Arnold Kling  

Garett Jones Blogs

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My Thoughts on Technology and ... The Bottom One Percent...

He is one of my favorite economists. He is only guest-blogging now, for Megan McArdle. I had stopped reading her blog while others were substituting, but Garett is a must-read. Still, his posts could use a bit of refinement, which I am sure he will acquire with experience. For example, He writes (italics mine)


If you want a big Keynesian multiplier:

1. Focus on projects that hire less-skilled workers (remembering that "skilled" includes pipefitters, electricians and other specialties that mercifully don't yet require a college degree).
2. Focus on projects that use workers from sectors with temporarily high unemployment rates.
3. Make some kind of effort to target parts of the country with high unemployment rates


It should have read,

If you are an entrepreneur who wants to set up a manufacturing operation during a recession:

1. Focus on projects that hire less-skilled workers (remembering that "skilled" includes pipefitters, electricians and other specialties that mercifully don't yet require a college degree).
2. Focus on projects that use workers from sectors with temporarily high unemployment rates.
3. Make some kind of effort to target parts of the country with high unemployment rates


There. Fixed now.


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COMMENTS (4 to date)
Thucydides writes:

This discussion assumes that the real purpose of "stimulus" is to stimulate the economy, rather than simply to allow deficit spending targeted at rewarding constituencies. Clearly that is how FDR used the WPA and similar agencies, and there is some evidence that the current stimulus has been put together with the same motives.

david writes:

Scale. Risk - "don't buy cars. Short horses", unless of course you are a large state or conglomerate whose revenue base is inherently diversified. Time preference - states have longer expected lifespans, especially compared to a new company.

Becky Hargrove writes:

The fact that Garett referred to those projects as a big Keynesian multiplier was what I liked! For one thing, his post highlighted the kind of conversation that Washington really needs to have with entrepreneurs about stimulus in the first place.

David Friedman writes:

"Time preference - states have longer expected lifespans, especially compared to a new company."

This is backwards; states aren't people, don't make decisions. Politicians do. Long term planning requires secure property rights, for reasons that I think are obvious--why invest in something for the long term if someone might take it from you before the investment pays off? Politicians have insecure property rights in their power and position, hence a short time horizon. Clinton could rent out the White House, but he couldn't sell it.

Which is why the talk is always about what the unemployment rate or inflation rate is going to be at the next election.

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