Greg Mankiw points us to this rather ingenius political ju-jutsu on the part of President Obama.
Question: The American people have seen hundreds of billions of dollars spent already, and still the economy continues to free-fall. Beyond avoiding the national catastrophe that you’ve warned about, once all the legs of your stool are in place, how can the American people gauge whether or not your programs are working? Can they — should they be looking at the metric of the stock market, home foreclosures, unemployment? What metric should they use? When? And how will they know if it’s working, or whether or not we need to go to a plan B?
Answer: I think my initial measure of success is creating or saving 4 million jobs. That’s bottom line No. 1, because if people are working, then they’ve got enough confidence to make purchases, to make investments. Businesses start seeing that consumers are out there with a little more confidence, and they start making investments, which means they start hiring workers. So step No. 1, job creation.
It is brilliant. Why? It is possible to measure how many jobs have been created between two points in time. However it is not possible to measure how many jobs were saved. These “saved jobs” never show up in any of the official statistics. As such It is a measure of performance that simply cannot be measured. Hence President Obama can claim it is true no matter if we lose 5 million jobs in the next year. Without his plan it would have been 9 million jobs lost.
Are their actual measures one could use? I think if the recession is over before the end 2009 then Obama could claim success of his stimulus plan. After all most are forecasting that the recession will last through 2009. If the article by Reinhart and Rogoff is correct it could last longer than that. Prof. Mankiw suggests that a given level of unemployment could be used as well. He also notes that no politician would rely on an actual measure where everyone could tell if the politician’s plan was a success or failure.
Prof. Mankiw also writes,
A completely honest (but perhaps politically ill-advised) response to the question would have been, “Geez. I am only President of the United States. I cannot be held responsible for everything that what happens with the economy!”
Which is why I say that all politicians are liars.
