The Kroog Versus The Coalition Of The Mean

Paul Krugman continues to beat the drum on America's unemployment situation, trying to convince people that this time it really is different.  How did we end up in an America where we're now trying to cut off the unemployed just as the second leg down in our economy begins to pick up speed (emphasis mine)?

The answer is that we’re facing a coalition of the heartless, the clueless and the confused. Nothing can be done about the first group, and probably not much about the second. But maybe it’s possible to clear up some of the confusion.

By the heartless, I mean Republicans who have made the cynical calculation that blocking anything President Obama tries to do — including, or perhaps especially, anything that might alleviate the nation’s economic pain — improves their chances in the midterm elections. Don’t pretend to be shocked: you know they’re out there, and make up a large share of the G.O.P. caucus.

By the clueless I mean people like Sharron Angle, the Republican candidate for senator from Nevada, who has repeatedly insisted that the unemployed are deliberately choosing to stay jobless, so that they can keep collecting benefits. A sample remark: “You can make more money on unemployment than you can going down and getting one of those jobs that is an honest job but it doesn’t pay as much. We’ve put in so much entitlement into our government that we really have spoiled our citizenry.”

Now, I don’t have the impression that unemployed Americans are spoiled; desperate seems more like it. One doubts, however, that any amount of evidence could change Ms. Angle’s view of the world — and there are, unfortunately, a lot of people in our political class just like her. 

It's the same folks who say America is a the greatest country on Earth, that its people are exceptional and destined, who talk about how special we are as a people, invariably they are the first to turn on their neighbors and say "I don't care if there's not any jobs out there, go paint fences and collect aluminum cans.  I'm not helping you.  Get a job you lazy bastard."

The deficit numbers are just an excuse to heap more misery upon the unemployed.  That's because a lot of people in Krugman's first two categories believe everyone who is unemployed still must be lazy, or trying to scam the system, or trying to fleece them personally.  It's a depressingly cynical worldview, and in reality that's just covering up for fears of something far more nasty:  that everyone who's still unemployed by this point is shall we say of a certain ethnic background.

That brings us to category three, which is not just populated by Republicans, either.

But there are also, one hopes, at least a few political players who are honestly misinformed about what unemployment benefits do — who believe, for example, that Senator Jon Kyl, Republican of Arizona, was making sense when he declared that extending benefits would make unemployment worse, because “continuing to pay people unemployment compensation is a disincentive for them to seek new work.” So let’s talk about why that belief is dead wrong.

Do unemployment benefits reduce the incentive to seek work? Yes: workers receiving unemployment benefits aren’t quite as desperate as workers without benefits, and are likely to be slightly more choosy about accepting new jobs. The operative word here is “slightly”: recent economic research suggests that the effect of unemployment benefits on worker behavior is much weaker than was previously believed. Still, it’s a real effect when the economy is doing well.

But it’s an effect that is completely irrelevant to our current situation. When the economy is booming, and lack of sufficient willing workers is limiting growth, generous unemployment benefits may keep employment lower than it would have been otherwise. But as you may have noticed, right now the economy isn’t booming — again, there are five unemployed workers for every job opening. Cutting off benefits to the unemployed will make them even more desperate for work — but they can’t take jobs that aren’t there. 

Now that makes perfect sense to me:  Our problem here is stimulating demand, not supply.  The supply siders have been in charge since 1980.  We've finally gotten to the point where all the supply side economics on Earth won't fix the basic problem where Americans just don't have the wages, the savings, or the equity to pay for things anymore.  No demand, tons of supply = deflationary death spiral.


 And we're lining up millions of jobless as human shields against that.