Green Gabbro

The consensus piece of apologetics for Jindal’s anti-USGS remarks appears to be to claim that even though volcano monitoring is, of course, a worthwhile investment, it is not economically stimulating, and therefore does not belong in the stimulus bill.

To claim that this is what Jindal was actually trying to say requires a phenomenally over-generous interpretation of his speech. But forget what Jindal did or did not say, or mean to say, or imply – his big flop is yesterday’s news now. Considering the argument that volcano monitoring does not belong in the stimulus bill on its own merits… I just don’t get it.

I am not an economist, and I hope that people with a grasp of macroeconomics and fiscal policy beyond my Econ 101 will feel free to weigh in here. My understanding, though, is that in general, a good economic stimulus project is one that hands money to people who will immediately turn around and hand it to someone else. While economists can argue forever about Keynesian multipliers (and Internet kibbitzers can argue forever about which types of imaginary example people have the most virtuous money-spending habits), the rule of thumb is that good stimulus projects spend money directly on useful goods and services, or deliver money directly to people who are so completely desperate that they will immediately spend every last penny (cf. this very wonky discussion and this slightly less wonky discussion).

Volcano monitoring money will be spent directly, and swiftly, on goods and services – primarily new and upgraded monitoring equipment, and the people needed to install the equipment and interpret the data (source). We’ll get a long-term economic benefit from our improved ability to forecast and mitigate eruptions, just like we would with the oft-cited infrastructure investment of a new road (albeit with slightly more uncertainty – but the expected value is positive). And because volcano hazard warnings are a public good, there is little risk of disincentivizing private industry.

Why is this any less of an economic stimulus than a shiny new piece of highway or other generic infrastructure? Is it just because some people have defined the phrase “economic stimulus” to mean “tax cuts and ONLY tax cuts” and will refuse to acknowledge any dictionary not published by the Cato Institute? Or is there a real reason?

NB: I recognize that I’m doing better in this recession than many people, but I still do not have long-term employment and I am still in serious miser mode. So I am just the weest bit touchy about being told that I am not part of “We the People” and that my economic situation – and that of the many other unemployed/underemployed volcano-seismo-whooserwhatsits with whom I am competing for a very small number of open positions – is irrelevant to the country. I imagine that some folks in Redding, CA – where the high-end GPS manufacturer Trimble Navigation just went through a round of layoffs – might be touchy as well.

Finally, since I just spent the better part of an evening reading political arguments on the Internet, I have to share what I think is the winningest witticism of this whole kerfuffle:

One of the many graffitos found at the ruins of Pompeii: GOOGLE RON PAVL

Comments

  1. #1 Pele V.
    February 26, 2009

    Check out and join the Facebook Volcano Monitoring group! Because no one wants to be surprised by a volcano.
    http://www.facebook.com/group.php?gid=59952445247

  2. #2 jay
    February 26, 2009

    I think there is lots of room for skepticism WITHOUT buying into that idiot Jindal. True the volcano project puts money quietly into the system but this is true any other building project (including adding rooms to Bill Gates’ mansion).

    But that is not enough. There is not enough money in the stimulus package to simply ‘buy’ our way out of this problem. We need investment carefully targeted to areas where there will be a huge multiplier effect. New technologies (including green ones) that are ready to go profitable. Updating the power grid (so electric cars become viable) Financing plans that keep people from losing their homes (of feeling constrained by danger of losing their homes), and give people some legitimate reason to consider buying a home.

    This is a one-shot hail Mary pass. It’s not about long term planning for for a goal. This is about fast, confidence building, short term (for starters) results.

  3. #3 Starwatcher162536
    February 26, 2009

    Just FYI jay, updating the power grid really has nothing to do with making electric cars more viable. Whats needed for electric cars is a more cost-effective car battery.

  4. #4 jay
    February 26, 2009

    updating the power grid really has nothing to do with making electric cars more viable.

    Actually it does. Many parts of our power grid are already strained beyond capacity, and this is already a concern to the power industry. For wholesale adoption we need a better grid and much more (clean) generating capacity.

  5. #5 Jon H
    February 26, 2009

    jay wrote: ” We need investment carefully targeted to areas where there will be a huge multiplier effect. ”

    It’s quite important not to dump the money in too few areas of the economy.

    Sure, they could try to spend a ton of money on power grid upgrades, but realistically a lot of that would be slowed down by NIMBY resistance and corporate attempts to foot drag, pad bills, and generally skim money off the top. What good is it to allocate $20 billion for power grid updates in New England if it is held up by a few state governments and the New England grid operators?

    Replacing a geological monitoring station’s equipment doesn’t have these problems, but still generates purchases of, I assume, specialized expensive gear.

  6. #6 Uncle Al
    February 27, 2009

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  7. #7 John Karabaic
    February 27, 2009

    You did forget the other characteristic of a stimulus item: it should be spent on something which would not be purchased during ordinary economic activity. That is, it should not be spent on something which would be bought anyway, but should be “additional spending.”

    Volcano Monitoring fits that pretty well, along with the other criteria you cite: good multiplier, spent quickly, public good, etc.

  8. #8 Lab Lemming
    March 2, 2009

    Is the corollary to Volcano Monitoring as part of a stimulus package that volcanoes should be ignored when the economy is humming along? After all, during a boom all those volcanologists could earn heaps more $$ looking for copper or zinc…

  9. #9 Maria Brumm
    March 2, 2009

    Is the corollary to Volcano Monitoring as part of a stimulus package that volcanoes should be ignored when the economy is humming along?

    To the extent that you can spend a bunch of money during a recession establishing and upgrading networks that will then require less $$$/labor to maintain and monitor… yeah, actually. Mineral resources tend to be a boom/bust market anyway, so to the extent that you can do your periodic infrastructure work while skilled labor is cheap without compromising overall performance… why not?

  10. #10 Kerrick
    March 2, 2009

    Could it be because conservative economists believe government spending does not affect demand?

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