The whopper of a "stimulus package" that Obama's team is working on and which will probably be close to $1 trillion before all is said and done has some major flaws in it already according to former Treasury Secretary Paul O'Neill.
Quote in this Bloomberg piece, O'Neill shows us the incredible numbers involved in Obama's jobs program:
The Obama administration’s goal of creating 3 million new jobs by January 2011 will run smack into “the natural demographic flow, which will add 3.2 million people to the workforce” in the same time period, O’Neill said. In effect, “we are going to spend $750 billion, the number of unemployed will rise and the (unemployment) rate will go down slightly.”
O’Neill did the math so you don’t have to. Each job “will cost $250,000, which doesn’t suggest much labor intensity for the dollars spent,” he said. “It makes me wonder if any of the planners or commentators are good at arithmetic.”
They’re not good at arithmetic. And one wonders about their facility with economics.
If putting people to work is the goal, we could get rid of all the heavy earth-moving equipment and go back to digging ditches with shovels.
Why stop there? If it takes one man two days to dig a trench three feet deep and 30 feet long with a shovel, how long would it take 100 men using spoons?
You get the point. We can always create jobs by replacing capital with labor, by going backward. The entire history of civilization has been characterized by an effort to move in the opposite direction and become more productive, which is another way of saying produce more with less.
Of course, the "stimulus package" is not meant to make sense. It is a payoff to Obama's union backers and a purely political effort to be seen as "doing something about the problem." One wonders if we spend a trillion dollars and unemployment drops a few tenths of a percent, will that seriously be hailed by the Obama Administration as a success?
Count on it.