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$250,000 per Job? Only a little bit too expensive. - Howard Tayler
Ramblings of a Happy Cartoonist
$250,000 per Job? Only a little bit too expensive.
If you've been following the news, there are lots of people screaming about how incredibly expensive the stimulus package was, and how it didn't create enough jobs for the money spent.

I'm not a fan of stimulus, nor big government, but I do know how to do math like a capitalist. An employee costs a lot more than just salary, and I haven't seen much reporting in this vein.

Let's say you've been given stimulus money to hire somebody. GREAT! Do you start writing them paychecks immediately? No. You find work for them to do. Let's go on to say that the employee is (as many of them are reported to have been) a construction worker. How much is it going to cost to put that person to work? Well... you have to have land on which they can put a building, materials to put up the building with, and tools for them to use. Some of this you might already have, but with stimulus money you're going to go buy MORE of it so you can grow your business and (here's another form of the word) STIMULATE the economy as a result.

Pulling numbers out of my butt: if twenty guys can build a subdivision of 40 homes in a year, and the homes cost $120,000 each to build, you've spent just short of five million dollars creating 20 jobs, at a cost of $240,000 per job.

You also created forty homes (in a depressed real-estate market that is saturated with defaults, foreclosures, and short sales, but I digress...)

Also, somebody out there sold you a whole mess of lumber, nails, concrete, PVC, etc.

Sure, if all we wanted to do was feed people tax money we could do it much more efficiently by just dumping the entire stimulus package into the existing welfare system. But that doesn't stimulate the economy, and it provides incentives for the wrong sort of behavior.

Again, let me say that I'm not a fan of the stimulus package, not as implemented, and not in principle. But the math I use as a good capitalist who wants to be able to create jobs tells me that the critics of the stimulus package are being very loudly dishonest in their criticism.

(Note: If you gave me $240,000 and told me to create as many jobs as I could, I would hire a writer, two line-artists, and a colorist and create graphic novels out the wazoo. If the books sold well, I'd be able to keep my employees. If not, well... they worked for a year, and we all had a good time with taxpayer money. DO NOT SEND ME TAX DOLLARS IT WILL ONLY END IN TEARS.)
43 comments or Leave a comment
unspeakablevorn From: unspeakablevorn Date: November 1st, 2009 05:30 am (UTC) (Link)
Well, the lumber, nails, concrete, etc, guys had work too.
sonictail From: sonictail Date: November 1st, 2009 05:36 am (UTC) (Link)
We had a personal stimulus package here and it appears to have worked (just run "1 AUD to USD" through google to see) and things are getting better.

It's not surprising that the implementation is off and I agree, it's not a bad idea. You just need to choose the right areas. And who could choose?

It's a sticky wicket to be sure ;)
anshackles From: anshackles Date: November 1st, 2009 07:46 am (UTC) (Link)
When they announced the first such package here in the UK, the sum being mentioned was about GBP1000 per person, roughly speaking. This was to be given to the banks, I think, to stimulate the banker's bonuses economy with, by lending more cash.

My comment at the time was "why don't they just give every single person in the country 1000 quid?". This too would stimulate the economy: those in need would spend it on stuff they needed. Those with jobs would likely spend it on extra presents or a holiday or something, the prudent would put it in the bank to add to their savings, some people would go out and binge on 1000 quids-worth of booze and smokes, and ALL of these activities, in varied ways, would stimulate the economy, plus, everyone would have felt good and felt that for once the government was actually giving them something, rather than the other way 'round.

Instead, of course, they dumped money in some fashion into the banks who are already widely mistrusted for paying themselves fat bonuses while the rest of us struggle. I've seen no evidence to speak of on how well it worked, but I know they expanded the scheme.
From: petronivs Date: November 1st, 2009 09:19 am (UTC) (Link)
GW Bush tried that here, with his tax cuts. Unfortunately, it wasn't that well received. Therefore, Obama evidently one-upped him by giving money solely to The People The Government Likes.
johnridley From: johnridley Date: November 1st, 2009 12:36 pm (UTC) (Link)
Tax cuts don't directly help the people who really need help the most, because they're not paying taxes in the first place. I have family members who never saw a dime, and years later are still destitute and barely able to feed themselves.
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unixronin From: unixronin Date: November 1st, 2009 04:16 pm (UTC) (Link)
Exactly the same here. Most of the banks just took the money and sat on it, with the intention of having a nest-egg of capital set aside to put them in a good position after the recession was over.

It's my considered opinion that even if the government HAD still given the money to the banks, there should have been a condition attached: "We are giving you $30 billion. You WILL write off $30 billion worth of bad mortgages, prioritized by need, and declare them paid in full." Bunch of foreclosures eliminated, bunch of families that don't end up homeless, lots of consumer income freed up that will actually go into the economy, pile of red ink off the banks' books ... win win win win. After all, it was taxpayer money in the first place anyway.

(And oh, what's this? You decided that a second mortgage on a fourth vacation home owned by one of your directors needed to be written off more urgently than a family of six in Los Alamos who have no work and are facing homelessness? ...You're going to jail.)
unixronin From: unixronin Date: November 1st, 2009 04:07 pm (UTC) (Link)
...And lots and lots of really shiny BLAM! ;)
From: betsumei Date: November 5th, 2009 11:59 pm (UTC) (Link)
Tears of joy from fans who'd really like to get their hands on those books?
klingonguy From: klingonguy Date: November 1st, 2009 10:23 pm (UTC) (Link)

Damn. So much for funding the Amazing Conroy graphic novel...
raithnor From: raithnor Date: November 2nd, 2009 11:09 am (UTC) (Link)
People seem to forget that about 40% of the stimulus was tax cuts.

The best the stimulus could do is prevent things from snowballing into a bigger mess, as it is there are signs that it wasn't enough to put the brakes on completely. We're still losing jobs just not as quickly.

What really needs to happen is the creation of new growing market here in America. Something sustainable that leads to real growth, not something tied to the perceived value of something like houses. Part of the problem is with a global economy a companies financial well-being can have very little to do with America's well-being.

The truly maddening maddening is the principle actors for causing this mess in the first place seem bent on making sure it's business as usual.

When 5 companies have the potential to completely destroy the US economy, there is something seriously wrong with the system. Letting unfettered "market forces" work is like playing Russian Roulette.

We need to get the economy on an upward cycle, and when that's beginning to happen taxes will have to be raised. That's really going to be te only way to pay the deficit down. However, politics being what it is it would be political suicide.

We really need to create an environment where a company would have an easier time creating jobs, instead of always being something to raise profit margins. Reforming Healthcare and Education would go a long way. For a small-to-mid sized company, let alone the self-employed, health care is prohibitively expensive. Education has a different set of problems, there's a disturbing lack of innovation at the lower levels, also there are quality problem because a school district is reliant on the local tax base and state educational funding. So you have this patchwork of school which can limit job mobility.

Bottom line, what we have right now isn't working. I'd rather back people who can see there's a problem and try to fix it, than to just say "Well, the market will eventually fix everything."
From: samholden Date: November 3rd, 2009 07:05 pm (UTC) (Link)
The actors that caused this in the first place are Bush and Greenspan. And surprise surprise Bush and Bernanke, and Obama and Bernanke are doing the exact same thing.

The problem with kicking the recession down the road a bit is that each time you do it the recession down the road will be of larger magnitude and the next kick won't go as far.

This recession is really just the 2001-2003 recession that was kicked down the road via stimulus. And it looks like we kicked this one further down the road too, of course that just means we are in for a whopper in a few years time (way less than the 7 or so years we kicked the can last time).

Bush almost got away with kicking the can into the next president's term, Obama won't even get it into his next term (if he gets one).
rurounifalcon From: rurounifalcon Date: November 2nd, 2009 02:41 pm (UTC) (Link)
Taylor, it doesn't help that what Washington claims is not that they've created jobs, they claim that they kept the jobless rates from getting worse. 'Cause last I checked unemployment hasn't stopped going up yet. Further, they've got no solid evidence that the stimulus worked, and many economists claiming that long-run it'll make things worse, plus there's the FACT that the "stimulus bill" was in fact nothing more than a big pork-barrel spending bill oriented towards the special interest groups that support the President and his party.

I'm starting to think we need two major Constitutional amendments here. The first would be some form of balanced budget amendment. The second would force Congress to only deal with one topic per bill, and so prevent all these damnable riders and add-ons to major bills that either spend money or sneak in legislation that one group wants but would never past muster otherwise (the recent expansion of Federal hate crime laws via the Defense Spending Bill comes to mind).
kazriko From: kazriko Date: November 3rd, 2009 10:45 pm (UTC) (Link)
It's Tayler. ;)

Also, have you seen what they're sneaking into the medical bill? Regulations on everything from Vending machines to Firearms. It's the holy grail of progressive thought made into law.
unixronin From: unixronin Date: November 4th, 2009 12:14 am (UTC) (Link)
I'd add one more requirement to that second: Write the bills in plain English, dammit. Require all bills before Congress to be written in language that you do not have to be a lawyer to understand, so that the voters who elected you have a fair chance of understanding what you're voting for as their "representative".

I could also find arguments in favor of an amendment that empowers the voters of the states to recall their senators and congressmen from office if they act against the interest of the voters. "You voted for WHAT?!? ...You are SO fired."
kazriko From: kazriko Date: November 4th, 2009 09:39 am (UTC) (Link)
The downside to using plain language is the ease at which it can be interpreted in a way that wasn't intended. The same is true of the legalese used in bills. They claim it's one way and that they'll never use it the other, but 10-20 years down the road when everyone has forgotten the debate, they start using in the other way...
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