Economic Stimulus Bill: Wise Words of Caution

Here's a good article on the stimulus bill from Gary Becker and Kevin Murphy in the Wall Street Journal.  They make several excellent points, but let me re-state one: the logic of stimulus applies to unemployed resources.  If we can get someone without a job back to work, or an idle factory back up to full production, then we clearly have a net gain.  However, if we stimulate sectors of the economy that are doing fairly well, then we are simply pulling resources from the private sector to the public sector, with no net gain. 

Example: health care spending.  We have tight markets for health care workers.  Here's an example from Oregon's Willamette Valley, where the list of sectors with vacant jobs is led by health care.  However, it's not just a localized problem.  Almost every part of this country has shortages of health care workers.  Stimulus spending in health care will simply move employed workers from the private sector to the public sector.

There are plenty of bad commentaries on the stimulus proposals, some even written by people with great credentials who agree with my conclusions.  Many economists have made their marks in microeconomics, the study of specific markets, and their expertise doesn't always translate well into macroeconomics.  Others have studied certain macro phenomena in academic detail, but have never really watched the ebb and flow of real economies.  Yet others are wedded to political parties or people and have become shills.  I'm afraid that it's hard for an average person to figure out who to listen to.  (Hint: you yourself are at the right place.)