Obama's Unmeasurable Metric
The Wall Street Journal has a good editorial on Obama’s claim that his stimulus has “saved or created” 150,000 jobs so far, and that he will ramp up spending to create another 600,000 more this summer.
The problem is that it is impossible to measure the number of jobs “saved.” Economist Gregory Mankiw calls this an “unmeasurable metric.” Agencies like the Labor Department and Bureau of Labor Statistics measure the number of jobs lost or created, but none of them track the number of jobs “saved” because there is no way to know.
Which means that talking in terms of “jobs saved” creates a very convenient situation for Obama:
“You created a situation where you cannot be wrong,” said the Montana Democrat. “If the economy loses two million jobs over the next few years, you can say yes, but it would’ve lost 5.5 million jobs. If we create a million jobs, you can say, well, it would have lost 2.5 million jobs. You’ve given yourself complete leverage where you cannot be wrong, because you can take any scenario and make yourself look correct.”
Now, something’s wrong when the president invokes a formula that makes it impossible for him to be wrong and it goes largely unchallenged. It’s true that almost any government spending will create some jobs and save others. But as Milton Friedman once pointed out, that doesn’t tell you much: The government, after all, can create jobs by hiring people to dig holes and fill them in.