The New Republic

Nicely put. I would add that it is also possible that people left jobs for companies where the handwriting on the machinery indicated their term of employment was ending soon. And that counts as job creation in my book.

- Nusholtz

August 31, 2011 at 8:03am

That's critical. From now on, all stimulus critics and unemployment extension critics must quit their job with no security and see how well they "adjust" to having to take a new job at a different firm. They can take their microeconomics and shove it.

- chaitless

August 31, 2011 at 8:15am

Chait, You miss the main point again ---- Keynesian stimulus didn't work. The fact that job switching under stimulus the same as normal labor market makes the point. The stimulus didn't pick up any Keynesian 'slack' and many of the jobs were part-time or temporary. No net job creation. The article is empirical proof that the underlying hypothesis of Keynesian is wrong. Using the scientific method means trying to prove/disprove your hypothesis with real data. ** Keynesian theory requires strong conditions to work: In the words of Lawrence Summers, stimulus spending must be “targeted” at unemployed workers and underused organizations. Roughly half of the new hires and one-third of the organizations in our sample fit the description. That means that almost half of ARRA jobs in our sample went to workers hired away from other organizations and two-thirds of our organizations already had plenty of work to do before receiving ARRA funds. This is far from the ideal prescribed by Keynesian macroeconomics. In the Keynesian ideal, spending should be targeted toward the slack sectors, and workers should overwhelmingly be hired away from unemployment lines. Instead, the direct job-to-job shifts for ARRA-receiving organizations were similar to the average job-to-job shift rates in the U.S. during normal economic times. ARRA was implemented at time when the Keynesian model had every chance of succeeding on its own terms. The high level of unemployment and the rapid deadline for spending created both the supply of workers and the demand for workers. If the job market results are so lackluster inthis setting, economists should expect even weaker stimulative results during more modest recessions.

- mr_rationale

August 31, 2011 at 9:22am

But mr_rationale, you haven't answered Jon's question: when company A loses workers to company B, what does company A do? Does it fill those jobs with new hires or not? And do you deny the title of this post - that employment is fungible?

- benjamin81

August 31, 2011 at 10:27am

I'd like to take this opportunity to say thank you to rationale, who I see is here once again simply asserting things without actually presenting any arguments. Well done, sir. You're doing more to discredit conservative thought that we ever could.

- tealeaves

August 31, 2011 at 10:31am

Mr_Rationale, I read your post and was going to go find material to refute it. Then I read the quote you provided underneath, and decided not to bother. Mercatus's argument (at least as presented in your quote; haven't yet read the paper) can be summarized as: Premise #1: This situation was a perfect setup for Keynesian stimulus. Premise #2: The ARRA was not a well-designed Keynesian stimulus. Conclusion: Therefore, the ARRA was a failure and Keynesian stimulus doesn't work. The conclusion does not even remotely follow from the premises. From those premises, the logical conclusion would be "The ARRA should have been more Keynesian and might have worked better if it had been," and Keynesian economists have been saying exactly that for some time.

- Dausuul

August 31, 2011 at 10:38am

Well done, Dausuul.

- GSpinks

August 31, 2011 at 11:04am

Whenever the Rat makes his (so-called) arguments, I always feel like he is standing under a sign that says, "Mission Accomplished!"

- Nusholtz

August 31, 2011 at 2:14pm

See, that's interesting, Nusholtz. I assume he doesn't mean what he says as a factual statement.

- miceelf

August 31, 2011 at 3:51pm

When such arguments have such blatantly obvious flaws even on first reading, I wonder: where are the editors? Doesn't anyone read this stuff over? I remember a 1990s column by Paul Weyrich, a leading light of the conservative movement, about Major League Baseball's disciplining the owner of the Cincinnati Reds for some comments she had made. "Where is the ACLU when you need them?" he asked. Ah, maybe the ACLU isn't there because last time I checked Major League Baseball isn't the government and so there is no First Amendment issue? Where are the editors when you need them?

- dsimon

August 31, 2011 at 5:19pm

dsimon, of course they read this stuff over...to make sure the author is toeing the party line properly.
Actually, now that I actually read rat's whole post (I usually skip them because the arrogant ignorance turns my stomach), I think the author might have made the opposite of the case he was trying to make...
the direct job-to-job shifts for ARRA-receiving organizations were similar to the average job-to-job shift rates in the U.S. during normal economic times. As opposed to the basic hemmoraging of jobs that has been occurring, meaning the stimulus brought almost a sense of normalcy to employment rates. Which suggests it did exactly what it was supposed to do, at least while it lasted. I wonder what would happen if we had the same level of spending for stimulus type jobs for, say, 6 more years?

- GSpinks

August 31, 2011 at 5:40pm

although, I'll take a moment just to reiterate that not until investment in main street becomes more lucrative than investment in wall street will money start truly flowing in the right direction again. I wonder if there is any way to de-incentivize investing in wall street?

- GSpinks

August 31, 2011 at 6:11pm

Great example of how the Gov creates jobs.... *** A company that served as a showcase for the Obama administration’s effort to create jobs in clean technology shut down Wednesday, leaving 1,100 people out of work and taxpayers obligated for $535 million in federal loans. Solyndra, a California solar panel maker, had long been an administration favorite. Over the past two years, President Obama and Energy Secretary Steven Chu each had made congratulatory visits to the company’s Silicon Valley headquarters.

- mr_rationale

August 31, 2011 at 9:22pm

Oh I almost forget -- even Chait's title is wrong Jobs are not fungible: - require different skill sets - compensation differs dramatically - economic value created differs dramatically - matters if they are not targeted at the 'slack' according to Keynesians Stimulus creates jobs the same way paying $200K for a worker to dig a hole and then fill it in creates a job. For the rationale majority, the aforementioned is a bad idea. For the moonbat minority -- keep digging holes

- mr_rationale

August 31, 2011 at 9:28pm

mr_rationale: When you criticize liberals' proposed solutions to problems without providing alternatives, one is forced to conclude that either (a) you don't think said problems exist, or (b) you agree that they do, but you think them insoluble, or (c) you have solutions, but consider them unpalatable to the left, or (d) you don't care. My money is on (d).

- henderstock

August 31, 2011 at 9:45pm

This is all much less complicated than rat and those arguing with him make it out to be. Jobs exist because there is demand for the output of those jobs, goods or services. Those who are employed providing services that are in demand then spend their income and demand other goods and services. Contrary to the inanity of the right, that now wants to claim that government demand is somehow different from "real" demand, there is no difference. The people paid by government to do whatever they are paid to do are the same as the rest of humanity and go out and spend their income on the same things as people employed supplying goods and services to meet private demand -- tacos, lawn seed, cable TV, cell phones. Therefore, as long as the government increases its demand, and as long as that demand cannot magically be met by the same number of people previously employed, as it cannot be, then additional, autonomous government demand increases employment exactly as an increase in private demand would. We can spend as much money as we want to or have to in the form of public demand to replace missing private demand, and we can do it for as long as necessary. Certainly, we should not want to pay people to dig holes and fill them in again. But, as I have pointed out numerous times, we paid 12 million people to blow up Europe and the Pacific and it worked just fine to bring an end to the Great Depression. So, we should of course want the government to spend on useful things, such as repairing and replacing our crumbling infrastructure, because we want the labor resource we put to work to create something of value. The people directly employed by government will have skills appropriate for what they are being asked to do. As the economy is dynamic, they may be already employed in those sectors, be hired away from other companies, or be hired from unemployment. It doesn't matter at all. It is the job of the market to adjust and allocate labor to the places it is needed, including the servicing of government demand. As long as that demand is in addition to existing demand, it is absolutely as effective in increasing employment as an increase in private demand. Indistinguishable. No different than if I spent my money on a new car while you spent your money on dance lessons. As the gap between output and capacity shrinks, both due directly to the public demand and the secondary and tertiary private demand that the public spending creates, we can become resource constrained. At that point we can reduce public spending to free productive resources for private consumption or we can decide that we prefer the new mix of public and private goods and continue a high level of government spending. Rat and the libertarians are caught in a paradigm of the economy that is essentially medieval. They think that the private sector produces corn and the government sector then consumes a share of the private output. That has nothing whatsoever to do with a modern economy. Government spending generates output -- commandeers a share of productive resources to meet its demand -- exactly as the private sector does. Whether we derive good value from the productive resources employed to meet government demand -- such as, for example, by running aircraft carriers around the ocean -- is a separate question. Government demand generates public goods, like aircraft carrier services. Private demand generates private goods, like time spent at the movies and french fry consumption. There is no fundamental difference other than who makes the purchasing decision.

- roidubouloi

August 31, 2011 at 11:33pm

Nice work, Roid.

- Fishpeddler

September 1, 2011 at 10:58am

Rat, everything you just slobbered is necessarily contraindicated in the facts. That the government created jobs that took employees from other jobs necessarily indicates the skill sets are similar and compensation was equivalent or better. Your last two points about economic value and their value as Keynesian stimulus are just babble that don't support anything you just asserted. Beyond that, I think Roi has pretty much nailed your coffin shut on this debate.
Well done, Roi.

- GSpinks

September 1, 2011 at 11:03am

mr_rat: "Great example of how the Gov creates jobs...." And shall I show what a great job that Enron did in creating jobs...or what the finance field just did to the entire economy? Should we have no restaurants because most restaurants fail? Should I not invest in any business because sometimes a business goes out of business? Sure, there are occasional busts both in public and private endeavors. Cherry-picking a failure does nothing to show whether the overall efforts are worthwhile in either field.

- dsimon

September 3, 2011 at 9:43am