http://www.forbes.com/sites/leonardburman/2011/12/20/blaming-the-victim-are-the-unemployed-just-lazy-or-defective/
Blaming the Victim: Are the Unemployed Just Lazy or Defective? When I was a grad student at the University of Minnesota, a cadre of brilliant young macroeconomists was searching for evidence that the 25% unemployment rate during the Great Depression was a phantom. In the ultra-rational models of these economic wunderkinds, involuntary unemployment couldn’t happen. The problem must have been that people weren’t willing to work at then-prevailing wages. New York Times columnist Paul Krugman calls this theory the “Great Vacation.” The current impasse between the House and Senate on extending the payroll tax cut and extended unemployment benefits is partly about differing views of unemployment. House Republicans want to show the unemployed some tough love to get them off the couch and back to work. They really didn’t want to extend unemployment benefits at all on the theory that preventing the unemployed from starvation dulled the motivation to find a job. Other like Mark Schmitt have pointed out that there are four job applicants per opening so motivation alone–even life or death–might not suffice to boost employment. Now the GOP has decided that the problem is that the unemployed are druggies or high school drop-outs (read, it’s their own damn fault) and have insisted that states be allowed to test UI recipients for drugs and require those without a high school diploma to get a GED. They also insist that extended unemployment be cut from 99 weeks to 79 weeks and that high income people be prevented from claiming UI benefits. That is, they want to make it more like a welfare program and less like insurance, presumably in hopes of diminishing its support. By all means, it would make sense for policymakers to look at the design of unemployment insurance, but now’s not the time to cut back. The main problem with unemployment insurance–similar to the problems created by all insurance–is moral hazard. When you have insurance, you can be pickier about choosing a new job. When the economy is healthy, it absolutely makes sense to limit the duration of UI benefits and closely monitor recipients to make sure they actively look for work. But with four job seekers for every vacancy, restraints on the duration of benefits and other limits will have virtually no effect on the level of unemployment. With so much excess supply of labor, even if you prompted a few job seekers to get back to work, they will just supplant others who are also looking for work. Moreover, being among the ranks of the long-term unemployed is just horrible. UI benefits average about $300 per week–below poverty level for a family of four–and the experience is degrading. Why would anyone in Congress want to pile on to the woes of the long-term unemployed? And expanding unemployment benefits during a deep recession is an excellent economic stimulus. Most unemployed people have little choice but to spend any income they receive. The House GOP does have one thing right. A two-month extension makes much less sense than a year-long continuation. They should amend the Senate bill to change February 29, 2012, to December 31, 2012, and send it back to the Senate. There’d be bipartisan support for that. Read Mark Schmitt’s excellent essay at the The New Republic for more. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
