the scale of FiOS, not just DSL), is something we need in order to stay economically competitive with the rest of the world.

Re:brokenwindowfallacy???

[4D6963]

Let's see, "mug him and take his wallet" = taxes? Let me guess, libertarian?

Re:brokenwindowfallacy???

[mattwarden]

Wow, I hate to be a typical slashdot commenter, but:

Bzzzt. You're wrong.

An investment is something you do when the benefits outweigh the costs. If that was the case here, it would have been on the books before the decision to "create jobs."

This is being done to "create jobs". The logic is: we need jobs, so we might as well do something that has some value and isn't a total loss.

Creating jobs in a partially useful area is a LOSS MITIGATION STRATEGY not an INVESTMENT.

The whole idea of "creating jobs" is ridiculous. If "creating jobs" is what it sounds like, then why doesn't the government always do it? And why don't we blame government when there is a rise in unemployment?

IF the government is paying for this with tax money (that it doesn't have), then this is just a wealth distribution tool (otherwise where are the wages coming from to pay these currently unemployed people?). IF the government is paying for this with debt and inflation (more likely), then this is just a temporary fix that increases the long-term consequences.

Let's call "creating jobs" what it is: floating more debt and printing more money into the economy and at the same time keeping people busy and superficially happy, with no concern for the long-term consequences. Deciding to do more stuff than was planned in order to create new jobs is by definition doing things where the benefits don't outweigh the costs for the "investment".

When do we stop deciding to screw over the country to temporarily relieve the difficulties of the minority few?

Re:brokenwindowfallacy???

[4D6963]

Cry me a river. Oh no, the government will demand me money so we can sustain our way of life by having infrastructure, health care, free education, garbage collection and so on.. You reap the benefits of the taxes you pay, even if the richer you are, the less you reap. Poor people reap the most compared to what they pay, because they're poor.

Not wanting to pay taxes when you're not poor is basically saying "fuck off poor kids, that's my money, you gotta get your own". Which is logically defendable, but arguably also makes you a heartless greedy egoistical apathic bastard.

Re:brokenwindowfallacy???

[mattrumpus]

The bit you're missing is the point of spending $x. Investment is different to simply buying something. You invest to increase your stock of productive assets. For example, borrowing to build a rail line that enables people to move goods more cheaply may result in increased economy activity, more business are profitable now than they were before the rail line. The tax take goes up, I easily pay off the $x over time, even though I pay an interest premium on it.

The problem really is borrowing to pay for a non-productive asset. Something that doesn't add to your, or societies, capability to make more "stuff" (which could be services too). This is why household debt is such a problem, it will have to be paid from future production, but the nature of what people spent the debt on (that awesome plasma say) does nothing to help them or society pay that debt.

Does that make sense?

IAAE

Re:brokenwindowfallacy???

[HardCase]

Roads. Fire protection. Police. A thousand other services that make the quality of your life what it is. You don't work for free and neither do the people who do those jobs.

Yours is a typically short-sighted view of taxes, particularly regarding education. If you don't think that you've never benefited from school taxes, ask your doctor where his undergraduate degree came from. Or the pilot of the next plane you fly on. Or the architect who designed your house. Oh, you say, I just meant direct benefits. Well, sorry, pal, we don't differentiate between direct and indirect benefits. You pay to send your neighbor's kid to school and you get the indirect benefit of a more educated citizen. It seems odd that your private education didn't cover the value of benefits such as that.

Now if you want to argue that tax money may not be spent wisely, I might agree with you on that point. Narcissism doesn't really serve us all that well.

Re:brokenwindowfallacy???

[nine-times]

An investment is something you do when the benefits outweigh the costs. If that was the case here, it would have been on the books before the decision to "create jobs."

Even according to this, building useful infrastructure sounds like an "investment". Unfortunately, we've under-invested in our infrastructure for several decades, an in recent times somehow magically expected the "free market" to take care of keeping our bridges from falling down.

Building good and useful infrastructure is an investment, and one that happens to have a side benefit of "creating jobs".

Re:Or...

[El Torico]

Simple solutions don't create new Agencies and don't give bureaucrats more power and more money. The problem occurred because "civil servants" failed to do their jobs. The best way to restore faith in the markets would be to quickly convict those that committed these frauds, seize their assets, and ban them and the bureaucrats that failed to do their jobs from ever holding a position of public trust, in corporate management, or in finance.

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

[moderatorrater]

You're assuming that the money will be alone and that it won't be used for something sustainable. Let's say, for instance, that the government were to give money to a car company to build a factory. It's not likely that the government will give more than 60% of the money necessary to build the factory in the first place. Then, once that factory's built, it will be able to support itself by building cars that wouldn't have been built otherwise and is self sustaining.

In the same way, the government can give Verizon (or similar) 60% of the cost to wire California with fiber to the house. It's enough to convince Verizon to undertake the project in the first place and to gather funding from other sources so that they can complete it. Once complete, they're providing a service that wasn't there beforehand, and is well worth buying. 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. Not all of the jobs which were created for that project will stick around, but more jobs will be created due to the higher available bandwidth in the area.

Why the Soviet Union Collapsed...

[ducomputergeek]

...was more to do with lack of physical infrastructure than anything else. They had the means to produce a lot of food, but a lot of it rotted out in the fields. They didn't have the roads and rail to get it from point A (field) to point B (processing plants) to point C (supermarket shelf).
   

Re:Why the Soviet Union Collapsed...

[keithjr]

Well, we solve that problem by paying farmers not to grow food. Thus, no rotting in the fields.

Re:Why the Soviet Union Collapsed...

[homer_s]

was more to do with lack of physical infrastructure than anything else. They had the means to produce a lot of food, but a lot of it rotted out in the fields. They didn't have the roads and rail to get it from point A (field) to point B (processing plants) to point C (supermarket shelf).

That was the consequence of central planning - something that a lot of people here seem to support.

No, good economics.

[plasmacutter]

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.

Standard reaganomic bullcrap.

Taxing the INCOME of the wealthy to build infrastructure actually compels the creation of MORE jobs than just the infrastructure itself.

I know these things, several of my family members own and manage incorporated entities. The more pressure you put on their personal income, the more they will keep within their corporations, which are taxed far less, resulting in more re-investment (for the layman, that means JOBS AND EXPANSION).

In addition to that, using those taxes from the wealthy to invest in infrastructure provides subsidized infrastructure for yet more growth.. ironically for all the pissing and moaning that subsidy is to the businesses of the wealthy.

It's a win-win-win situation.
the economy is stabilized, jobs are created, and the wealthy get a major subsidy to their business for a little tap-dancing with their accounting.

Re:No, good economics.

[deKernel]

No it is not a win-win situation. What you are practicing is Robin Hood economics which teaches class envy. Saying that it is "Ok" to tax the rich more takes away the incentive for most people to advance since most "rich" people are not associated with a corporation: they are just employees of a corporation.

The system in the U.S. basically incentive-based, and you taking away the incentive because it is going into the pocket of the government and not in the pocket of the person working harder or taking the risk to advance.

Re:No, good economics.

[JesseMcDonald]

If you assume one can take home either $250k or $55k for exactly the same work, sure, anyone would choose the $250k job, no questions asked. In general, however, that isn't the case. Higher-paying jobs tend to require more effort and longer hours, produce more stress, depend on specialized skills and connections which must be maintained, etc. The trade-offs a person may be willing to make to earn $1M likely wouldn't remain justified after 75% is cut away by taxes.

Everyone would like to make more money, but few are willing to pay the price. That price doesn't decrease any just because you tax away most of the incentive. Those on the margin, who would be willing to take on the additional responsibility at the higher salary but not the reduced one, will choose not to advance as a direct result of the tax.

Re:No, good economics.

[Rycross]

No, you haven't figured out where I am coming from at all. I am far better off than most of the population. As a matter of fact, last time I checked, I was upper-middle class, and had a decent shot of being lower-upper class. I love in a nice place in a good city, have plenty of extra cash for entertainment and travel, and don't have to worry about next month's bills. I'm in a good position in life, and its rather presumptuous of you to assume that I'm some lazy sap looking for a handout.

What you haven't figured out is that I'm trying to be honest about where my success came from instead of patting myself on the back and turning up my nose at people less fortunate than myself.

The thing is that I realize that there are a lot of people and outside circumstances that contributed to put me where I am. A large part of it was my own effort and decisions, but I also had a lot of help along the way, and that's not substantially different than a lot of people, especially people who claim to have themselves up by their own bootstraps.

When taking a close look at my life and success, and the lives and successes of others, I've come to realize that the self-made-man is myth that people use to make themselves feel better. Its used so that people can denigrate poor people as just being lazy or unethical. Its used to reassure people that those rich guys really deserve everything because they're just so much better than the rest of us. Its used so that people can turn a blind eye to their fellow humans without feeling like assholes.

What I'm saying is that people need to take a good hard look at where their success comes from instead of patting themselves on the back too hard. It might be that we realize that we do have some social responsibility, because society gave us the opportunity to grab our success. Despite my best efforts, I would not be who I am today if I grew up in Africa or some third world hell-hole.

That is where I'm coming from: an honest assessment of reality instead of an idealized myth.

Re:No, good economics.

[Viv]

The trade-offs a person may be willing to make to earn $1M likely wouldn't remain justified after 75% is cut away by taxes.

I have found that, generally speaking, the type of person making $1M in the first place is internally motivated more so than externally.

That is to say, in my experience, they bust their asses just as hard whether they're earning $50k or $750k.

The fact that they do this is, in large part, why they progressed to make $750k at all.

Re:do the math.

[Average]

With the layoffs out there there are *plenty* of IT people who will work for $30k or $35k if you won't. Maybe not in California or New York. But, if work could be outsourced (badly) to India, it can be outsourced (with better oversight) to Sioux City or Tuscaloosa. $35k, plus a part-time-working spouse, means you can afford a $100k house (which is perfectly believable in most of the country), pay off reasonable student loans, and eat. People will take that. Plus, you're working indoors in a nice office, not busting your back in the cold.

Yeah, it's Walmart wages. There are people lining up for those jobs, too.

where are the workers?

[cliffski]

Are there one million trained and skilled IT workers in the USA that are currently unemployed?
If not, this is just a great jobs package for China and India.

Re:where are the workers?

[Average]

Demanding US workers in the deal might mean more 'trained and skilled'. Many, many jobs are looking for "3 years this, 5 years that, plus the degree", and uninterested in growing in-house talent. Employers don't do that, since workers aren't loyal anymore, because employers aren't loyal, and so the cycle goes. A demand for US IT workers might mean more companies willing to hire a fresh face and do more training.

Bad assumptions

[DaveV1.0]

They figure only one third of the manufacturing jobs, and only the manufacturing jobs, created by this $10 billion IT stimulus will "leak" out of the country.

I think they underestimate the number of jobs that will "leak" out of the country in all parts due to H1B visas, outsourcing, and, of course, the off-shoring of IT equipment manufacturing jobs.

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.

I'm all for abandoning roads and bridges

[SuperKendall]

It's the only way automakers will finally have enough motivation to give us our flying cars. This the future, dammit.

Ronald Regan is on the phone...

[SuperBanana]

This would also create jobs (at least in the short term) indirectly, as those who get the high-paying jobs directly related to this "stimulus" will demand additional production and services to fill their personal needs, which will create other jobs, and so on. In this way, each dollar invested in this infrastructure will actually be spent multiple times.

Ronald Regan called from 1980, and wants his trickle-down economics policy back. This is a bullshit lie, and I'll give you two examples of why.

First off, people in high-paying jobs have a lower marginal propensity to consume. It sounds absurd, but the single parent with a $40k job is spending almost their entire paycheck back into the economy just to survive. Someone who makes $120k is not spending 100% of their paycheck- not even close. They're putting a fair amount into long and short term savings. On a related note, gas and food price jumps really hammer the $40k person more than the $120k person; percentage-of-income-wise, the $40k person spends much more on food and gas than the 120k person does.

Second: money spent these days very, very quickly leaves your local, state, and national economy. Spend $5 on a burger at national franchise, and a teeny bit of that goes to employing the people in the store. Some of it goes towards the materials for the product, which were made as efficiently and cheaply as possible. Most of it goes to a trademark holding company aka tax shelter in the Cayman Islands as "trademark license fee". The article I mentioned lists Limited Brands, Toys "R" Us, ConAgra Foods, Home Depot, Kmart, Gap, Sherwin-Williams, Circuit City, Stanley Works, Staples, and Burger King as examples. I'm sure there are hundreds more.

Even locally, money spent largely doesn't go to the business owner if they don't own their own property. It goes largely to the landlord of the property. Commercial property owners aren't in the lower income brackets; they're in the top income brackets, and they're writing off their Mercedes as a business expense.

Back in the 50's, corporations shared tax responsibilities evenly with the American individual. Now, A HREF="http://www.americanprogress.org/issues/2004/04/b45142.html">corporations pay about 7% and 60% didn't pay a dime. Meanwhile, their tax rate compared to the GDP is around 1.8%, down from the 1950's level of 5%. Meanwhile, you lose about 33% of your paycheck to state and federal taxes, then get taxed on the gas you put in your car and the stuff you buy.

Re:Ronald Regan is on the phone...

[mattwarden]

> Most of it goes to a trademark holding company aka tax shelter in the
> Cayman Islands as "trademark license fee".

And do you ever ask why?

> Back in the 50's, corporations shared tax responsibilities evenly with
> the American individual. Now, corporations pay about 7% and 60% didn't pay a dime.

And do you ever ask why this changed?

> Meanwhile, you lose about 33% of your paycheck to state and federal taxes, then
> get taxed on the gas you put in your car and the stuff you buy

Oh it's much, much worse than that. Not only do you pay taxes on the stuff you buy (ie, sales tax), but you pay a ton more in taxes that are hidden in the price of the products you buy (you hinted at this above). Due to increased competition and the ability to sell overseas more cheaply (increasing demand which affects the company's pricing model), companies can bake more taxes into the price you pay and avoid the taxes biting into their profit margins. When you buy a pair of scissors, you are paying sales tax, yes, but you are also paying payroll tax and partial income tax on the wage earner who mined the ore for the scissor blades. Same for the wage earner who formed the steel. Same for the wage earner who molded the blades. Same for the wage earner who dealt with the plastic. Same for the wage earner who molded the handles. Same for the wage earner who marketed the product. Same for the wage earner who stocked the shelf. Same for the wage earner who cleaned the store's floor. Et cetera. You pay a TON of taxes. I honestly believe if people understood how much money they pay their government to keep it running, they would be outraged and there would be considerable increased scrutiny on the government's behavior.

It truly is incredible how much the consumer pays to fund this government. Not to mention that flat consumption taxes -- and that's what this ends up being since I pay the same tax component in my scissors as the mother of 2 on welfare does -- are incredibly regressive.

Re:Ronald Regan is on the phone...

[shmlco]

"Someone who makes $120k is not spending 100% of their paycheck- not even close. They're putting a fair amount into long and short term savings."

And??? You think the money just disappears at that point? Or is it used to buy stocks and bonds, and taken by banks and invested in loans and other financial instruments?

That money goes into "the economy" too.

Re:Ronald Regan is on the phone...

[3263827]

Obviously you've never worked in the restaurant biz. Labor is usually the highest element in the cost of goods, typically around 20%. The food items are usually around 20%, paper items another 6-8%. Throw in rent, utilities, etc. Royalty fees for McDonalds are around 10%, and the franchisee is usually gunning for a 10% margin. So for a $1.99 Big Mac, $.40 stays in the local economy as wages, $.40 stays in the state/US economy for the food components, so on and so forth. So try another stupid example...

And it's Reagan, not Regan. But then again, facts don't seem to bother you too much.

Re:Ronald Regan is on the phone...

[dunkelfalke]

i wouldn't call stock market gambling an economy, whether it is directly invested or taken by banks and invested again.

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.

[jbolden]

The problems we are having are in general a result of deregulation. For example conflicts of interest between the buy side and the sell side of a brokerage. Or conflicts of interest between the investment banking arm of a bank and the traditional arm. Or conflicts of interest between stockholders and bondholders, or executives and boards of directors.

That is precisely the kinds of problems that government "getting in the way" is good at fixing.

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.

Re:Good for employment, bad for productivity.

[EMB Numbers]

Read James Carville's book: "We're Right, They're Wrong : A Progressive Program for the Millennium"

He agrees with you. He is also wrong on every point.

The U.S. Federal Highway System is an abomination. It destroyed inner cities. It damaged our culture. It destroyed rail roads which had to develop and maintain infrastructure on their own under the burden of oppressive regulation at the same time the federal government subsidized the competition (busses, trucks, highways). The government is constantly building roads to nowhere. Look up Robert Byrd sometime. http://en.wikipedia.org/w/index.php?title=Special%3ASearch&search=Robert+Byrd+highway&ns0=1

Look-up Tennessee Valley Authority and its role in the New Orleans levies.
http://www.nashvilleistalking.com/node/90474
http://en.wikipedia.org/w/index.php?title=Special:Search&search=Tennessee+Valley+Authority&fulltext=Search&ns0=1&redirs=0

Do you want to see what national health care will look like? Look at the Veterans Administration Hospital system.

How about the War on Poverty? Answer more people impoverished after it in 1980 than before it in 1964.

Who do you sue when the government screws you over ?

By definition, the bigger the government, the less free you are.

Name one government program ever that was an unmitigated success.

Re:Good for employment, bad for productivity.

[HanzoSpam]

The problems we are having are in general a result of deregulation.

ROFLMAO!!!

I keep hearing that, but I'd like you to name one example of deregulation. You call Sarbanes-Oxley deregulation? Regulation has, in fact, been pouring down thick and fast. The last major repeal of regulation was the reform of the Glass-Steagall Act in 1999. Guess who was president then?

Re:Good for employment, bad for productivity.

[arth1]

Every single one of your examples is, not coincidentally, a privatization where the government granted a monopoly or oligopoly to providers.

Should the British government have laid twenty parallel tracks before privatizing British Rail, so there could be real competition? That would only have delayed a fall-back to monopoly.

The natural state of capitalism is monopoly and oligopoly. Put ten capitalist players in a pen, and eight of them will be quickly be bought out by the other two, without replacements appearing, and the remaining two will reach a truce and split the market. You need to make the playing field uneven and punish the big players for small players to ever have a chance. If you're not willing to do that, at least let the government run the show -- they don't have a vested interest in maximizing profits to line the pockets of shareholders.

Re:Good for employment, bad for productivity.

[xaxa]

Then you should fix your government. All these things do work, if you pick the right country.

Who do you sue when the government screws you over ?

The government, surely?

Re:Love it!

[philspear]

At least you can choose to do business with the insurance company......

That's a good option when you're positive you will never, ever get sick or injured. And the choices don't end there, you can often choose between high premiums and high denials of coverage, or even higher premiums and higher denials of coverage. If you've had a bit of the cancer previously, your choices are even better! For instance, a friend of mine got to choose to either stay with a low paying dead-end job with adequate insurance, to switch jobs and go bankrupt with COBRA, or to go without coverage and risk a recurrance that would be classified as a pre-existing condition (again bankrupcy).

Seriously, the benefits of being able to call a number and possibly get your billing straightened out faster with a private company rather than the government more than makes up for the troubles those people who are not a good investment have. They shouldn't have ever gotten sick!

Re:Or...

[geminidomino]

Tomato..tomato..

You do realize that that particular idiom doesn't translate well to text-based communication, right? ;)

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.

Re:Digging Holes

[avandesande]

It's even worse than that. They are borrowing against you and your children's future production.

More jobs =/= more output

[Anonymous Coward]

An economist visits China under Mao Ze dong. He sees hundreds of workers building a dam with shovels. He asks: 'Why don't they use a mechanical digger?''That would put people out of work,' replies the foreman. 'Oh,' says the economist, 'I thought you were making a dam. If it's jobs you want, take away their shovels and give them spoons.'

Re:Love it!

[Rycross]

And yet my friend with Crohn's disease wishes he could find a new job but is afraid that he will lose his health insurance. Maybe he is ignorant of the reality, or maybe he's looked into it and its not quite that simple. At the present rate, he is being fucked over, and even with insurance being pushed into debt to merely stay alive and in "good" health.

I used to think that way too

[coryking]

Until I realized two things:

1) Companies located in our country have to offer health care plans. Companies located elseware dont directly have to offer this benefit--their government does it for them. GM is fux0red for many reasons--one of them is the fact they have to pay gobs of money in health care benefits when their competition doesn't. Thus, one can deduce it is harder for US companies to compete because their employee costs are higher then elseware.

2) You pay into an insurance pool of some form for pretty much your entire life. How fucked up is it that if you go uninsured for even a few months, you can get sick and go broke? Good luck getting insurance after you got sick too. While I can see things from the insurance companies perspective, and I dont think they are "evil" like some, I dont think they can sustain a business model that really keeps us all healthy.

3) Lets not forget that as you get older, your premiums go up. A young guy like me can get private insurance for around $210/mo while a 60 year old would be paying around $700/mo for the same plan. Group plans like the ones offered by companies can average the cost of their old and young employees. This is why when you go on COBRA and you are young, your premiums are way higher then what you'd pay if you got (and could qualify for) a private insurance plan. Lord help you, by the way, if you have a pre-existing condition and want to get a private insurance plan. Unless you have a "domestic partner" or a spouse who has group insurance plan, you can kiss the idea of being an independent contractor goodbye.

4) I'm glad I dont have to make decisions like this.

5) ???

6) Win Ponies.

Depends

[coryking]

Every single expansion of Governmental power erodes our freedom and liberty.

and

Group coverage plans (i.e: the kind you get from your employer) aren't allowed to exclude pre-existing conditions if you already had coverage.

Conflict. You lost freedom by not having a government provide healthcare. You have a medical condition? Want to be self-employed? Forget health insurance. You don't have that freedom anymore and you are stuck workin' for the man.

Sometimes you have to give up a freedom to gain another. This isn't all black and white.

Re:Depends

[Shakrai]

You lost freedom by not having a government provide healthcare.

Did I also lose freedom by not having a government provide me with free housing?

Sometimes you have to give up a freedom to gain another. This isn't all black and white.

But what if I don't want to give up that freedom? What if I want the freedom to live my life as I see fit with as little governmental interference as possible? Why should the government tell me how to live if I'm doing anything to harm my neighbors?

Here in New York State, Governor Paterson wants to impose an "obesity tax" on non-diet soft drinks. Why is this a role for Government? Leaving aside the fact that there's nothing wrong with consuming soda in moderation, why should it be the role of the Government to try and legislate behavior? One of the arguments used to justify polices like this is the increased health care costs of obesity. Where does it end? Is the Government going to outlaw or tax skydiving because of the risks involved? Drinking? McDonalds?

Less is More

[mosb1000]

"People sitting around doing nothing is wasted capital."

Sometimes doing nothing is better than doing something. I am talking to you, Uncle Sam.

Re:Less is More

[plasmacutter]

The economy had broken down to the point of life support by the time roosevelt got to it.

Without swift and decisive action, whether it's the economy or a human being, severe injury will result in long-term debilitation or death.

By the time roosevelt got there, the golden hour was long past. Roosevelt did an excellent job with what he had, and his efforts founded one of our nation's largest cities and paved the way for the US rise to economic power following the war.

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[account_deleted]

Comment removed based on user account deletion

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.

Re:Private Roads, the libertarian achilles heal.

[tweek]

What do libertarians have to do with it.

First off, most Libertarians are concerned with the proper roll of the federal government as defined in the Constitution. That has nothing do to with roads per se or even having those handled by private entities.

Secondly, there's a valid Constitutional argument that the federal government does, indeed, have a role in roads under the authority for interstate commerce.

What many people argue for, in terms of privatization, is getting the government out of the business of actually staffing the show. Why do we have such a large DMV? Why not farm the maintenance out to a private company that has to go through a bidding process?

I've never argued that roads need to be privatized but I have argued that we don't need a multi-thousand employee DMV when a private company can do it much more efficiently.

Re:Private Roads, the libertarian achilles heal.

[CodeBuster]

Just once, I've love to hear a die-hard libertarian explain how privatized roads would work. Just once.

They work quite well and in France of all places (hardly a Libertarian paradise). There are 1,00,960 km of roads in France and unlike many other countries, most of them are toll and operated by private companies such as Société des Autoroutes de Paris Normandie (SAPN). Now, before you respond, "Well, nobody drives in France" it is important to realize that France is among the most car dependent countries in Europe with 937 billion vehicle kilometers travelled in 2005 (85% by car). Despite this extensive private road network the public transport in France, as in many other developed EU states, is excellent (particularly by American standards) with high speed rail service, trams, and light railways providing extensive connections.

Now obviously it is not practical to privatize every last minor road and many forms of public transportation, street cars and buses for example, share the same local road networks as private vehicles. However, the example in France demonstrates that a quality network of highways and even regional roads can be maintained quite well by private enterprise. Indeed, that is more equitable. Why should people who never use the Highways pay for them? If they only take the bus and use trains or airplanes for longer trips then why should they pay for highways with their taxes?

The problem comes when people on both sides try to paint the issue of public vs private roads as an all or nothing proposition without acknowledging that a balance of the two is really what yields the best results.

Re:Private Roads, the libertarian achilles heal.

[SETIGuy]

What many people argue for, in terms of privatization, is getting the government out of the business of actually staffing the show. Why do we have such a large DMV? Why not farm the maintenance out to a private company that has to go through a bidding process?

"Private business is always more efficient" is also one of the lies that never gets challenged. For anyone who has been on the buying end of a large contract can tell you is that "low bid" is equivalent to "low quality", "inexperienced workers," "behind schedule", and "over budget" and that no amount of oversight changes that. The reason why is obvious to anyone: profit motive.

For any job with a finite time frame, there is going to be a minimum cost required for engineers, workers and materials. Now add 10% profit, and you've just made the job more expensive than it would have been for the government to do it. Now add some government engineers and managers to oversee the work. You've just added more cost to a price tag that is already too high.

Now throw in competition to be the low bidder. Well, a company isn't going to cut their profit, so the only options are to cut workers below the minimum necessary to meet schedule, cut material quality, and to pay off the inspectors not to notice how you're screwing the state. Then when it becomes apparent that you won't meet schedule, you start asking for more money. What are they going to do, stop the job? Hire someone else? You've already earned your profit on what you've done so far, what do you care if they give the rest of the job to someone else?

Re:Love it!

[Rycross]

Bullshit. My friends and I would definitely like some tax-funded universal health care, and we all hold down jobs, pay taxes, and pay for our own health care. We have a friend with a severe illness, and have seen the private system fuck him over and prevent him from reaching his potential. We want universal health coverage because we respect peoples' freedom and right to life, and we're willing to suffer (very very very) light inconveniences so that we can secure this. We are not selfish assholes.

I have no faith in the private system. The private system will fuck you over hard and fast given half an opportunity if it can increase their profits by .001%. I don't think people should have their freedom and even life taken away because they had the sheer audacity to become ill.

How do you define risk?

[RustinHWright]

A company must turn a profit to succeed. A government just needs to accomplish a decent rate of return on their investment for the entire aggregated economy it governs. If Blah Corp takes on the risk of creating a new design it fails if Goo Corp copies it and gets to market first. If the U.S. government takes on the "risk" of, say, putting in more internet capacity, the "downside" is limited to overestimating demand. That's what everybody was saying Korea did in the nineties. Now that those fat pipes have helped Korea become a powerhouse in a dozen fields, nobody is saying that anymore.
The only real risk that government faces is if the level of corruption is so vast that nothing gets built. This is a real risk, as anybody who has watched the fiasco of the "digitizing" of the patent system call tell you about. But it is addressable and is a risk for corporations, too.
Look at what happened to the OLPC project. Their own devices have been meh at best. But it's pretty damn obvious that they inspired the netbook market, which has been a vast win for everybody, including their intended recipients. No OLPC, no Intel Classmate, no EEE PC, and so forth. And, from the looks of it, we'll be seeing the Pixel Qi tech coming out in another year or two, which will be yet another vast win for their intended result. Have they "turned a profit"? No. Have they achieved an excellent return on investment? Hell fucking yes.
In short, most of what makes a project "risky" to a profit-making entity is a null-value statement in a case like this.

Uh, no.

[Shivetya]

Corporations are merely collectors of taxes, so regardless if they actually have a payout to the treasury they are in effect only transferring wealth from American taxpayers to the government. They are nothing more than a proxy for the US government collecting money from income earners. I don't want them to have parity with the regular income earner because it means that even more taxes are indirect and the American citizen loses more. In other words, the more that taxes are indirect the more that fraud, waste, and abuse, of those tax dollars is hidden from the consumer and more of the true cost of their government is hidden.

If Americans were taxed for the full amount directly we might have real change in America. Instead by the use of class warfare including both between income earners and putting the taxpayer versus corporations government is effective at hiding its true cost to the individual earner.

As for trickle down, put it bluntly, if I stop spending my income on side items, services I could do myself, it will not trickle down. Suddenly that restaurant has less customers, that lawn service fewer contracts, that car wash gets less cars, and someone is out of a job. So it does trickle down very well. The problem is those who seek to portray it otherwise give extreme examples to bolster their case.

Trickle down works fine but the burden on the income earner is so severe that most attempts will fail because people rightfully don't want to give it up.

The greatest ponzi scheme is the American Government yet it our very representatives that seek to exaggerate and find any they can find in the private sector as examples of greed when in fact it is the very government doing this that is the greediest of them all.