Paul Krugman reserved July 4 for what must be a deliberate deception, Punishing the Jobless, on the issue of extending unemployment benefits, which recently failed to pass the Senate.
Krugman blames Republicans, whom he terms “heartless”:
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.
The only problem is that Krugman ignores that Republicans were in favor of extending benefits by taking the money from elsewhere in the budget, including unused stimulus funds. It was the Democrats who balked at this solution, insisting on running up more debt. So the entire premise of Krugman calling Republicans heartless amounts to nothing more than a fiscal policy dispute. Why aren’t Democrats heartless for not going along with the Republican proposal?
Next, Krugman terms “clueless” people like Sharron Angle who have mentioned that the welfare state, including unemployment benefits, can create a disincentive for people to take jobs they otherwise would not take. Krugman admits that this is a real phenomenon:
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.
Krugman says this phenomenon is irrelevant in a bad economy, but once again he ignores that Republicans were willing to extend benefits if the benefits were paid for in the budget, not paid for with more money borrowed from China. So who is the clueless one?
Last, Krugman views unemployment benefits as immediately stimulative in the economy, because the money will be spent. That’s a fair point, which is why it makes sense to use stimulus funds for this purpose, rather than propping up bloated state governments and union contracts. So Krugman’s point actually defeats his point.
Back to the title question. Is Paul Krugman heartless, clueless or confused?
Yes.
Update: Donald Douglas has a Surprise! Republicans ‘Racist’ for No Vote on Unemployment Extension.
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Comments
Thanks William!
American Power linked back with, 'Surprise! Republicans 'Racist' for No Vote on Unemployment Extension'.
From a mediocre economist (yes I have a degree in economics) I think that Krugman is clueless.
I agree with the take given by Pasadenaphil. Also, I do not believe that if Keynes were alive today that he would agree with Krugman and co…
Sharron Angle is correct with her comment about unemployment benefits creating a disincentive. There are other nations e.g. the U.K. and Australia that have long term unemployment. I can speak to the situation in Australia since I am more familiar with regards to how disincentives are created. On the other hand, I am well aware that in the U.K. unemployment and the receipt of benefits is a generational thing.
The disincentives are created because of the extra perks that are offered to the unemployed – different rates for childcare, transport, medical etc. etc. What this means that when work is offered and there is no more unemployment benefit the perks disappear, and that means that the cost of the perks must be added into the equation. It is often better to receive the unemployment benefits than to take work that pays a few dollars extra than the fortnightly benefit. I guess Krugman has never experienced such a thing or is unaware that people do make choices based upon what they have to give up in order to take a real job.
Unemployment money is not close to enough to 'stimulate' the economy. Getting people back to productive work and getting regular wages stimulates the economy. Spending by itself does not solve the problem. Giving 20 dollars to a penniless man and then his spending it does not improve the mans standing and a paltry 20 dollars will not make any ripple in the economy. 500 million penniless folk spending 20 dollars will still not make a ripple an a huge ecnonomy such as ours.
A bad economy, contrary to what Paul says, makes the unemployment incentives to stay unemployed worse. People who in an otherwise good economy might have tried to get off unemployment, now figure that they either can't get a job or/and that getting a job in a bad economy is just not worth it since they are getting all this free money and perks.
And just because the "Neo-Keynesians" are even stupider than the old Keynesians means nothing. Keynes may not have been as "imprecise" as Krugman, but he was still a government loving anti-free market drip.
Oh, and carib, government spending can't "create" jobs, it simply takes jobs out of the private sector and ensconces them within the government where they contribute little to the economy or society. What part of that don't the moonbats understand?
"When you have 9.5 per cent unemployment, all stimulus funds should be applied toward job creation."
So, our government shouldn't spare any cash from building underground turtle tunnels and funding studies of breast size to give to the 9.7. unemployed while they wait forever for 'jobs' for all of them to be magically created from all this, instead they should give that money by accumulating our future debt instead?
We're not "wingnuts," you're a moonbat.
Also, if job creation should be the main goal, why extend unemployment benefits and money at all? Why not take all that money and add it to the "stimulus fund?"
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