Tuesday, November 3, 2009

The obligatory porkulus update

We took a hard copy of the local fishwrap out to Joshua Tree with us over the weekend and read of the Associated Press’s review that concluded the Obama administration overestimated by thousands the number of jobs it has created or saved with porkulus. That’s right – even that whopping 30,000 jobs created or saved that the administration is claiming is a fudge.

Quick aside: Porkulus money went to repaving the taxi-ways of a local commuter airport out in Santee a couple months back. It employed approx. 20 people for 3 weeks. Does that brief amount of employment get tallied under “jobs created or saved”? Considering the adminstration’s accounting methods, we’re saying “absolutely!”.

The article gave numerous examples of double-dipping and faulty accounting but this section towards the bottom of the article grabbed us:

Barbara Moore, executive director of the Child Care Association of Brevard County in Cocoa, Fla., reported that the $98,669 she received in stimulus money saved 129 jobs at her center, though the cash was used to give her 129 employees a 3.9 percent cost-of-living raise.

She said she needed to boost their salaries because some workers had left for better paying jobs.

"They were leaving because we had not been able to give them a raise in four years," Moore said.

You read that correctly. The money wasn’t going to save any jobs. There were not going to be any layoffs at Bab’s business. All that happened was your tax dollars were going to prevent people from taking jobs that were better paying. And since Ms. Moore was not being competitive in the open market, she was rewarded and those other businesses that were offering better compensation were punished.

This example represents what we are talking about when we say “picking winners and losers” and “misallocation of resources” with respect to porkulus. Those businesses that were offering better pay than Moore’s are now out a fresh infusion of labor talent and the normal flow and activity of workers changing jobs in an open and competitive market is stymied by external forces.

Exit question: All these businesses and government agencies that are getting porkulus money to hold on to employees and which just represent payroll bandaids… what happens next year and the year after that?

1 comment:

K T Cat said...

The claims won't matter as the debt-riddled economy continues to sputter or fall. These kinds of smoke-and-mirrors numbers are but a passing annoyance. In the long run, the idea of borrowing your way to prosperity is doomed to fail.