Unemployed Comments on the WSJFollow

I was going to write this very point, but you have done it for me. That's why eternally extending unemployment is a bad thing. In a downturn economy, not everyone can expect to obtain the same job or even one earning more than the unemployment benefits based on their previous salary will pay out. However, it is important for economic recovery that people do take those jobs. If they do, they'll "suffer" with lower income for a while, but the businesses will start to see recover and loosen their pocketbooks somewhat and higher paying jobs will then come back.


I know your economics education consists entirely of mastering balancing a checking account, but let me clue you in here:

People taking lower paying jobs does not spur the economy. It is, by definition, wage deflation. If it happens on a large enough scale, this leads to general deflation. General deflation utterly destroys a credit based economy, which ours is. The whole operating thesis of modern central banking is to prevent deflation at all costs, then control inflation.

Contrary to your fellow fucstick rock ignorant conservative traveler's post, stimulus that caused inflation would be DRASTICALLY better for long term growth of our economy than doing nothing and hoping. Cutting spending at this stage of a recovery cycle is idiotic...unless. Unless the idea is to worsen the economy for a short time for political gain. Then it's probably a good idea. It's a good idea, particularly if you can sell it to ignorant suckers as "the right thing to do". Then you don't seem like obstructionists concerned only with increasing your power.

This is absolutely the right thing for the GOP to be doing and they're doing well selling it. I'd have advised them to this if I were working for them. Then we'd all laugh about the part about how it could be sold as being good for the economy.


If everyone sits there collecting unemployment waiting for the jobs to come back, it'll take a hell of a lot longer for them to do so. A friend of mine's wife recently started working again after almost 15 years off work (raising their daughter as a stay at home mom). She can't drive due to medical issues and let's just say that the public transportation sucks where they live, so she literally has one strip mall within walking distance as the only option of places to find a job. She managed to get a job at a Starbucks in that mall. It doesn't pay a ton, but they do provide benefits and it'll help them out financially (they're in risk of losing their home right now as well). In just the month or so she's been there, three people have left the shop she works for, and they're having a hell of a time finding people to fill the jobs. They've got a manager who's doing double duty at another shop, and are having to try to get employees from two other shops to do shifts to fill the gap.

Yet they haven't raised wages? Amazing that your fucking meaningless anecdote generates a sample set of 1 and even the data there contradicts the 4th grade supply and demand theory you spew forward regularly on this board. If they can't find someone to work for the wages they offer, they should raise wages until they do, correct? Is that not your infantile understanding of the labor market?


I can't help but wonder how many people could work those jobs but aren't because they're going to wait until their unemployment checks run out before looking for something "beneath them". Meanwhile small businesses can't find people to work for them (yes, I'm aware that Starbucks isn't a small business, but the shops each follow a similar model). This is what I meant by feeling a little pain. You work a job, any job until something better opens up. The idea that we should all just sit around waiting for other people to make the economy recover and just collect checks for sitting around is stupid and counterproductive IMO.


Well, coming from someone who secured a job in literally the best job market in the history of the world, then clung to it for dear life while other people happened to make god decisions for his company, that really means a lot. Your opinion, サラリーマ, just couldn't carry any more weight. You've seen the hard times of people taking a 2 week certification class and making more than university professors. Thank goodness your work ethic carried you through.


Those are the sorts of attitudes which will make our current economic problems worse over time, not better. If you want to recover, you have to move forwards. Sometimes, it's not pleasant, but that's the way life works. And for the record, if I were to lose my job tomorrow, I have saved enough money that I could certainly sit on unemployment for the standard time period without problem (which I've more than paid into btw), and assuming I couldn't find a comparable salaried job in that time, I would take whatever I could find and do just fine. I live frugally now and save as much money as possible for a rainy day.

That'd work out well if the deflationary policy you advocate for came to pass. When you finished paying off your $300,000 condo that'll be valued at $80k, I'm sure your nest egg would go far.


Because of that, I'm not afraid if that rainy day comes. If more people thought of their financial future as their responsibility rather than assuming that the government will take care of them, more people would be prepared for such things and could weather them. Sadly, we live in a society in which the entitlement mentality has taken hold and many people don't think in terms of personal responsibility.

You're not personally responsible, you've just been astonishingly lucky. Or hey, maybe it's both, who knows? Maybe you could have succeeded in a much tougher job market. No way to say really. Some people who can dunk on a 6 foot rim can dunk on a 10 foot rim, too. Assuming that it's not any harder though, just makes you a fucking fool.

Your mistake, which is to be forgiven because you exist in a world surrounded by people who all believe the same false assumptions, is that you think the most important effect on the economy is wages. It's not. It's productivity.

Obviously, if everything else were equal, a worker making a lower wage has those deflationary effects. But that's not the case here. They aren't equal. It's not a choice between a worker earning 50k or 30k by doing work which is valued by other market forces at that rate. We're talking about a worker who used to earn 50k while doing work which was valued at that level by other market forces who is now producing absolutely nothing while pulling down a 40k unemployment check,

They produce demand by spending the unemployment check, moron. Production has nothing to do with a recovery, idiot. Demand does. Why did we quickly recover from the great depression? World War. Why? It created huge demand fueled by *entirely useless non productive government spending*. It's hard to think of a clearer example of how idiotic what your posting is than this. We recovered from a far, far, worse catastrophic downturn only when THE GOVERNMENT WENT INTO MASSIVE DEBT CREATING DEMAND. All of the massive technological and productivity growth that occurred in the 40s could have as easily occurred in '37. It didn't because there was no demand for it. The supply side argument, of course, is that if society had just been smart enough to build 10000 bombers on spec and spend billions on science projects no one had a desire to buy the engineering outcome of, thing would have gotten better that much sooner.

Get it yet? Demand destruction drives downturns, increased productivity drives expansion.

Economies don't exist in a rational vacuum, where these can be substituted for one another. Do you understand yet? During a period of expansion, stimulus has much less net effect than increasing productivity. During a contraction, productivity has virtually no effect. This is the entire point of having monetary policy *at all*. To smooth out the bumpy macroeconomic consequences of an actual free market. An actual free market is a two steps forward, one step back affair, constantly collapsing and overheating as small changes in information rebound back and forth impacting asset pricing.

So, to make the argument you're making now, WOULD REQUIRE ACKNOWLEDGING THAT WE'RE RIGHT NOW IN A PERIOD OF RECOVERY SO STRONG THAT STIMULATING DEMAND WILL HAVE NO EFFECT.

Is that the argument you're making?



Huh? Short term wage deflation for a portion of the economy wont cause my property to lose value relative to the dollar.

It may, it may not. The value of your home relative to the dollar is unrelated to the value of the dollar. The value of the dollars you borrowed to pay for it isn't. If you have more debt than *liquid* assets, you should be praying for general and wage *inflation*. I can see how you wouldn't understand that, however.

Anyway, stuff to do, taking the kid to the zoo, no time to reply to the rest of the your post. I'm sure I missed a lot of insightful revolutionary paraphrasing of Herbert Hoover.

Smashed,



Artificially created demand is not sustainable; i.e. cash for clunkers and the first time home buyers check. In fact it actually hurts the economy in the long run.

No, but if you're alive and not retired or disabled you should be counted in the workforce.

Yeah, I always thought this was one of the stupidest things that people can 'leave' the workforce that way. I really doubt the number of people who don't need to work and are fine with that aren't significant enough to throw things off.

Elinda,

Whose words would they be?



The same way taking steroids hurts the person taking them.

So the economy is going to be fantastically strong but rather angry with tiny *****************
And prone to die soon.

And this is where the left's ideology gets in the way. The correct answer is "both". As I have pointed out numerous times when we've had this same debate before, the assumption that the right is pro-supply, and the left pro-demand isn't completely accurate. The right is "use whichever is needed at the time", while the left is anti-supply. The left is anti-supply because they have to be to play to the "rich vs poor" dynamic they use to build up a voting base. As a result, the left has to leave half of the economic tool-kit unused when facing an economic problem. Your blanket statement that production has "nothing to do with a recovery" if evidence of this in your own thinking.



Yes. The government went into debt buying up huge amounts of war materials. But this isn't what got us out of the depression. It was what the suppliers of those materials did with the factories and the capital they'd gained during the process which did. Obviously, demand is necessary, but without supply you end out with too many dollars chasing the same products around an inflationary circle. Both sides are needed. Not just one. You can't demand your way out of a recession any more than you can supply your way out of it.




We didn't get out of that economic downturn because we borrowed money though. It's what we did with it. And spending it on social programs and temporary wage replacements in ways which do not allow the producers of goods to gain ground financially doesn't work. That's what we did for the first 12 years of the Great Depression, and it showed no sign of stopping. Even during WW2, the economy didn't really recover. It was the post war period in which the rapid recovery occurred, and that was because we suddenly found ourselves with a massive industrial machine looking for products to build and workers to hire, and a massive amount of labor looking for work. That combination fueled the recovery and a decade of unmatched prosperity.



No one's talking about demand destruction here though. What I'm talking about is degrees to which things are positive for an economy. And at the top is a fully employed labor force who are producing more than they cost (a health free market economy). A distant second is employing labor to do less productive things, but at least keeping them active and receiving paychecks (the various jobs programs out there). Waaaaaay in third place, well into the "this is a bad thing" category is simply paying people a wage even though they aren't producing anything, but just to keep them able to buy stuff.

It may be better for the individual for them to receive 40k/year without producing anything, but it's much much worse for the health of the economy. Surely, you can see that paying people who aren't producing anything is a bad idea? Because at the end of the day, the funds to pay them has to come from somewhere and that "somewhere" ultimately is the total productivity of the nation.



Sure. But unless you want to eternally be in a contraction, you have to make allowances for productivity, don't you? Hence, the problem. You want to trim the sails when the storm surge and high winds are striking the ship. But you don't do so at the cost of the ability to open them up as soon as possible. The need to artificially create demand isn't because that actually helps get out of a financial downturn, but because it may be necessary in order to weather it. You get out of it by opening up the sails, so to speak.




No. I'm saying that we're in a period in which we *could* recover, but are not because people who think like you do economically find it much more politically advantageous to extend the crisis as long as possible. Combine that with the natural preference for "big business is bad!" among those currently in power and their predilection for "give a man a fish and feed him for a day" solutions, and you've got a recipe for a repeat of the 1970s economically speaking. The unfortunate reality is that the political left gains enormously if they can maximize the number of people reliant on government programs for their day to day lives and this provides them a great opportunity to increase that number. It's kinda silly to expect that they'd willingly give that up if they had a choice.




Simplistically put, but sure. Um... I do have about twice as much in assets than I do in debt. I understand very well what an inflationary period would do to me financially. I'm sure I'll muddle through, but there's a larger aspect to this. Two aspects really:

1. We rewarding bad economic behavior. This is what I thought we were supposed to avoid, and what everyone was attacking those evil big businesses for doing. Borrowing too much money and relying on the government to save them. By advocating a "inflate our way out of debt" approach, and even arguing that this is good because all the people who have debts will find them decreasing relative to their wages over time is negative reinforcement, isn't it? If the government does this, or even just appears to be on track to do this, why shouldn't everyone just rack up as much debt as possible? Isn't that a bad idea?

2. It hurts the "other side". Yes. Those evil big business types. Who loans the money out? We're all bashing those lenders for not lending even though the government bailed them out, but how on earth can we expect them to lend money when there's a good chance we may hit a major inflationary cycle? It's like asking people to hit themselves in the head with a hammer and then wondering why they wont do it. On a more small scale point, but one which matters to "the little people", it kills the dream of prosperity which presumably fuels most people to work harder than they would otherwise. The US worker is significantly more productive per hour worked because each one hopes to some day become wealthy. Maybe not "rich", but successful. When you go into that sort of inflationary cycle, you reduce the relative amount of debt, but you *also* reduce the relative amount of wealth. That's a crushing blow to the middle class. I suspect that's also why many on the left are ok with this. They don't see this as a negative thing, since they like class warfare and know that the best way to win control over the working class is to prevent them from becoming middle class (or force them back into the working class via processes like this).


It's a bad idea... Unless your intention is to extend the duration of the financial downturn, and work to eliminate the middle class. In that case, it's a great idea!

The reason the hardcore GOPers hate the stimulus is that they are scared like all Hell it will work. Face it, if it does, they are hosed for the next 8-12 years.

Maybe this is where foreign news services let you down. That's not what it is at all. It's written up that way, but in practice it's nothing more than a give away to pet projects & paybacks political favors. It funds wild goose chase science projects, buys hybrids for government entities, builds toy trains in communities that will never be able to utilize them and puts convention centers in towns that are never likely to hold a convention. It does the same thing that the homeland security money did, buys state of the art SWAT gear for rural sheriff's departments and million dollar fire trucks for the auxiliary Mayberry brigade. It's just a bald faced vote buy that can't work to create sustained growth in the economy.

If you've done any amount of interstate traveling, you'd know that those "pet projects" are actually sorely needed improvements. Merging from 316 to I-85 no longer causes my life to flash before my eyes.

Actually, the complaint from Nobel prize winning economist Paul Krugman was that the bill was too small in its size and scope; that something twice as big was going to be needed to provide long term relief for the entire US economy, not just small parts of it.

What I wanted to see was a big green energy push. 1.85 billion was just set aside for two more major solar farms. That's the kind of investment we need. The two farms will provide construction with some big temporary work, must contain parts produced in America by American factories (so GE won the contracts big time), and will also provide 1,600 permanent private sector jobs. One of the farms alone will provide enough power for 70,000 homes.