Seems to be a safe assumption

Greg Mankiw on the US government shut down and GDP:

In this interview, CEA chair Kevin Hassett (around minute 4:00) dismisses the adverse impact of the government shutdown on real GDP. It seems to me that he is more wrong than right. Kevin appears to be assuming that government workers don’t produce anything of value when they are at work, or that they will make up all the undone work when they return, so making them stay at home has no significant economic impact. 

I reckon that is a very safe assumption.  What does that  mean?

If that were really the case, we should give them all shorter work weeks, so they can enjoy more leisure.

Not quite.

The first thing to note about the so-called government shut down is that the US government is still collecting income tax. It is still maintaining tariff barriers to international trade. It is still waging war against business and entrepreneurship though excessive regulation. What has happened is that the US government has stopped spending some money.

Back to Mankiw:

Take, for example, the national parks that are now closed because of the shutdown. Those families that would otherwise be enjoying them are suffering a true reduction in economic well-being that is forever lost.

The solution to that problem is privatisation.  Why does the US federal government own parks? Then there are substitution effects. If you can’t go to a national park, go to the movies. Go to a private park.  A few years ago I was in the US military cemetery in Normandy and I asked the tour guide if anyone ever visited the German military cemetery. Apparently only when the US government is in “shut down”.

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15 Responses to Seems to be a safe assumption

  1. stackja

    Why is USA government doing much of anything? Voters can decide.

  2. Tel

    If that were really the case, we should give them all shorter work weeks, so they can enjoy more leisure.

    No, no, that would create a perverse incentive.

    We should give them much longer work weeks to encourage them to quit and get real jobs.

    The solution to that problem is privatisation. Why does the US federal government own parks?

    It doesn’t of course it has not “closed” the parks, instead it is currently in the process of occupying the parks, in much the same way as factory workers might occupy a plant which they did not build and do not own.

  3. Bruce of Newcastle

    Now eating their leather belts and tree bark.

    Day 4 of no government

    The effects of the government shutdown have gone from bad to worse. Last night was eerily silent. Not a creature was stirring, not even a mouse. Facing starvation, people are getting desperate. Some people dreamed of snow falling today so they could have something to melt and drink. … Everyone senses the anarchy that lurches like a troll on Twitter. The shutting down of the government has imperiled the nation like nothing before. This is worse than 9/11 or Pearl Harbor Day or Game 7 of the 1997 World Series.

    They are really suffering!

  4. a happy little debunker

    We need to remember this shutdown is because the Dems wont pass a spending bill worth $4 Trillion over a matter of $5 Billion – 0.5% of the total.

    Perhaps they think this is the ‘thin edge of the wedge’ that can unseat Trump – nothing else they have tried has worked to that effect.

  5. Mark M

    Q. How long before those government workers not earning money during closedown get their union rep to pressure the dems to cave in?
    A. Winning.

  6. The solution to that problem is privatisation. Why does the US federal government own parks? Then there are substitution effects. If you can’t go to a national park, go to the movies. Go to a private park. A few years ago I was in the US military cemetery in Normandy and I asked the tour guide if anyone ever visited the German military cemetery. Apparently only when the US government is in “shut down”.

    Privatise national parks? Great, now the cost of going to one increases significantly, the access is be reduced to reduce liability, less access is available to increase profits by minimising maintenance etc.

    How has the privatisation of building permits gone? What once cost $50 or so to get from the local council engineering office now costs in the order of $800 through a private building surveyor. The job involves about three progress inspections and a tick and flick to complete council records.

    Not everything works to the consumers advantage when it’s privatised.

  7. Tel

    Privatise national parks? Great, now the cost of going to one increases significantly, the access is be reduced to reduce liability, less access is available to increase profits by minimising maintenance etc.

    It would be a bad idea to sell all the available parks to one company thus creating a monopoly. It would also be bad to allow any one company to buy up all the parks.

    I might point out that as a taxpayer the cost of NOT going to a national park decreases significantly once they are made private. Also, Parks & Sparks won’t be able to construct a bushfire hazard and then blame Global Warming.

  8. Mother Lode

    Mind you, once divesting themselves of the cost and responsibility for parks, don’t imagine taxes will be correspondingly decreased. They are always desperate for more taxpayer money to bribe taxpayers (and non-taxpayers) to vote for them.

    If the parks were privatised the tax money collected would be reallocated to some other more retarded boondoggle.

    This is not an argument against privatisation, but against the rampant cupidity of government.

    Theoretically an opposition would seize on this as something to embarrass the government, but since they themselves can expect to be in government within an election cycle or two, they would also be losing money, so an unspoken agreement is maintained.

  9. Death Giraffe

    Privatise national parks? Great, now the cost of going to one increases significantly, the access is be reduced to reduce liability, less access is available to increase profits by minimising maintenance etc.

    ..
    Is cost the same as price?
    For sure the retail price of entry to you might change, but the cost of maintaining those parks must go down in a competitive private enterprise arrangement. And move from taxpayers to users.
    Just like the surveyor work you site.
    If compliance costs in surveyance are too great for business that points not to privatisation but to another fundamental problem: over-regulation and the tendancy of existing crony businesses to use compliance costs as a barrier to new entry- solution: less regulation.

  10. For sure the retail price of entry to you might change, but the cost of maintaining those parks must go down in a competitive private enterprise arrangement. And move from taxpayers to users.
    Just like the surveyor work you site.

    How would privatising national parks create competition?

    If compliance costs in surveyance are too great for business that points not to privatisation but to another fundamental problem: over-regulation and the tendancy of existing crony businesses to use compliance costs as a barrier to new entry- solution: less regulation.

    You think? I’ve gone through the process (putting a roof on a veranda) and it’s not about the regulations, they haven’t changed. In the case of building surveyors, there’s no competition.

  11. JohnA

    bemused#2892798, posted on December 27, 2018, at 12:25 pm

    You think? I’ve gone through the process (putting a roof on a veranda) and it’s not about the regulations, they haven’t changed. In the case of building surveyors, there’s no competition.

    Because building surveying/certification is a government-mandated task formerly assigned to a local government employee.

    Now it is a government-mandated task assigned to a select number of private individuals.

    Nothing substantive has changed.

  12. Tel

    What once cost $50 or so to get from the local council engineering office now costs in the order of $800 through a private building surveyor.

    Calling an electrician to fix a broken wall socket costs something around $250 or double that if you are in an office building where additional procedures apply. The job itself involves five screws. Don’t even get me started about calling a plumber.

    Do you really think any engineering work gets done for fifty bucks in this country? Either the council were tossing the real expense over to the rate payers, or they were giving it a quick glance over and rubber stamping.

  13. Because building surveying/certification is a government-mandated task formerly assigned to a local government employee.

    Now it is a government-mandated task assigned to a select number of private individuals.

    Nothing substantive has changed.

    That’s called privatisation; just like the railways, power generation, road building, rubbish collection etc. You take it out of government hands and give it to private companies to manage, deliver and make profit.

  14. Do you really think any engineering work gets done for fifty bucks in this country? Either the council were tossing the real expense over to the rate payers, or they were giving it a quick glance over and rubber stamping.

    I built an 11m x 4m corrugated iron roof, with hardwood timber frame (to meet BAL requirements) over our veranda a few years ago. I submitted my self-drawn plans to a building surveyor who gave it a stamp of approval. I then built the frame and the building surveyor inspected it and gave it a stamp of approval. I then helped the local plumber install the roof, guttering and drainage and the building surveyor inspected it and gave it a stamp of approval and shortly after I received a written certificate of compliance.

    I’ve twice previously done exactly the same with similar council engineer inspections and approvals. Absolutely nothing has changed other than who now does the inspecting and approvals, and the ten-fold increase in cost. This is how the former functioned for decades and didn’t seem to create any issues. The building surveyor added no added value to the process than what occurred previously.

    Anyone who thinks councils do a better job now than they did 20+ years ago must be very young indeed.

  15. Bemused:

    Anyone who thinks councils do a better job now than they did 20+ years ago must be very young indeed.

    Fifty years ago, councils did roads/garbage/water at an excellent price.
    Twenty years ago they did a shed load more at an outrageous price.
    Today, they do fuck all while robbing us blind.
    But they now employ lots of people to do so.

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