Unemployment benefits

[MikeWaters]

I need a liberal to explain to me why unemployment benefits, into perpetuity, with no hard deadline, is good for America.

A system that creates a disincentive to work seems to be poor policy.

[ChinoCoug]

Unemployment benefits shouldn't extend into perpetuity, but the optimal amount of time is higher than current levels.

Studies have shown that unemployed people cut back on their consumption even if they keep getting a check, which means the hardship of unemployment is sufficient incentive to find work even with unemployment benefits.

http://american.com/archive/2007/nov...s/the-theorist

...Werning found that the unemployed naturally reduce their consumption over time, even if you keep sending them checks. This finding contradicts the belief that you have to stop benefits in order to make people feel a hardship.

[Archaea]

Originally Posted by ChinoCoug

Unemployment benefits shouldn't extend into perpetuity, but the optimal amount of time is higher than current levels.

Studies have shown that unemployed people cut back on their consumption even if they keep getting a check, which means the hardship of unemployment is sufficient incentive to find work even with unemployment benefits.

http://american.com/archive/2007/nov...s/the-theorist

Who argues you must make people feel a hardship in order to create an incentive to find work? This is a red herring.

First, your correlation sounds simplistic and makes an argument which can be easily knocked down.

Second, incentives to find work seem related to many other factors rather than the existence of unemployment checks, though it seems implausible that some people won't prefer having a check rather than working. The analogy seems to be the concept of imposing the death penalty. If the imposition is not ambiguous and clear, it becomes a deterrent but if not then it's not a deterrent. Here, if you have too many benefits, the immediacy makes people scramble for work whereas a lengthy distant cut-off will deny a person the psychological urgency due to impending termination of benefits.

[MikeWaters]

What is "sufficient incentive"?

If I get an unemployment check that is 90% of my regular pay, I'm going to cut down on my consumption. But I think I would be pretty ok with just collecting my check and not working (ignoring the fact that I actually like work and think it is good for the spirit and constitution, and thus would not personally want to sit around).

I've had a friend that was happy as a clam collecting unemployment, and was only talking about getting a job when his unemployment was going to run out.

Famously, in a Seinfeld episode, George Constanza is fine and dandy collecting unemployment, and only fakes looking for work.

The USA is moving to a socialist welfare state, where no one does any work, and all the goods and benefits magically appear out of thin air.

[Archaea]

Originally Posted by MikeWaters

What is "sufficient incentive"?

If I get an unemployment check that is 90% of my regular pay, I'm going to cut down on my consumption. But I think I would be pretty ok with just collecting my check and not working (ignoring the fact that I actually like work and think it is good for the spirit and constitution, and thus would not personally want to sit around).

I've had a friend that was happy as a clam collecting unemployment, and was only talking about getting a job when his unemployment was going to run out.

Famously, in a Seinfeld episode, George Constanza is fine and dandy collecting unemployment, and only fakes looking for work.

The USA is moving to a socialist welfare state, where no one does any work, and all the goods and benefits magically appear out of thin air.

What I don't quite understand is the increasing taxation from people in downtimes.

My example. Our state, Nevada, is in an economically desperate time. Government is cutting back, yet revenues are still declining. So the proposal of the legislature which fears pissing off too many labor unions is to not cut back as far as proposed and to increase taxes. My concern is that increasing taxes during a time of want will further deplete the businesses which are barely skipping by.

Isn't it consistent with socialist economic theory for Government to spend more and to increase taxes during the good times to recover what it spent during the lean times?

Won't increasing tax burdens during depressed times further depress the business cycle?

[MikeWaters]

States can't run budget deficits, normally. Heaven help us, if they did, this entire nation would be 50 trailers in a trailer park full of hi-def TVs and single-digit credit scores.

States that are wise hold onto a rainy day fund for the lean times.

But it's already been shown that it is largely corrupt idiots that get elected, and being wise is not one of their strongsuits.

[ChinoCoug]

Originally Posted by Archaea

Who argues you must make people feel a hardship in order to create an incentive to find work? This is a red herring.

Haha, OK then, if one doesn't need hardship for motivation to look for work, keep sending them those checks! Motivation is already there!

[ChinoCoug]

Originally Posted by MikeWaters

What is "sufficient incentive"?

If I get an unemployment check that is 90% of my regular pay, I'm going to cut down on my consumption. But I think I would be pretty ok with just collecting my check and not working (ignoring the fact that I actually like work and think it is good for the spirit and constitution, and thus would not personally want to sit around).

You are looking only at the change in consumption from getting regular pay to getting an unemployment check for a smaller amount. After people get the second check, third, etc. for the same amount, they still gradually scale back their consumption over time although their check each month is the same amount.

[MikeWaters]

Originally Posted by ChinoCoug

You are looking only at the change in consumption from getting regular pay to getting an unemployment check for a smaller amount. After people get the second check, third, etc. for the same amount, they still gradually scale back their consumption over time although their check each month is the same amount.

Meaning they are acquainting themselves to their new reality.

If people anticipated getting another job soon, they would not need to scale back consumption.

Instead they are thinking, "well, I'm going to be on this amount of income until my benefits run out, so better be prudent." It isn't like most people sit around and make permanent budget changes they institute immediately.

Sorry, you are talking to a conservative here. You can talk stupid to liberals, but I have a bit more common sense that.

"Sufficient incentive." Hilarious.

[ChinoCoug]

Originally Posted by MikeWaters

Meaning they are acquainting themselves to their new reality.

If people anticipated getting another job soon, they would not need to scale back consumption.

Bingo! And unless he's crazy and wants to continue the low consumption, he'll want to get a job, so sending him the checks won't create the bad incentives you're talking about.