Government Make Work Programs

Why is it politicians think they can create jobs were none existed before? Take for example Barack Obama’s claim that he’ll create 5 million new jobs,

Help create five million new jobs by strategically investing $150 billion over the next ten years to catalyze private efforts to build a clean energy future.

John McCain is no better,

John McCain Will Commit $2 Billion Annually To Advancing Clean Coal Technologies. Coal produces the majority of our electricity today. Some believe that marketing viable clean coal technologies could be over 15 years away. John McCain believes that this is too long to wait, and we need to commit significant federal resources to the science, research and development that advance this critical technology. Once commercialized, the U.S. can then export these technologies to countries like China that are committed to using their coal – creating new American jobs and allowing the U.S. to play a greater role in the international green economy.

Here is the problem. If we take money from Peter and Paul and give it to Patrick, have we created any wealth? No. Suppose we take money from Peter, Paul, and Patrick and give it to XYZCorp to build a road, have we created any wealth? Technically yes, but there is a slight problem. The money that Peter, Paul and Patrick had taken wasn’t likely to “sit idle”. Peter, Paul and Patrick would have likely spent it or invested it themselves. Even if they put it in the bank the bank would have likely turned around and lent it out to someone. All of these things create wealth, or at least resulted in production of either goods or services and thus employ people.

Not only that but taxes come with a deadweight loss.

In economics, a deadweight loss (also known as excess burden or allocative inefficiency) is a loss of economic efficiency that can occur when equilibrium for a good or service is not Pareto optimal. In other words, either people who would have more marginal benefit than marginal cost are not buying the good or service or people who would have more marginal cost than marginal benefit are buying the product.

While this sounds a bit dry, what it is saying is that certain trades that would have taken place absent the tax (monopoly pricing, externalities, etc.) are no longer taking place an hence that economic efficiency is lost (this economic efficiency comes in two flavors, consumer surplus and producer surplus and is of value to both consumers and producers). In short, things are worse off in the presence of the distortion (tax, etc.). This is an additional burden of taxes, monopoly prices, etc. This is why such policies rarely, if ever, have any lasting permanent benefit on employment.

There is another problem as well. Government run projects are not like privately run projects. Start up a small company to explore the profitability/practicality of plug-in hybrid vehicles and you fail to turn a profit for a period of time and you will go out of business. Start up a multi-billion dollar bureaucracy for a similar purpose and it fails…why that is justification for an even bigger budget. There wasn’t enough money to begin with. The break through is just around the corner (and if not this up-coming corner, why it will be the next one). Once a bureaucracy is in place there are powerful interests to see that the bureaucracy stays in place. The politicians who supported the bureaucracy don’t want to admit to being wrong/failures/wasteful. The bureaucrats themselves like getting their paychecks. And heck there are lots of people employed there! Why if we shut down the bureaucracy those people would never ever find another job anywhere ever, ever again.

Now it is possible that government projects can be beneficial. But for a government program to to do better than private actions the benefit has to outweigh not only the private benefits people would have derived from their income, but also the loss associated with deadweight loss. That is a fairly high bar to clear, and I doubt many politicians could explain the concept of deadweight loss, and those that could just don’t give a damn about it. Bring home the bacon to your constituents so you can get another term.

The nonsense that government will create jobs is by and large mostly nonsense. The government competes with private interests in the same labor market. It isn’t all clear that there would be less jobs if the government wasn’t hiring people. In fact, there might actually be more people hired with less government. And again, this isn’t to say that there is no role for government, just that the current role is likely bloated, inefficient and more of a problem than a solution. But both McCain and Obama think that they can make government work right. Elect them and they’ll fix it and get it juuuusst right.

FILED UNDER: Campaign 2008, Economics and Business, Government, Politicians, US Politics,
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. Anderson says:

    Why is it politicians think they can create jobs were none existed before?

    Gosh, I have no idea.

  2. There are a few exceptions. If we removed barriers to drilling, drilling jobs are likely to be created. Of course if the government didn’t have the regulation the jobs would have been there already, so you can argue about them creating or restoring jobs in that case.

    Some thing, like roads, are not likely to be created in sufficient amounts to justify an individual spending the money. And certainly there will be jobs created from the road construction.

    Obama is typically vague on what he is going to do. Run down the street tossing money around, give the money to companies that give his wife and friends big raises, get Gore to stop flying around on private jets or whatever. So it isn’t clear how it works. If he was doing X-prizes it might actually do some good.

    McCain is going down the ‘public research’ path. You can make a good argument that the government involvement in the manhattan project and 60’s space race got fundamental research done that wouldn’t have been done or would have taken a lot longer if the government hadn’t stepped in. On the other hand to that is there are already major market incentives to accomplish what Obama and McCain are advocating. McCain acknowledges it will happen with out the government, he is just trying to speed up the process.

    The government can ‘create jobs’ with regulation (e.g. Sabine Oxley), but that is likely to come at the expense of other jobs, so it favors one group (lawyers and accountants) against other workers.

    And government can certainly kill jobs. In the 80’s when the democrats were pushing the class warfare ‘sock it to the rich’ luxury tax, they cost jobs in industries (e.g. US yacht building).

  3. Patrick T. McGuire says:

    If we take money from Peter and Paul and give it to Patrick, have we created any wealth?

    You have for me!!!

    Take for example Barack Obama’s claim that he’ll create 5 million new jobs,

    Coming from the man who claims to calm the seas, this doesn’t sound like much of a stretch.

  4. Michael says:

    There is another problem as well. Government run projects are not like privately run projects. Start up a small company to explore the profitability/practicality of plug-in hybrid vehicles and you fail to turn a profit for a period of time and you will go out of business. Start up a multi-billion dollar bureaucracy for a similar purpose and it fails…why that is justification for an even bigger budget. There wasn’t enough money to begin with. The break through is just around the corner (and if not this up-coming corner, why it will be the next one).

    That’s why you spend money on projects with realistic, achievable goals where progress can be measured. Building a road has a very clear end-state, progress can be easily seen, and the cost is usually fairly well understood at the beginning.

    Spending money on “research” programs, be they energy, medical, or whatever, you have to assume that you are spending money for the work being done, and not for any specific end product. If you go into them with that awareness, you’re not caught unprepared for continuing costs and lack of achievement.

  5. Dantheman says:

    “If we take money from Peter and Paul and give it to Patrick, have we created any wealth?

    You have for me!!!”

    As Shaw wrote, any politician promising to rob Peter to pay Paul can always count on the vote of Paul.

  6. Seth says:

    Not sure I follow your logic on this. The deadweight loss argument aside, Obama said he would invest $150 billion into clean energy over 10 years. I didn’t see any statement that he intended to create a government agency and spend all of that money within only that agency. He stated that the majority of that money will be filtered into the private sector involved in green industry. To say that falls under the category of deadweight loss is to assume that a) there would be no national benefit to this economic injection b) that this injection would create no jobs c) this injection would hurt private industry d) that no one would use the energy it produced

    Ask GM and Ford if they would like a $150 billion grant. I don’t think they would turn it down. They might even hire people. And with the brown outs witnessed of late around several American cities, I’m pretty sure that the energy will be used.

    The key here is to build an energy system that contributes to other other industries. Think the National Highway Program. Think the Erie Canal. These were government programs that built transport systems that fueled economic growth by supplying transport more cheaply than had been available before. This goes doubly for energy as it would not only make energy cheaper (not only in market dollars, but also in real dollars where carbon/ clean-up, etc. are included in cost) but it would also reduce the importation of energy so energy dollars spent would stay in the US economy (think of $700 billion in oil imports staying in the US) thus reducing trade deficit.

    And if American companies have access to cheaper energy, they will be more competitive.

    Seems like an all around decent solution to our energy issues.

  7. Dave Schuler says:

    To say that falls under the category of deadweight loss is to assume that a) there would be no national benefit to this economic injection b) that this injection would create no jobs c) this injection would hurt private industry d) that no one would use the energy it produced

    Not quite. It’s only saying that the number of jobs that are created will be fewer than would otherwise be created.

    Now, I suspect unlike Steve, I would support a largescale federal engineering program to create a national redundant or failover superconducting power transmission backbone. Just to give one example. Our experience with the ROI on such plans including the the space program and the Internet has been pretty good.

    Neither of these were touted as job creation programs, however, and I think that any such claim would be a stretch.

    And, Anderson, if you’ve got some evidence that the WPA/CCC created more jobs than would otherwise have been created, it would be very helpful.

  8. PD Shaw says:

    It sounds like Obama wants to spend Peter’s money on resurrecting the Future-Gen project, a clean coal prototype that the Bush administration announced in ’03 and killed at the completion of the design in ’08. Like the worst government contracting projects, the design became more complex and expensive until it no longer served its function: to be a prototype for clean coal designs that could be replicated in the market.

    If the project is restored, it will bring jobs to an area with a sluggish economy. I don’t think it will have broad environmental benefits, which is the problem with selling environmental programs as a jobs creation program.

  9. Bithead says:

    There are a few exceptions. If we removed barriers to drilling, drilling jobs are likely to be created

    That brings up an excellent point. I mean, Verdon’s points are well taken, but seem to me limited in breadth of discussion to only those situations where government is directing the work, and of course the results within that framework are going to be broadly negative, Anderson’s exception not withstanding.

    And, for my money your point on Sarbanes Oxley is a grand example of this, with an added heapin’ helpin’ of unexpected consequences, and unfunded mandates.

    Government serves best the object of wealth creation when it gets out of the way. For example, in energy. Can anyone explain to me what government has done recently but limit the amount of energy available to us, either by outright bans on it’s creation or by taxation and regulation on it’s use?

  10. Steve Verdon says:

    Anderson,

    Asking people to fill dig a ditch, then fill it in…repeatedly isn’t employing people. It is wasting people’s time, money, and for, in the end, nothing. Thanks for proving my point.

    Seth,

    What do you think that Obama has an account where every billion dollars he takes out another billion miraculously appears in its place? We live in a world of finite resources, and even the Obamassiah can’t change that. As such, taking $150 billion means that we have $150 billion less to spend in some other part of the economy. As such it is doubtful that the results are going to be better than if Obama did nothing.

    And please, don’t give me the cut waste, fraud, and abuse line Obama fed us at his rock show…errr convention. That is what every scoundrel we send to Washington says, and we have yet to see such savings materialize.

  11. Tom Strong says:

    How about this: the government invests $150 billion over the next 10 years to educate every American man, woman, and child in the basics of macroeconomics, microeconomics, and personal finance?

  12. Anderson says:

    Asking people to fill dig a ditch, then fill it in…repeatedly isn’t employing people.

    Argument by caricature, of course. The WPA accomplished quite a bit, tho I daresay that FDR would’ve been quite happy with the ditch-digging/filling.

    Anyway, the argument against taxes seems a bit misplaced. We’ve *spent* the money — Peter and Paul went to Iraq, for instance.

  13. Seth says:

    I think that in this case and at this time, yes, a concentrated effort to revamp our energy system would do more to positively affect our economy than any other equivalent expenditures right now. I refer you back to my mention of the Federal Highway Act by Eisenhower. Smart investment into key areas that change the the entire process of the economic engine, and thereby positively affect all users of this investment (i.e., anyone using energy, being pretty much all of us). And no, I don’t believe that if nothing was done more and better green energy investments would be made. I’m not saying they would stop, they would just not proceed at a pace comparable to the pace a $150 billon investment would drive them. Think of the investment as fast-forwarding the process.

  14. Steve Verdon says:

    Anderson,

    Did you read the stuff about deadweight loss? Did you understand it? My guess is no.

    As for the ditch digging, paying people to do nothing is not creating wealth it is wasting time…time that could be used doing something productive.

    As for the WPA its impact was negligible. For 2 years before its existence unemployment was dropping. Why? Well looking at international data it appears to be the abandonment of the gold standard. Once a country left the gold standard their economies usually started to expand. Ironically, 2 years after the advent of the WPA unemployment spiked back up again. What happened to the Roosevelt magic?

    I think that in this case and at this time, yes, a concentrated effort to revamp our energy system would do more to positively affect our economy than any other equivalent expenditures right now.

    I doubt it. Markets are surprisingly good at switching to the least cost method of doing something. See for example whale oil. If we had the government back then we probably wouldn’t have any whales alive today.

    The highway system is a fine example of a public good subject to congestion, as such it is not terribly relevant. Apples and oranges and all that.

    Smart investment into key areas that change the the entire process of the economic engine, and thereby positively affect all users of this investment (i.e., anyone using energy, being pretty much all of us).

    If this were the case then you need to come up with reasons why private firms wont do this, and show that these reasons actually exist. I’m skeptical, to say the least. The idea of network externalities is not usually a good reason for government intervention. For example, fax machines did just fine without the Bureau of Fax Machine Promotion and Deployment.

    And no, I don’t believe that if nothing was done more and better green energy investments would be made. I’m not saying they would stop, they would just not proceed at a pace comparable to the pace a $150 billon investment would drive them. Think of the investment as fast-forwarding the process.

    Well no duh. Subsidize something you get more of it. What you need to do is provide a persuasive argument as to why the subsidy is needed. If it only because such industries are currently not profitable that isn’t sufficient. Wait until they are, don’t foist more expensive industries off on us then bullshit us by telling us it will create lots of jobs that otherwise wouldn’t have been created.

  15. Seth says:

    “What do you think that Obama has an account where every billion dollars he takes out another billion miraculously appears in its place? We live in a world of finite resources, and even the Obamassiah can’t change that. As such, taking $150 billion means that we have $150 billion less to spend in some other part of the economy. As such it is doubtful that the results are going to be better than if Obama did nothing.

    Your own words Steve. Thanks for the pedantic no duh. Charming.

    But it is good to know that we agree that such a large investment would speed our conversion to said energy.

    And as you are in the energy arena yourself, I shouldn’t need to tell you the billions that are being invested into green energy. T Boone Pickens comes to mind. As do such small bit players as BP, Seimens, Exxon, etc.

    Then why speed things up?

    Time.

    Scientists are saying we don’t have a lot of it if we are to stave off some serious repercussions should we not change course on our energy production which is also one of the major drivers of carbon production.

    Markets don’t account much for these issues. Or at least not until they affect the market, which will probably be too late.

    Government can.

    As to the whale oil bit, I don’t follow your train of thought. But if the government is going to invest $150 billion, I challenge you to name another area where that kind of money would have that sort of long term economic impact.

    Oh wait, education. I may have answered my own question.

  16. Brett says:

    What’s your definition of “outweighing the deadweight loss” on the part of governmental programs? There ARE other priorities for government other than ensuring that maximum economic output is occurring.

  17. sam says:

    Now, I suspect unlike Steve, I would support a largescale federal engineering program to create a national redundant or failover superconducting power transmission backbone. Just to give one example. Our experience with the ROI on such plans including the the space program and the Internet has been pretty good.

    Certainly DARPA’s key role in the development of the internet needs no amplification. For the space program, one need only google “space program spinoff” and read some of the links to see that major benefits in materials science, medicine, electronics, etc. were and are being derived from that program.

    Now this is certainly true:

    Government run projects are not like privately run projects. Start up a small company to explore the profitability/practicality of plug-in hybrid vehicles and you fail to turn a profit for a period of time and you will go out of business.

    But with something like the Moon landing, where it was not at all clear that success could be achieved, only government would and could take the risks and the bear the failures (sadly, for example, the deaths of Grissom, White, and Chaffe) and keep going. It’s hard to imagine any private enterprise, on its own, assuming those risks and responsibilities. It seems to me that no other entity than a government could have initiated and sustained a program like that.

  18. Tlaloc says:

    How about this: the government invests $150 billion over the next 10 years to educate every American man, woman, and child in the basics of macroeconomics, microeconomics, and personal finance?

    By god yes! And then we can teach them all about Astrology, alchemy, and the medicinal uses of leaches.

    How about the economists actually get their field out of the “jackassery” category before we try to teach people what the experts don’t know. Too much to ask?

    Too many problems in america boil down to economists being given too much say, not too little.

  19. Bithead says:

    But with something like the Moon landing, where it was not at all clear that success could be achieved, only government would and could take the risks and the bear the failures (sadly, for example, the deaths of Grissom, White, and Chaffe) and keep going

    I suggest to you the test cannot be made. Only government has the power to bypass it’s own rules. Employment rules, insurance, union, etc… all would play heavily to prevent private companies from attempting space exploration.

  20. sam says:

    Only government has the power to bypass it’s own rules. Employment rules, insurance, union, etc… all would play heavily to prevent private companies from attempting space exploration.

    QED

  21. Bithead says:

    But see, where we differ is I view that as a negative thing.

  22. sam says:

    Yep, that’s where we differ.

  23. Steve Verdon says:

    Your own words Steve. Thanks for the pedantic no duh. Charming.

    But it is good to know that we agree that such a large investment would speed our conversion to said energy.

    Actually I don’t think it will speed up anything. You want to know how to speed things up in this area? Its really, really f-cking simple.

    Taxes.

    Taxes on oil, gasoline, and so forth. Make it more expensive so people will not want to use it anymore, or use as little of it as possible. Of course we don’t hear this from the candidates. Instead we get this basic line of bullshit,

    “We need alternative fuels. Gasoline prices are too high. Elect me and I’ll solve both problems at the same time.”

    Stupid, dishonest, and pandering. The trifecta of politics, IMO.

    And as you are in the energy arena yourself, I shouldn’t need to tell you the billions that are being invested into green energy. T Boone Pickens comes to mind. As do such small bit players as BP, Seimens, Exxon, etc.

    Then why speed things up?

    Time.

    Scientists are saying we don’t have a lot of it if we are to stave off some serious repercussions should we not change course on our energy production which is also one of the major drivers of carbon production.

    Okay, so we gone from jobs, to more economical, now on to its simply better for the environment. Guess what, there was a time when there was no antarctic icecap and animals actually lived there. The world didn’t end like some hysterics are claiming. I’m skeptical of the more…well hysterical claims this time. The reason for this is a bit involved and requires its own post really, but let me say that “panic politics” is not going to persuade me. In fact, it is used so often that my initial reaction is to call bullshit on it until I’ve seen mountains of data.

    As to the whale oil bit, I don’t follow your train of thought. But if the government is going to invest $150 billion, I challenge you to name another area where that kind of money would have that sort of long term economic impact.

    Oh wait, education. I may have answered my own question.

    Oh yeah, go read the lefty blogs about how wonderful No Child Left Behind is.

    Brett,

    What’s your definition of “outweighing the deadweight loss” on the part of governmental programs? There ARE other priorities for government other than ensuring that maximum economic output is occurring.

    Short answer: Take an economics course, preferably one on public finance/economics.

    Not so short answer: Typically economists don’t look at output, but instead look at things like individual welfare (shocking I know). While deadweight loss results in lower output, and hence avoiding/reducing it would increase output; avoiding/reducing it also enhances welfare for individuals participating in the market where there is a deadweight loss. Simply enhancing output while not enhancing welfare is a waste of limited resources and is the very problem my initial post is about.

    Sam,

    Yep, that’s where we differ.

    Private firm bypasses employment rules, insurance, union, etc… and it is a bad thing. Booo!!! Burn her…Burn the duck…err witch!!!!

    Government does it…YAY!!! Party all teh time FTW!!!!!11one!!!

    After all the government never misuses its authority..slavery…Tuskeegee…Jim Crow…extraordinary rendition…our current set of…mmmmmm…interrogation techniques….

    You are confronted with and complain about the misuse of government for the past 8 years and yet you see no problem expanding the power of government. Keep this in mind the next time your preferred party is booted out of power and the guys you don’t like get in and take advantage of the expanded powers and scope of government.

  24. Grewgills says:

    I suggest to you the test cannot be made. Only government has the power to bypass it’s own rules. Employment rules, insurance, union, etc… all would play heavily to prevent private companies from attempting space exploration.

    Bit,
    Does NASA follow less restrictive employment rules than contemporary engineering firms?
    Does NASA carry less insurance than contemporary engineering companies?
    Does NASA prevent it’s employees from unionizing?
    I am not sure of the answer to the second question, but am certain of the answer to the 1st and 3rd (NO).
    In short the reason you give is not the real reason. The real reason is because the investment is very large and there is no guarantee of monetary reward for those making the investment. NASA spent nearly 23 billion in the late sixties and early seventies on the Apollo program (>130 bill in 2005 dollars). There were some amazing applications that came out of that work that it can be argued have made more money for Americans and American companies than that initial investment, but would any company in the 60s have made that kind of investment to find out?

    Everyone else,
    On a less mega budget note, most entities interested in near term profits do not invest in primary research, rather they invest in applied research based on primary research that has already been done (generally funded by a government or non-profit). Without government and non-profit involvement far less primary research would get done and consequently far less applied research. Another benefit to publicly funded primary or applied research is that the results are public rather than proprietary allowing many rather than few to develop them further. This is particularly important when one wants to kick start a new technology. If GE develops the next generation of battery technology then GE owns it and sets the price. If the government develops the tech then they can allow anyone to make it and there is immediate market competition for its production.

    As in Dave’s example the losses/risks are most severe at initial implementation. Subsidies in whatever form reduce (or at least diffuse) these losses to the point that private enterprise is willing to act then, after the phase in, the market can find a new equilibrium. This new equilibrium would be based more on production costs and demand rather than development costs + production costs and demand.

    BTW deadweight loss is not unique to government institutions. When there is a monopoly (as in the GE example above) or near monopoly then the loss is passed on to the consumer.

  25. Bithead says:

    Does NASA follow less restrictive employment rules than contemporary engineering firms?

    Of course not. By law, outside firms couldn’t employ those standards.

    Does NASA carry less insurance than contemporary engineering companies?

    In the strict sense yes. Of course, they’re self-insured. Government can do that.

    Does NASA prevent it’s employees from unionizing?

    I doubt they’re that smart, frankly.

    The point I was making and the one you’re missing, is that most of the reasons government is the only one who can take on such tasks is that the way laws are now set up they’re the only ones who can. Rather like the Governmen and the postal service though not quite so direct.

    And this bears on your valid point about investment, too, since because of the way the laws are set up so restrictively, it’s far more of an investment for private firms to do than government…

    but would any company in the 60s have made that kind of investment to find out?

    Again, the test cannot be made. You and I both know government will never get out of the way long enough for us to find out.

  26. Bithead says:

    By the way, I note with some amusement that this is one of the first times I can recall when VErdon and I have come down on the same side of something so solidly.

    But added taxes on gasoline?
    Up against the wall, heritic!(grin)
    Seriously, It’s already over-taxed, Steve. You champion lessening government and then propose to give them more power to tax? Does not compute.

    Let the market sort it out, and get goverment out of the way.

  27. Grewgills says:

    …Guess what, there was a time when there was no antarctic icecap and animals actually lived there…

    When animals lived on Antarctica it was not where it is now (believe it or not new earthers it moves).
    At the times when there were no/minimal/seasonal icecaps the parts of the world where most people now live were much less friendly to human habitation.
    Certainly the world or life on it are not in danger of destruction* and only the most poorly informed think so. IMO the bar for necessary action should be set far lower than that ridiculously high level. We are obviously in disagreement about where that bar should be set and the current height of that mountain of evidence.

    *though many individual species are in such danger for a variety of reasons

  28. Grewgills says:

    Of course not. By law, outside firms couldn’t employ those standards.

    BS

    In the strict sense yes. Of course, they’re self-insured. Government can do that.

    As can any sufficiently wealthy entity

    I doubt they’re that smart, frankly.

    There are several unions for NASA employees.

    most of the reasons government is the only one who can take on such tasks is that the way laws are now set up they’re the only ones who can.

    The laws you initially mentioned are not at fault so which laws are they that prevent this work? Please cite a few (or at least one) specific law.

    it’s far more of an investment for private firms to do than government…

    How so? Again specificity is appreciated.

    Again, the test cannot be made.

    Agreed

    You and I both know government will never get out of the way long enough for us to find out.

    We disagree on the barrier. To my mind the largest barrier is time travel.

  29. Michael says:

    Seriously, It’s already over-taxed, Steve. You champion lessening government and then propose to give them more power to tax? Does not compute.

    He wasn’t suggesting that we should increase taxes on oil, he was saying that if your intention was to increase spending on alternatives, taxes are the most effective way to do it.

  30. Michael says:

    You and I both know government will never get out of the way long enough for us to find out.

    There are about a half dozen private companies attempting that right now, within the context of current laws. One of them, SpaceX, was just recently granted the use of launch sites at Cape Canaveral.

    It turns out that the laws of physics and the laws of economics are a much bigger obstacle to them than the laws of the US government.

  31. Bithead says:

    BS

    Realy? What private firm could do taht, then? particularly the military aspects, I mean.

    As can any sufficiently wealthy entity

    Well, there again, that’s a standard set by a law the government needn’t worry about. It’s amazing what you can do when you set the rules…and you have an unlimited source of theft funding.

    it’s far more of an investment for private firms to do than government…

    Again, when you set the rules, you have a rather distinct advantage. That cuts across everythnig, including pay, benefits, etc.

    The laws you initially mentioned are not at fault so which laws are they that prevent this work? Please cite a few (or at least one) specific law.

    A reasonable example would seem to be the post office bit as I mentioned. But when’s the last time, for example we saw an environmental imact statement incidental to a lift-off at the Cape? (Hint… the private compnaies have to do it..)

    I doubt they’re that smart, frankly.

    There are several unions for NASA employees

    QED.

    There are about a half dozen private companies attempting that right now,

    Well, there’s that time travel thing again.

    It turns out that the laws of physics and the laws of economics are a much bigger obstacle to them than the laws of the US government.

    The first is obvious, the second, obviously wrong. THe economics of the thing are made far more complex than needs be by the long established laws considering the conduct of private enterprise.

  32. Bithead says:

    He wasn’t suggesting that we should increase taxes on oil, he was saying that if your intention was to increase spending on alternatives, taxes are the most effective way to do it.

    I still disagree, from a practical perspective.

    Oh, granted, it would certainly knock out the oil companies, but what would it leave us with? I fail to see that knocking out the oil compaines is a good thing. Matters of princiles of priavte enterprise and governmental interference in a free market situation aside…There’s effectively no replacement at the moment. That’s not going to magically happen by itself, even with government promises about finding for research.

    The economy is in trouble just nw because of energy prices. Taxing will only hurt us when we can least afford it.

    Also, lets recall the number of times we’ve been promised a particular use for the income relative to a particular tax.

    Social Security, as an example. What did those funds end up paying for?

    The state lottery systems and education. Most of hem now feed not to education, but to the general funds.

    Federal gasoline taxes… which supposedly were bound to highway construction and maintainence. Where’d THAT go?

    You and Verdon talk loudly, (and correctly for the most part) about government abuse, (And I would certainly include the avove list as examples of such) and yet you still seem trusting that the money will go where they say it will. Doesn’t your efficiency argument rather depend on the government keeping their word?

    I suggest to you you’re asking for more problems, that way. Witness… The degree to which we’ve been having energy problems is directly connected to how much governmental interference has occurred.

    That’s just off the top of my head; I’m just gettng started here. Sorry, still no sale.

  33. Steve Verdon says:

    Seriously, It’s already over-taxed, Steve. You champion lessening government and then propose to give them more power to tax? Does not compute.

    I wasn’t advocating anything, merely pointing out the best policy for achieving the stated outcome.

    People want more alternative fuels. People want less oil/gasoline consumption. People want less pollution. People want something to be done about global warming.

    The solution to these problems are clear: oil and gasoline are way under priced due to these external issues so we should increase the tax on oil/gasoline to bring it into correct marginal cost/marginal benefit ratio.

    However, neither politician advocates this policy and instates comes up with addle brained pandering solutions instead, and they eat it up with a spoon.

    Oh, granted, it would certainly knock out the oil companies, but what would it leave us with? I fail to see that knocking out the oil companies is a good thing. Matters of principles of private enterprise and governmental interference in a free market situation aside…There’s effectively no replacement at the moment. That’s not going to magically happen by itself, even with government promises about finding for research.

    Argumentum ad extremum. Nobody is saying that the tax has to put oil companies out of business, all it needs to do is raise the price enough to make alternatives and/or research into alternatives look more attractive. Further, we could reduce income taxes so that the actual tax is revenue neutral. We’d still get the substitution effect due to the price increase, although we’d likely lose the income effect.

    Of course there is still the issue of deadweight loss, but if the above problems are indeed real, then we actually want the deadweight loss in this case. If one were to read my initial post I note that externalities can cause a deadweight loss and to correct for it you’d want to use a unit tax on the product in question.

  34. Michael says:

    Oh, granted, it would certainly knock out the oil companies, but what would it leave us with?

    It wouldn’t knock out the oil companies until there was an alternative, but it would just significantly handicap our economy if set too high. Oil companies are surviving just fine on the high taxes we’re already assessing.

  35. […] jobs” whatever that means … John Stossel doesn’t think so, and neither does Steve Verdon…. and that’s one of the first times I’ve had serious agreement with the latter in […]

  36. Bithead says:

    I wasn’t advocating anything, merely pointing out the best policy for achieving the stated outcome.

    I question that it’s even the best policy, as I’ve laid out in my response to Micheal.

    People want more alternative fuels. People want less oil/gasoline consumption

    Well, mose specifically, they want the mobility for the lesser cost. Some go to extremes to try and get that… Me, there’s only so much I’m willing to do for a gallon of gas.

    People want something to be done about global warming.

    Some, it’s true are still on that jag. Yet, there seems to be evidence that nature’s already got that well in hand.

    Argumentum ad extremum. Nobody is saying that the tax has to put oil companies out of business, all it needs to do is raise the price enough to make alternatives and/or research into alternatives look more attractive.

    Which in turn lowers volumes, which in its turn lowers profits below viablity, sooner or later.

    Look, say what you will about the total numbers, and certainly there’s a number of people out there screaming about the numbers involved in the total…. but the fact is, we’re still dealing with companies which are now dealing with a 3% profit margin, more or less. Assiming of course, you don’t include the costs of exploation and taxation.

    What you propose is taxing something to lower consumption on it. The oil company sells less. Doesn’t lower volumes mean lower profits, and lower profit returns on a given investment, meaning lower profit margins in total?

    Again, 3%. What other set of companies survives for long on those kind of numbers?

    It’s not a matter of killing oil companies iis desired or not, ….(though I don’t doubt some people would be dancing, till they saw what that really means… but I digress)… I’m saying it WOULD happen, desired outcome or not.

    but if the above problems are indeed real

    Well, here, I’ll agree; that is a large question at least. For the record, I don’t think they are.

  37. Steve Verdon says:

    I question that it’s even the best policy, as I’ve laid out in my response to Micheal.

    Again, it is the best policy for achieving the stated goals.

    Which in turn lowers volumes, which in its turn lowers profits below viablity, sooner or later.

    No, not neccessarily sooner or later. And I don’t buy that 3% profit margin line. At least not for the major integrated oil companies.

  38. Grewgills says:

    Realy? What private firm could do taht, then? particularly the military aspects, I mean.

    What standards for employment does NASA impose that a private firm could not?
    I don’t know any astronauts, but do know that the standards for hiring NASA scientists could be applied by any private firm.

    Well, there again, that’s a standard set by a law the government needn’t worry about.

    Because it is a wealthy enough entity. Certainly there are many megacorps that could also self insure or simply own the insurance carrier they choose to use.

    Again, when you set the rules, you have a rather distinct advantage. That cuts across everythnig, including pay, benefits, etc

    What rules/laws make it easier for NASA and more difficult for private industry. If it is just American laws why haven’t they off-shored this work?

    A reasonable example would seem to be the post office bit as I mentioned.

    That is not a specific law and does not even work well as an example outside of that. Again what laws are preventing private firms from being able to do this.

    But when’s the last time, for example we saw an environmental imact statement incidental to a lift-off at the Cape?

    Here is info to access one. There are a host of others. Just google Cape Caneveral eis or NASA eis to find them. Really you should at least spend the 5 sec required for a google search before you make statements like that.

    THe economics of the thing are made far more complex than needs be by the long established laws considering the conduct of private enterprise.

    And yet again, give some specifics. What are these long established laws? If you continue to fail to cite any I will have to assume you are talking out of your @ss.

  39. Bithead says:

    nd I don’t buy that 3% profit margin line.

    D’Oh…

    Glad you caught that, My error… Typo. Meant 9%. (Why can’t phone pads and number pads be set up the same way? Mmmppphh)

  40. Bithead says:

    Here is info to access one. There are a host of others. Just google Cape Caneveral eis or NASA eis to find them. Really you should at least spend the 5 sec required for a google search before you make statements like that.

    Fine. Now, what does the government pay for that, vs what a private agency pays? Does government pay itself for such things?

    Because it is a wealthy enough entity.

    And being able to write it;s own laws doesn’t hurt.

    If it is just American laws why haven’t they off-shored this work?

    The operating costs tend to be offset by the skillsets of the people such agencies would need to hire, for one thing.

  41. Bithead says:

    Well, let’s see, here. Need land for takeoff or landing? Government can simply take that land, or condem it and grab it at a fraction of it’s value. Not so, private companies.

    Need lots of fuel? Don’t expect private companies to be able to afford to pay for both the fuel and the attendant taxes.

    Need retrieval for ocean landings? Well, hell, son, that’s what the government has a Navy for. But of course private industry cant do things that way.

    Etc, etc.

  42. Grewgills says:

    Fine. Now, what does the government pay for that, vs what a private agency pays? Does government pay itself for such things?

    Once again BS. The government pays the scientists and others that do the EIS just like any private company. That one private company hires another private company to do their EIS should by your general argument make that a more efficient and thus cheaper operation.

    And being able to write it;s own laws doesn’t hurt.

    Once again what laws are you referring to. Be specific.

    The operating costs tend to be offset by the skillsets of the people such agencies would need to hire, for one thing.

    and the people with the necessary skill sets refuse to work anywhere but the US and EU? Looks like another load.

    Well, let’s see, here. Need land for takeoff or landing? Government can simply take that land, or condem it and grab it at a fraction of it’s value. Not so, private companies.

    Was Cape Canaveral acquired this way? How about Kennedy or Goddard? Do you know of any that were acquired by means much less expensive than those available to private industry? What barriers are preventing private industry from buying land and building launch sites? Could it be the massive expense of building a site that can handle the loads imposed by the space craft and machinery used to move them? Might it also have something to do with the much lower expense of renting time on an already extant site?

    …Need retrieval for ocean landings? Well, hell, son, that’s what the government has a Navy for…

    So your argument boils down to the government has better infrastructure in place to deal with the necessities of space travel. Can private companies not buy, lease, or rent boats? This is not a government imposed expense, rather it is yet another of the myriad and quite large expenses associated with space travel. Those large expenses with little guaranteed payoff are the real reason private industry has only very recently started taking its first tentative steps towards space travel. Governments paid the up front development costs and private industry and society in general have benefited greatly. In the not to distant future non-government entities will be able to launch their own missions into space with their own vehicles and that will be thanks to the ground breaking work of governments in this field and thanks to government built facilities for at least the early flights.

    Government investment into alternative energy techs may have a similar effect, though again we do not know going in what the payoff will be. Hopefully the side benefits will be as great as they have been for the space program. If not 15 billion a year for 10 yrs is a relatively small slice of our budget and it is a gamble that I think is well worth taking.

  43. DOUGLAS FIELD says:

    SENATOR OBAMA,PLEASE GIVE AMERICA ~ A DOSE OF REALITY CONCERNING THIS US HORROR ???

    LETS ALL HOPE OUR MEDIA FRIENDS CONTINUE TO ALSO SHOW AN INTEREST IN REPORTING ON THIS AMERICAN HORROR FACING THESE (TENS OF THOUSANDS) FORGOTTEN AND TRAPPED POORER AMERICANS, AND HOW THIS PRESIDENTIAL CONTENDER HANDLES THIS VERY SERIOUS ISSUE FACING AMERICA’S LATINO AND BLACK AMERICAN COMMUNITIES ????

    WITH 80% OF THE BLACK AMERICAN VOTERS SAYING THEY SUPPORT SENATOR OBAMA IN THIS PRESIDENTIAL ELECTION, IT IS ONLY FAIR FOR EVERYONE TO KNOW PRIOR BEING ELECTED OUR NEXT PRESIDENT OF THE UNITED STATES HOW THIS DEMOCRATIC SENATOR TRULY FEELS ABOUT THIS AMERICAN JUDICIAL HORROR CONTINUING TO INFLICT GRAVE HARM ON THE BLACK AMERICAN FAMILIES AND THEIR COMMUNITIES NATIONWIDE ??????

    *** WHEN GOD’S FACE BECAME VERY RED ***
    THE US SUPREME COURT GAVE ENEMY COMBATANTS FEDERAL APPEAL HC RIGHTS LAWYERS AND PROPER ACCESS TO US FEDERAL COURTS,AND POORER AMERICANS (MANY EVEN ON DEATH ROW) ARE DENIED PROPER FEDERAL APPEAL LEGAL REPRESENTATION TO OUR US FEDERAL COURTS OF APPEAL, AND ROTTING IN AMERICAN PRISONS NATIONWIDE ?????????

    ***THE AMERICAN PEOPLE ARE $LOWLY FINDING OUT HOW EA$Y IT I$ FOR MIDDLE CLA$$ AND WORKING POOR AMERICAN$ TO FALL VICTIM TO OUR U$ MONETARY JUDICIAL $Y$TEM.

    ****WHEN THE US INNOCENT WERE ABANDONED BY THE GUILTY ****
    The prison experts have reported that there are 100,000 innocent Americans currently being falsely imprisoned along with the 2,300,000 total US prison population nationwide.
    Since our US Congress has never afforded poor prison inmates federal appeal legal counsel for their federal retrials,they have effectively closed the doors on these tens of thousands of innocent citizens ever being capable of possibly exonerating themselves to regain their freedom through being granted new retrials.

    This same exact unjust situation was happening in our Southern States when poor and mostly uneducated Black Americans were being falsely imprisoned for endless decades without the needed educational skills to properly submit their own written federal trial appeals.

    **INNOCENT AMERICANS ARE DENIED REAL HC RIGHTS WITH THEIR FEDERAL APPEALS !!
    This devious and deceptive judicial process of making our poor and innocent prison inmates formulate and write their own federal appeal legal cases for possible retrials on their state criminal cases,is still in effect today even though everyone in our US judicial system knows that without proper legal representation, these tens of thousands of innocent prison inmates will be denied their rightful opportunities of ever being granted new trials from our federal appeal judges!!

    Sadly, the true US *legal* Federal Appeal situation that occurs when any of our uneducated American prison inmates are forced to attempt to submit their own written Federal Appeals (from our prisons nationwide) without the assistance of proper legal counsel, is that they all are in reality being denied their legitimate rights for Habeas Corpus and will win any future Supreme Court Case concerning this injustice!

    For our judicial system and our US Congressional Leaders Of The Free World to continue to pretend that this is a real and fair opportunity for our American Middle Class and Working Poor Citizens, only delays the very needed future change of Federal Financing of all these Federal appeals becoming a normal formula of Our American judicial system.

    It was not so very long ago that Public Defenders became a Reality in this country.Prior that legal reality taking place, their were also some who thought giving anyone charged with a crime a free lawyer was a waste of taxpayers $$.

    This FACADE and HORROR of our Federal Appeal proce$$ is not worthy of the Greatest Country In The World!

    ***GREAT SOCIETIES THAT DO NOT PROTECT EVEN THEIR INNOCENT, BECOME THE GUILTY!

    A MUST READ ABOUT AMERICAN INJUSTICE:
    1) YAHOO AND 2) GOOGLE
    MANNY GONZALES THE KID THAT EVERYONE FORGOT IN THE CA PRISON SYSTEM. ** A JUDICIAL RIDE OF ONES LIFE !

    lawyersforpooramericans@yahoo.com
    (424-247-2013)