Friday, March 13, 2009

Cost? What cost?

Mark Thoma spots an absolute howler on Fox News.

Republicans Propose 'No Cost' Stimulus, Fox News: SEAN HANNITY, HOST: And in "Your America" tonight, another economic plan is also emerging tonight. The Republicans have proposed an alternative to the president's $787 billion stimulus package, and it costs a little bit less. Zero dollars. And it also promises to create two million new jobs without any of your money.

Hmmm, a 'no cost' stimulus?

JOHN SHADEGG (R), ARIZONA CONGRESSMAN .... With unemployment rates going up how can we produce American jobs? And the answer is we have had a non-energy policy in this country for a very long time. The reality is we are giving jobs to oil fieldworkers and natural gas fieldworkers in Russia and Saudi Arabia and Venezuela, when we should be putting those people to work here in the United States.

It doesn't matter how you define costs: explicit production costs, implicit opportunity costs of the resources involved in production, environmental costs. etc, there is no such thing as a 'no cost' stimulus to economic activity. On the opportunity cost story, while there are idle resources in the US economy, opening the Arctic National Wildlife Refuge to oil exploration will require specialised resources that will be diverted from other activities, reducing the net number of jobs created.

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