Alan Reynolds, writing in the New York Post, makes one of the best observations on the unemployment rate that I have come across. His contention is that the stimulus package actually INCREASED the unemployment rate substantially. By extending unemployment benefits, at no cost to the states, there is no incentive to go back to work. Subsidize unemployment, and you get more of it. That explains a lot.
Every time a liberal uses the levers of government to ‘do good’ by interfering with the market economy, the law of unintended consequences ALWAYS comes around to bite them in the butt. No grounding in finance or history, no grounding in reality.
Alan asks:
Why did the unemployment rate rise so rapidly -- from 7.2 per cent in January to 10.2 percent in October? It was clearly the administration's "stimulus" bill -- which in February provided $40 billion to greatly extend jobless benefits at no cost to the states.
When the government pays people 50 to 60 percent of their previous wage to stay home for a year or more, many of them do just that.
And the stimulus bribed states to extend benefits -- which have now been stretched to an unprecedented 79 weeks in 28 states and to 46 to 72 weeks in the rest. Before mid-2008, by contrast, only a few states paid jobless benefits for even a month beyond the standard 26 weeks.
When you subsidize something, you get more of it. Extending unemployment benefits from 26 to 79 weeks was guaranteed to leave many more people unemployed for many more months.
And longer unemployment translates to higher unemployment rates -- because the relatively small numbers of newly unemployed are added to stubbornly large numbers of those who lost their jobs more than six months ago.
Read the whole thing here.
At least the American public is beginning to catch on that the emperor has no clothes:
Author: Mark
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