November 22, 2008

Fiscal Stimulus

Everybody is talking about "fiscal stimulus" and "infrastructure projects" (i.e., public works, like FDR's WPA). Larry Summers says that there is a "multiplier effect" and every dollar of government spending generates more dollars of overall economic activity in the American economy.

But nobody is talking about the obvious: Will the public works jobs be restricted to American citizens? To American citizens plus legal residents? Or will they just suck in more millions from south of the border as the Housing Bubble did, who will send tens of billions back home, depriving America of Larry's promised Multiplier Effect?

The real economic collapse is happening in the four sand states, California, Nevada, Arizona, and Florida. Sending billions to them for infrastructure projects would mean a large fraction of the public works payroll would go to illegal and legal aliens.

The one sure way to keep the unemployment rate in California (now 8.2%) from growing so fast is to have illegal immigrants go home. It's a lot cheaper for all concerned if ex-construction workers are unemployed in Mexico or Guatemala than if they are unemployed in California. But nobody is mentioning that.

Next, Obama's big goal is to set off an Alternative Energy Bubble to inflate the economy in time for the 2012 election. But, those kind of infrastructure projects (e.g., erecting a massive number of ugly windmills that chop migratory birds to shreds) take forever to get off the ground in Blue States due to environmental restrictions. In Red States, it's faster to get going. Will Obama want to send most of the money to Republican states? Or will he override the environmental dogmas of his base?

The kind of thing we can spend a lot of money on within 2009 are projects like freeway resurfacing -- exactly the opposite of what all the Save the World types who voted for Obama want.

My published articles are archived at iSteve.com -- Steve Sailer

33 comments:

Anonymous said...

Fiscal stimulus? Sounds dirty.

Anonymous said...

I'm waiting for the day when the "multiplier effects" of economic actions other than the government handing out other people's money can have on society is talked about. Multiplier effects like, oh, I don't know, having "family formation" as the basis of societal mores, having sound money so that we know the correct amount of capital saved that can be allocated for production (not consumption), things like that. For some reason, we seem fond of the multiplier effects that only governments can create -- such as creating false booms by making people consume more of the things they want (like having more "choice:" 257 different car models, 57 types of ice cream, 1024 positions for having sex, etc.) thereby eating their corn seed by not investing their capital in the production of things they actually need.


JD

Jeff Burton said...

The prospect of a new WPA makes me want to weep. What kind of work will they offer? I have a the remnants of a genuine WPA project on my property - a small limestone quarry, where the local unemployed tore chunks of rock from the earth with picks and loaded them into horse-drawn wagons. How many overweight ex-UAW guys are going to sign up for that?

Highway projects, of course, are much better, because as anyone who drives can observe, you need at two or three people to lean on shovels for each one doing something useful.

flyingbird said...

Much respect, Mr.Sailer.
What time is it in Washington now? You don't sleep?

Thanks again for your posts. I enjoyed them.

Anonymous said...

Ah-ha, but you aren't supposed to talk about dollars sent home being dollars forever lost.
No, the free-trade crowd insist that every foreign held dollar 'benefits' America in that it will 'inevitably be used to purchase US goods and services'.
With China trillions of green-backs, I only wonder which chunk of 'US goods and services' takes their fancy - perhaps a great big chunk like Exxon?

Robert said...

Obama will probably send money to the Red States. This was Franklin Roosevelt's strategy. He spent millions in the south, the west, and in suburban Republican areas,through WPA, CCC, Tennesee Valley Authority etc. In other words areas where his support was the weakest. This government money had the effect of boosting Roosevelt's image in these areas and helped keep him in office.

Anonymous said...

Steve,
What no one seems to talk about is that the United States has essentially implemented many new "New Deals" since the original New Deal. Just look at any federal, state or local government websites and see the massive amounts of public works programs in the pipeline. Progressives talk about today's government as if this was 1928 when government spending as a percentage of GDP was 5-10%. Today it is around 40% and growing.
If you want to see a list of public works programs, just google "Robert Moses." He essentially built the NYC Metropolitan area highway system. However, all of those jobs went to American citizens in the late 30s, 40s, 50s and early 60s, when immigration was basically halted. Once thing the news media hasn't discussed is how we are just unable to pay for these public goods over the long term. My idea, privatize all of the expressways, parkways, bridges, etc. However, the government should mandate that a minimum amount of money be spent on maintenance and that toll increases can only be raised a certain amount every x years, similar to the Indiana Toll privitization project. Also, the toll operators and investor groups have to be American, rather than Australian, Spanish, etc. (These countries have large infrastructure companies)

Mongoose said...

Oh, this is to reward the Unions for the millions they shelled out for this election. It will do much more hard than good

"Special interest", by the way, here means the interests of the of the rest of us that wish to earn our own way in the capitalistic system of our forefather, and those that wise to retain those earings.

The "public good" here are the recipients of the Democrats New New Deal patronage system.

They have neatly inverted the meaning of things here.

Evil aptialsim and the general public = Special Interest;
Key constituencies = The pulbic "good"

Lying communists, one and all.

And crazy too, they seem to think it is 1932 and are proposing the same solutions as then. What is next, more national parks built

I hate to point this out, but we are no longer a nation of made up of manual laborers -- well, at least not the legal residents of the country. What are we going to do have Java programmers lay cement?
(though I would not mind seeing some investment bankers working by the side of the road. But in a chain gang, not the recipients of government make work programs.)

Thras said...

I can't imagine anyone else doing it, but maybe Obama will actually spend 10 seconds thinking about all the black people in inner cities who don't get the jobs that go to illegal aliens.

I doubt it though.

Lucius Vorenus said...

To American citizens plus legal residents? Or will they just suck in more millions from south of the border as the Housing Bubble did, who will send tens of billions back home, depriving America of Larry's promised Multiplier Effect?

Jesus Christ - assuming that the "Multiplier Effect" even exists in the first place is like believing in the ecopagan myth of "Global Warming".

The only thing effect that multiplies with these programs is the amount of time, effort, productivity, and wealth which is transferred from smart, prudent, sober, industrious people over to stupid, fatuous, inebriated thieves [and that includes all of the marxist university professors living the high life on their tax-payer subsidized grants].

Jun said...

But nobody is talking about the obvious....

Not enough people are talking about the other obvious point -- where the heck is the gov't going to get all this money to spend?! Hope the printing presses don't overheat.... :-/

kurt9 said...

Steve,

You should know full well that fiscal stimulus using infrastructural projects is a non-starter. You know how long it took from when it was first planned until construction finally started on the Century freeway. You know about the intense approval process, EPA impact statements, acquisition of eminent domain (right of way) for the land to build it, and all of the social groups that had to be paid off (even though they had nothing to do with the freeway).

It takes 8-15 years for these kinds of infrastructural projects to work their way through the approval process before the first shovel-full of dirt can be moved.

Larry Summers and the democrats are being disingenuous when they tout infrastructural projects as the way out of the recession for the next 3-4 years.

The ONLY infrastructural projects that could be built this side of 2016 is government-subsidized solar plants built on federal land in the Southwest (because they can get federal wavers).

RobertHume said...

Historically, plenty of US citizens have moved from states with low employment to states with high employment ... no problem.

It's just that these days the illegals move faster, fewer local ties to break, and they will work for much less.

So the solution is e-Verify ... only allow bidders who use e-Verify.

If that is not done the jobs can be in Vermont and the illegals will show up.

If it is done, the big projects can be in LA and citizens will move there from Michigan to get the jobs.

testing99 said...

FDR deported Mexican-origin people in the US as much as possible. Some even legal citizens, and required proof of citizenship for WPA programs.

He and the AFL also restricted Blacks from unionization and "White" jobs.

This was the key to his patronage success. Even though he did a poor job of managing the economy, he created a patronage network that was effective because it reached most voters. Obama is incapable of seeing that requirement.

He can have Affirmative Action, La Raza open borders, or a widespread New Deal 2.0 that has massive popular support, but not both.

SF said...

Freeway resurfacing is not the worst thing in the world. It's much better than building new lanes and new freeways for a state that will probably have less vehicle miles travelled in the period 10-20 years from now. And the current low price of oil products (asphalt) won't last. Do the most essential resurfacing now. Also look at needs to upgrade power transmission on existing rights of way.

Anonymous said...

I don't find windmills ugly and don't know that they are all that bad for birds. Considering the impact of fossil fuel extraction on wildlife, this objection strikes me a insubstantial.

The post oil world is coming whether we like it or not. No amount of drilling in Alaska is going to change that. Be happy you have a president elect who realizes this.

Anonymous said...

"Historically, plenty of US citizens have moved from states with low employment to states with high employment ... no problem.

It's just that these days the illegals move faster, fewer local ties to break, and they will work for much less.

So the solution is e-Verify ... only allow bidders who use e-Verify."

The Federal Govt starts rolling out E Verify for contractors & subs on January 15.

i am the walrus said...

Highway projects, of course, are much better, because as anyone who drives can observe, you need at two or three people to lean on shovels for each one doing something useful.

I doubt any money will be spent on highway projects considering that the members of our elite don't use the interstate highway system -- they fly.

Polistra said...

How about the multiplier effect of easing the regulatory burden and stopping lawsuits by the ecotyrants?
The cost of such changes is zero, and the benefits would be immediate. Obama has the political capital to make these changes, because most lefties will find a way to applaud his moves, and the bureaucrats will be more inclined to follow his lead. (Team membership matters far more than ideology.) He could do these things more easily than a Republican could. But will he? Maybe.

Anonymous said...

If DHS' Citizenship and Immigration Services (CIS) and Immigration and Customs Enforcement (ICE) can fight off Napolitano's potential restructuring of the E-Verify online system, aliens might be precluded by default. Under the SAVE and IMAGE programs, all federal contracts must be run through the social security and immigration databases for employment eligibility (Bush executive order 12989, I believe). E-Verify is mandatory in Napolitano's state, and it has caused a monumental shift in alien labor. Nothing is perfect, but if government contracts are forced to use E-Verify (and if Menedez, Napolitano and Obama don't kill it outright -- it's funded to March of 2009), then it will help (not cure) the alien public project problem.

headache said...

"Next, Obama's big goal is to set off an Alternative Energy Bubble to inflate the economy in time for the 2012 election. "

What a joke. Germans, who are supposedly world leaders in windmills and other green shit, are still trying to get their propellers to work in the North Sea. Land-based propellers are a joke and a nuisance. Sea-based ones generate more power but rust fast and are expensive to build. Never mind the birds. The big lie about propellers is that you need the exact same amount of power generation available using traditional sources so that if the wind stops blowing, or the propellers fall off, the train still runs. Nobody talks about this charade.

Enviro talk is cheap but to actually produce green stuff which works is very expensive and not really worthwhile, unless your motivation is energy-independence. The only Politician talking about getting the Arabs out was Sahrah Palin. So all this green stuff was just cheap talk mimicking the Europeans meant to make Obama look cool. Green power is mostly a financial rathole.

Anonymous said...

It would be a better investment to build more nuclear power plants. That's at least an alternative energy that works, 24/7, rain or shine, and provides cheap electricity.

D

Bill said...

How about laying down some new rail lines? We need a new transportation infrastructure that isn't so dependent on cars and airplanes.

As for Obama's hype about alternative energy, I'm not sure the guy has a clue as to how to go about implementing something like that. The best "alternative" energy we've got is hydro (which is geographically restricted to wet, hilly areas like the Pacific Northwest), and the other viable non-fossil energy source is nuclear. The French get nearly all their electricity from hydro and nuclear now, and it works quite well for them. Solar and wind are at best supplemental energy sources

Last I checked, Obama still wanted to turn our food crops into fuel. Very bad idea.

Sebastian said...

If he moves to try to create "new" projects that's one thing. If he provides dollars to state and local governments to fund projects already green-lit, it's going to happen.

Every state, county, and municipality has block grant money for infrastructure. Some things get funded, some get funded partially, some wait in line.

We in Illinois did something like this, called "Build Illinois." Other than the ban on execution, it was one of the best things George Ryan ever did. It resulted in jobs and economic stimulus.

The architectural, engineering, and construction firms got the jobs, and hired regular people to do them. Not as glamorous as giving welfare to millionaires, but it worked.

StephenT said...

Couple of years ago a friend of mine who worked construction in SoCal made me aware of a repeated boast he was hearing a lot of: he'd been informed by a number of young mestizos on job sites that "we (illegal Mexicans) built the Golden Gate Bridge for you." Though the fact that it's still standing 70 yrs later would seem to argue against that being the case, I did a little research because -- who knows? -- maybe they did! In the course of this, I discovered just how, during the last Depression, another generation dealt with the potential of aliens illegally usurping public works jobs intended for needy Americans. The Golden Gate project was administered by the WPA. Priority in hiring was blatantly and without apology reserved for native-born US citizens, with top priority going to WW1 vets. Naturalized aliens could be hired only if/when there were openings still unfilled by American-born applicants -- and could be dismissed if Americans needing work applied for that job. Illegal aliens need not apply and, therefore, few did. Strict standards for citizenship proof were enforced. At regular intervals WPA agents conducted surprise "paper sweeps" at worksites like the Golden Gate. All foreign-born workers had to produce documents proving they were in the country legally and authorized to work. If they couldn't show them, they were outta there on the spot. (Many thus made a practice of always carrying their papers on their person while on the job.) Still concerned that some American citizens might lose a WPA job to an unauthorized foreigner, in 1937 the Roosevelt administration -- those hate-filled, right-wing racists like Henry Hopkins and Harold Ickes, no doubt -- gave all foreign-born workers on WPA projects two weeks to appear IN PERSON at regional offices and show citizenship docs + submit to questioning by agents to verify their eligibility for employment. A number were summarily fired for non-compliance after this massive call-out but it was widely accepted that most of these were actually legal, naturalized citizens who had simply misplaced their paperwork. Tearjerking stories appeared in the NY Times and direct pleas were made from the floor of Congress to FDR to make exceptions in such cases. Roosevelt held firm, few of the terminations were taken on appeal, and the vacated jobs were opened up to American citizens. Can we expect an American president to do the same today?
Now, about that story that illegal aliens from Mexico actually conceived and constructed the Grand Coulee Dam ....

Big Bill said...

Nice info, Stephen T. Thanks! Any web-based resources you could point to that show what a b@ll-buster FDR was on immigration?

albertosaurus said...

I think we can count on Obama to do everything wrong. Most left liberal nostrums yield unfavoarable outcomes. Obama has once again made respectable ideas that had been sinking into disrepute.

For example the minimum wage promotes youth (especially black youth) unemployment but it is favored by big unions to protect its membership from low wage competition. Obama will almost certainly support higher minimum wages.

Jimmy Carter called for solar power and windmills thirty years ago. He called the energy problem "the moral equivalent of war". Today after three decades of this war the US still gets less than one tenth of one percent of its energy from solar sources. Obama is an enthusiastic supporter of solar power. What more vacuous public policy dream could there be.

Well one nearly as vacuous an idea is the call for universal college education. Obama seems to think that getting more kids in college by having the federal government subsidize tuition is a wonderful idea.

Like many Americans Obama seems to suffer the delusion that the environment is in bad shape. This is in spite of the easily verified fact that all objective indices of environmental quality show substantial improvement. The air and water are cleaner than they have been for dozens or hundreds of years. I can remember polution but only because I'm so very old. The only environmental crisis today is that Jay Leno can't make smog jokes anymore.

Obama's economics are just a little out of date. His world view was current in 1848. I don't mind the demogogic pandering to the crowd so much as I fear that he actually believes all that class warfare and robber baron conspirator nonsense.

Nobody really expects Obama to adopt those policies that have come to be known as "race realism". Clearly Obama is about to lead an expedition into a new frontier of "racial fantasy". Expect sanctions against the Chinese for being good at math.

There is zero hope that Obama will or can reverse himself on so many policy fronts. The only real prospect for optimism is that Obama and his policies will launch the nation into a profound economic, strategic, and social crisis such that his crude and quaint ideas will be repudiated for a generation.

Anonymous said...

Litteraly half of the "uninsured" problem would go away if the "illegals" went away. Not only are most illegals likely to be without health insurance but they put so much downward pressure on wages for unskilled American's that they wipe out the possibility of anybody else getting employer paid insurance if they work in certain industries.

Anonymous said...

"The only real prospect for optimism is that Obama and his policies will launch the nation into a profound economic, strategic, and social crisis such that his crude and quaint ideas will be repudiated for a generation."

That's what just happened to Bush and whoever cares to call themselves conservatives these days. It'll be a long, long, way back from the past 8 years, I'm sorry to say.

Anonymous said...

Nice info, Stephen T. Thanks! Any web-based resources you could point to that show what a b@ll-buster FDR was on immigration?

"Settlers: Myth of the White Proletariat" by J. Sakai. It is online free in PDF if you G00gle it.

It is heavy polemic written by a Japanese Marxist who sees the white race as an evil class interest. You will not find these facts anywhere else.

Brent Lane said...

"The only real prospect for optimism is that Obama and his policies will launch the nation into a profound economic, strategic, and social crisis such that his crude and quaint ideas will be repudiated for a generation."

That's what just happened to Bush and whoever cares to call themselves conservatives these days. It'll be a long, long, way back from the past 8 years, I'm sorry to say.


I'm equally sorry to say that, outside of tax policy and Iraq, Bush's 'crude and quaint ideas' and Obama's are pretty much the same. Far from being repudiated, they are being put into overdrive.

josh said...

Construction of windmills off the cosast of Massachussettes could be back on track once Teddy Kennedy is out of the way!! So we got that goin' for us! :)

Anonymous said...

This was Franklin Roosevelt's strategy. He spent millions in the south, the west, and in suburban Republican areas,through WPA, CCC, Tennesee Valley Authority etc. In other words areas where his support was the weakest.

Uh, FDR was a Democrat. His support was weakest in the northeast. He had strong support in the South, because the Democrats were openly racist back then. So yes, he spent a lot of money in the South, but not because his support was weak there.

Larry Summers says that there is a "multiplier effect" and every dollar of government spending generates more dollars of overall economic activity in the American economy.

What is the multiplier effect of leaving the money in private hands?

Will the public works jobs be restricted to American citizens?

Undoubtedly Obama understands that every illegal immigrant is a potential Obama voter in 2012, so if anything he'll do what he can to encourage immigration, not restrict it.