On Tue, 2009-01-06 at 10:15 -0500, Louis Proyect wrote: > http://krugman.blogs.nytimes.com/2009/01/06/stimulus-arithmetic-wonkish-but-important/ > January 6, 2009, 9:26 am > Stimulus arithmetic (wonkish but important) > [...] > In the extended entry, a look at my calculations. > > The starting point for this discussion is Okun’s Law, the relationship > between changes in real GDP and changes in the unemployment rate. > Estimates of the Okun’s Law coefficient range from 2 to 3. I’ll use 2, > which is an optimistic estimate for current purposes: it says that you > have to raise real GDP by 2 percent from what it would otherwise have > been to reduce the unemployment rate 1 percentage point from what it > would otherwise have been. Since GDP is roughly $15 trillion, this means > that you have to raise GDP by $300 billion per year to reduce > unemployment by 1 percentage point. > > Now, what we’re hearing about the Obama plan is that it calls for $775 > billion over two years, with $300 billion in tax cuts and the rest in > spending. Call that $150 billion per year in tax cuts, $240 billion each > year in spending. > [...]
According to: http://www.bls.gov/news.release/empsit.t01.htm There are 10.3 millions so-called "unemployed" (and 80.2 millions "not working") people in the USA, for an "unemployment rate" of 6.7% (of a 154 millions "active" population). According to: http://www.bls.gov/news.release/wkyeng.t01.htm The median yearly wage is $37500 per year. 775 billions for two years is 387 billions per year. 387 billions per year is the median yearly wage for ... 10.3 millions people. So you can wipe out "unemployment" as currently measured to exactly zero for two years by having the government hiring people to dig lots of holes and then fill them up or whatever you find more useful (surely there's some infrastructure to work upon). How can that become only a bit more than 1% of "unemployment" decrease? Is basic arithmetic failing me? Laurent _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
