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How many jobs did the stimulus create? Rigged estimate.





ocalhoun
Not such a great source:
http://corner.nationalreview.com/post/?q=ZWVjZTI0Yzg5MTg2YjQ3NDEyYzQ3OTNmNWQ2N2EzN2Y

But a serious accusation:
Quote:

Yet the CBOs calculations are not based on actually observing the economys recent performance. Rather, they used an economic model that was programmed to assume that stimulus spending automatically creates jobs thus guaranteeing their result.

Quote:

The CBO model started by automatically assuming that government spending increases GDP by pre-set multipliers, such as:



* Every $1 of government spending that directly purchases goods and services ultimately raises the GDP by $1.75;

* Every $1 of government spending sent to state and local governments for infrastructure ultimately raises GDP by $1.75;

* Every $1 of government spending sent to state and local governments for non-infrastructure spending ultimately raises GDP by $1.25; and

* Every $1 of government spending sent to an individual as a transfer payment ultimately raises GDP by $1.45.



(Note that all CBO figures in this post represent the midpoint between their high and low estimates.)

Then CBO plugged the stimulus provisions into the multipliers above, came up with a total increase in gross domestic product (GDP) of 2.6 percent, and then converted that added GDP into 1.5 million jobs.

Quote:

its conclusion that the stimulus saved jobs was pre-ordained. The economy could have lost 10 million jobs and the model still would have said that without the stimulus it would have lost 11.5 million jobs.



Makes a lot of sense, but is hurt greatly by the source. Can anyone find some better confirmation of it, or can anyone (with evidence, please handfleisch) disprove it?
handfleisch
ocalhoun wrote:
Not such a great source:
http://corner.nationalreview.com/post/?q=ZWVjZTI0Yzg5MTg2YjQ3NDEyYzQ3OTNmNWQ2N2EzN2Y

But a serious accusation:
Quote:

Yet the CBOs calculations are not based on actually observing the economys recent performance. Rather, they used an economic model that was programmed to assume that stimulus spending automatically creates jobs thus guaranteeing their result.

Quote:

The CBO model started by automatically assuming that government spending increases GDP by pre-set multipliers, such as:



* Every $1 of government spending that directly purchases goods and services ultimately raises the GDP by $1.75;

* Every $1 of government spending sent to state and local governments for infrastructure ultimately raises GDP by $1.75;

* Every $1 of government spending sent to state and local governments for non-infrastructure spending ultimately raises GDP by $1.25; and

* Every $1 of government spending sent to an individual as a transfer payment ultimately raises GDP by $1.45.



(Note that all CBO figures in this post represent the midpoint between their high and low estimates.)

Then CBO plugged the stimulus provisions into the multipliers above, came up with a total increase in gross domestic product (GDP) of 2.6 percent, and then converted that added GDP into 1.5 million jobs.

Quote:

its conclusion that the stimulus saved jobs was pre-ordained. The economy could have lost 10 million jobs and the model still would have said that without the stimulus it would have lost 11.5 million jobs.



Makes a lot of sense, but is hurt greatly by the source. Can anyone find some better confirmation of it, or can anyone (with evidence, please handfleisch) disprove it?


Why would I need to disprove it? You just tainted it yourself. The CBO is a bipartisan committee charged with doing the most accurate calculations possible. The Nat.Review is a biased rag. Why bother?
ocalhoun
handfleisch wrote:


Why would I need to disprove it? You just tainted it yourself. The CBO is a bipartisan committee charged with doing the most accurate calculations possible. The Nat.Review is a biased rag. Why bother?

Yes, the source is horrible, which is why I'm asking for confirmation or disproof rather than stating it as fact.
Just because they are 'bipartisan' doesn't mean they are (correctly) accomplishing what they were charged with doing. Remember, I have absolutely no trust in both major parties.
Why bother? Because if you can disprove it, (using a reliable source) I won't believe this accusation. Otherwise, I'll be filing it under the 'likely/possible, but unproven' category... And I mean that. If it is disproven, I really will change my beliefs about it, unlike some people here (on both sides) who would defend something no matter what the opposition. I'm asking for evidence against it from credible sources though. (criticizing this source, me, or people who disagree with you in general does not constitute evidence.)
Bikerman
Well, a couple of points...(or maybe more if I start to flow Smile )

a) Let's leave this notion of 'proving' things where it belongs. If you want a precise definition of where it belongs then I'll be happy to debate that in the science forums, but it doesn't belong here.
b) Ocalhoun reasonably asked for conformation*
c) The general point seems to me to be silly. All figures of this nature are projections based on some starting assumptions. How do you think they arrive at the numbers? Counting? The question is not whether specific generalisations were made, but whether the general sampling/reporting technique is robust.
d) The cumulative error range of any such figure is likely to be plus or minus a figure greater than it is, which is to say that I would not treat ANY such number as particularly accurate.
e) The article ends, I believe, with the most important content:
Quote:
The debate over the efficacy of Keynesian stimulus is essentially a debate over the correct multipliers. Some believe the multipliers are high, others believe they are as low as zero (or even negative). Testing the stimulus requires testing the multipliers. Yet by simply assuming large multipliers, CBO effectively pre-ordained its conclusion that the stimulus worked, regardless of what actually happened in the economy.
That is true, but let's then have the result of using different multipliers. By not doing so the author of the article is being lazy and patronising (or got chopped by the editor).

* Putting something out with the disclaimer that one is merely wondering if it is true, is not a defence which can be generally supported, however.
ocalhoun
Bikerman wrote:
How do you think they arrive at the numbers? Counting?

A better way would be to trace a representative sample of the money, and closely examine the effects that sample had.

This way, though, seems rather circular:
Did spending all this money create jobs?
First, we'll assume spending money creates jobs.
Since we spent money, jobs must have been created somewhere.
handfleisch
ocalhoun wrote:
handfleisch wrote:


Why would I need to disprove it? You just tainted it yourself. The CBO is a bipartisan committee charged with doing the most accurate calculations possible. The Nat.Review is a biased rag. Why bother?

Yes, the source is horrible, which is why I'm asking for confirmation or disproof rather than stating it as fact.
Just because they are 'bipartisan' doesn't mean they are (correctly) accomplishing what they were charged with doing. Remember, I have absolutely no trust in both major parties.
Why bother? Because if you can disprove it, (using a reliable source) I won't believe this accusation. Otherwise, I'll be filing it under the 'likely/possible, but unproven' category... And I mean that. If it is disproven, I really will change my beliefs about it, unlike some people here (on both sides) who would defend something no matter what the opposition. I'm asking for evidence against it from credible sources though. (criticizing this source, me, or people who disagree with you in general does not constitute evidence.)


Economic forecasting is analogous to weather forecasting. Now while I don't trust the weatherman so completely that I don't look out the window before I go out, that doesn't mean I am going to set up my own weather station and start consulting satellite maps. In fact, weather forecasting is pretty good these days, especially since they now say "90% chance of rain" (so they can't be wrong). The weather forecaster in this case is the CBO, non-partisan experts, and I'm not going to think I can crunch the numbers on the stimulus package any more than I am going to suddenly master meteorology.

Likewise, the National Review in this case is for the economy like they are for Climate Change -- they are deniers, those ideology-driven pseudo-scientists who find a typo in a report and declare it a lie (because cleaning up the world threatens their oil company profits -- the National Review's director is a third-generation oil man who now runs an investment company).

Now, find me credible sources who say the CBO is way off, and maybe I'll listen. But in general this is all just internet-based hoohaw.
ocalhoun
handfleisch wrote:

Economic forecasting is analogous to weather forecasting.

Who's forecasting?
I want to know what is happening right now, and what has happened in the recent past.
This can be known absolutely, and with yet more government-spending-for-economic-recovery coming up, its important to find out for sure if the first round of spending did any good.
handfleisch
ocalhoun wrote:
handfleisch wrote:

Economic forecasting is analogous to weather forecasting.

Who's forecasting?
I want to know what is happening right now, and what has happened in the recent past.
This can be known absolutely, and with yet more government-spending-for-economic-recovery coming up, its important to find out for sure if the first round of spending did any good.


Forecasting/ analysis, point remains the same
ocalhoun
handfleisch wrote:

Forecasting/ analysis, point remains the same

How about less analysis, more actual investigation?
handfleisch
ocalhoun wrote:
handfleisch wrote:

Forecasting/ analysis, point remains the same

How about less analysis, more actual investigation?

Sure, and point still remains the same. Show me some alternate investigation or analysis from a credible source and maybe I'll listen. At this point, we have good analysis and conclusions from a very good source with a good track record. Listening to the fake outrage from right wing oil-company rags is a ridiculous waste of time, as in the premise of this thread.
ocalhoun
handfleisch wrote:
At this point, we have good analysis and conclusions

... and that's all we have, apparently.

What about comparing those conclusions to real, collected data, in order to test the validity of the analysis?

And the idea of it being a 'very good source' is rather subjective. I'm disinclined to trust a government report about the worth of a government program... Too much conflict of interest for institutions that are untrustworthy to begin with.
handfleisch
ocalhoun wrote:
handfleisch wrote:
At this point, we have good analysis and conclusions

... and that's all we have, apparently.

What about comparing those conclusions to real, collected data, in order to test the validity of the analysis?

Sure, of course.
ocalhoun wrote:
And the idea of it being a 'very good source' is rather subjective. I'm disinclined to trust a government report about the worth of a government program... Too much conflict of interest for institutions that are untrustworthy to begin with.

No that's really way off. Go ahead and look up the track record of the CBO as compared to other major organizations doing economic analysts -- it's got a good one. Measures have been taken to keep it as nonpartisan as possible, since Repubs and Dems both know that somewhere along the line they have to have real numbers to work with, and to do otherwise would be to court true economic implosion (like the Soviet Union telling itself lies about it's five-year plans).

But of course some people like to say it's all subjective, that neither so-called side can be trusted, so that they can just believe any fantasy or Utopian political idea they want, no matter the facts.
ocalhoun
handfleisch wrote:

But of course some people like to say it's all subjective, that neither so-called side can be trusted, so that they can just believe any fantasy or Utopian political idea they want, no matter the facts.

If the entire estimate depends on an arbitrarily decided notion that government spending always creates jobs, then it is subjective. To be objective, they need to go out and collect real data about what really happened, not just reword predictions into history.
Quite true that neither side can be trusted. Though you may be blind to the indiscretions of Democrats, surely you can agree that Republicans can't be trusted.
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