How Many think that Chris Dillow and Roland Benabou are Right? I do, and even have some reasoning to back that assessment. It is the old 2 to the number of Corporate Executives as Power, making about 18 Corporate decisions a day (if Corporate management expresses the normal Hiring practices and exhibited experience in normal expressed range–else the Power is much lower in Number). How many days must pass before the Dice rolls wrong? One has to remember Professional does not mean always Right! Error decisions are predictable, it is the durative length of Time between Error decisions which is unknown–2 or a Dozen decisions can be wrong in a Row; that cluster of wrong decisions can even be assigned Odds–everything is possible. Remember that Business is not infallible, and even is definably fallible!
Alex Tabarrok has finally given a good economic argument to explain the Stimulus concept to beginning Students. The only trouble I would perceive in the analysis consists of the fact that fiscal policy planners have long understood the argument, but do not understand the forces behind the argument. The V factor in the equation is totally determined by the Market, and expansion of M or V by fiscal policy will itself cause a loss of velocity from the Market, as Bank re-associate to accommodate the expansion of M, or the development of Debt. Fiscal policy must develop actual Production capacity for it to exceed mere Expenditure (what they build must further economic expansion, not simply look Pretty or consist of Subsistence payments). The argot of Economists fails to inform that in a competitive Market system, marginal purchases always presents a rise in Resource pricing; something Good in a Production decline, something Bad in a degenerative Labor decline with sustainable Production schedules.
The Congressional Budget Office and Greg Mankiw (do check out page 12 of the Report) suggest that there will initially be an increase of 1.2–3.3 million Jobs through the end of 2010, but with a slight decline thereafter. I have far more faith in Crowding Out effects than either of these two sources, especially with the crisis of finance at the State level. Production for Basic Needs can be maintained, even with another 10 million reduction of Jobs. Most of the Stimulus efforts apply to replacement of current State efforts, though those efforts are much less capitalized. I do not believe there will be massive Job multiplication from the Stimulus package until late 2010 in the first place, and then the increase of Jobs would be at most around 200,000, and immediately reduced upon final payment of federal aid. Smart Economists will probably state that I am wrong in this, but I have been through a couple of these things, and nothing ever worked according to projected Scale. lgl