A Stitch in Haste

The more things change...

President Bush signed a $286.5 billion highway bill on Wednesday that he said would create new jobs but which critics contend is stuffed with billions of dollars worth of lawmakers' pet projects.

The legislation funds road and mass transit construction for six years, but also contains $24 billion in "pork" — special add-ons initiated by members of the Senate and House of Representatives to curry favor in their home districts.

"The bill ... is going to help give hundreds of thousands of Americans good paying jobs," Bush said.
...
But the measure contains more than 6,300 special projects.

Of course, any government spending bill, especially a bloated pork-barrel such as this, never "creates" jobs, it merely redistributes them. If the government had not spent the $286.5 billion on transportation and pork, then taxes could have been reduced by that much, which would have meant $286.5 billion that taxpayers could have spent elsewhere, which also would have created jobs, probably more and better jobs, than the transportation bill does.

The government should build roads because they're needed, not to perpetrate and perpetuate a lie upon the American taxpayer. Spending bills do not create jobs, they only redistribute them.

Let the record reflect that Pragmatic Libertarian beat me to citing the Broken Window Fallacy (though I swear it was on my to-do list!). See also Pejmanesque, Marginal Revolution, Angry Bear, Jujitsui Generis.

Cross-posted at Bastiat's Window.

Bill O'Reilly, the staunch defender of all things redneck ... the rank commercialization of ... the True Meaning of Christmas, now claims that Christmas is an economic necessity:

Every company in America should be on its knees thanking Jesus for being born. Without Christmas, most American businesses would be far less profitable; more than enough reason for businesses to be screaming Merry Christmas.

This is, of course, utter nonsense.

Specifically, this is a variation of the Broken Window Fallacy.

It is true that without Christmas (in both its religious and secular applications), American society would be worse off, in terms of non-economic utility, since we would not have had something that a large segment of the population likes, for one reason or another. Less to enjoy means less utility means worse off.

But that is a far cry from the claim that there would necessarily be an economic impact if there were no (commercialized) Christmas.

If we didn't save for Christmas, then we would in all likelihood save for something else -- birthdays and anniversaries and so on. If we didn't spend on Christmas, then we would in all likelihood spend on something else -- birthdays and anniversaries and so on. Or maybe we would just spend more on a regular basis evenly throughout the year.

In fact, one might argue that it would be better for business generally, and retailing specifically, if consumption weren't so concentrated into a two- or three-week period. Firms could hire more year-round, full-time employees rather than seasonal temps. They could balance out their manufacturing and warehousing capacity, since they would not need to "meet the Christmas rush." And of course there would be the efficiency of reduced menu costs (i.e., no Christmas displays to put up and take down each holiday season).

I am of course not saying scrapping Christmas would be good for the economy. I'm saying the net economic impact would be unpredictable, and something close to a wash.

Hat tip to PurpleScarf.

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As a footnote, am I the only one who finds it utterly astounding that the "radical Christmas defenders" like O'Reilly are fighting to preserve the commercialization of Christmas by lamenting the "Happy Holidays" alternative in stores? If I were a Christian devoted to the True Meaning of Christmas, then I'd probably prefer that stores use "Happy Holidays" rather than "Merry Christmas."

Render unto Wal-Mart that which is Wal-Mart's, and render unto Jesus that which is Jesus'.

If I were a Christian...

So not only is he a foreign policy illiterate, but he's also an economic illiterate:

Olbermann: You were in the Illinois legislature when Soldier Field was funded. You voted for it although you seemed reluctant at the time. Was it the right call?

Obama: Absolutely it was the right call because it put a whole bunch of Illinois folks to work. Strong labor jobs were created in this stadium, and at the same time we created an enormous opportunity for economic growth throughout the city of Chicago, and that's good for the state of Illinois.

Okay, back to high school economics:

Government spending does not create jobs; it merely redistributes them -- net of bureaucracy, inefficiency, corruption, etc.

Government spending does not create wealth; it merely redistributes it -- net of bureaucracy, inefficiency, corruption, etc.

Yes, you now have a shiny new stadium -- which was a never a public good and therefore should never have been funded with taxes in the first place. But now what don't you have? What private opportunities -- to build, to improve, to invest, to spend -- were eliminated because people -- your "Illinois folks" -- had to pay taxes to fund this neat-o stadium?

Yes, some people were made better off -- some workers employed by the stadium construction companies, some sports teams and other crony capitalists who bought government subsidies through lobbying (or worse), some fans who are now the recipients of ticket welfare.

But who is worse off, as a result of taxes that were higher than they had to be (and also as a result of other economic side-effects of extra government spending, such as higher interest rates)?

Economics does not allow you to see only what can be seen. It demands that you also see what cannot be seen.

Politics allows, perhaps requires, such intellectual sloppiness. Economics does not.

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Read the Broken Window Fallacy here; more on stadium economics here; more thoughts from the Tax Foundation.

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I had briefly hoped that Obama would be the least nightmarish of the viable presidential candidates. I had known, for some time, that he was a moral defective. But I wondered whether his inexperience might have served as a substitute for the gridlock (which we will not have in 2009) that is the only guarantee of government inaction.

But with his nuke-himself-in-the-foot remarks about Cuba and Pakistan and now this, I am again forced to have no favorite Tweedle. Go figure.