Posted by
Andrews on Wednesday, December 02, 2009 6:11:40 PM
I have been writing for some time about the imaginary numbers used for "jobs saved or created." (See "
Heads I Win, Tails I Win...", "
Anecdotal Evidence of Coming Inflation", "
Fairy Population up 6%! Pixies Almost Double!" and "
WSJ Discovers Miscount in Total of Fairies and Dragons!".) Today's
Best of the Web reports on an explicit admission that just such numbers are being used:
Stimuli Work, Ergo the Stimulus Is Working
MarketWatch reports on a cheering finding from the Congressional Budget Office:
The $787 billion fiscal stimulus program approved in
February is working pretty much as expected, the Congressional Budget
Office said Tuesday. U.S. employment is about 600,000 to 1.6 million
higher, and real gross domestic product is about 1.2% to 3.2% higher
than they would have been without the stimulus, CBO said. That estimate
is nearly identical to the CBO's assessment in March. The CBO based its
estimates on long-standing relationships between additional spending
and economic growth, rather than relying on incomplete and inaccurate
reports from companies awarded federal contracts. Much of the direct
government spending in the stimulus bill is yet to come.
Did we read that right? Yes, we did. Here's the actual CBO report:
Estimating the law's overall effects on employment requires
a more comprehensive analysis than the recipients' reports provide.
Therefore, looking at the actual amounts spent so far (where
identifiable) and estimates of the other effects of ARRA on spending
and revenues, CBO has estimated the law's impact on employment and
economic output using evidence about how previous similar policies have
affected the economy and various mathematical models that represent the
workings of the economy. On that basis, CBO estimates that in the third
quarter of calendar year 2009, an additional 600,000 to 1.6 million
people were employed in the United States.
So the CBO's estimate is "nearly identical" to the one in March
because it is based on exactly the same information: the cost of the
stimulus and the putative effect of spending that much money. It's like
a restaurant reviewer who estimates the quality of a meal by looking at
the prices on the menu.
Not to beat a dead horse, but isn't this also the same bogus method used to compute "peak oil"? (See "
Rejecting "Peak Oil" and "
Why Peak Oil is Laughable
".) And most other bogus figures with which we are inundated daily? (See "
Shocking Numbers" and "
Bad Economics Part 4".) And people wonder why I argue that we should distrust numbers, even from supposedly "trustworthy" sources?
Does this even need an additional comment?
POSTSCRIPT
For more on the same topic, examine the articles cited in "
Bad Economics Part 4". You may also enjoy reading "
Mathematical Deception", "
The Rubber Yardstick", "
Inflation and Uncertainty", "
Why Do People Consider George Will Bright?", "
The Limits of Econometrics", "
The Limits of Technocracy", "
Chaos Theory and Athropogenic Global Warming", "
Knowing Our Limits" and "
The Limits of "Scientific" Management".