Will politicians ever stop lying to the public?
People, maybe we should extend unemployment benefits yet again. The job outlook is bleak, unemployment is high, and lots of people are hurting bad. Maybe it's the civilized thing to do.
But could we please just stop yapping out the bald faced lie that unemployment benefits create jobs?
Obama and Pelosi were again claiming that yesterday. The closest thing to any analysis of why was Nancy's "it injects demand".
Today, Mark Thoma has found an economist to parrot the company line as well. He offers absolutely no analysis or evidence for the proposition.
You know why there's no analysis or evidence given? Because, even on the crudest of Keynesian grounds, its horse-hockey!
The proposed bill would affect around 1,000,000 workers and we'd be giving them a few hundred bucks a month for what, another year? so thats, say $300 x 12 x 1,000,000 or $3.6 billion passed out in 12 "doses" of $300 million each in a geographically diffuse pattern.
Yeah, I can see entrepreneurs all over the country rushing to hire new workers to handle the massive increase in demand created by this program.
It never seems to enter their heads that at the margin, subsidizing unemployment tends to create more unemployment. There are a lot of studies in economics showing that employment spikes at the time when unemployment benefits run out.
Yes, I know the benefits are small compared to a job. No I am not calling unemployed people lazy. I am perfectly willing to concede that the humanitarian case for extending benefits may trump the marginal incentives they create to postpone taking a job.
What I won't concede, what I'm very very tired of hearing asserted as if it was obvious, is that extending unemployment benefits will create jobs.
Obama and Pelosi remind me of that movie about the bus. It's like if they stop spending money at a certain high rate, they will explode.