President Obama is now claiming that unemployment could climb above 10% without his stimulus program.
This is a weird claim. For every job the stimulus creates, some other job disappears. Suppose one of those jobs pays $50,000 per year. That is $50,000 that taxpayers now do not have to spend. The less they spend, the fewer jobs that their spending can create.
By its very nature, the stimulus cannot create anything, at least on net. It has opportunity costs at least equal to any benefit it has. Add in transaction costs, and the economy stands to worsen from the stimulus. That’s why Obama’s claim is such an strange one.
All this has been said a million times, here and elsewhere. But according to polls, 56% of Americans still don’t get it.
Is it the economist’s job to repeat himself until that figure improves? Or is that a Sisyphean task? Opportunity cost ignorance goes back to at least the Roman Empire. There is no compelling reason to be believe it will ever go away.
Inertia Wins! 