Defenestrating Thoughts from the Bivouac

There are so many things wrong with Obama’s “American Recovery and Reinvestment Plan” that it’s hard to know where to start.

At the root of it, we have to recognize that the government cannot actually create jobs. Any hiring the government does is by taxing the private sector. Thus, since all the government’s money is pulled from the private sector, all the government can do is re-allocate resources. Any job the government “creates” is just shifting a job from the private sector to the public sector.

Furthermore, due to the nature of incentives, government job “creation” is really a misallocation and malinvestment. The explicit goal of the government action is to create jobs. It doesn’t care about competitively producing goods for discerning buyers. It doesn’t care about the return on investment.

A great example of this is the destined-to-fail auto bailout; no private investor will invest in the Big 3 because the risk far outweighs the return. The government, which doesn’t have a strong incentive to invest wisely, will just throw money at the problem. The government’s incentive is to be see as “doing something”.

Simple math can show as that Obama’s “job creation” is a clear malinvestment:

He urged Congress to give its quick attention to his still-evolving economic stimulus plan, designed to create or save 3 million jobs at a cost of about $800 billion (source).

Dividing $800 billion by 3 million jobs tells us that each job saved or “created” will cost $250,000! What sort of jobs are these and where do I sign up?

Why does it cost the government so much to “make” a job? Probably the usual reasons: waste, pork, paying back special interests and simply not caring about spending wisely.

The latest job figures show us that 11.1 million Americans are unemployed. With $800 billion dollars Obama proposes spending, we could give them each a salary of $72,000. That would solve your unemployment problem pretty fast.

[T]he number one goal of my plan … which is to create three million new jobs, more than eighty percent of them in the private sector (source).

So roughly 20% of the jobs will be government jobs? That means there will be 600,000 new government bureaucrats! Each one costs a quarter of a million dollars.

And to put more money into the pockets of hardworking families, we will provide direct tax relief to 95 percent of American workers (source).

Calling it a tax cut while not cutting spending is disingenious. If the government “cuts taxes” and doesn’t reduce spending, it builds an even bigger deficit. And in order to pay back the debt, the government takes money from the taxpayer later.

So the “tax cuts” are really just forced loans. We have to pay back the money later. That’s not “stimulus” that’s just more debt!

Why is this so hard for politicians to understand? If debt got us into this mess, more debt won’t get us out of it! The old adage “Insanity is doing the same thing over and over again and expecting different results” applies here. Except instead of saying “insanity” I think it’s more accurate to say “stupidity”.

Credit will never be as free flowing as before. Now, you need to be creditworthy.

Consumers won’t be spending like crazy anymore. There’s too much debt in the system and individuals are now going to start paying down debts and start saving.

Obama’s stimulus plan is a joke. It’s getting pretty clear that this guy has no idea what he’s doing.

Government cannot create jobs. Government can just forcibly take money and re-allocate it. And since each job costs $250,000 I think it’s pretty clear that the re-allocation is a huge misallocation.

Right now we’re in a severe recession due to lack of capital. And Obama’s plan is to forcibly seize capital and then severely misallocate it. All this will do is make the recession last much longer.