The Stimulus Program Is Not Stimulating Truth in Reporting

The other day a top-notch interviewer on financial radio was paying more than his usual deference to his distinguished guest on the subject of health care. The guest summed things up with an analogy. He said the case for requiring young people who don’t want health insurance to purchase it anyway was the same as the case for requiring automobile owners to have car insurance.

I waited for the interviewer to point out that the required automobile insurance is liability insurance–in case he has an accident that hurts someone else–whereas the required health insurance would be insurance for the purchaser’s own benefit. He didn’t. Required bicycle helmets would have been a more honest analogy.

The Wall Street Journal had an article recently on the miss- and over-reporting of jobs created or saved by the stimulus program. The article said Hormel Foods acknowledged that the “company had declared it had created or saved the equivalent of 384 jobs because 384 of its existing employees had worked for one week to fulfill those contracts. A spokeswoman confirmed that the company had failed to calculate the annual equivalent for the jobs.”

So, the spokeswoman thought converting the number to annual equivalents would have corrected the problem? No.

The bigger problem was that these were not new jobs created or even jobs saved. It was just some work done for a week by existing employees. Maybe some good was done, giving the food away, but the good wasn’t the creation of new jobs or the retention of jobs that would have gone away otherwise.

The errors in the reports are shameful enough, but they show more than carelessness. They demonstrate an eagerness to tell the government what it wants to hear–true or not. How many mistakes have you heard of that under represent the number of jobs created? How could so many misrepresentations be missed? For the same reason. Everyone involved wanted the numbers to be large just as the borrowers and the lenders of subprime “liar” loans had a mutual interest in telling and accepting the lie.

On several recent occasions I’ve seen news reports about how many new jobs are being created by sophisticated new projects such as a new generation of solar panels. Come on. Are we really expected to believe that these projects requiring high level science and engineering are being manned (and woman-ed) by unemployed workers standing on the corner waiting for work?

Are we supposed to believe that the construction projects receiving attention as job creators do not pull any skilled and experienced workers from other projects? Are all the new jobs we see on TV net new jobs? Or, are most of them new jobs that appear before the TV cameras without being netted against the related reduction of jobs elsewhere?

I generally don’t believe in conspiracy theories. I don’t think journalists got together to plot how they would mislead the public about the effectiveness of the stimulus program in creating new jobs or the logic of arguments being used to promote certain health care reforms. But that’s what they are doing, almost without exception. How many news stories have you seen where the reporter points out that the new jobs in the report aren’t necessary net new jobs overall–that many or most or all of the workers involved would have been working elsewhere? What are we to think about motivation?

Comments (5)

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  1. Kevin says:

    “Truth is the first casualty of war.” – Hiram Johnson

    It seems that truth is also a casualty in government reporting when politics are involved.

    I think this administration should just hire people to move rocks from one side of the road to the other. Then move them back the next day. If someone complains about the unworthy work, ban all copiers from government offices and hire thousands of typists. Rock movers and typists will create a lot of jobs.

  2. EHROSEN says:

    Who benefits?
    Perhaps well intentioned, but, so was the Pied Piper.

  3. Joe Calhoun says:

    While I know there are plenty of people who want to blame this on the politics of the writers, I think the explanation is much simpler and much more frightening. The reporters are dumb; they don’t ask the right questions because they don’t know what the right questions are. Most of them wouldn’t know what questions to ask even after reading this blog post.

  4. Joe, your point is good, but it could be worse: I believe some people just *don’t want* to ask the right question and *don’t want* to know the right answer. They take comfort on the mutual reassurance of dogmatic thinking. And the explanation for this behavior may be found in economics itself: for these people, making the effort of learning sound economics would be more costly at the personal level than allowing themselves to remain in ignorant bliss. As long as they believe, correctly or not, that they’re not being made worse by doing it, they will keep doing it. In some sense it’s all the result of a system of incentives and institutions that promote economic irrationality as an acceptable norm.

  5. William Martz says:

    Even if one person who was unemployed was employed, it would still not be accurate to say a job was created because the effect of the use of the money by the original owner of the money would not be taken into account. Or the effect of debasing our currency is not taken into account. I realize that the way this is being sold is, Yes, Virginia, there is a Santa Claus 2: We can debase our currency, create jobs that generate something constructive, end the jobs, restore the currency, pat ourselves on the back, and call it a day. Please see Charles Hoy Fort, catsup.