Paul Krugman, Cynthia Tucker, and the unemployment benefits debate, Pt. III
The AJC’s Cynthia Tucker blogged today about a testy exchange we had last summer on ABC’s “This Week” regarding government unemployment benefits and the effect that endless extensions have on reducing the incentive to seek a job. Once again, she mistakes standard economic arguments for moral judgments: “Does the right really believe the unemployed are lazy?”
What offended Tucker’s sensibilities was the blunt manner in which I summed up taxpayer-subsidized inducements: “If you put enough government cheese in front of people, they are just going to keep eating it.”
As I said in August and reiterated last week during the Bunning Senate floor showdown, the question is where do we draw the line? There is no such thing as a “temporary” entitlement in Washington and there are precious few politicians willing to challenge the permanent, ever-expanding Nanny State (quoting from the WaPo article: “under multiple extensions enacted by the federal government in response to the downturn, workers can collect the payments for as long as 99 weeks in states with the highest unemployment rates — the longest period since the program’s inception.”)
None other than Paul Krugman of the Fishwrap of Record acknowledges that generous unemployment benefits reduce the incentive to seek jobs.
As he put it exactly:
“Everyone agrees that really generous unemployment benefits, by reducing the incentive to seek jobs, can raise the NAIRU” [the minimum rate of unemployment consistent with a stable inflation rate].
“Everyone agrees.” “Everyone?”
Tell it to Ms. Tucker. Or the nutroots and Democrat demagogues who went bananas when Sen. Jon Kyl basically said the same thing last week.
Or, um, perhaps Paul Krugman should tell it to himself. Last August, he sniffed that “Ms. Malkin’s theory of unemployment is no crazier than what’s coming out of some of our leading universities.”
Or out of crazy textbooks like…this one authored by none other than Paul Krugman and noted by the WSJ’s James Taranto:
Former Enron adviser Paul Krugman takes note in his New York Times column of what he calls “the incredible gap that has opened up between the parties”:
Today, Democrats and Republicans live in different universes, both intellectually and morally.
“What Democrats believe,” he says “is what textbook economics says”:
But that’s not how Republicans see it. Here’s what Senator Jon Kyl of Arizona, the second-ranking Republican in the Senate, had to say when defending Mr. Bunning’s position (although not joining his blockade): unemployment relief “doesn’t create new jobs. In fact, if anything, continuing to pay people unemployment compensation is a disincentive for them to seek new work.”
Krugman scoffs: “To me, that’s a bizarre point of view–but then, I don’t live in Mr. Kyl’s universe.”
What does textbook economics have to say about this question? Here is a passage from a textbook called “Macroeconomics”:
Public policy designed to help workers who lose their jobs can lead to structural unemployment as an unintended side effect. . . . In other countries, particularly in Europe, benefits are more generous and last longer. The drawback to this generosity is that it reduces a worker’s incentive to quickly find a new job. Generous unemployment benefits in some European countries are widely believed to be one of the main causes of “Eurosclerosis,” the persistent high unemployment that affects a number of European countries. (emphasis added)
So it turns out that what Krugman calls Sen. Kyl’s “bizarre point of view” is, in fact, textbook economics. The authors of that textbook are Paul Krugman and Robin Wells. Miss Wells is also known as Mrs. Paul Krugman.
It seems Krugman himself lives in two different universes–the universe of the academic economist and the universe of the bitter partisan columnist. Or maybe this is like that episode of “Star Trek” in which crewmen from the Enterprise switched places with their counterparts from a universe in which everyone was the same, only evil.
Like Spock, the evil Krugman is the one with the beard.
Krugman argues that right now the situation is different because unemployment is high. His position seems to be that the need for short-term stimulus trumps longer-term worries about raising the NAIRU.
The problem, as more learned economists than I will point out, is that once you’ve established that unemployment benefits will be extended during recessions, then that policy gets incorporated into workers’ expectations. And you can’t easily undo those expectations once the economy improves.
But never mind all that. Evil conservatives hate unemployed people! Bad, bad conservatives!
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Schizo-nomics?
Bunning’s principled and rational stand just allowed the media to demagogue once again about how cruel conservatives are, and how compassionate libs are. I expect libs to peddle that drivel; but it sickened me when other Republicans implicitly furthered that demendted point of view by abandoning Bunning. Bunning’s point was “just pay for it”! Isnt that what Dems wanted? Permanent unemployment benefits exist already: it’s called welfare. How’s that worked out for us?
That’s really the only way to respond to this kind of no-win argument. Ms. Tucker and Mr. Krugman should be asked (1) Should there be any limit, fixed or variable, to unemployment benefits, and (2) if so, how many weeks are desirable?
Soon, the only ones employed that will be able to pay income taxes are government employees.
The private sector will all be on permanent unemployment. Is being unemployed “green?”
Food banks, homeless shelters, and the like are worthy institutions, and we would have more money to give to them if the government quit taking it away to fund, say, the National Endowment for the Arts. In fact, people would have more money to spend on food and housing in the first place so that they would be less likely to wind up in the situation of needing those things if the government quit doing that.
Private industry usually does a better job of just about everything, and that includes charity.
And they’ll kick your dogs, slap your baby and leave dirty socks on your coffe table when company is coming. Scwewy wabbits!!
I have some liberal friends and relatives who chide me because I don’t believe in endless or free gov’t handouts. “Don’t you want to help people?” is their cry. I have no problem helping people, I have a problem with the gov’t just mindlessly throwing money at people and problems.
Rule No. 1 – Life isn’t fair
Rule No. 2 – You can’t change Rule. No. 1.
A person’s unemployment may or may not be their fault, but they have to deal with it. Unfortunately, getting a new job may be painful at first, but it is more rewardiing in the long run.
It seems temporary support to help people get back on their feet becomes like a narcotic drug. The gov’t doesn’t allow you to ween yourself off. If you find a job its cold turkey. If you stay unemployed the gov’t provides mediocre sustinence, but it seems like it is better to stay than take the risk and endure the pain to get off and find a job.
Yeah, it keeps bums like me from seeking employment. Because when my income went from $8000 a month to $1600 a month because I became unemployed, that $1600 a month extends my ability to not go be forced to sell my car by a couple months over all.
It keeps me from seeking a $10 an hour job is what it does. It allows me to look for gainful employment based on my ability to perform work. Thus far I have applied to jobs as low as $18 per hour, and yet I have yet to get an actual second opportunity to press the case that the company should hire me over someone else. There are just that many other people out there competing for the jobs that do become available.
I must admit that I am less desirable for hire for several reasons; I am disabled and while it does not effect my performance, it has effected the duration of all my past work, such that in 18 years I have held 14 different jobs. I am also short a Bachelors degree, I only have an associates along with 15 years of experience, so anyone applying with a Bachelors degree will likely beat me out for the jobs. Also, 90% of the jobs now are asking specifically for Bachelors degrees, where in the past only about 30% were for my line of work. Many are even asking for master’s degrees, and thus I am not even able to apply for almost 90% of the jobs that fit my background, because there is simply a large enough pool of workers that my resume, once they see the Associates degree, is never even considered.
So, should I get extended benefits? Do they keep me from becoming employed? I am not sure, but I think the real reason I am not getting any job offers is because the job market is being destroyed by progressive liberal agendas being pursued by our illustrious leaders in DC, and while it is happening, companies are laying off people like me, that are not ideal perfect candidates and replacing them with perfect candidates while the pickings are cheap and plentiful.
So let me get this straight:
People are off on “funemployment” – cavorting on the beaches; going to movies – just hanging out.
Riiight. I’m sure there are some who use unemployment as a vacation – but I don’t think that’s typical.
Simple economics: if people were voluntarily staying unemployed to avail themselves of the lavish benefits offered by unemployment and Medicaid, we should see the unemployment rates (including U6) fall; layoffs would fall and wages and benefits would rise as employers seek to hire increasingly hard to find workers.
Does anyone see that happening?
The funemployment schtick is easy for Michelle or Rush to say – they’re set for life. And it’s easy for Kyl and the gang to say since they, too, are set for life.
Given never-ending immigration and globalization, most of us will be competing, Grapes of Wrath-like, for subsistence wages.
I consider myself a conservative. I also know I got laid off a week ago along with about 20 percent of my co-workers (lucky enough to get severance). I am not looking forward to being off work very long.
I am in my 50s (engineer – you know, one of those STEM workers we’re all so desperate to produce more of).
It will be increasingly tough to get a job given the number of new grads and H1B (cheaper). I’m too old to train in another profession much different (won’t be going to medical school) and I doubt I will do well hanging drywall (assuming construction picks up).
Yet the rent goes up, the car payment comes due, and taxes have to be paid.
Capitalism is a fine system – but only when capitalist put the interests of their nation first. Given the economic mess and our fatal reliance on hostile powers for our survival… well, we’re doomed.
Thank god I didn’t bring any kids into the world.
“Thank god I didn’t bring any kids into the world.”
That is a terrible way to look at things. Good STEMs have good STEM kids.
So, how many years do you think somebody else should support you while you pick and choose among the various jobs you don’t care to do? The problem is that you don’t appear to understand that “unemployment insurance” isn’t a right, it’s extorted charity – just as every other government welfare program is. It’s also a cost of doing business for your previous employer (at least in some states) that can prevent them from rebuilding their business to the point where they can begin to rehire laid-off employees. In fact, most people don’t begrudge paying unemployment to tide people over until they can get back on their feet. Problem is, too many people take advantage of the situation. It’s clear from your posts that you think you’re far too valuable to take just any job because it might cause a reduction in your lifestyle. I have a son-in-law just like you, except he doesn’t qualify for unemployment, so he lives off of my daughter’s very meager wages while he “looks” for a job in his “chosen field” instead of taking something to help feed his family. As far as I’m concerned, it should be cut back to the 26 weeks it used to be. That’s plenty of time to reorganize and find something else – even if it doesn’t measure up to your high standards.
It never fails. No matter how much charity some people receive, it’s never enough.
Sound a little harsh? Probably so. I’ve been unemployed on occasion myself and never collected a dime of unemployment. I went out and found another job – and it wasn’t always easy.
astonerii: yes – that sentiment sounds awful. I do have nieces and nephews and I fear for their future.
If I had kids, I would have done what I could to dissuade them from entering a STEM field. (I’d probably urge them to get a government job.)
A fair number of the bright kids are doing just that. Why take some of the toughest coursework in college for a job that will have you competing with third-world imports so that you can spend the next 40 years sitting in a Dilbert-style cubicle working for a pointy-haired boss (with layoffs here and there)?
The money is in finance… figuring out ways of tapping money flows without actually adding any value to the economy.
Technology makes an excellent hobby. A career? Not so much.
I certainly don’t want to run out the 26-week clock on benefits. First off, I can’t afford to (unless I file for bankruptcy) and, second, I get bored quickly.
Aside from job-looking, I’ve started teaching myself programming for the Mac (which is looking to be cool).
“Sound a little harsh? Probably so. I’ve been unemployed on occasion myself and never collected a dime of unemployment. I went out and found another job – and it wasn’t always easy.”
Good for you. I applaud your dedication to paying for a benefit you do not use, even when eligible.
While I applaud you for doing it, I will not feel bad that I take the opportunity to make sure that I do not degrade my family’s lifestyle permanently by getting stuck in a 60 hour a week job that barely pays what I am eligible for through unemployment.
Yeah, the unemployment benefits are coerced, and I agree that is not a good thing. But those were also coerced out of my potential income for the years that I did work. Most of what I live on is from savings, a savings that would have been larger had I had a larger income that likely would have resulted from my employer not paying unemployment taxes. I do not feel entitled to extended unemployment, but while it is available, I will use it to my own personal best interest and that of my family’s.
By the way, I think you are a bit jerkish. I would love to witness you turning down social security and Medicare when you get old enough for them. Since you are such a upstanding person, and did not collect unemployment, and think no one else should either, I will imagine you feel the same about the coerced entitlements of Social Security and Medicare. As such a person, you will either live off savings, or remain in the workforce until you die. Or you could do as your son-in-law is doing and do the dishonorable thing that families through the ages have done and relied upon family.
Maybe I am being a bit harsh, but hey, this is reality. I have been disabled for 21 years, and could get 100% disability payments from the government, but you know what, I decided to work as much as I could instead. So, since I did something honorable, like you, my authority is just and you should listen to me.
Forgot this site allows cool text options in my above posts….
Actually, that is my field of work. Mechanical Design Engineer. Mostly stick to Computer Aided Drafting. I actually had to look up STEM to see what you meant. I knew the Science and the Engineering, was lost on the T and M.
I too have been doing some training. Been reading many books in my line of work. Have some student versions of new CAD software so I can practice and maybe be able to apply for jobs that ask for those packages as well as the Pro Engineer I know. I figure in about a month I will be ready to do some Finite Element Analysis.
astonerii: good luck to you.
I’m a software engineer with some hardware design background so I stick mostly with embedded systems which, at least for now, isn’t as readily outsourced/off-shored at straight IT work.
If it will stay that way just long enough to reach retirement…
New-New Speak:
By paying the weaker workers not to work the more productive workers will of course find work sooner.
/sarc off
Likely, even now after about 18 months since the economic implosion began, only now would we be starting to see the economy beginning to recover IF: fairly sensible economic solutions were employed, i.e., tax and government spending cuts; and this recession were considered fairly typical in length and scope. Given the absolutely devastating “solutions” of the Obama administration (and, to some extent, the Bush solutions) in the form of Keynsian spending, we should expect more extensions of unemployment benefits yet. The recovery will almost certainly take far longer than it probably would have even if left alone, and employment figures almost always lag behind other economic indicators.
I think part of the problem, robert537, is that while hard times affect folks of all political persuasions, the political and pundit class remain untouched by “downsizing”. You can be sure you’ll never see either Rush or Kyl in an unemployment line – so, if nothing else I guess you could say they keep their word.
Now if Kyl wanted to do something that was actually helpful to the situation, he would renounce his founding membership in the McCain Amnesty Citizenship Giveaway Gang and stop insisting we give American jobs away to illegals just to make “Everybody’s Girl” Lindsey happy. Otherwise it’s major crapweasal hypocrisy and voids anything he has to say on the issue of the lack of jobs.
All things considered, I’d say in not choosing refusing unemployment benefits as the hill they wanna die on shows that the politicians may be crapweasals, but they’re not complete “let ‘em eat cake” fools.
I will be supplementing my funemployment this year with a seasonal watermelon stand. Wish me luck!
Krugman said “Today, Democrats and Republicans live in different universes, both intellectually and morally.”
He is correct. The farther liberals move from God and His moral compass, the more immoral they become.
It’s not liberals one is talking about when Christianity is mentioned.
Was this the same Paul Krugman who used to be an “advisor” to Enron? As I recall, Mr. Krugman got a $50,000.00 fee from Enron for writing a “report”. For Mr. Krugman to say he did not know what was going on at Enron is like the piano player in a house of ill repute saying he did not know what was going on upstairs.
These elitist, snobbish knotheads will say anything to defend their boy on the throne.
I can tell you from personal experience that once you are collecting unemployment benefits, it is an incentive to slow down your efforts to find another job! I have always had a pretty strong work ethic. But when I got laid off, I discovered that:
1. The employer who lays you off has to pay the unemployement, or at least part of it. If you are unhappy about the lay off or think it is unfair, why not “sock it” to your employer?
2. It is incredibly easy to just call in every couple weeks and tell them you are looking for a job. Then sit back and get your check in the mail.
3. Your job search efforts can be quite minimal…send out a few resume’s, make a few phone calls.
4. It is nice to be able to be home and not tied to a job when there is so much other stuff you can be doing!
In other words, they make it too darn easy to just take the money and run. I thought my benefits ran out after a certain time. Then, just in the nick of time, they extended them. Then, there was a new year and my benefits were recalculated and extended even longer.
If I took advantage of the situation, I can only imagine how many others did the same. I did take temporary jobs here and there. And I did keep looking, but just not as hard as I could have.
Government handouts are very easy to get sucked into, even for those who don’t believe in them!
Ahem…by design
Cynthia Tucker is as useful as a deck chair on a submarine. Too bad she’s not getting her 99 weeks of unemployment.
Ok. I’m confused. The genius Krugman believes and teaches that perpetual unemploment subsidies are bad in the long term for economies but his alter ego says they are necessary because Keynesian economic theory must be observed at all times? I guess, if you believe in the tooth fairy…
Leftist economic geniuses are more religious that I had ever thought. The problem is that they believe in bad religion and their belief system is far less justifiable than that of the Warmists.
Re: Happy Scrapper:
Weird. I see it differently.
My first week of my two week notice of intent to lay me off I made 240 separate work contacts. My second week, I made about 40 contacts and 30 follow-ups. My third week, I made about 20 and 15 followups. My fourth week, about 12 and 6. My fifth week about the same. I put as much effort in each week after the 4th week, but there are actually limited number of job openings showing up. Recruiters are not calling people up to even let them know that jobs they applied for have already been filled, and they are just as slow as we are that are unemployed. My job search includes the entire USA, and even though I hate with my soul certain states, I still put my applications in and make the follow-ups. Most job contacts through the internet though give no form of follow up method, so not all jobs I do follow up on.
My biggest problem, is that my disability, while it does not affect my performance, it does affect my ability to go to work every day. It is just not possible to go to work with a long lasting migraine. So any company I have worked for in the past never rehires me. So, I have been burning bridges for the last 18 years.
Let’s not get started on that “supply and demand” scam again. “Everyone agrees” that prices go up because of greedy, evil companies.
As an employer…I’m happy to report that if they extend unemployment benefits more, I’ll have to shut down and the the rest of my employees will be unemployed too.
Do people not understand that unemployment benefits come from somewhere and “that somewhere” is their pay. When I hire somebody, I look at their total cost (including unemployment “insurance”) and if the total cost is more than the total benefit, I don’t hire them. Right now, with costs increasing because of the extensions, I hire fewer.
Just to be clear, CRus – I’m sometimes a bit slow on the uptake,lol – what you’re saying is that the you see the UB cost as taking away from what you would otherwise pay them directly? Do I got that right?
Tell it to me.
I’m an unemployed Conservative who always votes Republican. I voted for Sarah Palin (not for John McCain). I work on a project basis in the IT industry on all the latest technology.
And I’ve been on unemployment for almost a year because across the board, American corporations have been so terrified of the economy these corporations have killed every upcoming IT project.
I’m glad you don’t need the unemployment. But some of us need it until the economy turns around and businesses restart their IT investment.
Just remember this … it may sound good but some of the people you are kicking to the curb happen to agree with you some of the time.
Certainly not this time.
“give ‘em unemployment and they’ll stay on unemployment” is wrong and you are wrong for peddling it.
Some, repeat, some of the unemployed are in fact lazy. Period. If you are not one of them, no need to defend your honor.
Degrade your family’s lifestyle? I hope that is not actually as selfish as it sounds. As someone who is subsidizing your “family’s lifestyle,” maybe you could sacrifice a little of that during tough times. Only you know whether you can or can’t, but if you can and choose not to, you are wrong.
Employers are not footing this bill people so save the greedy capitalist crap. Employers pass this cost on to consumers so everyone suffers from this practice.
I have held up to three jobs simultaneously to make ends meet so I have no sympathy for the unemployed. Somehow, the illegal aliens everyone condemns (I do as well, so I am not being hypocritical) find work to support themselves and their families by lowering their standards. Are you too good to do their job? When, with lots of government intervention (just like last time) this recession turns into a depression, you will do the things you choose not to do now so why wait? Get with it already and stop crying.
As for you college students, how’s that change working out for you? Suckers.
So many people are Shocked! Shocked, I tell you, that the current slide to socialism has produced these times of record unemployment. Remember these times when (maybe if) we get past them and make sure your children suffer a bit (not physically). That is the best antidote for socialism. If you don’t believe me, ask anyone who lived through the last depression. Best of luck to the honorable who fall into this category. I know times are tough but whining about it does not solve it. Get angry, get to work and change it.
To be fair, pabarge, it is unfortunately true of a certain segment of the population. But I agree with your overall point about painting with a too-wide brush. I suspect that’s why Kyl just did a minimal amount of cheerleading but stayed very clear of joining Bunning’s indiscriminate offense against the unemployed as a whole. Kyl isn’t at all trustworthy but he’s not a complete idiot, especially when unemployment is pegging 10%.
That part of your argument is silly, SpeakEasy. Astonerii could just as easily demand you stay off the highways that he “subsidized”. Not picking on you – just pointing out if that is your basis, it works both ways. Well, actually, “millions of ways” as it would include all Americans who’ve paid taxes.
It is exactly as selfish as it sounds. You think I work for other people for their good? While I do find joy in ensuring that the work I do is as high quality and value added as I can possibly produce, I do the work so my wife and I have a standard of living that allows us to enjoy life reasonably well.
As such, I do not spend my time taking people’s words out of context. Here is my full quote
Which you fully copy pasted into the quote zone, but truncated for the effect of making your claim of my selfishness. Seems you missed that word permanently. Our current lifestyle is far removed from what my working days lifestyle was. We have cut back on every luxury with exception to a telephone and internet access. Those I use to remain informed, and do my work searches.
You think I would shy away from being called greedy, or selfish? Those are virtues not bad moral character. They become bad character flaws when they are abused, but when employed in general, they help all people.
The selfish desires of manufacturers produce products everyone uses and benefits from, if they did not, they would not remain in business. The greedy nature of bankers allows businesses to grow faster than they would if they had to earn every penny in advance before expanding.
On the other hand, the evil sides of these things produce what one would expect. The selfish abuse of government to get votes forces them to subsidize the unemployment of voters, to the negative effect of harming businesses and feeding the unemployment line more and more workers. The Greedy call for more power in the government causes them to create new entitlements, and regulations and demands for more taxes, which again, feeds the unemployment lines.
As I said, I will not willingly permanently cause my families lifestyle to be degraded by taking a job that pays less than the unemployment that I am offered.
I am selfish, and I am greedy, and I will accept any money that is offered to me, so that me and my family do not suffer. I am a hypocrite, because I would prefer that every last social engineering endeavor on the part of the federal government was repealed. SS, Medicare, Department of Education, SCHIP, Unemployment extensions, home interest deductions, in fact each and every single tax deduction and worse yet every last tax credit, any money for research and development, get rid of the EPA and every last regulation that does not have something to do with the direct business of doing the work enumerated in the constitution.
I am selfish just like every other American. When it comes time to collect medicare and SS, just like every single last person who got to that point, I will collect, just as every last one of you will, if it is still there. Just like every last one of you, I will use the tax credits and tax deductions offered to keep that money in my pocket where I can spend it on my selfish interests.
My wife and I were partners in a business up until the end of 2009. At that point, she sold her shares to me and became an employee. After 5 quarters, I can fire her and she can go on rather generous unemployment that will literally run for a couple of years.
This shows the problem with the government Things are always done, and then grown to cover some silliness, with the best of intentions. But, unfortunately, the best of intentions can never account for the cleverness of individuals.