'Job creating' particle accelerators?
These days, attaching the words "jobs creator" to any policy is a surefire way to get it passed. But the practice has gotten ridiculous.
In this file photo, two engineers works to assemble one of the layers of the world's largest superconducting solenoid magnet at the European Organization for Nuclear Research (CERN)'s Large Hadron Collider particle accelerator, in Geneva, Switzerland. A new accelerator research facility in Illinois is being billed as "job creating." The project is important for other reasons, Bernstein argues, and shouldn't have to be tagged as "job creating" in order to get funding
Martial Trezzini/AP/Keystone/File
The NYT is right about : you want to sell or kill a policy these days, it鈥檚 mandatory to attach the words 鈥渏obs creator鈥� or 鈥渏obs killer鈥� to it.聽 I鈥檝e played along鈥攁lways in good faith鈥擨 never asserted numbers I didn鈥檛 believe or couldn鈥檛 defend.聽 But as the piece points out, it鈥檚 gotten pretty ridiculous.
In fact, the article overlooks the weirdest example I鈥檝e seen of this 鈥渟ell-it-with-jobs鈥� strategy: this press from the Energy Dept. on the new-job-creating particle accelerator (hat tip: MG):
鈥淕round Broken for New Job-Creating Accelerator Research Facility at DOE鈥檚 Fermi National Accelerator Laboratory in Illinois鈥� [my bold]
Sounds like the Onion, right?
Economist David Card, as quoted in the NYT piece, basically has this right:
鈥淚t鈥檚 just a selling point. You can say anything, no matter what, creates jobs. I don鈥檛 think people should pay much attention to it.鈥�
Still, despite the fact that we鈥檝e pretty much punted on job creation given our current politics, it is very much within the purview of public policy to help generate job growth at times like the present.聽聽 Would the policy process be better served if economists stopped making such predictions?
Not always.聽 I think the right answer has to do with magnitudes and purpose.
When we鈥檙e talking about an $800 billion stimulus like the Recovery Act, or the $450 billion American Jobs Act (AJA), then sure, policy makers should consider and estimate employment impacts.聽 For the smaller stuff however, Card鈥檚 right: it鈥檚 just not possible to generate a high enough signal-to-noise ratio to pull out a reliable estimate.
How to generate job impacts for the big stuff is another question.聽 Despite the assault on them, Keynesian multiplier models of the type we used to estimate the number of jobs from the Recovery Act work well, but the only way such an estimate makes sense is against a 鈥渃ounterfactual鈥� of how jobs would have trended in the absence of the policy, and that鈥檚 not easy for people to swallow.
BTW, that鈥檚 another reason why you can鈥檛 make reliable estimates for smaller projects鈥攖hat shovel-ready, job-creating particle accelerator is advertised to create 200 jobs!聽 You can鈥檛 possibly generate a reliable counterfactual of whether such a small number of jobs would be created without the project.
And for Buddha鈥檚 sake, I鈥檓 not a particle physicist, but I鈥檓 totally ready to believe we need to do this type of research, regardless of the job impacts.
And, in fact, it鈥檚 this insight that should point the way forward on this question.聽 As long as unemployment remains so elevated, I don鈥檛 expect people to stop using silly jobs estimates.聽 But it would be better if we evaluated policies that are clearly not mainly about job creation鈥攆rom particle accelerators to oil pipelines to EPA regs鈥攐n the basis of their actual, underlying purpose.
If we鈥檙e actually talking about a jobs bill, like the Recovery Act or AJA鈥攂ills whose main purpose is temporary stimulus鈥攖hen sure, run the models and guesstimate the job impacts.聽 Same if we鈥檙e talking about a payroll tax cut or wage subsidy: these are measures intended to boost labor demand and, if they鈥檙e large enough to generate a signal in a big economy like ours, economists should run the numbers.
But if the main purpose is clearly not job growth鈥攊f it鈥檚 a policy to improve the environment, enhance our research capacity, examine the feasibility of a new renewable energy source鈥攖han sure, it鈥檚 fair to mention as an added bonus that the project will spin off some jobs.聽 But to attach a hard number to it only creates a false and typically indefensible sense of certainty that at this point, few people take seriously.聽 Nor should they.