IBM and ITIF pitch for $30bn to save America

To be honest - and this is a hard thing for politicians, IT vendors, and think tanks to do - we have to worry about direct jobs created and hope for - but not count on - the network effects for additional jobs. And that is because we are dealing with people who are afraid to spend money. Those other jobs may not materialize, after all. In that case, we are talking about $157,085 per created or retained job, with the hope of adding another 434,295 jobs, with a $10bn investment for broadband infrastructure. That sounds pretty expensive, and it also sounds more like a bailout for the phone companies, the cable companies, and the IT and telco gear makers.

This stimulus package idea reminds me of when, during the 1990s recession, Bell Atlantic - one of the Baby Bells that is the predecessor of Verizon - offered homeless people free voicemail services, when some food and lodging and maybe a job was really in order. The free voicemail is great - don't get me wrong - but it doesn't address the problems homeless people face.

The $10bn stimulus package for IT investments at healthcare providers - not the healthcare billing companies, but real doctor's offices, clinics, and hospitals - seems more pragmatic, even if it will not create that many direct jobs. Only about 43,410, according to estimates by IBM and ITIF. Another 115,670 indirect and induced jobs were projected from this investment, and another 53,025 from network effects from those jobs. We all could use better medical care, for sure, and it seems stupid but understandable that only 1 in 20 medical practices have computerized records. (They sure have computers for billing, though.) You would think that patient care would be the priority, but billing really is. Medicine is a business, after all. Anyway, the ITIF report estimates that that $10bn investment in healthcare IT would create 5,800 computer manufacturing jobs, 10,600 software development and support jobs, and 27,000 IT services jobs.

As for the smart grid stimulus, the ITIF report reckons that a $50bn investment to modernize the electrical grid to allow producers and consumers to control their usage and the price they pay for juice, among other things, would create an average of 58,645 direct and indirect jobs. (Notice how ITIF lumped direct and indirect jobs together there? That's suspicious, and it implies that direct job creation for this stimulus is even lower than for economic stimulus aimed at broadband Internet and healthcare IT.) Adding in induced jobs and network effects on the local economies where the electrical grid is modernized takes up the job count to 238,745 (this one is an average over five years, not in one year). ITIF says that if the government pumped in $100bn over five years into smart grid tech, it could boost the total number of created jobs to 477,490.

It is hard to argue that America doesn't need universal broadband Internet service, or computerized healthcare, or a smart electrical grid that saves us energy and money. But it is harder to argue that these investments are the best way to create and retain the most jobs. You could argue that a better long-term investment that creates lots of jobs would be to build more schools or better transportation systems. And you can bet that all of the industrial giants in the country, just like IBM's Palmisano, will be making their cases to soon-to-be President Obama. ®