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Paul O'Neill on the Obama jobs intitiative
Wednesday, December 24, 2008
In today's commentary at Bloomberg, Caroline Baum consults former Treasury Secretary Paul O'Neill on President-elect Obama's $750 billion stimulus program aimed at bettering the lives of the 10 million unemployed Americans - one solution is surprisingly simple.
“If we write a check for $75,000 to each of the unemployed, we won’t have anyone ‘unemployed,’” said former Treasury Secretary Paul O’Neill.Just think how many jobs could be created if they used tiny spoons?The recipients may not be working in the traditional sense of going to the office each day, but the government can provide for their needs without anyone having to lift a finger.
The Obama administration’s goal of creating 3 million new jobs by January 2011 will run smack into “the natural demographic flow, which will add 3.2 million people to the workforce” in the same time period, O’Neill said. In effect, “we are going to spend $750 billion, the number of unemployed will rise and the (unemployment) rate will go down slightly.”
O’Neill did the math so you don’t have to. Each job “will cost $250,000, which doesn’t suggest much labor intensity for the dollars spent,” he said. “It makes me wonder if any of the planners or commentators are good at arithmetic.”
They’re not good at arithmetic. And one wonders about their facility with economics.
If putting people to work is the goal, we could get rid of all the heavy earth-moving equipment and go back to digging ditches with shovels.
Why stop there? If it takes one man two days to dig a trench three feet deep and 30 feet long with a shovel, how long would it take 100 men using spoons?
9 comments:
This looks like a bargain compared to giving $700 billion to the Madoff Brigade and getting no return whatsoever. It's too late to save the dollar, so we might as well pile on the programs during the brief period when foreigners are still willing to buy treasuries.
I would go so far as to say that no matter what Obama does he will get more ROI then Bush got off his 6-7 Trillion addition to the Nat debt, even if its digging with tiny spoons.
I rather pay somebody $75,000 per year to dig with a spoon then pay a rich banker (and his trophy wife with expensive tastes) at AIG a $500,000 annual bonus. At least something of value, such as a road gets built with the $75,000 digger. With the AIG bailout we get more financial schemes produced
Each job created may cost $250k, but less than $50k of that will end up in the pockets of the laborers. That is never the point. The other 80% adds to the net earnings (and therefore bonuses and share appreciation) of the politically connected companies who will be awarded the contracts.
The people who cooked this up may be poor at arithmetic, but they are terrific at quid pro quo.
Hello Anthony Alfidi, yes just drive around the Washington DC beltway and read all those signs on beltway (Lockheed Martin, CACI, etc.) and you will find out which companies may get in o that 80% action. Go the parking lots of these companies and look for the expensive imports parked in the first 1/3 of the lots. The owners of those cars are the recipient of most of the 80%.
What O'Neil ignores is the 75,000 spoon diggers take that money and spend it in the local economy on cars, healthcare, food, education, TAXES. These people are so out of step of the real economy it would be funny if it weren't so sad.
Speaking of arithmetic, with respect to the first comment about Madoff, there must be alot more underneath, just like the iceberg that sunk the Titanic.
A Ponzi scheme of that magnitude could not last for very long-a geometric progression of that size would run out of investors after a few cycles. I'm guessing that what really happened is Madoff turned to the scheme no more than 18 months ago. How he made those returns up to that point is another story for the accountants to uncover.
If we write a check for $75,000...
... Then everyone will be in the top quintile of income. Sounds silly.
Worse yet, it sounds dangerous. The numbers will eventually spread back into their typical bell curve distruibution. In other words, 80% of the populace will blow their 75K on taking out loans and buying lottery tickets.
Income in the U.S. is certainly NOT normally distributed.
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