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Don't have a proper source but seen from a journalist on twitter that there are now 2million fewer employed Americans than there were when Obama's stimulus package was passed 28 months ago :rolleyes:
Time to quit this ridiculous stimulus idea, stop wasting money America doesn't even have and get some fiscal sanity restored.
It is utterly irresponsible to be borrowing money just to splash it around on this sort of garbage.
He is milking it as ways to get funding for his other projects. Also, the added bonus of spending now is things look better now, which help his chances of re-electoin. Then his second round has President, his second 4 years, can be centered around fiscal responsibility, or perhaps during his second term he can begin pushing for the more politically damaging issues, becuase there is no third term. Like pushing harder for gay marriage rights.
Unfortunately most of the stimulus program is paid out or in the process of being paid out. That said, a lot of it has gone to random pet projects. More info can be read on the slightly crackerjack site http://www.recovery.gov/Pages/default.aspx
As I said in 2009, the stimulus is an irrelevant sideshow. One that people don't even pay attention to anymore.
We're going to disagree on this yet again. I agree there has been some wasteful spending associated with ARRA and other stimulus, but a lot of it was very much useful and necessary. If anything, I think some more stimulus might be nice right about now - Larry Summers suggested another $100-200 billion in infrastructure spending and cuts in payroll taxes from the employer side, and I don't really disagree. Furthermore, IMO it's almost certain QE3 would be a good idea, though it remains to be seen if current market weakness is a transient phenomenon or not.Quote:
Originally Posted by RandBlade
It's largely irrelevant what employment looks like when ARRA was passed (in the middle of an awful recession) and now. You have to look at the counterfactual - what would have happened if stimulus (both monetary and fiscal) hadn't been passed? It's hard to know, but previous experience indicates a massive shortfall in AD is a bad thing.
I think fiscal stimulus is largely a done deal now just because it's politically impossible to carry out right now, but I absolutely believe monetary stimulus should proceed as needed. We do not want a repeat of the mistake of 1937.
Also - I'm not sure I get the logic that borrowing money right now is a bad idea. Rates are at ridiculously low level - we could borrow a trillion dollars at less than 3% interest, maturing in ten years, and use it to fund much-needed infrastructure projects. It's a pretty good deal, and while we shouldn't do it just because we can, it's not a bad idea to do it to improve employment, needed infrastructure, and AD. Hell, the construction industry could use a lift right now anyways, given their truly awful unemployment numbers.
http://img.photobucket.com/albums/v3...seLaughing.jpgQuote:
Originally Posted by RandBlade
The recession of 1937 wasn't the result of some common-sense spending discipline. And borrowing a trillion dollars would require our Congress to demonstrate that they can actually think about long-term fiscal issues. But a Congress that can't plan around long-term fiscal issues shouldn't be making long-term infrastructure allocations.Quote:
Originally Posted by wiggin
You saved my day. (And it's only 08:12)Quote:
Originally Posted by Nessus
I recall that the stimulus was suppose to keep unemployment under 8%. How is that working out?
Well thought out OP. Firm foundation for the argument. I especially liked the part where OP compares how the economy and employment would have looked if there hadn't been a stimulus plan.
Can we have someone come in here and argue: "Yeah!" please? Oh hi Lewk.
:hatsoff: well done fellers, well done.
Definitely just because you can doesn't mean you should, that would be a ridiculous idea. So you borrow a trillion dollars now (on top of the trillions you already owe) then continue to borrow, and borrow, and borrow and in 10 years time the rate has risen 12%. What then?Quote:
Originally Posted by wiggin
I'm sure the Greeks thought it was a great idea to "borrow to invest" because rates were low for them too. The assumption that just because rates are low now they will stay that way is one of the most dangerous and fiscally irresponsible it is possible to make. We should be taking advantage of the low rates by running a surplus and repaying debt now, so that when rates do rise (and interest payments etc rise) we are in a healthy position.
May have been a brief OP but I have argued against this waste of cash many times before with some detail.Quote:
Originally Posted by Ziggy Stardust
A counter-factual is rather impossible to prove.
Impossible to prove, but not impossible to make claims of I reckon.
But don't mind me since I haven't read your previous detailed argumentation, I'll bugger off post haste. :)
*buggers off*
So... Congress should never make long term infrastructure allocations? Seems like a really bad way to run a country.Quote:
Originally Posted by Dreadnaught
Also, my two points were separate. The recession of 1937 was largely due to too-tight monetary policy; I was separately arguing that some fiscal stimulus wouldn't be the worst idea, especially if done with some care.
Uhm, the idea is countercyclical spending. The loans are good for 10 years, and in that meantime, the increased GDP (and thus increased tax receipts) coupled with tighter fiscal policy would result in a more-than- $1 trillion (plus interest) decrease in the deficit. So actually new borrowing at 12% would be lower than in your scenario where we do nothing.Quote:
Originally Posted by RandBlade
Oh, please, the comparison with Greece is ridiculous and you know it. Greece was overspending in boom times, and not on useful economy-building projects (funding for research, infrastructure, lower taxes, etc.).Quote:
I'm sure the Greeks thought it was a great idea to "borrow to invest" because rates were low for them too. The assumption that just because rates are low now they will stay that way is one of the most dangerous and fiscally irresponsible it is possible to make. We should be taking advantage of the low rates by running a surplus and repaying debt now, so that when rates do rise (and interest payments etc rise) we are in a healthy position.
As for the rates question, your logic makes no sense. Let's take this to an individual example. I have some student loans that were made at ridiculously low interest rates (~2.5%). In addition, I get a tax writeoff on the interest I pay, so the rate effectively drops to under 2%. If I have a chunk of money right now, I could either pay off the loans immediately or use it for something else - say, investing in a home or the stock market. The average return will easily beat my 2% loss from the loans, but you think I should call it 'fiscal responsibility' to pay them off immediately because - some day in the distant future - I might need to put some purchases on a credit card since I still have a tiny loan payment.
You're never going to have a surplus in a recession - tax receipts are down, automatic stabilizers (e.g. unemployment) are up, and austerity will just hurt everyone involved. So why not take advantage of the rock-bottom rates now so that when you can run a surplus later on, you can pay off debt and then some?
True, but there are comparisons to be made. The UK had a similar style recession as the US (though not identical), yet hiring outlook is better in the US:Quote:
A counter-factual is rather impossible to prove.
http://www.economist.com/blogs/daily...oyment-outlook
Similarly, the US' recession was shorter and shallower than most developed countries, despite the fact that the financial and property bubbles burst most spectacularly here. I'd credit monetary and fiscal policy for this, though obviously it was far from perfect, esp wrt employment.
Yes, and I've got a bridge to sell you.Quote:
Originally Posted by wiggin
So over the last few years, how much surplus was saved during the rest of the cycle to be spent now?
Right, right - so the US hasn't been overspending? That's why its been kind of running such a surplus and has plenty saved for a rainy day?Quote:
Oh, please, the comparison with Greece is ridiculous and you know it. Greece was overspending in boom times, and not on useful economy-building projects (funding for research, infrastructure, lower taxes, etc.).
Because the US isn't investing. Its spending for the sake of spending, that's not the same thing.Quote:
As for the rates question, your logic makes no sense. Let's take this to an individual example. I have some student loans that were made at ridiculously low interest rates (~2.5%). In addition, I get a tax writeoff on the interest I pay, so the rate effectively drops to under 2%. If I have a chunk of money right now, I could either pay off the loans immediately or use it for something else - say, investing in a home or the stock market. The average return will easily beat my 2% loss from the loans, but you think I should call it 'fiscal responsibility' to pay them off immediately because - some day in the distant future - I might need to put some purchases on a credit card since I still have a tiny loan payment.
You're never going to have a surplus in a recession - tax receipts are down, automatic stabilizers (e.g. unemployment) are up, and austerity will just hurt everyone involved. So why not take advantage of the rock-bottom rates now so that when you can run a surplus later on, you can pay off debt and then some?
Exactly. Spending isn't investment.
I assume you don't believe in Keynesian theory then?Quote:
Originally Posted by RandBlade
To be honest I'm not sure exactly what you're trying to ask here.Quote:
So over the last few years, how much surplus was saved during the rest of the cycle to be spent now?
The US hasn't been overspending much. Our debt load was quite manageable before the crisis (Greece's, however, was not), and is still lower than many developed nations. I don't deny that Congress is generally more spendthrift than I would like, but most of our deficit spending before the recession was due to war spending and not a structural deficit problem.Quote:
Right, right - so the US hasn't been overspending? That's why its been kind of running such a surplus and has plenty saved for a rainy day?
Also I should mention that I don't view surplus as an actual surplus, but rather a deficit that still results in a lower debt-to-GDP ratio (generally below 2-3% of GDP for the US).
Lastly, I want to emphasize that arguing against Keynesian theory because you don't trust Congress is very different from arguing against it on economic grounds. Not trusting Congress can be gotten around while still providing adequate stimulus - for example, insisting that any stimulus be tied to a strict medium-term deficit/debt reduction plan, or placing stronger automatic spending limits that are tied to GDP growth. Arguing against the theory itself is what I have issues with, since it presupposes that stimulus itself is the problem, rather than Congressional idiocy.
There's two main components of stimulus spending in the US - various investments (mostly infrastructure, but also research and the like) and tax breaks. Both are relevant for improving economic activity and employment (though some are better than others), but only investments are likely to have long term impacts on growth. Outside of that, of course, there was some stupid spending, but the bulk of stimulus was hardly 'spending for the sake of spending'. While Keynes may have been somewhat right in that government spending as an end to itself may be desirable in an economy experiencing an AD shortfall, I feel that it's misguided to think that way when there are so many very important funding priorities that aren't useless and have better multipliers.Quote:
Because the US isn't investing. Its spending for the sake of spending, that's not the same thing.
Most economists don't...Quote:
Originally Posted by wiggin
Uhm, source? Obviously there's various forms of neo-Keynesian economics, but it's a pretty major part of economic policy today. Monetarists might disagree with some of Keynes but they just argue more for a focus on countercyclical monetary vs. fiscal policy (I believe both are important), and the Austrian school has never had many adherents.Quote:
Originally Posted by Loki
edit: I think it's clear that the wholesale abandonment of Keynes in policymaking in the 80s was a miserable failure, while the mixed approaches in the last two decades have been somewhat more successful (albeit with some spectacular failures as well). Academic interest waxes and wanes with fads, but there are plenty of Keynesian (or some variant thereof) in academia as well.
You seem to have forgotten neoclassical economists, who dominate micro and look with extreme suspicion at macro in general and neo-Keynesianism in particular. And of course most policy people will be Keynesians: they are the ones who think government intervention is a good thing. :bored:Quote:
Originally Posted by wiggin
Please, policy isn't just recommended by the government... and the neoclassical synthesis (which includes Keynesian macro theory) is pretty much the only game in town right now.Quote:
Originally Posted by Loki
Look, obviously old-school Keynesian economics has morphed a lot over the years. But the basics of countercyclical fiscal policy is very much alive and well.
What other game is out there, besides deficit spending by the government or the Fed monetizing debt?
I'm more of a believer in Neoclassical economics. I believe Keynesian economics has a (limited) time and place and this isn't it.Quote:
Originally Posted by wiggin
You believe in counter-cyclical spending? So therefore we should have ran up a surplus during the good times, to spend during the bad. How much surplus did the US run between the last recession of the dot-com crash and this recession?Quote:
To be honest I'm not sure exactly what you're trying to ask here.
The US should have been running a surplus during the good times, not a deficit.Quote:
The US hasn't been overspending much. Our debt load was quite manageable before the crisis (Greece's, however, was not), and is still lower than many developed nations. I don't deny that Congress is generally more spendthrift than I would like, but most of our deficit spending before the recession was due to war spending and not a structural deficit problem.
If real growth > deficit, yes that can be viewed as a (small) surplus arguably. But then you should only expect a small deficit during the recession and that will be made up entirely from the fall in real growth and not from any actual increase in spending. You can't have your cake and eat it too.Quote:
Also I should mention that I don't view surplus as an actual surplus, but rather a deficit that still results in a lower debt-to-GDP ratio (generally below 2-3% of GDP for the US).
I'm arguing it on both.Quote:
Lastly, I want to emphasize that arguing against Keynesian theory because you don't trust Congress is very different from arguing against it on economic grounds. Not trusting Congress can be gotten around while still providing adequate stimulus - for example, insisting that any stimulus be tied to a strict medium-term deficit/debt reduction plan, or placing stronger automatic spending limits that are tied to GDP growth. Arguing against the theory itself is what I have issues with, since it presupposes that stimulus itself is the problem, rather than Congressional idiocy.
The US isn't even in recession so now is not the time to dive into Keynesian wastefulness.
Modern economies already have Keynesianism built in. Increased benefits due to unemployment, reduced taxation - all that is already providing a counter-cyclical counterweight there is no need to throw in "stimulus" as well, especially when the economy isn't even in decline in the first place. Don't forget Keynes himself was writing before modern welfare. Given the absence of any surpluses, there is no ability to afford it either. Once again, especially when we're not even in recession.
http://bbs.cenet.org.cn/uploadImages...2351189701.pdfQuote:
Originally Posted by wiggin
To the extent that there's a consensus, it's that monetary policy would work, and that additional government spending would technically increase the GDP. There is no consensus as to whether this increased government spending would lead to offsetting decreases in savings/investment.
As RB, I also want to know how exactly you can call for countercyclical measures when GDP is increasing by about 2.5% a year and the last recession ended two years ago. You seem to be of the view that as long as the economy isn't at full capacity, the government should run a massive deficit. You fail to acknowledge the consequences of pursuing this policy.
http://www.economics.harvard.edu/fil..._Scientist.pdf
Quote:
This essay offers a brief history of macroeconomics, together with an evaluation of what we have learned. My premise is that the field has evolved through the efforts of two types of macroeconomist—those who understand the field as a type of engineering and those who would like it to be more of a science. Engineers are, first and foremost, problem- solvers. By contrast, the goal of scientists is to understand how the world works. The research emphasis of macroeconomists has varied over time between these two motives. While the early macroeconomists were engineers trying to solve practical problems, the macroeconomists of the past several decades have been more interested in developing analytic tools and establishing theoretical principles. These tools and principles, however, have been slow to find their way into applications. As the field of macroeconomics has evolved, one recurrent theme is the interaction—sometimes productive and sometimes not— between the scientists and the engineers. The substantial disconnect between the science and engineering of macroeconomics should be a humbling fact for all of us working in the field.
To avoid any confusion, I should say at the outset that the story I tell is not one of good guys and bad guys. Neither scientists nor engineers have a claim to greater virtue. The story is also not one of deep thinkers and simple-minded plumbers. Science professors are typically no better at solving engineering problems than engineering professors are at solving scientific problems. In both fields, cutting-edge problems are hard problems, as well as intellectually challenging ones.
Just as the world needs both scientists and engineers, it needs macroeconomists of both mindsets. But I believe that the discipline would advance more smoothly and fruitfully if macroeconomists always kept in mind that their field has a dual role.
What time and place would be better? We have a huge output gap and high unemployment after the worst recession in 80 years.Quote:
Originally Posted by RandBlade
Just because foolish fiscal policy during boom times wasn't in line with what I want doesn't invalidate countercyclical spending - it invalidates the governments that pushed for those policies. Other boom times (say, the 90s) resulted in quite significant surpluses.Quote:
You believe in counter-cyclical spending? So therefore we should have ran up a surplus during the good times, to spend during the bad. How much surplus did the US run between the last recession of the dot-com crash and this recession?
For that matter, if you subtract out war and 9/11 spending you get much closer to primary balance.
The exact magnitude of the fiscal loosening shouldn't be based on how tight it was before, but what the economy actually needs. That being said, even using your rubrics would vary from recession to recession - given the depth and length of a recession, the size of the output gap, unemployment, etc. contrasted with the integrated savings from boom times, you can probably come up with a rough estimate of a 'reasonable' increase in deficit spending. I'm not sure anyone has done that, or even if it's possible to do so in a meaningful way before the end of a recession.Quote:
If real growth > deficit, yes that can be viewed as a (small) surplus arguably. But then you should only expect a small deficit during the recession and that will be made up entirely from the fall in real growth and not from any actual increase in spending. You can't have your cake and eat it too.
Firstly, it's not 'wastefulness'. Secondly, we have an enormous output gap and employment problem. Even technical growth (albeit anemic for a recovery) doesn't translate into the expansion phase of the business cycle.Quote:
The US isn't even in recession so now is not the time to dive into Keynesian wastefulness.
I agree in principal, though, that during actual good times deficits should be ruthlessly slashed.
Automatic stabilizers are nice, but the US has less (generally) than most other developed nations, and they're simply not enough to close the gap. We also have some pretty wasteful automatic stabilizers - our unemployment insurance scheme in particular could use some serious reform to improve the incentive structure.Quote:
Modern economies already have Keynesianism built in. Increased benefits due to unemployment, reduced taxation - all that is already providing a counter-cyclical counterweight there is no need to throw in "stimulus" as well, especially when the economy isn't even in decline in the first place. Don't forget Keynes himself was writing before modern welfare. Given the absence of any surpluses, there is no ability to afford it either. Once again, especially when we're not even in recession.
In general, RB, I get the feeling that you and I don't disagree on the basics here, but rather a question of magnitude. You admit automatic stabilizers and appropriate stimulus are a good thing for economies in trouble, you just think there's already been enough. I simply can't fathom why you think this, given the execrable state of the recovery - as your own OP mentioned.
2.5% a year is very optimistic for 2011. The economy isn't even close to full capacity, we have huge non-structural unemployment and a major output gap, so growth should be way above even your optimistic figure. Even assuming we have to eat the output gap and deal with a slow employment recovery (not a good idea, but I suppose a valid approach), we're still in a spot of economic weakness now due to a number of factor. Some might be temporary (e.g. the Japan earthquake), and there's a valid debate to be had right now about whether currently soft economic numbers are just a blip or a sign of worse things to come.Quote:
Originally Posted by Loki
But even if it's just a blip, that points to keeping current fiscal policy stable, not tightening in such a precarious position. I prefer to be proactive - an extra $100-200 billion in useful spending won't break the bank, but it might significantly help avoid further stagnation or even a double dip.
How about during the recession, not after it?Quote:
Originally Posted by wiggin
Yes it does. Its so easy to claim that we're supposed to spend in the bad while neglecting to save in the good. Try making a difficult choice. Very few surpluses have ever matched what they should to counteract the deficits.Quote:
Just because foolish fiscal policy during boom times wasn't in line with what I want doesn't invalidate countercyclical spending - it invalidates the governments that pushed for those policies. Other boom times (say, the 90s) resulted in quite significant surpluses.
Closer? Under the theory of countercyclical spending it should be a surplusQuote:
For that matter, if you subtract out war and 9/11 spending you get much closer to primary balance.
Given that you're not in recession its irrelevant. It is for the free market now to develop and fill the output gap and create employment.Quote:
The exact magnitude of the fiscal loosening shouldn't be based on how tight it was before, but what the economy actually needs. That being said, even using your rubrics would vary from recession to recession - given the depth and length of a recession, the size of the output gap, unemployment, etc. contrasted with the integrated savings from boom times, you can probably come up with a rough estimate of a 'reasonable' increase in deficit spending. I'm not sure anyone has done that, or even if it's possible to do so in a meaningful way before the end of a recession.
So you need companies to expand and fill the gap, creating jobs.Quote:
Firstly, it's not 'wastefulness'. Secondly, we have an enormous output gap and employment problem. Even technical growth (albeit anemic for a recovery) doesn't translate into the expansion phase of the business cycle.
Because I don't think the government should manage you to being in full recovery. If the government filled the output gap so there was crowding out of any potential for growth that would be a terrible thing. Its taking the easy way with Keynesian theories that helped create stagflation in the seventies, don't see why you think it'll stop it now.Quote:
In general, RB, I get the feeling that you and I don't disagree on the basics here, but rather a question of magnitude. You admit automatic stabilizers and appropriate stimulus are a good thing for economies in trouble, you just think there's already been enough. I simply can't fathom why you think this, given the execrable state of the recovery - as your own OP mentioned.
2.5% a year is very optimistic for 2011. The economy isn't even close to full capacity, we have huge non-structural unemployment and a major output gap, so growth should be way above even your optimistic figure. Even assuming we have to eat the output gap and deal with a slow employment recovery (not a good idea, but I suppose a valid approach), we're still in a spot of economic weakness now due to a number of factor. Some might be temporary (e.g. the Japan earthquake), and there's a valid debate to be had right now about whether currently soft economic numbers are just a blip or a sign of worse things to come.
But even if it's just a blip, that points to keeping current fiscal policy stable, not tightening in such a precarious position. I prefer to be proactive - an extra $100-200 billion in useful spending won't break the bank, but it might significantly help avoid further stagnation or even a double dip.
What you're basically calling for is countercyclical policies at all times except at the very peak of the business cycle (which is only time time the economy is working at full capacity). Does that seem sane to you?Quote:
Originally Posted by wiggin
As for spending $100-200 billion not breaking the bank, what world are you living in? No one would even consider these kind of expenses until 2008. Just because everyone in the policy circles lost their minds doesn't mean that the laws of economics suddenly cease to apply. No country can afford to throw around hundreds of billions during a recession, and certainly not 2 years after a recession. I don't think you realize how catastrophic the consequences of a loss of faith in the American economy would be. And that loss of faith will not happen gradually; once it happens, we'll be Greece. I find it highly irresponsible to risk this event just to artificially increase GDP by 1%.
RB-
This is a worthwhile debate to have, but I'm not likely to have much of a chance to continue until Monday or so (taking the wife on an anniversary trip). I do want to briefly mention that your concerns about crowding out the public sector would be valid if we didn't have such large output gap. But since we do - even with significant government intervention - we can conclude the limiting factor is not government crowding out.
We both agree that it's best for recoveries to be driven by the private, rather than public sector. I think that in the case of most recessions, automatic stabilizers coupled with smart monetary policy can probably keep a recovery going smoothly enough without the need of significant additional fiscal intervention. Yet the fact of the matter is that for a number of reasons this recession is not experiencing a rapid period of 'catch-up growth' to close our output gap, and unemployment has remained stubbornly high. A little nudge with fiscal policy is probably worth it - the cost is not prohibitive, and downside risks to doing nothing are huge.
I find your fixation on technical definitions of recession to be largely unhelpful as well. It doesn't matter if GDP is technically growing (or at least nominal GDP; real GDP is another story entirely). It matters how much of a hole we're still in, and it's still pretty damned deep.
Lastly, this is a debate for another time, but there are plenty of very reasonable Keynesian-like theories to explain stagflation that don't invalidate countercyclical spending. Generally they focus on 'cost-push' inflation and the like, which is always a concern, but more so in the 70s due to the oil embargo. While there does seem to be some cost-push inflation affecting headline inflation today, it hasn't fed through to core inflation (or inflation expectations), indicating that markets at least are unconcerned about a wage-price spiral. This is largely due to the fact that wages are being held down by persistently high unemployment and an output gap. Honestly I think the concerns about stagflation are seriously overblown given our inflation environment today.
Loki:
Hardly. Most recoveries are far faster than our current one, and there is rarely a large output gap this far after a recession.
As for the magnitude of the stimulus, I think you're getting lost in the sheer amount of money and not realizing the much larger pot it's coming from. It's a drop in the bucket for a one-time deal, and it's not exactly being burned up into nothing either.
I cannot fathom the events that would cause a loss of faith in the US economy. A loss of faith in Congress is one thing, but the strength and vitality of the US economy? We're talking about 14 trillion dollars of production a year in one of the most integrated and dynamic markets the world has ever seen.
I agree with Wiggin in that we are not in danger of turning into greece or for our economy to collapse. The only thing I feel worth investing in Stimulus wise, aside from alernative energy, is perhaps new businesses ones that aren't neccessarily just replacing old ones (thus not helping the job situation much). Perhaps doing some micro-lending at reasonable loan rates to businesses that meet a guide line, ones that suggest they'll be having a decent success rate, that could fullfill desires in various community niches. In periods of unemployment, it's not that we want new business that will just compete with the old ones to emerge, but rather ones that fill other needs real or imagined by the community.
On the spending issue on a whole, I do feel we need to give the economy time to work, you can't keep spending unitl you get to your desired percentage of unemployement/production/ you need to give an opportunites for the wheels you set in motion to turn. Still I like the idea of micro lending to new business or expanding businessess to fill in various niches that exist.
Quote:
Revitalizing the U.S. economy through government spending
philg - June 16, 2011 @ 5:39 pm ยท Filed under Uncategorized
As the U.S. economy’s growth continues to disappoint, various folks are calling for an increase in government spending. If U.S. businesses aren’t expanding then government should step in and do the spending and hiring itself. In the classical economic analysis of this process (see Keynesian economics) there is no adjustment made for the fact that government spending might not be as efficient as private business spending.
As the owner of a very small Boston-based helicopter charter company, I spent one morning this week with a very bright and experienced FAA safety inspector who drove out to my house in his government-issued car to inspect our records. This helicopter charter operator is licensed in the special “single pilot 135″ category, which generally means that the owner is the pilot and nobody else can fly paying customers. The FAA inspector, however, was working from a checklist that applies to all 135 operators. We went through a bunch of questions relating to how familiar was I with the procedures for hiring additional pilots and making sure that I had checked with their previous employers to find out if they’d ever failed a drug test. The FAA inspector also looked at my monthly duty time records to make sure that I hadn’t flown more than 1400 hours in the preceding 12 months (FAR 135.67). No Boston helicopter charter company with a single helicopter has ever flown more than about 50 hours per year, but we went through page after page of reports showing either 0 hours flown or 0.5 hours flown. Finally, the FAA inspector looked at my random drug testing program to make sure that everything was in place. I’m subject to the same drug testing requirements as United Airlines. I am the drug testing coordinator for our company, so I am responsible for scheduling drug tests and surprising employees when it is their turn to be tested. As it happens, I’m also the only “safety-sensitive employee” subject to drug testing, so basically I’m responsible for periodically surprising myself with a random drug test. As a supervisor, I need to take training so that I can recognize when an employee is on drugs. But I’m also the only employee, so really this is training so that I can figure out if I myself am on drugs. As an employee, I need to take a second training course so that I learn about all of the ways that my employer might surprise me with a random drug test and find out about drug use. But I’m also the employer so really I’m learning about how I might trap myself.
Given the costs of this guy’s salary, pension, government-issued car, supervisor, and office space, I estimate that the records inspection cost the U.S. taxpayer $500. Just a handful of these inspections, therefore, would have paid for an online system that would eliminate the need for inspectors to drive around to folks’ hangars and houses.
Five minutes after the FAA inspector left, I received a phone call. “I’m from the FAA and we’d like to schedule an audit of your drug testing program.” I remarked that a fully qualified FAA inspector was barely out of the driveway and had just gone through every document that I had on the subject. “He was from the FSDO (Flight Standards District Office)? That’s a completely different department. We’re going to send two inspectors up from Atlanta next month.” Why two? “We always send them in pairs.” What did they want? “We’re going to fax you a detailed list of all of the information that we need and you should immediately contact your drug testing provider (Lexis/Nexis) to tell them that you’re being audited. There is a bunch of information that you can get only from them. As soon as you get the fax, you should re-fax it to Lexis/Nexis.” I said that I didn’t have a fax machine, so he promised to send the information via U.S. mail. It could not be emailed.
As we also deal with some separate FAA maintenance regulators, I think it is fairly likely that we will meet with more FAA employees this year than with paying charter customers (most of the business is sightseeing or flight instruction; those activities are regulated separately and by different FAA employees; we have a separate drug-testing program for the sightseeing operation).
The FAA performs a valuable service in conducting checkrides with charter pilots and looking at maintenance records, though what they do has considerable overlap with our insurance company, which employs its own check airmen. But the paperwork inspection and drug testing program audits (this is our second) are done at a cost that would bankrupt any private enterprise that was subject to competition. My interactions with other government agencies have been much more limited, but I don’t see why they would be different, on average, than the FAA. If so, government stimulus money is not a substitute for private spending because the government spends money in ways that no private business or individual would choose to spend money.
http://blogs.law.harvard.edu/philg/2...ment-spending/
That helicopter guy overlooked a couple of things. First, gov't spending to stimulate the economy doesn't mean already-employed federal workers doing more work, just to do more work. If he wanted to criticize teh big bad gummint for inefficiencies or redundancies, he should have just stuck to that. His blog rant had nothing to do with Keynesian economics or federal spending as stimulus.
Second, private and charter pilots of planes and helicopters are being scrutinized closer as part of Homeland Security. Post 9/11 revealed at least one terrorist had been taking private flying lessons while planning the hijackings, but the paperwork and background checks weren't well coordinated. (Even if a red flag popped up, no one would know or follow-up.) Then there's the man who flew a charter plane into an IRS building. Flying machines are now considered a type of weapon, or terrorist tool.
GGT, you almost hit the nail on the head...
...which means that we need to spend money to ask irrelevant questions several times a year to a one-person company; ie: "oh noes, tewwowists, let's waste money!". That's always the thinking.Quote:
Originally Posted by GGT
Writing about wasteful gov't spending or redundancies in process is one thing, but that's not a very good argument against all gov't stimulus spending during recessions. Just that it should be targeted and forward-looking.Quote:
Originally Posted by agamemnus