I know it’s yesterday’s news, but I’ve been busy and I do have a couple of observations about the government shutdown I want to air. First off though I should confess that I found the entire episode to be more about exercises in political theater than any attempt to govern by either side of the aisle. It was mostly playing to their bases and funding sources while the eventual outcome was obvious. That it sucked so many into writing endlessly tedious articles and airing repetitive television pieces about the farce is perhaps the saddest part of the entire episode. With closure, however, comes the chance to look back and assess a few things. That’s the point here.
Much has been made of the deprivations of government workers who were without work and pay for several weeks. The press made it seem as if, save for those charged with protecting us from imminent harm, all others were left to fend for themselves. Actually about 10% of all government workers were furloughed. Fosetti has a nice short post which makes the following points:
- There are about 4.4 million government employees.
- 800,000 were sent home initially.
- 400,000 were recalled within a few days.
That’s it, folks, 400,000 government workers had two weeks off with full pay, with no interruption of benefits and they were able to draw unemployment payments during the shutdown. We should all be forced to endure such hardships.
The Conceit of Economists
The President’s Council of Economic Advisers has issued a report titled, “SHUTDOWN AND DEBT LIMIT BRINKSMANSHIP”, they capitalize it, not me. In it they purport to accurately measure the effects of a partial reduction in government activity for two weeks in a $16 trillion economy. Here is their introductory paragraph:
The government shutdown and debt limit brinksmanship have had a substantial negative
impact on the economy. The shutdown directly affected the economy by withdrawing
government services for a sixteen day period, which not only had direct impacts but also had a
range of indirect effects on the private sector. For example the travel industry was hurt by the
closing of national parks, businesses in oil and gas and other industries were hurt by the
cessation of permits for oil and gas drilling, the housing industry was hurt by the cessation of
IRS verifications for mortgage applications, and small businesses were hurt by the shutdown of
Small Business Administration loan guarantees. In addition, a reduction in consumer confidence
and an increase in uncertainty associated not just with the shutdown but also the
brinksmanship over the debt limit affected consumer spending, investment and hiring as well.
Now just how much of the harm they see in the shutdown do you think is permanent? Do you think, for example that oil and gas companies are not going to get new drilling permits forever? Do you think that most mortgage applications won’t get processed or for that matter haven’t been already? Do you see the same logical flaw here that I do? Specifically some private activity was deferred but not eliminated by the shutdown, thus any impact on the overall economy is likely to be very muted and noticeable only within a very short time period.
If you have nothing better to do with your time I invite you to read the entire report and marvel at the ability of these economists to find causation in correlation and measure so precisely the impact of the shutdown so quickly after its end. If you do wade in keep in mind that we measure GDP on a quarterly basis and then revise the initial estimate twice more before settling on a number and ask yourself what Magic 8 Ball these guys have.
A Judge Isn’t Amused By The Forest Service
Grandstanding was the order of the day during the shutdown and the closure of the national parks and monuments probably marked the high (low?) point. While it made perfectly good sense not to have thousands of tourists wandering around an unattended Grand Canyon it was perfectly senseless not to let them wander around, say, the Lincoln Memorial. Even more inane and actually vindictive was the closure of thousands of public facilities which happen to be located on federal land though not managed by the government. Coyote Blog is written by a fellow who also happens to operate a number of facilities located on federal properties. He has a nice index of his posts relating to the government mandated shutdown of his facilities during the shutdown which I recommend if you want to get some good background on the issue, but his post today on a lawsuit filed by the National Forest Recreation Association against the Forest Service illustrates at least one judge’s skepticism towards the actions of the government.
Well, the basic problem is that the Forest Service never should have closed these that were permitted properties. And they in fact violated the agreement they had with these plaintiffs in doing so without necessity and determining they had a right to do so, which I don’t think they did….
[the Forest Service has] nothing to do with the administration and management of the campgrounds other than the inspections at any given time.
So, what they have done is unreasonably close these parks, preventing the concessioners who pay a premium in order to get this permit and lease the property under the requirements in this permit — and the Forest Service was very ill-advised to make the decision to close these grounds under these circumstances, where you have given up the maintenance and administration of these campsites.
I understand the overall obligation for public safety, but you have delegated that to private entities. And you took it away when it wasn’t costing you a dollar to leave it as was. And in fact, that’s where we get into the restraint of trade and the fact that there are losses which are most likely uncompensatable.
A small matter you might say, and I would be hard pressed not to agree with you, but also a great example of how far government will go in the furtherance of its own ends. From Ted Cruz’s utterly inept attempt to defund Obamacare to the President’s pretense that negotiation is not an integral part of politics this has been a farce composed mostly of trivialities. The real shame is that so many devote so much time to making these actors believe that in the long term their antics amount to anything. Which means, I guess, that I should apologize for writing this.