Zippidy Doo Da

I'm not stupid, I'm from Texas!

Friday, March 12, 2010

Letter to the Editor

Textbook example

In “Bunning and the GOP in an alternative universe” (Page B9, Saturday), Paul Krugman states, “Today, Democrats and Republicans live in different universes, both intellectually and morally.”

He continues: “Take the question of helping the unemployed in the middle of a deep slump. What the Democrats believe is what textbook economics says: that when the economy is deeply depressed, extending unemployment benefits not only helps those in need, it also reduces unemployment.”

Then Krugman draws his comparison: “But that's not how Republicans see it. Here's what Sen. Jon Kyl, R-Ariz., the second-ranking Republican in the Senate, had to say when defending Bunning's position (although not joining his blockade): Unemployment relief ‘doesn't create new jobs. In fact, if anything, continuing to pay people unemployment compensation is a disincentive for them to seek new work.' … To me, that's a bizarre point of view — but then, I don't live in Kyl's universe.”

A handful of bloggers did Google searches since this column appeared in The New York Times and came up with this interesting quote from a college economics textbook called Macroeconomics: “Public policy designed to help workers who lose their jobs can lead to structural unemployment as an unintended side effect.”

The authors cite this example: “In other countries, particularly in Europe, benefits are more generous and last longer. The drawback to this generosity is that it reduces a worker's incentive to quickly find a new job. Generous unemployment benefits in some European countries are widely believed to be one of the main causes of ‘Eurosclerosis,' the persistent high unemployment that affects a number of European countries.”

The co-authors of this textbook go by the names of Paul Krugman and Robin Wells (aka Mrs. Paul Krugman). So, according to Krugman, the Republican's “bizarre point of view” is in fact “textbook economics,” even textbooks written by Krugman himself. Like many Nobel Prize winners in the recent past, Krugman sure knows how to completely change and reverse his science depending on whoever is in power.


-Kudos to whatever web-heads went digging in that Krugman text. This, however does not mitigate the fact that, at least to hear them tell it to their base, the GOP would, if they could , dismantle unemployment compensation, Social Security, Medicare, Medicaid, child labor laws, the Sherman Antitrust Act, and the Thirteenth Amendment to the U.S. Constitution.


At 3:04 PM , Blogger liquiddaddy said...

Darnnit, Charly, those damned facts!

Speaking for Dr. & Mrs. Krugman,
I would point out that the "generous" benefits that "last longer," that they talk about has spawned a social class of whiny deadbeats. On the other hand, the meager payments the unemployed get in Texas, combined with the short period of eligibility, along with the onerous job seeking and counseling requirements, made worse by the fact that you can't limit your search to those in one's career, make the program not much fun to deal with.

To think the differences do not matter, and that the one here still results in significant disincentives from real employment is to believe that there is a huge class of lazy families living high on the hog with TANF, Medicaid and food stamps.

Also, they were speaking of "long term" payments. Unemployment benefits do not typically last even as long as the national average time it takes to find a job once unemployed.

There is no need to take wing-nuts out of context; they really mean the shit they say; however, in real life complex problems are solved by complex answers, and in the example you cited the answer to the question of whether or not benefits add to unemployment is complex. In the short-run, which is relevant to now, all government spending is helpful. Shit, we need even more.

At 12:13 PM , Blogger Lulu, the Dewey Dame said...

God. I can't believe that Krugman wrote that. In what year?

I think that Bushie provided him with intensive aversion therapy.


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