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$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."
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.
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.
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.
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.
Can we calculate how many jobs are lost as the indirect result of pulling $30 billion out of the economy via taxation?
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.
Please help metamoderate.
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.
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 ...
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.
SJW n. One who posts facts.
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?