Wednesday, May 19, 2010

The Mr. Potter Defense


“This is the carrot-and-stick method of galvanising your population: work hard and you can make millions; don’t work and you’re in real trouble. If you were after some evidence of how the US has managed to enshrine hard-working values in its citizens, this chart is probably a good place to start. And these figures matter. Long-term unemployment is a far bigger problem than short-term joblessness. Not only do long-term unemployed outnumber those temporarily out of a job (for a year or less), they are also far, far harder to encourage back into the workforce.”

There is a fairytale economy and a real economy. In the fairytale economy, capitalists profit when they make good decisions and lose money when they make bad decisions. In the fairytale economy, the lazy working people grab money from the government and the bankers are thrifty and hard working because they eschew such anti-capitalist hand-outs. Edmund Conway delivers a corollary argument that uses statistics to show more generous unemployment benefits leads to longer term unemployment.

When we check in with reality, however, something is amiss. The US, he says, has the least generous unemployment protections and that is one of the reasons why our economy does so well. There is one problem. The US now has a rate of long-term unemployment that simply does not fit his chart. Long-term unemployment, despite the best efforts of government to keep benefits low, and protect working people from the scourge of idleness, is at the highest level seen since at least the 1970s, and probably since the 1930s.

In the real economy it is bankers who get the most generous government benefits and working families who suffer the most. Where has that got us? A testosterone-laden rabble instead of a thrifty banking class. And all because a few starry eyed dreamers like Timothy Geithner stir them up and fill their pockets with a lot of taxpayer money.

No comments:

Post a Comment