June 6, 2010

PORKBUSTERS UPDATE: Harvard Study Shows Earmarks Cost Jobs.

Using data spanning four decades, Harvard researchers measured the effects on local businesses as their local congressmen grew in stature in Washington. The study correctly assumed that when a senator or representative acquired a powerful committee assignment, he would exploit his new position to funnel more money to constituents back home. But the Harvard researchers also assumed — incorrectly, they would discover — that local businesses in a member’s home state or district would benefit from opening up the federal largesse.

“It was an enormous surprise, at least to us, to learn that the average firm in the chairman’s state did not benefit at all from the unanticipated increase in spending,” said Joshua Coval, one of the study’s three principal authors. In fact, the study found that in the years following a congressman acquiring a powerful committee assignment, the average company in his state cut back capital expenditures by 15 percent. In one prominent example, Alabama went from receiving $6 million less in annual earmark spending than other states to $90 million above the state average after Republican Sen. Richard Shelby assumed the chairmanship of the Senate Intelligence Committee in 1997. Shelby earmarked $15 million for low-cost fabricated housing, but the study found that one of Alabama’s largest suppliers of this housing, Homes Inc., correspondingly reduced capital expenditures by 79.5 percent and downsized its work force by 30 percent.

Coincidence? Not likely. “The pattern repeats itself across decades and over thousands of firms.”

It’s all about the welfare of the political class and its cronies, it’s not even about “taking care of the district.”

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