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This morning I pointed out the similarities of Rolling Stones song HANG FIRE to what President Biden is doing by incentivizing staying home and being a lazy slob!
“Experts” predicted 1 million jobs would be created in April. The actual number fell far short, at 266,000. Republicans warned that overly generous COVID-19 relief benefits create a disincentive to work.
The day before this disappointing jobs report, Bloomberg wrote:
In earnings calls and business surveys, executives often blame stimulus checks and generous unemployment benefits for hampering hiring efforts. …
Friday’s employment report, which is projected to show the economy added 1 million jobs in April, should offer new insight into this mismatch and whether it’s deterring growth.
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When the numbers came in, Biden administration officials lacked no shortage of excuses. Some potential workers, they argued, feared going back to work because of COVID-19; many schools had still yet to resume in-school learning, particularly burdensome for single parents; we’re still early in the bounce back from the COVID-19-stricken economy; one month’s worth of numbers does not a story tell; and employers just need to raise wages.
Labor Secretary Marty Walsh urged perspective: “Well, you know, under normal circumstances, and certainly we’re not living in normal circumstances, the 266,000 job gain a month is a good number. Unfortunately, we’re still in the midst of a pandemic.”
President Joe Biden rejected the elephant-in-the-room possible explanation for the disappointingly low April job numbers—that the generous provisions in the COVID-19 relief packages, coupled with state and local aid, create a disincentive for people to go back to work. Biden dismissed “loose talk that Americans just don’t want to work. … The data shows that more workers are looking for jobs, and many can’t find them.”
>> Watch “Severely Disabled Man Suffers Consequences of Paying Americans Not to Work”:
But Bloomberg wrote, “Anyone who previously made less than $32,000 per year is better off financially in the near term receiving unemployment benefits, according to economists at Bank of America.”
Blog writers for the libertarian Cato Institute wrote: “Combined with state unemployment benefits, around 37 percent of workers can currently make more unemployed than in work. A low-income worker in Massachusetts previously earning $535 per week faced a pre-pandemic replacement rate of unemployment insurance benefits to earnings of 48 percent ($257). Now, the same worker would obtain benefits worth 104 percent of their pre-recession earnings ($557).”
But not to worry because, writes The Washington Post, a Labor Department spokesperson says his office “has not seen evidence” that the COVID-19 relief benefits incentivize people not to work.
Since when does the Biden administration require “data” or “evidence”?
Where is the evidence that a $15 minimum wagewill do more good than harm, given that the overwhelming consensus among economists is that minimum wage loss hurt the unskilled?
Where is the evidence that a $2.4 trillion “infrastructure investment” plan will do more good than harm, given the necessary massive tax increases?
Where is the evidence that universal pre-K for the poor will improve results for K-12, given the “fade out” effect that shows no long-term benefit?
There is, however, a great deal of evidence that burdening the economy with more taxes and regulations hurt growth. Eight years into the New Deal plan designed to rescue the economy from the Great Depression, President Franklin Delano Roosevelt’s secretary of the treasury, Henry Morgenthau, wrote:
We have tried spending money. We are spending more than we have ever spent before and it does not work. … I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. … I say after eight years of this Administration we have just as much unemployment as when we started … and an enormous debt to boot!
But as long as politicians, in the name of compassion, take money from one party to give to another; borrow money to be paid later with interest; and print money that ultimately triggers inflation, who needs evidence?
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Many academic studies show that extending unemployment benefits lead to more joblessness!!
To Be Genuinely Compassionate, Politicians Should Focus on Job Creation, not Unemployment Benefits
January 10, 2014 by Dan Mitchell
Washington is in the middle of another debate about redistributing money.
But that’s hardly newsworthy. Politics, after all, is basically a never-ending racket in which insiders buy votes and accumulate power with other people’s money.
The current debate about extending unemployment benefits is remarkable, though (at least from an economic perspective), because certain politicians want to give people money on the condition that they don’t get a job. Needless to say, that leads to a very perverse incentive structure.
There is a problem with joblessness, to be sure, but it’s misguided to think that extending unemployment benefits is the compassionate response.
Senator Paul and I wrote a column for USA Today about a better way of helping the unemployed. Looking at the empirical evidence, we argue that it’s time to unleash the private sector by reducing the burden of government.
We started with an assessment of the labor market, which has been dismal under Obama’s reign.
The nation is enduring the weakest recovery since the Great Depression, 11 million people remain unemployed, and millions more have dropped out of the labor force. For minorities, it’s even worse. The black unemployment rate is more than twice that of whites. And the weak job market means that even those who are employed are having a hard time climbing the economic ladder.
We explain that more unemployment benefits is a misguided approach.
There’s a lot of talk about helping those down on their luck, but there’s a big divide on the best approach. Our view is that America needs a growth agenda based on reducing the burden of government. The unemployed need a strong job market, not endless handouts that create dependency. …There’s an understandable desire in Washington to “do something,” and extending benefits once again certainly is the easy route for policy makers. But if we are serious about keeping workers out of the long-term unemployment trap, we must have a debate about which policies cause unemployment and which policies create jobs.
The column cites many of the academic studies showing that unemployment benefits lead to more joblessness.
I’ve made this point during television interviews, and this Michael Ramirez cartoon echoes our thinking in a more entertaining fashion.
And we definitely can’t overlook this superb Wizard-of-Id parody. It doesn’t focus specifically on unemployment benefits, but it makes a great point about labor supply incentives.
But let’s get back to the column. Our main goal is to identify the types of policies that would generate jobs and growth.
Simply stated, genuine compassion should be defined by helping people get back to work so they don’t need to be wards of the state.
And easing the burden of government is the best way to make that happen. Our column looks at some evidence – from both overseas and here at home – about the policies that are associated with better economic performance.
Big government is responsible for today’s unemployment situation. …Since President Obama was elected, we have spent $560 billion on unemployment benefits. It’s likely many more jobs would have been created had the government not diverted that money from the economy’s productive sector. …Instead of copying stagnant European nations with bigger public sectors, we should learn from countries that have achieved better performance by lowering the burden of government. Singapore and Hong Kong are examples of jurisdictions with small governments and free markets that enjoy strong and sustained growth with very low levels of joblessness. …look at Canada, which has significantly boosted its jobs market with pro-growth reforms, or Switzerland, which has cemented its traditionally strong labor markets with reforms to control the growth of government. This is not a partisan argument. Or at least it shouldn’t be. The United States enjoyed strong levels of job creation during both the Reagan and Clinton years. But in both cases, public policy was largely the same, featuring an increase in economic freedom.
Some people may wonder whether Reagan and Clinton belong in the same category.
Well, as illustrated by this chart, they both presided over periods with impressive job creation.
And they both presided over periods with generally good economic policy.
Reagan moved the country in the right direction on purpose. Clinton, by contrast, may have wanted to move the nation in the other direction, but he was unsuccessful.Indeed, the evidence is very strong that the overall burden of government fell during his tenure.
Whether by accident or design, America needs another period of free markets and shrinking government.
For further details on the recipe for good policy, here’s the video I narrated for the Center for Freedom and Prosperity, which explains the conditions that lead to strong and sustained growth.
Free Markets and Small Government Produce Prosperity
Uploaded on Feb 17, 2009
Now that the so-called stimulus has been enacted, hopefully policy makers will turn their attention to policies that actually improve economic performance. This Center for Freedom and Prosperity Foundation video reviews the key finding in the Fraser Institute’s Economic Freedom of the World and explains that, contrary to the policies of Presidents Bush and Obama, smaller government and free markets are the way to boost economic growth. For more information: http://www.freedomandprosperity.org
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P.S. I’m obviously a fan of Senator Rand Paul. Not only does he choose good people as op-ed partners, he also gave me public credit for a good Obamacare joke.
P.P.S. On a separate topic, I wrote in December 2012 that the strongest evidence for media bias is which stories get covered. A perfect example is that journalists already have given 17 times as much coverage of the Chris Christie “bridgegate” scandal as they gave to the IRS scandal over the past six months
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