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Guest Post: Unemployment Insurance Schemes And The Dependency Of Welfare
Submitted by James Miller of the Ludwig von Mises Institute of Canada
Unemployment Insurance Schemes And The Dependency Of Welfare
In the Garden of Eden there is no scarcity. Food, clothing, and shelter in are abundance. Resources merely fall from the heavens upon command. It is economic paradise precisely because economics does not exist. The universal laws that hold in the world of scarce goods vanquish in the land of the plenty.
The vision of Eden is the politician’s main source of employment. That is, promising to lead the suffering masses toward utopia by government decree makes for great electoral results. The voting fodder ignorant of economics falls in line to cast a ballot to grant themselves other people’s money. But of course many voters don’t see it this way. Their vision of the state is that of Eden. They see the bureaucrats and enforcers capable of tapping an infinite pot of wealth to pass along prosperity to those subservient enough to put them in office. This in turn has lead to the establishment of the welfare state and its plethora of entitlement programs.
For those who see the modern day welfare state as corrosive to the productive capacity of any given country, no where is this theory more evident than the scheme of unemployment insurance. In a recent National Post article, the entitlement attitude was on full display:
Jenna Somerton views her layoff from a job at Algonquin College in June of 2010 as a blessing in disguise: She lived on employment insurance benefits for eight months, took stock and decided what she really wanted to do with her life.
Of course, she admits to taking advantage of her EI cheques at the beginning, after hunting for a job with no luck.
“I was thinking ‘Free money, the government owes me, I paid for school … I deserve this,” the 27-year-old Ottawa resident says now.
She soon got serious, using the subsidized income to hatch plans to start her own web development business. Some of her friends, she said, have not been so diligent.
“I’ve known lots of people on EI and I know a lot of them just stayed on EI and as soon as it ran out they started freaking out and then they started looking for jobs…. [The government] makes it so easy.”
In Ms. Somerton’s view, it is the government that owes her and she is rightly deserving of the “free” money. Her error is unfortunately not unique. The notion of the government not restricted by the amount of resources it is able to squander from the private sector is hardly touched on in what passes for informed opinion. The reading of the editorial section in today’s highly regarded newspapers often contains numerous recommendations on what the state can and should provide. What is never eluded to is the real cost of government expenditures. While it is a simple task to rattle off the dollar cost of a program, to truly gauge the price of the state, one must look at what may have been foregone to provide for the payment of taxes.
The proper understanding of government is that it is parasitical in nature. It can only spend what it first forcefully takes. Because the political class is beholden to how much theft it can get away with before sparking an enraged uprising, it also invents new schemes to not be reliant on tax collection alone. This includes borrowing and accumulating debt; which is nothing more than the promise of future taxes. And there is inflation which benefits the first receiver of new money, that is the state, to spend freely before prices adjust economy wide.
Whatever the devious method, each comes at cost to the taxpayer. Again, the nominal price of taxation by itself is easy to calculate. What is often neglected is what the pilfered funds could have been used for if left in the necessarily more prudent non-public sector. It was recently came to light how the great technological innovator Apple Inc. sets up branches in cities with low corporate tax rates in order to lower its tax bill. This is of course a great thing as Apple, constrained in income by how much it receives from consumers, is a better steward of scarce resources then the state. Apple’s tax avoidance is obvious. The further technological innovations financed by money the government bandits don’t help themselves to is not readily apparent.
The general public is blind to this state of affairs. Many have been conditioned through years of public schooling to see the state as Eden. The short term benefits of government transfer payments override any conceivable long term gains of genuine wealth creation in the private sphere.
Decades of the predominant welfare state have not only created a reliable voting constituency dependent on handouts, it has perpetuated the Santa Clause-like image of the state. What isn’t considered is the overall social degeneration that is a byproduct of the so-called “social safety net.” As noted economist Thomas Sowell explains:
While liberals may think of the 1960s as the beginning of many “progressive” trends in American society, cold hard facts tell a very different story. The 1960s marked the end of many beneficial trends that had been going on for years — and a complete reversal of those trends as programs, policies, and ideologies of the liberals took hold.
Teenage pregnancy had been going down for years. So had venereal disease. Rates of infection for syphilis in 1960 was half of what it had been in 1950. There were similar trends in crime. The total number of murders in the United States in 1960 was lower than in 1950, 1940, or 1930 — even though the population was growing and two new states had been added. The murder rate, in proportion to population, in 1960 was half of what it had been in 1934.
Every one of these beneficial trends sharply reversed after liberal notions gained ascendancy during in the 1960s. By 1974, the murder rate had doubled. Even liberal icon Sargent Shriver, head of the agency directing the “war on poverty,” admitted that “venereal disease has skyrocketed” even though “we have had more clinics, more pills, and more sex education than ever in history.”
As for black economic advances, the most dramatic reduction in poverty among blacks occurred between 1940 and 1960, when the black poverty rate was cut almost in half, without any major government programs of the Great Society kind that began in the 1960s.
Why be productive and take of yourself when someone else picks up the tab? This isn’t a cold hearted question but a basic recognition that in most cases, leisure and immediate pleasure are preferred to delayed satisfaction.
Back to unemployment insurance, no matter how much it is denied by entitlement apologists, there is no escaping the truth that if someone is paid not to work, they will generally not work. As Murray Rothbard writes in his magnum opus Man, Economy, and State:
For almost all actors, leisure is a consumer’s good, to be weighed in the balance against the prospect of acquiring other consumer’s goods, including possible satisfaction from the effort itself.
People will always be economizing beings who make choices between how they spend their time and where they dedicate their labor. The National Post article makes mention of this consideration among those on the dole as small business owners…
have found themselves competing with the EI system for workers who are weighing opportunity costs: Would I toil in a hard labour job for $10 an hour or not go to work for roughly the same amount of cash?
This reluctance to work was documented in a 2009 survey which found many businesses unable to hire those on the unemployment rolls:
A CFIB survey published in September, 2009, found 22% of small businesses owners had trouble hiring people who are on EI, as workers said they would rather continue collecting benefits than work in the more hands-on jobs. Another 16% said that in the past year, they had had an employee ask to be laid off so he or she could collect EI benefits (these rates were higher in Newfoundland and Prince Edward Island).
This is all a consequence of the welfare state which has institutionalized poverty instead of relieving it. The real beneficiaries of entitlement programs are not the recipients but those who maintain their positions as gatekeepers to the money. The saddening dependency of others and the government’s monopoly over coercive tax collection is what provides them a steady stream of income.
As long as the public still operates under the fallacious assumption that the state is costless, they will continue to vote themselves into destitution. Living standards will decline as productivity gains begin to taper off. A generation of the entitled will soon find themselves deserving of nothing because the real wealth producers will have long since abandoned their efforts to serve others.
Host bodies only ever have so much blood to give.
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What happened in the 60's was we went (a shift) from a physical economy to a paper one AND outright imperialism via the Vietnam war. Granted the paper part came a little later, but the pressures came from this time (Vietnam war). Yes the economic effects of the Vietnam war never wore off.
It wasn't welfare that brought us the 70's. It was Vietnam. Vietnam got us off the gold standard, because Vietnam allowed DeGaulle to do what? Oh that's right, change in dollars for gold. Instead of ending Vietnam, idiot Nixon listening to crack monetarist advice took us off the gold standard.
This whole article is just another Austrian missive that is as fraudulent as any Keynesian. Both oligarchical monetarism in nature mind you.
Slowly but surely working people are being turned into slaves. So we are supposed to say when the rubicon has been crossed from working wage to welfare pay as a problem of welfare? No it's the problem of the system making everyone slaves by consistently deflating wages while prices skyrocket for decades. Once again everyone got it ass backwards.
Sorry food stamps and welfare didn't get us here, monetarism and imperialism did. A shift from physical economic and scientific growth, to paper, wars, and stagnation.
It's is utter lunacy and asinine to compare the fraud, paper, and imperialism as not the problem, but welfare. Sorry, that's plain wrong. VD and teen pregnancy were lower because of a lack of welfare, and rose because of it? Shouldn't this be the whole Krugman wars are good for growth moment?
Economic decline leads to diseases of all sorts including VD, because the structure that keeps diseases lower wastes away. Again just look at Austerity and Aids in Greece for a recent example.
Because a few quotes from some kids who don't understand shit and are pissed means EVERYONE is like this, and this is their focus. Bullshit. People also forget she paid INTO the fund before hand, so in a sense it WAS her money. But when economic depressions hit everyone hits the fund at once, which it wasn't designed for.
This article is crap. Guess at trends and says they are the result of welfare. Yeah, they learn well how to sell bullshit like Krugman and Bernanke. Pure sophistry.
But that's monetarism, get people to forget about what's real and follow dogma to their graves. Austrian is crap. Keynesian is crap. BOTH are oligarchical. That's a fact.
As if welfare is spent on things that aren't supply variable meaning the supply is easy to increase because IT IS NOT absolutely finite. There I go with actual thinking again. Austrians with their idiot variables like any Keynesian statistical model.
A CFIB or whatever survey said 22 percent of people would rather collect shit money and stay and home than work for shit money. Gee I wonder how many of those 22 percent were for slave wages. Anyone realize that if minimum wage was equal to the purchasing power of the original 25 cents it would now be over 30 dollars. But hey, free trade means you either accept that and be happy or they'll push those jobs to china for 30 cents an hour. She can at least look for a better paying job rather than get stuck in a 9/hr job or can try out that business plan.
Most people don't give a shit about gov't. It's boorring. Let's turn on snookie instead.
I've never heard of anyone sitting around trying to game the gov't. Oh in a nation of 300 million I'm sure there are a few, and the number in total could be large, but it's still insignificant. Ask the average person what 'Garden of Eden' means to them they'll think it's a TV show. But to focus on this is asinine, because people don't do it. People WANT to be honest and upstanding save a few, who generally are already in power or in jail. The nature of man is GOOD, not evil. There just happens to ALSO be some evil motherfuckers out there.
Because people sit around and want to be lazy and not work that's why people don't. Sorry, if you look around most people who aren't working is because the system doesn't have the jobs due to the focus and setup of our economic system combined with the depths of the depression/breakdown crisis we're only entering. Even pre 2008, what was the point? We weren't progressing anywhere, just spinning wheels, creating bubbles, and doing nothing. Isn't job placement important. Wouldn't it be better for some high school kid to get that 9/hr job afterschool? Or for a person who worked at a college to pretend they now have another career in the fine career field of slave?
The idiot Austrian response is to unemployment is let the people die. Then our numbers look better and our dogma is followed. Keynesians couldn't come up with anything more crazy (but in their own crazy other side way)
People don't vote on dependancy, they vote for whoever 'feels' right, or talks a good game, or who they see on TV more. That's who has been elected. Though this trend won't be there forever as 'change' is overtaking this, but if the guy who can talk a good game promises change, well you have a winner and a loser. Then you have the 'scare tactics'....you'll lose your freedom, you'll be attacked. Don't talk about anything real. Play on people's emotions. That's what the ivy league school Sigmund Frauds suggest.
So the next time everything crashes, it's not because of Benocide, Krugman, derivatives, free trade imperialism, warring imperialism, shift of focus from physical economy to paper derivatives casino fraud, regulatory capture, Bush, Obama, Reagan, Clinton, supply side, and a million other misfocused endeavours...it's because of welfare...because...because...the numbers that have been inflated through the system tell me so and this quote here and this incorrect correlation of VD there means it must be so. Austrians = Keynesians just they aren't in power and their dogma ain't killing the world as much except Europe (just a bit, but a bit nonetheless). But give them a chance and it will. How about some real economics, not a switching of dogma from one incorrect oligarchical side to the oligarchicy's other backup side. Want the oligarchy and not real economics to remain, vote someone in who STILL follows monetarism, an oligarchical principle.
The article also makes the incorrect assumption that 'leisure' came from Welfare? No, it came from monetarism. It came from imperialism. It came from importing the same British bullshit we beat in 1776. Blue collar became bad. Everyone needed to keep up with the Joneses. Everyone needed to conform to corporate created ideals on TV and other forms of media. But no...it was really welfare? WTF. It wasn't the IVY league pushing Sigmund Fraud? It wasn't 'Mad Men'? It wasn't the importation of decadence that is like peas in a pod with imperialism?
Austrians and Keynesians have little to no clue about economics and can only follow their dogmatic playbook instead of reality and hope things turn out allright. Right now it appears we live in blindsville and the one eye Austrian is King. Well move to another land where everyone has two eyes. That'll be the best choice.
This article COMPLETELY disregards every gain in the physical economy and scientific focus we had during those 'good times'. Want to know what follows such focuses? Good times generally. What comes about when you ditch it? The last 40-50 years. But hey I'm sure they used some great groupthink to come up with 'welfare' as the cause. They never even talk about how much of a 'corrosive' factor it is. So I guess I'm going to assume its .0000001 percent of the problem we face. Because anything significantly more is Krugmanesque and ignoring the real driving factors.
What we need is....
Physical economic focus. Scientific progression focus. Water projects. Energy projects. Space projects. So on and so forth. Give that girl an opportunity for a real job, with a real focus, doing something REAL, and a real wage, and somehow I doubt even welfare with snookie gets ditched. What happens when everyone goes off welfare do to real jobs being available? Under the assumption put out by Austrians, there can never be any pullback or decrease, because people desire a free thing over anything else.
Glass-Steagall separation...which works. Anytime we took away the appropriate restrictions we got chaos (who the oligarchy like to get 'order' from). S&L, Dotcom, Subprime/derivatives, etc.
American Credit System (founding father shit, not anti-american oligarchical monetarism...which is what two economic theories[and more]...oh yeah Keynesian and Austrian sophistry).
Neither Austrians, nor Keynesians represent the economic ideology of our original constitutional system. That of a CREDIT system. Where the people (who don't want golden toilet roll holders) utter the credit needed for an economy to function as it should.
Hey at least Austrians see the flaws in Keynesians so they're at least halfway there. At least they see some of what is right and wrong. But they sure STILL fall for another load of groupthink garbage. This article should be called 'Austrian Groputhink about Welfare and our misinterpration of what broke the economy during the last 40-50 years'.
The economy is not meant to be a stagnant place. Where is the scientific focus from Austrians? (not pseudo-science, but real science). The world and the human race is never static, it's either progressing or regressing. We need both private AND public focus on the scientific and physical economic growth. But since our whole setup forbids it, and we've used up our 'fat' from previous discoveries and have grown into them, ONLY major projects through gov't can start. What has Apple done with all that money? KBR sure got a whole lot what about them? No ONLY gov't, wrested from the control of corrupt imbeciles can do it. Without such undertakings it won't happen. Funny enough WHEN Keynesians at least paid lip service to this that's when Keynesianism supposedly worked. In spite of Keynesianism of course.
Congratulations Space X, welcome to 1958 in 2012 after the man spaced program has been receeding due to dogma since 1968. You only had computers AND CAD to aid you amongst everything else, like a developed workforce and expertise from NASA. Quite an accomplishment. Can I hire a bunch of ex-NBA players to win a city rec league championship and laud it as one?
The scale needed to progress science and the physical economy are too large for any corporation to undertake. Let alone have balls for. Austrianism is a dead end, because it's dogma says Gov't can't do such things. Hey there's nothing wrong with Apple taking NASA tech and making lots of money. But to think Apple alone will lead the charge, is Helen Keller before schooling retarded.
Impeach Obama
Glass-Steagall
American Credit System with National Banking
Or have this idiocracy world, brought to you by Austrio-Keynesians. (but also remember both sides stole the 'good' aspects of each, omitted a bunch of shit, and twisted it into an ideology that only the oligarchy can benefit from). Fuck monetarism.
It's always a pleasure reading your perceptive comments how things really are. Guns or butter? It's a simple and rational choice, yet no one will mention it. It's sacrilegious to deny Pentagon endless dollars so that they could throw it down the endless procurement blackhole.
If welfare is a problem, isn't job outsourcing?
"It wasn't welfare that brought us the 70's. It was Vietnam."
Because the Great Society didn't cost a thing.
"As if welfare is spent on things that aren't supply variable meaning the supply is easy to increase because IT IS NOT absolutely finite."
Yes, welfare spending absolutely increases the supply of unemployable morons, since it subsidizes their reproduction and livelihoods.
I stopped reading after those two blatant falsehoods. So for the rest of your hyperbolic screed here, this disingenious attempt at conflating Austrianism with the failed central planning approaches of monetarism and Keynesianism rates: TL;DR. EPIC FAIL.
But thanks for trying. You get a cookie in this week's Special Olympics.
Personally I hope they have everyone kicked off unemployment soon. And food stamps. That way all the "it's not that bad" idiots can see what's really going on. Depression in disguise.
As long as you're not one of the ones that needs the food...right?
No person should be forced to pay unemployment "insurance" and no person should be paid for not working.
2 Thess. 3:10...if anyone is not willing to work, then he is not to eat, either.
OK, so, I'm collecting $440 a week on UE and some Bible thumper offers me a job at $10 an hour but can only guarantee 2 days per week--IF I can do 40 hours of work in those 16 hours. Do I take the job or the UE?
Is the condition of employment the Bible thumper is offering you to accomplish 40 hours of work in 16 hours? This sounds a bit exagerated, but maybe so. I say you should take the job and trust God to provide you with additional employment. At least you would be in accordance with God's word.
Lay down the beer, smokes and lotto tickets for good and you will find the 16 hours a pleasant addition to your life.
How do you know it is God's word?
I read about the prince of lies in that book, he my have had a hand in it too.
That doesn't sound very Christian. Doubtful Jesus would have approved.
Most of the fucks who post here believe that Christ likes a wide stance and a tight wallet.
Kinda makes me wonder - how many old ladies with way too many diamonds on their hands would you have to knock over and then pawn their stuff to make ends meet each month? One? Maybe two at most. Any parking lot near a Nieman Marcus or Nordstrum will do. Want to bet how many times a day somebody is making that calculation right now? And then there are the other options. Home invasion - open your safe or watch your wife and kids die MF. Express kidnapping - we're gonna pay your ATM a little visit - here, let me just drop a little of this acid on your hand so you'll know what your face will look like if you resist. Lots of vulnerable victims, lots of opportunities. The shit has barely begun to hit the fan.
Better park that Mercedes and get a Civic. And dress WAY down when you go shopping.
And the Markets, flea markets and pawn shops are bursting with bargains for those who do have a little cash.
I rather pay 20 dollars for a computer desk than go to Staples and cough up 300 plus tax for one.
Wolves are cunning masters of Human Nature. They can spot a victim and make the decision to close and attack...
There are sheepdogs among us.
I'm a unemployed heavy equipment operator. Of course due to the economic downturn. I have applied for many jobs in my field and for many that are not. I have a wife and 2 kids to feed. I've been jerked around with my unemployment for ever and have not received any pay yet. Im telling you that this whole negative tone towards those that want to work but cannot is terrible. Understandable that those feelings are mostly towards the "career" assistance collectors. But I had to go dig by hand 8 4x4x4 ft holes today to help pay the bills. If I get some food assistance I will not be ashamed. I've worked hard my whole life and paid in like most of you. Just try to understand that there are a lot of us who will take a job and most will take it at a dramatic cut in pay. The theft being perpetrated against us all is more of a crime than having to help feed your countrymen. Exit soap box.......
I assure you, no one has a problem with someone like you taking UI, that is what it is for.
I assure you, most of the fucks that post here DO have a problem with him. Don't apologize for the complete fucks that would sell their own mother into slavery for profit.
Exactly right Rand. Most of the libertarian fucks on this site blame RevJack for his predicament. This is just about the last place in the world this guy should expect any empathy or compassion.
According to one of the sociapaths above (Bohm Squad) it's all this guy's fault for not saving enough money when he was employed - i.e.:
Or a person could be responsible for one's self and save for such an occurrence rather than depending on money from the State - which has been forcibly taken from other individuals. What would you do with the extra 6%+ each paycheck - save it or spend it?
Abolish transfers from the productive to the unproductive. Have some accountability for one's self.
Transfer payments are universally bad for everyone (on the whole and in the long run).
Now post the one where I said Charity used to help in these circumstances but has been handicapped by the State welfare system.
You misunderstand my position (which after reading some of your posts is no real surprise). People should plan for these circumstances, that's common sense. Charity from private parties should help, too. The government should NOT be in the business of taking care of things people can take care of on their own. That destroys wealth, destroys resources, destroys capital, and makes everyone worse off.
The fact that your only argument is based on an ad hominem attack shows both your lack of understanding about such things and your diminished capacity to synthesize information when it is spoon fed to you. Adults argue with each other by challenging ideas...not name calling.
I will also disagree with your assumption I am a sociopath on the basis I want society to progress - your false assumptions about how economies work ultimately leads society down a dark and dismal path. After all, why is it you think we're in this situation? Irony for you.
Just as the culture we have now didn't appear instantaneously neither will the desired outcome of moving toward libertarianism. It is a system you HAVE had before in the US and is one of only a few that has proven itself to work rather than proven itself to fail continuously as is the case with communism, fascism, authoritarianism, socialism and modern crony-capitalism.
An integral part of a Libertarian society / culture is that the extended family unit supports each other rather than the state or society at large, which I acknowledge is hard for people to imagine in today's environment.
The decentralization of power and influence is Libertarian by nature and it is exactly what we need right now.
I assure you, no one has a problem with someone like you taking UI, that is what it is for.
________________________________________
Made me laugh.
Really? Might be better for that US citizen, considering his situation, to face reality and not be lulled by soundcraps like no one has a problem etc
US citizens are expansionists and their expansion scheme has reached the saturation stage.
Getting US citizens to look around to see what peer they are going to push under the train to keep their entitlements.
This unemployed US citizen, no matter his sincerity and the reality of the causes depriving him from the opportunity of working, has the profile to be one pushed under the train.
Quite a lot of US citizens have a problem with him. Ignoring that is dangerous.
Too bad you're not up in Canada- I could spit and hit 6 jobs you're qualified for and i'm not even in a booming area.
A good heavy equipment operator is worth his weight in gold
James Miller,
Fuck you. You Fuckity Fuck.
Sincerely,
LetThemEatRand.
Dupe.
Usual US citizen cheap propaganda.
The world has been abundant so far. It has been since before the rise of US citizens, around the 1700s. US citizens inherited the situation.
That is the first point. The comparison to Eden is moot. We are in an abundant world.
Else, it is the same song as charity. The situation was good but got perverted along the way.
People were charitable in the past and the intrusion of government made them uncharitable etc
The reality is simply other: that is the lack of charity and the lack of job opportunities that allowed the government to step in and fill the gap.
If indeed, the situation was such before that absence of unemployment could magically provide ground for work to exist, the unemployment scheme would not have taken root.
As usual and often, this US citizen dismisses other values to the employed situation, reducing it to a check issue. Being employed does not bring only money. It brings other stuff like social recognition, a sense of worth etc
The best part being for the end:
while this US citizen takes the road of scarce world, he simply ascribes the matter of being productive to will. Yet one can be the most proficient in one's trade, without the proper environment to support the work activity, one can not work.
As the environment is limited, therefore is the capacity to work.
Or does this US citizen repeat under another form that the environment is unlimited, and just wait for the ingenuiosity of man to be tapped in an infinite way?
Possible as he is a US citizen and US citizens sing the same song.
Welfare recipients or Bankster eating Zombies. I vote for the Zombies. But it is just a matter of time.
For those who see the modern day welfare state as corrosive to the productive capacity of any given country.
I really don't go around worrying about the productive power of my country. So much of what people do is just spinning wheels anyway. We really could get by on much less productivity. People used to get by with hardly any of the women working outside the home. I get sick of hearing about jobs, jobs, jobs and now I am really quickly sick of hearing about the productive capacity of any given country. What we need is to have shelter, food, water, clothing and medicine. Shelter, food, water and clothing are very gettable with nothing but property tax free land. Medical care is the only thing that we could not just do ourselves.
I think the way our system works requires a safety net. If it is determined that everyone in the country was guaranteed some property tax free land, and they were allowed to build on it and farm on it with no permit fees, I could see how it would be completely viable to get rid of the safety net. But with most people getting by with jobs and money and having nowhere to live and nothing to eat without jobs and money, and with corporations being immortal and therefore able to hoarde land I just don't see the logic in getting rid of the safety net. It shouldn't be gotten rid of until the system is set up so each person has land to live on and grow their own food.
The system is broken more than can be fixed by just going back to before the great society.