Did you think that the 2010 U.S. Census was going to save our nation from catastrophically high unemployment? In case you did, University of Chicago economist Casey Mulligan today points out that counting all the Americans in the world, as fun as it was, did not provide us with economic salvation.
Worse than that, the apparently paltry effects the Census had on our employment situation suggests that the Keynesian model of government spending as a source of economic stimulus is flawed. (This is bad, Mulligan says, because the Obama administration assumed that government spending would help the economy — every 10 people hired by the government would create an additional six jobs. And the Obama administration spent a lot of money hoping that the Keynesian model would work.)
Mulligan says that, if the administration’s assumptions about stimulus were true, the hiring of census workers has merely offset what would have been a catastrophe for the labor market:
Perhaps the stimulus benefits of public employment are both large and too subtle to be easily seen in the aggregate employment data or the private sector’s appreciation of public employment programs has been frustrated yet again by extraordinary negative events that miraculously coincide with true stimulus. Or maybe the Keynesian multiplier has been exaggerated.
Whether or not the Census hiring is truly an indictment of Keynesian economics, we can all pretty much agree that sending temporary government employees to knock on people’s doors and harass them into filling out some forms is a highly counterintuitive approach to economic stimulus.
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