Barack Obama’s Rhetorical Sleight of Hand

Greg Mankiw points us to this rather ingenius political ju-jutsu on the part of President Obama.

Question: The American people have seen hundreds of billions of dollars spent already, and still the economy continues to free-fall. Beyond avoiding the national catastrophe that you’ve warned about, once all the legs of your stool are in place, how can the American people gauge whether or not your programs are working? Can they — should they be looking at the metric of the stock market, home foreclosures, unemployment? What metric should they use? When? And how will they know if it’s working, or whether or not we need to go to a plan B?

Answer: I think my initial measure of success is creating or saving 4 million jobs. That’s bottom line No. 1, because if people are working, then they’ve got enough confidence to make purchases, to make investments. Businesses start seeing that consumers are out there with a little more confidence, and they start making investments, which means they start hiring workers. So step No. 1, job creation.

It is brilliant. Why? It is possible to measure how many jobs have been created between two points in time. However it is not possible to measure how many jobs were saved. These “saved jobs” never show up in any of the official statistics. As such It is a measure of performance that simply cannot be measured. Hence President Obama can claim it is true no matter if we lose 5 million jobs in the next year. Without his plan it would have been 9 million jobs lost.

Are their actual measures one could use? I think if the recession is over before the end 2009 then Obama could claim success of his stimulus plan. After all most are forecasting that the recession will last through 2009. If the article by Reinhart and Rogoff is correct it could last longer than that. Prof. Mankiw suggests that a given level of unemployment could be used as well. He also notes that no politician would rely on an actual measure where everyone could tell if the politician’s plan was a success or failure.

Prof. Mankiw also writes,

A completely honest (but perhaps politically ill-advised) response to the question would have been, “Geez. I am only President of the United States. I cannot be held responsible for everything that what happens with the economy!”

Which is why I say that all politicians are liars.

FILED UNDER: Economics and Business, Government, , ,
Steve Verdon
About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.

Comments

  1. I will see you 4 million saved jobs by Obama and raise you 40 million saved jobs by Bush last year. Kind of gives liar poker a whole new lease on life.

  2. ZuDfunck says:

    I don’t know if I buy this…

    Although he is a politician he is one of the good guys!

    Let’s just hope this whole deal takes and we have America heading back where it was before Bush…

  3. […] had these exact same thoughts two or three days ago and I failed to express them.  Now they’re up on Outside the Beltway for everyone to see next to Professor Mankiw’s […]

  4. Arcs says:

    Hence President Obama can claim it is true no matter if we lose 5 million jobs in the next year.

    Conversely, he can say we haven’t quite done enough yet, so let us throw another trillion or so at the problem.

  5. Steve Verdon says:

    I don’t know if I buy this…

    Then kindly explain how you’d measure jobs saved? You are limited to using historical data only.

  6. odograph says:

    Jeez, I think I got that “or saved” bit a year ago. It is part of the folly of economic prediction. It’s no less silly than saying “we added X and without our action there would have only been Y.”

    You’re really just blaming politicians for using the flexibility (BS) that economics gives them.

  7. sam says:

    Well, he’s not alone in stuff like this. Have there not been firms in deep and deepening doodoo which give bonuses to management, and offer as the rationale: The company would have done much worse but for the actions of VP Whosis and his able assistants (and they’re getting a bonus, too). Too bad about the layoffs.

  8. So one bad turn deserves another or at least excuses another? Is that your argument?

  9. Steve Verdon says:

    You’re really just blaming politicians for using the flexibility (BS) that economics gives them.

    Uhhmmm no. Economics does not provide this flexibility.

    So one bad turn deserves another or at least excuses another? Is that your argument?

    But Moooooooooooooooooooooooooom, he did it toooooooooooooo!!!!1!!11eleven!!!

    So much for “change you can belive in”.

  10. odograph says:

    Uhhmmm no. Economics does not provide this flexibility.

    I’ll quote Paul Kedrosky again: “More fuel for my take that skepticism-verging-on-nihilism is the right answer when faced by economists splitting along party lines.”

  11. Joe R. says:

    I personally saved over 1 billion jobs worldwide last year.

  12. tom p says:

    40 million saved jobs by Bush last year

    Well, he didn’t “save” mine…

    These “saved jobs” never show up in any of the official statistics. As such It is a measure of performance that simply cannot be measured.

    The measure of a good politician: The ability to feed people BS while they reply, “Tastes great! Less filling!”

    As to whether his plan is going to work, I have read too much on both sides to ever figure it out. I suspect I am like most people: In the “wait and see camp”. If I am working in a year, I will probably give him the benefit of the doubt, if not, I won’t.

    Besides, what’s the old saw? “Economics is not a predictive science, it is a descriptive science”?

  13. raoul says:

    The comments here illustrate why the GOP has sunk so low. First, there was no sleight of hand- Obama always talked about how many jobs would be saved with his plan by showing how the unemployment rate would rise so far and then even more so without his plan. Second, one is asking for a certain answer on a definitionally speculative endeavor. The post and the comments are more reflective of the mind-set than valid criticism.

  14. odograph says:

    I think the indisputable fact is that hiring someone to change the DC landscaping, or to insulate homes, … hires someone.

    “At what cost?” is a reasonable question, but the immediate outcome is fairly certain.

    It gets into handwaving when economists try to predict how many of those gardeners/insulators will get pulled from other jobs and how many will come off the unemployment rolls. It’s further handwaving when they try to guess how many jobs the gardeners/insulators own spending will “create or save.”

    … we can answer the first question after the fact, with a survey of the hires, but the second question will be forever unknown. Though of course economists will argue it back and forth for entire careers.

    (I mean, Megan McArdle is arguing The Great Depression again today. Nothing like 80 years to (not) lock down economic questions, eh?)

  15. tom p says:

    Second, one is asking for a certain answer on a definitionally speculative endeavor.

    Rauol, you make Steve’s point when you say the above. As Steve asked, how does one measure “jobs saved”? I voted (and volunteered) for Obama, but I know B*llSh*t when I hear it.

    And this one stinks. Whatever positive attributes he brings to the equation, he is still a politician.

  16. fester says:

    By looking at the dogdamn counter-factual of either the CBO or Moody’s of projected employment levels without the stimulus package and actual employment levels on Jan. 1 2010 — that is where the ‘saved’ job metric is coming from. Multiple predictions are made and the best guesstimate is that the policy change will result in employment levels 4 million jobs higher than no action.

    Always look at and ask for the fr*cking counter-factual, that is policy analysis 102.

  17. Steve Verdon says:

    I’ll quote Paul Kedrosky again: “More fuel for my take that skepticism-verging-on-nihilism is the right answer when faced by economists splitting along party lines.”

    Then kindly explain how you would measure jobs saved. Using historical data only.

    Raoul,

    I was going to reply, but tom p. said it best.

    Look, I hope this all works out fantastically. Really. But my fear is that it wont. In fact, I think it could make things worse, hopefully I can write something up along those lines soonish.

  18. odograph says:

    Steve, how did you possibly miss that I don’t believe any of the numbers? If you are telling me that I should instead “choose yours” and “ignore his” then you are back into the dueling false-numeracy.

  19. odograph says:

    Oh, maybe I should say that if you meet someone who says “we don’t have any good numbers, but let’s just use these …”

    You have just met an economist.

  20. Zelsdorf Ragshaft III says:

    Obama did not write a plan, Pelosi did. There is nothing in this deal that will save one job. Your President spent a huge amount of money to fly to Denver to sign a bill he could have signed in Washington DC and there are those that bitch about CEO pay. At least they do something. Obama just campaigns. He has never run anything except his mouth.

  21. Steve Verdon says:

    Steve, how did you possibly miss that I don’t believe any of the numbers? If you are telling me that I should instead “choose yours” and “ignore his” then you are back into the dueling false-numeracy.

    Exactly what number have I put forward? I think you are attributing to me a position I haven’t put forward.

    That being said I think you are right not to believe Obama’s numbers he is a politician and hence a liar.

  22. odograph says:

    I was thinking of the “stimulus works” … “does not” arguments put forward each with their own set of numbers gleaned from past recessions/depressions.

    That’s the econ split which is uncomfortably along party lines. Yes, politicians can quote from those, drawing on their sets of economists. The ‘enablers.’

  23. Rick DeMent says:

    “…There is nothing in this deal that will save one job.”

    Well then given the amount of tax cutting in the plan I guess you would agree that the GOP all tax cut plan is the same waste of spending as was every other tax cut ever proposed if the goal was to “save or create jobs”?

    Steve,

    I agree with the over all tenor of this post. We have seen the same kind of logic in action. Remember the house republicans swearing up and down that Clinton’s tax increases would tank the economy, when they didn’t we heard “… yeah but the economy would have been a thousand billion times better if Clinton had not raised taxes” argument from all quarters. So while I agree with the basic logic of this post and largely the conclusions I can hardly be outraged about something that is SOP among ideologues on both sides.

  24. odograph says:

    Ah, here we go:

    Falsifiability and replicability are key cornerstones of any academic research. If you’re running an empirical study, and your results aren’t replicable, your study is largely worthless.

    But it turns out that nearly all empirical research is worthless on this criterion, according to a devatating new paper by B. D. McCullough and Ross McKitrick. In economics especially, if you try to replicate an empirical result, you’ll probably find that you can’t get the data — and if you can get the data, you’ll still be a long way from true replication […]

    Fairly devastating for economists who purport to know better.