Do the math

by Russ Roberts on February 11, 2009

From the AP (HT: Drudge):

The Federal Highway Administration has estimated that every $1 billion
the federal government spends on infrastructure projects translates to
35,000 jobs. Collins put the total infrastructure spending — including
highways, mass transit,
environmental cleanups and broadband facilities — at $150 billion. Do
the math and that translates into more than 5 million jobs, based on
the highway administration's assumptions.

Or do the economics.

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vidyohs

T. O. Eric,

But, not this time. We can rest assured that this time they will do it right.

Eh?
Mezzanine

RVTurnage - define which demand is 'natural' and 'artificial'. When out entire economy is built upon government fiat currency, it pretty much muddies the waters.
RVTurnage

Doesn't that assume that no person will work on more than one infrastructure project?

How long does 1 infrastructure project last? 6 months, a year, two? What happens to those 5 million people then? Oh yeah, they lose their job because the artificial demand is gone.
Mezzanine

The fallacy is believing private sector jobs last longer then government created jobs. Anything else is wingnuttery.
The Other Eric

Vidyohs, I appreciate the analogy.

On a related note: What are the actual incentives here for states and paving contractors? In the 1960s there were few large funds available for roadway construction, but giant pots of money tucked away in bridge building funds. This prompted 'skyway' and 'elevated road' construction. These were, of course, built in a region prone to snow and freezing temperatures so that even to this day these roadways freeze over and deteriorate with amazing rapidity.
Ike Pigott

...or, let's just put the ENTIRE stimulus into road projects, and create 30-million jobs!

Because, you know, all math is linear, right?
vidyohs

Mezz - Russ - et. al.,

"If 5 million jobs will be created according to the math, why not admit it? Anything else is wingnuttery."

No the government math is perfect. It accurately describes what happens with money alloted to be spent by government agencies. You put a $150 billion in the top of the funnel with the absolute understanding that all of it will never make it out of the spout on the bottom of the funnel.

On a cold day (50 degrees to 32 degrees) set a normal kitchen funnel outside along with one cup of Brer Rabbit dark molasses. After about an 30 minutes go out and pour the molasses into the funnel and see how much of the molasses actually makes it out the bottom. Most of the molasses will stick to the inside of the funnel and stay there under those conditions for a very very long time.

Well that is the way the dollars flow out of the bureaucratic funnel, most it seems to get stuck inside.....all for very good reasons of course.
Jeremy

Great, now I can finally realize my lifelong dream of going to work for the Federal Highway Administration. Me and another 12 people can all take turns holding a sign to warn drivers to slow, on the newly created 12-lane 480 loop that surrounds the Rawlins, Wyoming metro area. This is a lot better than what I was planning to do with the rest of my life; good job, Uncle Sam. Once again, you've taken care of everything.
kazoolist

If this were true, it would mean the government would be spending $28,571.43 per job.

Let's run with that for a second and consider the inherit claim in all this that the economy is so bad that only government driven demand can "save or create" these jobs. The implication of that is that these jobs will take no part in satisfying private demand, so compensation for these jobs would be limited to non-private (government) funds. If that holds, it means each of the 5 million jobs "saved or created" would have to be capped at no more than (on average) $28,571.43 (or, actually, lower given bureaucratic administrative costs that also have to be accounted for).

Considering that the median income of all working *and non-working* Americans above age of 14 was around $26,000 in 2006, it seems like this means the government will be "saving or creating" pretty lousy jobs or these numbers are way off.
Mezzanine

The MSM is so unbiased that we need to shut down Rush Limbaugh. Yeah process that one.
Jacob Oost

More eye-roll-inducing tripe from the Associated Peons (can I say that?).

Is there any mainstream media outlet that is any good at reporting economic matters?
Ironman

Or do the math, the way it should be done to account for the economics.

Remember, Obama's goal isn't to create jobs, it's to "create or save" 4 million jobs. Just because they already exist and would probably continue existing doesn't mean he can't count them!
Mezzanine

If 5 million jobs will be created according to the math, why not admit it? Anything else is wingnuttery.