Nancy Pelosi:
""The unemployment insurance extension is not only good for individuals. It has a macroeconomic impact. As macroeconomic advisers have stated, it would make a difference of 600,000 jobs to our economy," House Minority Leader Nancy Pelosi (D-CA) said at a briefing on Capitol Hill."
This is genius. Who would have thought that by paying people to not work that it creates jobs. Lets' pay more people to not work and create even more.
There is no surprise here f&b, unemployment money is used to buy goods and services. DEMAND creates jobs.
http://mediamatters.org/research/201007020030
Who would have thought that pouring water into a pump will help make water come out? It's called "priming the pump", which is what the economy needs, and is what unemployment insurance payments provide. Demand must be increased - ask ANY businessman what will prompt him to hire and that will be his answer.
Neocons want to prime the pump as well, but they think throwing money at the rich is the way to do it. The last 3 years of economic history has proven them wrong. Supply side economics is an authoritarian economic pipe dream.
F&B doesn't care what economists say: how can creating demand in the economy create jobs?
It's unfortunate that you misunderstand or misinterpret what Pelosi and Reid have said recently - but they are right and you are wrong.
Polosi said it would create 600,000 jobs. What's to misunderstand?
Unemployment benefits are pure economic stimulus. I.e. the money is always spent.
There’s consensus on this basic truism from every authority on the matter.
Prior to the GOP becoming a collection of willfully ignorant, gleefully nihilistic loons such basic economic data was not considered to be of a particularly incendiary political nature.
I know Rush claims otherwise, and that his claims support his carefully laid though no less absurd narrative, but do try to poke your head out of the bubble from time to time.
Deane: Polosi said it would create 600,000 jobs. What's to misunderstand?
And you thought she meant - what, 600,000 jobs created in a weekend, Deane?
And let's please stop pretending that unemployment benefits are "paying people not to work." These benefits do not equal the recipient's former income - it's just something to help them get by so they don't starve or have to get evicted while they look for another job.
You know we could hire a bunch of people to just fact check.
Probably would take 600K people to beat back the ignorance out there.
So if we lay off more people and pay them to not work, we will stimulate the economy even more.
If I can get the government to pay me $1,000 a week, I guarantee I will spend it and stimulate the economy. Would that be a good thing? Would it be a good thing for the people from whom it was taken?
That's just dumb, F&B. First, you don't get unemployment for quitting, but for being laid off. And you are laid off because the company is experiencing a lack of demand. If I were an employer, I would want some money to keep flowing into the pocket of my former employee, so as to keep up at least a small degree of demand for my business, since employees (and ex and future employees) are also often customers.
You seem to assume that a person would rather take $300 a week for free than make $500 a week by working. Would you make that choice? I think not. So why assume others would make that choice?
No-one is happily “living” off unemployment benefits rather than seeking work.
I don’t’ care how often you hear and read it from conservative “news” sources. It’s not true.
And I repeat: Unemployment benefits are pure economic stimulus. The money is always spent. There’s consensus on this basic truism from every authority on the matter.
You can ignore it all you want. It doesn’t make it any less accurate.
Extending UI may not create jobs, but it sure helps preserve the ones that now exist. Why do you think Republican elected officials (despite their occasional grumbling) almost always go along with extensions, and will likely do so again? Because one of their core constituencies -- conservative small business owners in small, struggling towns -- tell them they can't stay in business without the localized purchasing power that UI benefits maintain in times of high unemployment. If you want to argue that point, F&B, those are the people you'll have to argue with.
F&B: So if we lay off more people and pay them to not work, we will stimulate the economy even more.
Of course not - but that's a false comparison. We're comparing:
- People not working and collecting NOTHING to spend
vs.
- People not working and collecting an unemployment check to spend.
Obviously, it would be better if someone was working and making even more than their unemployment benefit.
I think the problem here is the loose use of the words "create" 600,000 jobs by Polosi.
What might be more accurate is that it would "preserve" 600,000 jobs.
I'm only suggesting the word preserve in place of create, not agreeing on the 600,000 figure. I have no idea if that is realistic or not. She probably doesn't either.
"And I repeat: Unemployment benefits are pure economic stimulus. The money is always spent. There’s consensus on this basic truism from every authority on the matter."
And so would that money have been spent by the employed who it was taken from. It's not "stimulus" to take what you would have spent and give it to someone else to spend.
And by putting people on unemployment benefits indefinately, it reduces the incentive to find work. They can be more picky and choosy and delay being productive. This puts a strain on those who are footing the bill and paying them to do nothing. This is not good for the economy or for employment. Unemployment benefits, especially extended benefits, INCREASE and prolong unemployment.
Instead of appealing to unknown authorities that the government can create something from nothing, please explain how this works in your own words.
Deane>> "I think the problem here is the loose use of the words "create" 600,000 jobs by Polosi."
Actually the problem is the conservative website -CNSNews.com - and Fox Nation.
http://mediamatters.org/blog/201112160007
Although the right-wing media are generally supportive of tax cuts, they often find themselves opposing them whenever they are proposed or supported by President Obama and Democrats. This is true of the proposal to extend an existing holiday on the payroll tax. The latest attack came from Fox Nation -- with an assist from CNSNews -- which mocked House Minority Leader Nancy Pelosi as having "totally lost it" for comments she made about the payroll tax holiday and extension of unemployment insurance.
LP, I'm sure it would be better if these two entities just let her nonsense slide by unnoticed. After all, what people don't know can't hurt them, right!
Yeah, conservatives love playing stupid - and most of the time its not an act.
Let's say a man is making $50,000 a year, and he loses his job, and let's say unemployment benefits pay 100% of his salary, so he still has $50,000 a year to spend.
So now that he has the same money to spend on the same goods and services, nothing is any different, nothing is lost, and the overall economy is no worse off?
F&B: Let's say a man is making $50,000 a year, and he loses his job, and let's say unemployment benefits pay 100% of his salary, so he still has $50,000 a year to spend.
But the benefits won't pay 100% of his salary. It's usually about half. So there's a great incentive right there to go out and find another job: you can either get 50% of your old salary for 99 weeks and then NOTHING, meanwhile needing to prove that you go out and look for work every week...or just find a job that pays closer to 100% of your old salary. Even if you find something that pays 80% of your old salary, there's meanwhile the chance that you can get a better job.
Of course, many unemployed simply hate being without a job: it's humiliating and depressing to them. In the Real World, unlike Republican "Fantasy Land of Freeloaders," many people actually hate being unemployed.
It's 100% bs to say unemployment benefits "stimulate" the economy. The money given to the unemployed to spend is less money for someone else to spend--a sum zero situation.
And even though unemployment is 50% less than what someone had been making, if benefits are extended indefinately, there is an incentive to make due, and it's quite possible to get used to working zero hours for 50% instead of 40 hours for 100%. And there is a very strong disincentive to find a job that doesn't measure up to their previous job, and the pay will always be judged by the difference between what they get doing nothing and what they will get for the new job. So if the new job only pays $100 more a week than what they make on unemployment, they will see that as a $2.50 per hour job, and probably reject it.
But can you humor me regarding my hypothetical, Andrew? If unemployment pays 100%, all is well, right? The unemployed person will still be "stimulating" the economy just as much as when he was working.
Again, F&B, you're just putting up a big strawman (your hypothetical) about people enjoying being unemployed for half their old salary. You're welcome to believe that just as you're welcome to believe the moon is made of green cheese. I don't see any point in arguing with you about your beliefs that have no basis in fact. Enjoy.
"It's 100% bs to say unemployment benefits "stimulate" the economy. The money given to the unemployed to spend is less money for someone else to spend--a sum zero situation."
You're wrong to assume everyone uses their dollars the same way. In a sluggish economy a dollar in the hands of a poorer person is much more stimulative that that same dollar in the hands of a rich person, simply because the poorer person is much more likely to spend that dollar. And getting dollars moving through the economy is what will break the cycle of this persistent recession, *not* wealthy people socking money away and not spending it or hiring people with it (to the tune of about $2 trillion so far).
LOL!!
I think F&B needs to go out and talk to some people in the real world.
Dollars that are taken from the productive and shifted to pay someone to not work are not taken out of someone's mattress. They are funds that are already "stimulating" the economy in the way of purchases and investments. Taking that money and shifting it to someone else does not create anything new.
Go out and talk to some people in the real world.
This argument is somewhat silly. Most who are unemployed want to work, as their benefits are less than than their former income. Employers who have to unemploy, also pay a price as they pay part of the unemployment benefits. OK, so let's summarize: most unemployed will be spending LESS. Guess what, most employers who unemploy also will be spending LESS. Add it up. It is a lose-lose, for both the unemployed AND the employer. This is how it works, folks.
You're an absolute idiot. I do think you suffer from mental illness. There are just some basic truths you can't grasp.
1. Unemployment benefits are about 25% of your working salary. And they are limited in how long you can collect. While I'll admit that there is a small percentage of people who live the wet neocon dream of someone being better off on unemployment than being employed, I'd be willing to bet that 95% of those receiving benefits would rather be employed and making more than not.
2. Unemployment benefits are the same as a tax cut. You're putting money in the hand of somone at the expense of another. If I can guarantee that the money I put in someone's hands will end up being spent, rather than someone like me who would put in in my Roth IRA or my son's 529, I'd rather that money be given to someone who will spend it. Ever hear about the velocity of money, Einstien?
We can agree to disagree about the incentive aspect.
But when people stop working, less things are being produced. That's a fact.
The person who is out of work is essentially being given products and services for free. It does not "stimulate" the economy if everyone who is used to trading their goods and services for other goods and services, has to give away some of their goos and services to someone else doing nothing in exchange for them.
If it were true that taking from the productive and giving it to the nonproductive "stimulates" the economy, then let's really stimulate it and give all the unemployed $100k each a year for life. Just think what they could do for the economy by spending all that money!
Now please excuse me for a few hours. The water level in my swimming pool is low, and I have to take some water from the shallow end and dump it in the deep end to fill it up.
Peole don't "stop" working. They are laid off.
Here's a simple math equation for you to comprehend, if you can.
X = Money from working people
Y = Money given to unemployed
Z = Total money available to spend
Which equation amounts to more Z?
X + Y?
or,
X?
Do us a favor and hang out in the deep end.
.
X = money spent by working people
If money is given by working people to non working people and that money is represented by Y, then money spent by working people is X - Y
So here are the equations now
X - y = money spent by working people
y = money spent by nonworking people
Which is greater
X
or
(X - Y) + Y
I'll let you figure it out, but will jump in if you're having some problems adding the variables.
Wrong. A working population that has income plus unemployed getting benefits as a whole has more to spend than a working population that has income plus unemployed who get no benefits.
Seriously, do you like S&M? I know you're a catholic, and you guys are more into young boys than S&M, but it appears you like punishment.
Look at my math again.
Your's is flawed.
You can't take something out of a set and then add it back into the set and end up with more.
If that were the case then we don't really have an unemployment problem. They don't need to work. Just give them more to spend and we'll all have more.
X = money spent by working people
If money is given by working people to non working people and that money is represented by Y, then money spent by working people is X - Y
Not necessarily...unless you assume that working people spend every cent they have. For example if I normally spend X on needed goods and services, but then decide to donate $1000 to charity, I will still spend X on goods and services, but perhaps save $1000 less that year. Assuming that the charity spends the $1000 on needed goods and services, the contribution results in an extra $1000 being spent on goods and services, rather than being stuffed in my vault.
BTW, reading your equations I assume that the variable "Y" is really the same as variable "y"....ok?
One thing that no one has mentioned yet is that UI doesn't come out of the working people’s pocket.
It is "Unemployment Insurance" that the EMPLOYER pays the state. The state then determines if the unemployed worker is eligible then pays them.
F&B, I'm going to try this one more time then I need to go to bed.
First, let's agree that money moving through the economy is good for the economy, and money not moving through the economy is not good for the economy. Can we at least agree on that?
So Scrooge McDuck is sitting on a pile of money; he's already bought everything he needs, he pays his staff and employees, continues to run his businesses, yet *still* has enough money to take a refreshing dip:
http://www.youtube.com/watch?v=aPX5mRSQ3pw
Donald Duck is having a hard time. He is a single dad of three precocious nephews, and he needs every dollar he can get his hands on. Even more so, the nephews would rather spend than save:
http://www.youtube.com/watch?v=Maho5R656xM
Which dollars are doing more for the economy? The dollars in McDuck's vault are doing nothing for the economy. He's run out of things to spend those dollars on; he can't grow his businesses because demand has stalled. He could buy more stuff for himself, but that quickly becomes redundant and impractical. But, the nephews get some money and they SPEND IT as quickly as they get it. Dollars in their hands are better for the economy than dollars in McDuck's vault.
(notice I've said nothing in this example about taking McDuck's money and giving it to Donald or the nephews. I'm just trying to establish which dollars are more stimulative.)
F&B, you need to move up from Econ 101 to Econ 102. This is pretty basic stuff, and universally acknowledged by economists - but just as universally denounced by ideologically driven right wing hacks. I always like to assume you are not a right wing hack.
It doesn't make much sense to complain that unemployment benefits create a disincentive to find work, at a time when there are already four or five times as many job seekers as openings.
I've said this before but it bears repeating: Yes, it's true there are some people who don't mind kicking back and collecting unemployment until it completely runs out, going through the required motions of looking for work but not trying very hard to find it. I've been one of those people in the past. They tend to be single, childless renters who know how to live on a modest income and have few major expenses. It makes perfect sense to me to let that group stay out of the labor market for a while so that those who ~need~ to work -- people with children to feed and big mortgages to pay, and for whom a measly UI check just doesn't cut it -- can have an easier time finding a job. I see this as a social benefit, not a drawback, of extending UI in hard times.
Bad anaolgy edesel, the dollars are not stuffed in a matress or in piles in a vault. These are dollars taken from someone else who would be spending them, or dollars that are invested in production. Nobody has "idle" dollars.
And no, I do not agree that making money "move" through an economy is always a good thing. Once again, there could be a government make-work scheme to dig a gigantic hole and then fill it back up. We would have workers, paychecks, money moving through the economy, and at the end of the day nothing to show for it, and a net loss, since that money was moved from production and efficiency to pure waste and squandered resources.
"there could be a government make-work scheme to dig a gigantic hole and then fill it back up"
That's basically what military spending boils down to. It consumes enormous resources while adding nothing to the overall quality of life, except that it does provide some people with employment.
"nobody has idle dollars"
That's wrong on it's face. Check your wallet. Check your change jar at home. Check your savings account that is earning .2% interest (essentially idle). Check the value of land holdings that haven't changed in four years or are dropping in value. Check the cash accounts of some of the richest people in America.
All idle money.
When I save money, I'm slowing the recovery just the same as the wealthy that are sitting on $2 trillion in cash. Remember George Bush's plea after 9/11? Afraid of a massive recession following the attacks, he asked everyone to "go shopping". Not "go invest your money" or "go save your money". Even George knew what really keeps economies moving.
Time to go back and hit the Econ textbooks again, F&B.
Getting back to the gist of the principle...
If someone who is not working is given $400 a week to spend, does this work in favor of the economy just as much if he instead would do enough work to earn $400 a week?
"That's basically what military spending boils down to. It consumes enormous resources while adding nothing to the overall quality of life, except that it does provide some people with employment."
If we didn't need military spending and lived in a peaceful world, or if all the inefficiencies and unnecessary wars could be eliminated, it would be much better to not have military spending "stimulate" the economy.
The military doesn't produce anything. Bomb makers don't produce anything that benefits the economy. We would all be richer and the economy would be "stimulated" even more if there were no military spending and no soldiers to pay, but if instead that spending went towards production and consumable goods.
But we live in a world where there are evil aggressors, so we have to have a military, though I'm sure there is much waste that could be cut.
So I agree with your overall point as it's exactly the point I've been making--spending money in ways that squander resources does not "stimulate" the economy in a positive way.
"When I save money, I'm slowing the recovery just the same as the wealthy that are sitting on $2 trillion in cash. Remember George Bush's plea after 9/11? Afraid of a massive recession following the attacks, he asked everyone to "go shopping". Not "go invest your money" or "go save your money". Even George knew what really keeps economies moving."
When you save money you are strengthening the economy. Those funds go towards to tools of production. You're not helping the economy by blowing excess funds on $5 lattes.
George Bush was full of it, and his "stimulus check" scheme was the dumbest thing he ever did.
"George Bush was full of it, and his "stimulus check" scheme was the dumbest thing he ever did"
If they were able to speak for themselves, there would be hundreds of thousands of dead Iraqis that might take issue with that statement.
F&B: If someone who is not working is given $400 a week to spend, does this work in favor of the economy just as much if he instead would do enough work to earn $400 a week?
Do you want me to address your fake hypothetical or the real situation where a worker who would make $800 takes home $400 in unemployment benefits?
Since the US government is in a deficit situation, we're borrowing $400 more to pay the benefit (just like we borrow to pay for the Pentagon, etc.), what you're asking is whether it's better for the US economy to borrow that $400 vs. not. But that $400 is spent on things like rent and food. Is it better for the economy not to borrow that $400 (at like 1% interest) and have the unemployed person to be evicted and live in her car? Then the landlord has a vacant property - or at least there is one fewer rented home in the area. Multiply that by the number of people who would not be able to afford rent or mortgage payments without unemployment payments. You think we shouldn't borrow the money and have all of those unemployed people not renting or paying mortgages anymore.
What does that do to the investor's income who rents out those properties? Reduced - so they spend less. And the whole economy contracts. It's cyclical, you know.
As others have said, that $400 is going to be spent whereas $4Million to a wealthy person getting a tax cut is going to be re-invested most likely, not spent. And that $400 of spending is retaxed - so some of it does recycle back to the government in revenue, which paid only 1% to borrow it anyway.
No one is saying that you just borrow an infinite amount of money and give it out as stimulus - there's a point of diminishing returns, obviously. It's like drinking water when you're thirsty: the first gulp or two of water are the most quenching, but after a while of drinking water you aren't thirsty anymore; drink too much and you get sick. That first bit of water helped the most.
Econ 102? Forget it. Try Econ 035.
I've never read more stupidity in my life. I almost wonder if this is a joke?
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