Perpetual Motion Watch

You might be interested in Kathryn A. Edwards’s analysis at RAND of the $600 weekly unemployment benefit increment:

In the CARES Act, Congress increased unemployment insurance benefits by $600 a week through the end of July. As those extra benefits approach expiration, lawmakers—and many Americans—are at odds about what should happen next.

Tens of millions of Americans are still without work. No one wants to push the unemployed out into the street (literally or proverbially), but some workers are getting bigger unemployment checks than they ever did paychecks. This appears to be a sticking point as Congress has returned from its recess to debate another pandemic relief bill.

Can’t unemployment benefits simply be capped, say at 85 percent of a given worker’s typical wage? That is, can’t the federal government do a replacement-rate top-up, rather than a flat-dollar top-up?

Yes, it’s possible—but not practical or politically palatable.

Her emphasis is on the fixed nature of the increment but it should be obvious that there are problems with the increment itself. The battle right now is apparently between Democrats who, apparently, want to continue the increment indefinitely and Republicans who want to reduce it to $200. How they arrived at that figure is unclear to me but it’s little more sustainable than $600.

The notion that maintaining 15% or 20% of the people on an indefinite basis (if they’re not pledging not to renew the increment, their intent is to continue it on an indefinite basis) simply by extending ourselves credit without consequences is a form of perpetual motion. Disagreeing with it is not cruel. It is simply pointing out the obvious.

A lot of the appropriation is being saved. Trying to inflate it away is cruel, too, and worse yet it’s punishing the prudent.

8 comments… add one
  • Greyshambler Link

    punishing the prudent

    And exacerbating the pension problem, soon no amount of prudence will balance the budget.

  • Andy Link

    In my view the feds should just back-stop the state unemployment systems, which are getting sucked dry. Same with K-12 education maybe with some extra funds to help pay for all the required changes in education delivery.

    Or do what some suggested originally and just pay all or part of the salaries for those businesses that government forced to be closed.

  • Andy Link

    In Covid news, I was reading an update on the nordic countries today. They’ve generally been minimally supportive of masks or even borderline anti-maskers, yet all their numbers are dropping – even Sweden which I think is now at comparable levels to its neighbors.

    This is a weird disease. One of my continual frustrations is the supreme confidence – all around – that people have about what to do. I think a lot more intellectual humility is in order.

  • steve Link

    Your cited article says this.

    “While many are cutting back on their spending and hoarding cash like never before, poorer Americans are still spending nearly as much of their money as before the pandemic.”

    Nowhere, unless I just missed it, does it say that the people receiving the $600 are saving that. It makes the point that this is mostly a drop in spending on services ie people arent going out to restaurants, movies, hotels, bars, theaters, etc.

    Andy- Analyzing just one thing absent an analysis of culture and other actions to reduce risk gets you these kinds or results. If you hate masks but are very good at distancing and avoiding large crowds you are probably OK. IIRC the Swedes and Nordic countries in general have smaller households than average so they are already predisposed to lower rates of spread.


  • Greyshambler Link

    What I’ve thought all along. I can’t speak for AAs but NAs always have a houseful much of that due to addiction and early death of parents.
    Double whammy when gma &gmpa die of the Covid.
    I can’t solve that but some people have suggested AAs and NAs and Spanics get Covid more cause they are fat.
    Hell, this is America, we’re all fat.

  • Greyshambler Link

    As to perpetual motion, if it exists, I think you’ll find it in the horsefly.

  • Guarneri Link

    All this savings and spending disparity shows is that the shutdown policy was cruelest to the two groups you most did not want to be cruel to: 1) low wage earners and 2) job creating entrepreneurs.

    Notice how this has largely come down along party lines. The total shutdown advocacy is predominantly a Democrat one, a Fauci style bureaucrat one, and a media one.

    They must hate the poor, because they have done squat in stopping the virus. But they’ve done a fabulous job at harming those groups. And now the debate is over the size of the crumbs.


  • bob sykes Link

    The problem is the lack of production. Giving money to out-of-work people when there is no production of things does not address the real problem. The only things people can do is pay down debt or save the money. Now of course the feds are talking about inflating the payments away.

    Our leaders are true idiots.

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