Tuesday, November 1, 2011

Multiplier

Government economists (and government-sympathizer economists like Paul Krugman) like to talk about a "multiplier" effect, where government spending is amplified by the ripple effect of money injected into the economy.  This was in fact a major justification for Keynsian spending programs in general and the "Stimulus" in particular.

So riddle me this, Keynsianman: what's the multiplier for the "Green" jobs programs, like Solyndra?  It seems that it's not just less than 1.0, it's actually negative:

Q: When is a job not a job?

A: When it's a green job.

This is not a joke, it's not funny and it's not new. Anyone who reads this blog has been aware of this inescapable truth for some time. They'll have read (back in March 2010) about the research by Dr Gabriel Calzada Alvarez of the Rey Juan Carlos University in Spain showing that for every "green job" created by taxpayer subsidy another 2.2 jobs are destroyed in the real economy. They'll have read (February 2011) about the even more damning research from Verso economics, showing that for every "green job" created by taxpayer subsidy another 3.7 jobs are destroyed in the real economy. They'll have read about the report by Economics professor Gordon Hughes, appropriately titled The Myth Of Green Jobs. And they'll surely be aware of the stupendously large quantities of US taxpayers' money – $38.6 billion of it – which has been squandered by President Obama on futile enterprises like the solar energy company Solyndra.
Remember how Obama was modeling the US Solar Power effort on the Spanish model?  Every solar job there came at the expense of 2.2 jobs lost in higher taxes.

Quite frankly, I'd be more impressed with the governing elite if they actually would do their homework once in a while.

3 comments:

ProudHillbilly said...

But it SOUNDS good...

Old NFO said...

That would be a novel concept... sigh

Back of the Envelope said...

But what is the real Human Cost?

Cost : Benefit ratio > 1.0 is hard to hard enough to get to when is dealing in $, much less jobs, but I will try to convert, say –

The average wage a worker makes during a career, Work-Hour (Wh), is $20.00, 1 Wh = $20.00.
The average worker’s Work-Week (Ww) is 40 Work-Hours, 1 Ww = 40 Wh.
The average worker’s Work-Year (Wy) is 50 Work-Weeks, 1 Wy = 50 Ww.
The average worker’s career, the Work-Life (Wl), is 50 Work-Years, 1 Wl = 50 Wy.
The average worker over a career supports not only his life but a spouse, 1 Work-Life = 2 Lives.

Turning the conversion crank,

($20.00 / 1 Wh) * (40 Wh / 1 Ww) * (50 Ww / 1 Wy) * (50 Wy / 1 Wl) * (1 Wl / 2 Lives)

Wh, Ww, Wy, and Wl cancel out leaving us with (20 * 40 * 50 * 50 * ½) $ / Life, or

One Life = $1,000,000 (actuaries may present something different)


Now, never mind the GREEN™ spending, what is the human cost of the most recent three years of deficit spending, C, at approximately $1 Trillion per year?

The Cost of the last three years of deficit spending, C = 3 Years ( $1 Trillion / Year ) / ( $1 Million / Life )

Cost = 3 Million Lives.