@altgate

An Engineer’s Suggestion For the Stimulus Plan

Experiment
I’m sick and tired of politicians looking at the same law and proclaiming polar opposite results will occur if it’s passed.

I just saw a clip where McCain is saying a “disaster will occur” if the $800 billion stimulus package is passed and then a few minutes later a clip of Obama saying, a “disaster will occur” if it’s not passed immediately.  Come on.  Of course, the problem is that economists themselves can’t agree on this (and thus there are brand name economists testifying on behalf of both positions).

Where are the numbers in people’s arguments?  Why aren’t politicians referencing studies that indicate the efficacy of various programs?  I keep hearing that the $800 billion will “save or create” 4 million jobs.  Do the math…that’s $200,000 per job!  So if job creation is the goal, shouldn’t spending line items be listed by their relative cost-per-job?

[BTW, doesn't $200K per job seem a bit high?]

I’ve often herd economists say in their defense that they can’t “run experiments.”  Really?  This is the difference between engineers and scientists.  The latter like to research what happens.  Engineers like to shape what happens.

Anyway, here’s my “engineer” suggestion.  Run an experiment.  Take the $800 billion dollars and distribute it to the states based on population then leave it to the states to decide what to do with their share.  Make the only requirement be that the states agree to provide detailed accounting and reporting into an open database accessible by all.  Red states can send the money back to Washington or cut taxes and the blue states can spend to their heart’s delight.

This way, in 10 years or so we will be in a position to say with some authority whether or not these spending, tax cuts or non-interference programs actually work.

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Categorised as: Current Affairs

  • Anon

    I liked the suggestion at http://bradhicks.livejournal.com/422902.html which seemed to be bsed on historical evidence.

  • http://blog.jedchristiansen.com jedc

    Furqan, I have to say there’s probably a reason that your math works out to $200k/job. It’s because the government isn’t just funding just jobs.

    When you build a road/bridge/other infrastructure a significant portion of the cost is the steel, materials, equipment, etc. (And of course it’s those knock-on effects that theoretically create the Keynesian “multiplier” effect that gives a stimulus more bang for its buck.) How much of the total is real infrastructure, I haven’t seen, but I’ll guess it’s a good chunk of cash.

    I really don’t wholeheartedly agree with the way the stimulus is turning out, but when you’ve got two opposing views of how government should be run and how to effect the economy in government, it’s no wonder the result is a bit of a mess.

  • Beardo

    That is a freaking awesome idea. Of course that means no politician will listen to it. You’d also have to figure out how to isolate the effects of the stimulus from the resulting data to see if it was the stimulus or just the natural order of things that fixed it. At least we’d know where the money went unlike the $700+ billion bailout.

    • http://www.altgate.com/ fnazeeri

      Maybe randomly pick a few states and they get nothing so that way there would be a “control” sample in the equation to compare the others against. That sounds a little harsh, but perhaps not since a lot of the Republicans feel that is the optimal strategy so they might even volunteer.

  • Steve D.

    Good plan, Furqan!

    PS: Just saw this one newmogul.

  • adam

    I’d say that this isn the difference between engineers and scientists, but between scientists and philosophers. One of the fundamental rules of science is that you absolutely must base everything on experiment.

    (incidentally this is why I and so many of my scientist and mathematician friends sneer at economists, the majority of whom – it often seems – would rather pontificate, or gamble the lives of millions on “theory”, than ever risk proving themselves wrong)

    (oh, and the fact that so many of them that believe they are incredibly good at Math … aren’t ;) .)

  • http://bgladd.blogspot.com BobbyG

    What productive, socioeconomically beneficial role might the venture capital industry play in the upcoming economic stimulus/recovery efforts?

    http://bgladd.blogspot.com/2009/02/what-now.html