Pro-bailout economists talk about the multiplier effect. Spend some government (taxpayer) money, and the effects multiply in the economy, as if the Invisible Hand were on speed. Some day some young genius is going to earn a Nobel explaining the divider effect. Create a government job and the productivity in the marketplace divides as a result of the increased taxes needed to support the jobs . . . down the road. Mathematize the notion, and youve got your Nobel. (Of course, theres nothing in the idea that Bastiat or Mises or Tullock hasnt explained — but add that math and youll really get somewhere.)
Our orator-in-chief also says hes in the biz of saving jobs. But here, like the bank bailouts, whats happening is that some people are getting raises and bonuses out of bailout money, while the unemployment rate goes double-digit.
The real multiplier effect — Keynes was looking in the wrong direction, no doubt — regards talk. For every dollar government spends, politicians claim umpteen more jobs saved. Its not reality. The multiplication effect occurs entirely in rhetoric and in PowerPoint presentations. Or on recovery.gov. (For more accurate accounting, go to Onvias recovery.org.)
Michael Cooper and Ron Nixon start out a New York Times analysis with this:
In June, the federal government spent $1,047 in stimulus money to buy a rider mower from the Toro Company to cut the grass at the Fayetteville National Cemetery in Arkansas. Now, a report on the governments stimulus Web site improbably claims that that single lawn mower sale helped save or create 50 jobs.
And that, folks, marks just the beginning, just one example.
The magic of this sort of job creation doesnt rest upon the logic of markets or Adam Smiths invisible hand (which makes actual sense, when you think about it — people gain through trades, thats why both sides in any trade voluntarily agree to it, with each gain contributing to a real, additive progress). Here the magic lies simply in the lying. The multiplier multiplies because politicians tell multiple lies.
Every downturn we get the same thing. Hot air. Vaporware and vaporwork.
Usually I get angry in the face of lying politicians, but maybe its time to just relieve ourselves with a large collective snort, a concerted chortle. Our leaders may believe their blather, but we dont.