I found the recent editorial from the Wall Street Journal, comparing President Obama to Seinfeld’s George Costanza amusing but exaggerated:
In a 1994 “Seinfeld†episode, George realizes that “every decision that I have ever made in my entire life has been wrong. My life is the complete opposite of everything I want it to be.†Jerry replies: “If every instinct you have is wrong, then the opposite would have to be right.â€
So Costanza approaches a gorgeous woman in the coffee shop and announces, “My name is George. I’m unemployed and I live with my parents.†To his surprise, she’s interested. He lands a job with the Yankees after insulting George Steinbrenner.
Maybe President Obama ought to take Jerry’s advice too. That’s our reading of a striking new economic study that examines Congress’s decision to zero out extra unemployment benefits last year.
The authors find that this abrupt policy shift created some 1.8 million jobs, or slightly more than three of five net positions filled in 2014. The cuts also pulled a million workers who dropped out of the labor force back into the workplace. This reality happens to be the opposite of what Mr. Obama and other liberal sachems predicted.
Unlike the editors of the WSJ, I do not believe that the president’s policy preferences can be improved by taking every one of them and doing the opposite. I think the president is opinionated, incurious, has a dislike of private businesses, and an inexplicable confidence in the workings of government. That’s not to say that every business is to be praised while every government action is malignant. Good policy is just more complicated than that.
I need to read the study to be certain, but how does NBER explain that there WASN’T a surge in people going back to work when UEC started running out for people by the hundreds of thousands if not millions in 2010? It’s not like I’ve been collecting UEC for the last five years, nor have millions of others.
Ellipses, as I understand the theory: unemployment benefits, including extensions, increase the unemployment rate at least marginally over what the rate would be without those benefits. So I suspect the answer to your question is that unemployment would have been worse in 2010 had those benefits not run out. This is based upon comparing differences btw/ states with different benefits.
I didn’t understand it as saying that one can reach full employment by cutting benefits, nor that the jobs filled are good ones.
That’s exactly what is says, and the methodology, PD. The notion is that there is a certain fraction of the unemployed who would be just as happy collecting benefits as working. Not all, just some. And it goes to the question of how big a gap between earned wages an ue bennies there must be to induce work seeking in perceived suboptimal jobs. Emotional topic.
It turns out that President Obama and his supports are right. The economy is going gangbusters, and jobs are being created everywhere. The problem was nobody would take them.
The great experiment is over deficit spending out the ass, Fed monetary engineering schemes, and no unemployment are the way to get an economy moving. I suspect the Democrats will be able to live with that formation.
I should buy stock in Ben-Gay and back braces for all the contortions that will be performed. Logic be damned, or as I was once told, “you are making it sound stupid.”
Drew,
“The notion is that there is a certain fraction of the unemployed who would be just as happy collecting benefits as working.”
It’s not just a question of that though, it’s also economic reality. Not sure of the aggregate numbers, but I know a lot of people who want to work and are decidedly not happy being out of work, but the opportunities just aren’t there. Additionally, for people with families a low-wage job won’t even pay for child care. That’s just one case where staying home makes perfect economic sense – unemployment benefits just makes the decision that much easier.
There are many other studies showing that UE insurance has a small effect. This is a good example of people believing that the most recent study, no matter how badly done, must be the best. Given that there is no reasonable causal linkage between people returning to the workforce and ending UE insurance, the study should be taken with a large grain of salt.
Steve
Oops. Anyway, only 1.3 million people went off UE insurance last year, yet this created 1.8 million jobs and drew another million back into the work force?
http://www.nextnewdeal.net/rortybomb/did-ending-unemployment-insurance-extensions-really-create-18-million-jobs
Steve