Monday, December 27, 2010

Bad pork and worse pork

A particularly trenchant analysis of the faulty logic of “stimulus” came this morning in a Wall Street Journal op-ed entitled “Confessions of a State Stimulus Czar.” (The original title was Confessions of a Stimulator.)

Industry veteran Tom Evslin tried to spend Vermont’s stimulus funds wisely but found it was mostly a futile exercise. One highlight:

The acceleration of government projects that had already run the approvals gauntlet—primarily the paving of roads—worked. But the building of new infrastructure failed. Due to the time required to apply for grants and receive permits, none of it was done during the recession, and only a little will be done in the next few years.

Nothing is "shovel ready" in the U.S. We've created a wall of regulatory obstacles—environmental, historical sites, etc.—that blocks doing any major project on a predictable or reasonable schedule. Not even all the king's men with all the people's money can build tunnels, railroads, wind turbines, nuclear plants or anything else significant without years or even decades of delay. If permitting were speedy, we wouldn't need government money to have a construction boom.
In other words, we needed pork barrel spending to fix the problems caused by government regulation, but in the end regulation won out over pork.

Even the good short-term effects were cancelled by the worse long-term effects. As predicted, Evlsin noted that the spending made things worse, because “the federal money came with strings attached” to prevent state governments from becoming more efficient by cutting costs — and thus the funding worked to “prolong the overspending.”

Despite being CIO of the most socialist state in the union, Evslin was blistering in his criticism of subsidies for renewable energy:
An industrial policy based on government grants and tax credits is an oxymoron at best and a disaster at worst. As an example, tax credits for solar photovoltaic systems have stimulated the solar industry in China. The Chinese don't install them there, they just sell them to us. More generally, these grants, tax credits and the like just mean higher-cost electricity.
Finally, he disputes any net job benefit from the stimulus spending:
The stimulus failed to keep the national unemployment rate below 8%, as had been promised. Overall, the stimulus had a negligible effect on overall unemployment, although it saved government jobs (temporarily) at the expense of private employment. Counts of "jobs created or saved" are meaningless. Jobs lost due to higher taxes, national debt or government crowding-out were not counted.
Driving home tonight, I heard one talk show host quote this “bureaucrat” with glee. Clearly this was a pundit too lazy to spend 2 minutes throwing Tom’s name into Google and reading what was readily available, including the biography at

I knew Tom (and his wife Mary) when the were running Solutions, Inc., a fax modem company. After that he ran server products for Microsoft BackOffice, launched AT&T WorldNet and cofounded a wholesale VoIP company that IPO’d in 1999. Not my definition of a bureaucrat.

It’s too bad that we don’t have more people like Tom in ”public service”: these are people who’ve had to manage the bottom line, including cutting spending if revenues are inadequate to cover expenses.

California briefly had someone like this in statewide office — Democrat Steve Westly, who gave up his job as state controller in a futile run for governor against career politician Phil Angelides. Westly’s failure to win election — along with that of Al Checchi, Meg Whitman and others — will certainly discourage other qualified business leaders from trying to enter politics directly from private industry.

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