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Wednesday, August 18, 2010

Alaska, South Dakota Receive Most Stimulus Per Person

Hot on the heels of Governor Rounds's decision to take Scott Heidepriem's advice and accept the full $47 million in stimulus dollars Uncle Sam is offering to help with Medicare and education, the New York Times reports that South Dakotans are already the second-biggest recipients of stimulus dollars per capita. As of May, each one of us has received $1781 in stimulus (funny, I don't feel stimulated).

The only state more stimulated than South Dakota: Alaska. Sarah Palin's rootin'-tootin' independent-minded neighbors have hauled in $3145 in stimulus dollars per person.

NYT's Michael Powell points out a curious pattern of really red, anti-federal government states like Alaska, the Dakotas, Wyoming, and Louisiana raking in big stimulus dollars and federal aid and enjoying low unemployment.

Pro Publica provides a full sortable chart here. As I run some quick numbers, I find almost no mathematical correlation between the amount of stimulus per person and the April 2009 unemployment rates, the April 2010 unemployment rates, or the change in unemployment rate between those dates. However, I do find a slightly positive (0.37-0.39) correlation between total stimulus dollars delivered per state and April 2009 and 2010 unemployment rates, which suggests at least some sensible targeting of the stimulus dollars to the places with the highest unemployment. But these casual spreadsheet calculations, along with the fact that low-unemployment South Dakota has raked in big aid per capita, suggest we could be targeting our stimulus dollars better. Maybe Mike Rounds, Bobby Jindal, and other governors of low-unemployment states should have stuck by their guns, rejected all of the federal stimulus dollars, and sent them to places that needed the assistance more.

By the way, taxable sales in South dakota dropped 1.5% for FY2010. Taxable sales over the same period dropped 9% in Madison. If we each hadn't had an extra $1781 in our pockets from Uncle Sam, how much worse would those sales figures have been? And (cynical question, but worth chewing over at lunch) if South Dakota had received no stimulus dollars at all and the entire state economy had collapsed, would anyone in New York or Washington have noticed?
Bonus stimulus model: The Displaced Plainsman brings to our attention an alternative model for stimulus spending: our German friends poured money into keeping people in jobs rather than supporting them once unemployed. The causality is surely more complicated, but Germany could see 9% economic growth this year.


  1. Maybe red states tend to get more stimulus money because they're a little more stubborn, and it takes more pork for their state to convince them to go along and get on board?

    But to answer your rhetorical question: if we each hadn't had an "extra" $1781 in our pockets from Uncle Sam then--woe
    of woes--then Uncle Sam would never have needed to take the $1781 out of our pockets in the first place, leading, of course, to complete financial collapse because, as everybody knows, Americans are incapable of spending money properly unless it has been repossessed and magically blessed by the wise men in Washington at least once.

  2. Twitch, that hurts my head. You're kidding, right? You don't really think that's the way it works, do you?

  3. The federal government owns land in SD, so much land that we need compensated for that property not being on the tax rolls. Look at the grasslands, the two forests, the reservations, even the power generated on the river is federal.

    If the fed's will not hand over our land, then we should get more money.

  4. "And (cynical question, but worth chewing over at lunch) if South Dakota had received no stimulus dollars at all and the entire state economy had collapsed, would anyone in New York or Washington have noticed?"

    Cynical answer: No, they would not have noticed. They would be starving in the dark, drowning in roiling anarchy. If our state economy had collapsed, theirs would have evaporated.

    Seriously, I wonder: Did states with relatively low population density get more stimulus money per person than states with high population density, in general?

  5. Bill, which one? The stubbornness and the pork? Or the magi in Washington bestowing blessings upon our money to render it spendable?

    If it's the former, then no, not really. I have no clue how the politicians actually determine the specific provisions in their gargantuan pieces of legislation. (It's probably best that way, too. If I actually did have a clue, I might start clinging more to guns and religion.) I just sort of threw the theory out there--something it might be interesting to read about in the abstract of an obscure 20-page political science paper utilizing public choice theory and overelaborate Schaubildsmeierhofenbeckerian equilibria modeled as a series of zero-sum games characterized by imperfect information, or something like that.

    But if you're wondering whether I actually believe in the D.C. Magi, I must declare with the utmost conviction that I do, with every fiber of my being. The government must do something to your money to give it extra stimulus powers after they take it away and before they give it back to you! And magic is the only rational explanation. (White magic, of course, because those pure, holy folks in Washington would never engage in the other sort.) Stimulus powers just don't create themselves, you know.

    And don't be like one of those idiot teabaggers and tell me that the government actually doesn't have magic powers to make money more stimulative. You'd just be saying that because our president is black and you're a racist!

  6. Thad, you offer one of the most reasonable rationalizations for South Dakota's welfare status that I've ever heard. Payment In Lieu of Taxes—we've talked about that here at the Lake Herman Sanitary District level: GF&P holds a big chunk of land, Lake Herman State Park, which thus does not contribute to our district's tax rolls. We've thought about whether we should ask Pierre to compensate our district for the lost tax revenue.

    But I think that logic breaks down when we consider that ownership by a larger federal entity is not quite like ownership by some tax-dodging private entity. We are the owners, through government, of tose federal lands, just as we local folks own Lake Herman State Park in cooperation with all of our fellow South Dakotans. Our local governing entitites don't get property tax from those properties, but we get all sorts of other benefits. I would argue that having national grasslands and forests in our backyard, just like having a state park right here in Lake County, makes up for the gaps on the property tax rolls.

  7. Well Twich, call me simple minded, but what you call "magic," I call "printing press."

    Everybody seems so hung up on the idea of the Government working like the "family checkbook" that they forget the main differences. The most important being that US Government "daddy" (unlike your daddy) has a printing press in the basement and it's legal for him to print money.

    Kinda takes the Harry Potterness out of it, I know, but there it is.

    That's how new money can come out of nowhere, instead of from your left hip pocket to your right.

  8. This news from Germany puts even more positive light on the Administrations move to bail out the auto industry last year. When jobs are saved it is much easier to get an economy rolling again, then if new job creation has to be waited on.

  9. Holy cow, Barry! I hadn't made that GM connection, but it makes sense. Good point!

  10. But Bill, that's the most magical part of the whole deal! You don't think the printing press at the Fed is just any printing press, do you?

    No, it would be impossible for a muggle printing press to stimulate the economy. Suppose my daddy did have a printing press and he used it to print money. They would put him in jail for counterfeiting because he would just be enriching himself at the expense of others--the extra money wouldn't stimulate the economy at all, it would just inflate the money supply and make everybody else's money a little more worthless.

    But, magically, this doesn't happen when the Fed prints money, because they have a enchanted printing press! Ever since the D.C. Magi chanted the Federal Reserve Incantation of 1913 and the Arch-Wizard Lord Keynes blessed it in the late 30's, the printing press at the Federal reserve has had certain mystical powers. The inflation effect that would normally occur upon printing money is counteracted by magical forces. Nobody is enriched at the expense of anybody else (especially not powerful government contractors and big financial institutions). It's just extra wealth magically created out of nowhere, enriching us all!

    And don't try to tell me that anybody could create wealth out of nowhere using non-magical means. That's just preposterous.

  11. Twitch, are you kidding me? What do you think the dot com bubble was? Or the stock market in general. Derivatives. Banks loaning $100 (or more) on each $10 on deposit?

    Money is a vague, philosophical concept, my friend. And anyone who tries to tell you any different is lying to you.

    Your mistake is that you think any of it is real. Any of it.

  12. Bill, what are you talking about?

    If I have made any mistake, thinking that money is real is not one of them. I've been going out of my way to point out how money isn't real and is in fact, entirely magical! And it would be a complete disaster if it wasn't and we returned to the backwards days when non-magical money prevailed.

    Consider the early days of the second Industrial Revolution--economically speaking, one of the most dreadful periods in American history. The Washington Council of Economic Magi were but scattered, and had no central bank at which to convene. Instead of white magic, the money was backed in muggle gold. As a result, the poor and middle classes were forced to endure such oppressive conditions as rising standards of living, better clothing, better housing, increased access to food, and government deregulation; all at the hands of the evil robber barons!

    So you're right. Money is not real. It's magic! And lucky thing, too.

    As for the dot-com bubble, obviously the problem there was a shortage of magic! The Green Sorcerer and the rest of the council printed some enchanted money to keep the federal funds rate low from 1994 onward, but it just wasn't enough! Luckily they quickly realized their mistake and began really cranking out the abracadabra and keeping the rate really low for the next decade, leading, of course, to our current economic prosperity.

    I really don't think our views are all that different. We both realize that money isn't real (thank goodness). Now if you'd only open your mind to rationality and accept that Ben Bernanke is, in fact, a literal financial wizard, we could be on the same page, and what a wonderful thing that would be!

  13. Twitch, okay, that's more like it. Thanks for clarifying. For a minute there I thought you were talking about real money! ;^)


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