On Thursday, Simon Johnson expressed his beliefs on the state of
unemployment in the United State. Johnson looks at the potential ruling by
(what Johnson states) House Republicans to cut unemployment benefits by 40
weeks-worth of the current budget. The matter of the fact is that this
cut in unemployment benefits would be extremely detrimental to so many
Americans.
As of right now, we have been hovering around the 10% unemployment rate. What we are taught in an intro macroeconomics course is that this number hides many factors that would bloat the unemployment rate numbers. Underemployment is excluded from the true value of the unemployment rate.
As of right now, we have been hovering around the 10% unemployment rate. What we are taught in an intro macroeconomics course is that this number hides many factors that would bloat the unemployment rate numbers. Underemployment is excluded from the true value of the unemployment rate.
While these people may have jobs, the hours that are necessary for
them to be content is not being reached. Also, people who have been
outside of the workforce and no longer qualify as unemployed are still
unemployed, yet these numbers are not calculated to the proper unemployment
rate percentage. Johnson states that 16.9% of the workforce is currently
in these positions similar to the counted unemployment. Disgruntled
employees and unemployed people who are discounted create a serious flaw to how
America’s economy is currently running.
On average, the level of long
term unemployment usually stands at 10-15% of the total unemployment rate.
In 2008, this number skyrocketed to 45%. The job market may
be improving, but a question must be asked whether we are gathering people who are
desperately in need of work (the 45%) and putting them into a position for
success. The cycle seems to be playing against this group.
The positive note to this is that our economy has seen job creation over the past quarter. With that, there is less need to provide unemployment benefits. However, the economy is not coming back as fast as the amount of benefits needed are coming in. In fact, the current position (when including those who should potentially be included in the UR) brings back memories to the 1930’s.
The biggest problem we seem to be overlooking is that we can’t just have the upper portion of Americans basking in the rewards of an improving economy. Balance is what will create a sustainable economy. I have written over the past weeks over and over again that government officials continue to push for corporate tax cuts, education tax cuts, and now unemployment benefits cuts, but what we would like to see is improvement at all levels of our country. I hope that I have been clear through my posts that I don’t hate the essence of capitalism, but more so the place where it currently stands at the moment, and the long term effects it may have on our economy.
While Johnson argues the mean spirit that the unemployment benefits cuts imply, I am not so sure I would accept this. I think many people think entirely rationally, and therefore pursue their own self-interests and personal gain. But eventually, there comes a point where the costs placed on society ultimately outweigh the benefits of the few.
Reference:
Johnson, Simon. “Mean-Spirited, Bad Economics”. The Baseline Scenario. http://baselinescenario.com/2012/02/09/mean-spirited-bad-economics/
The positive note to this is that our economy has seen job creation over the past quarter. With that, there is less need to provide unemployment benefits. However, the economy is not coming back as fast as the amount of benefits needed are coming in. In fact, the current position (when including those who should potentially be included in the UR) brings back memories to the 1930’s.
The biggest problem we seem to be overlooking is that we can’t just have the upper portion of Americans basking in the rewards of an improving economy. Balance is what will create a sustainable economy. I have written over the past weeks over and over again that government officials continue to push for corporate tax cuts, education tax cuts, and now unemployment benefits cuts, but what we would like to see is improvement at all levels of our country. I hope that I have been clear through my posts that I don’t hate the essence of capitalism, but more so the place where it currently stands at the moment, and the long term effects it may have on our economy.
While Johnson argues the mean spirit that the unemployment benefits cuts imply, I am not so sure I would accept this. I think many people think entirely rationally, and therefore pursue their own self-interests and personal gain. But eventually, there comes a point where the costs placed on society ultimately outweigh the benefits of the few.
Reference:
Johnson, Simon. “Mean-Spirited, Bad Economics”. The Baseline Scenario. http://baselinescenario.com/2012/02/09/mean-spirited-bad-economics/
No comments:
Post a Comment