Human Events Blog

Employment Through Unemployment

Here is President Obama’s latest clutch of big ideas for reducing unemployment, presented as part of his fifteenth “hard pivot” to job creation:

So, when Congress gets back in September I want to move quickly on things that will help the economy create jobs right now.  Extending the payroll tax credit to put a thousand dollars in the pocket of the average American worker.  Extending unemployment insurance to help people get back on their feet.  Putting construction workers back to work rebuilding America. 

Those are all steps we can take right now that will make a difference and there is no contradiction between us taking some steps to put people to work right now and getting our long-term fiscal house in order.  In fact, the more we grow the easier it will be to reduce our deficits.

[Emphasis mine.]  When he talks about “putting construction workers back to work rebuilding America,” he means the big “infrastructure” slush fund he wants to build up for Democrats, and the construction workers in question would be his Big Labor political allies.  In other words, the exact same things he did back in 2009.

The payroll tax credit he’s talking about extending is, by definition, something we already have – and we’ve also had unemployment above 9% the whole time.  Obviously, that $19.23 per week Uncle Sam has been stuffing into the pockets of the “average American worker” is not creating many jobs.  And by the way, isn’t that marvelous payroll tax credit coming out of Social Security taxes?  Once again, Obama’s idea of “economics” consists of stealing money from the future to fund voter-pleasing programs today.

That leaves us with the remarkable notion that extending unemployment benefits would boost job creation.  This is not a new idea either.  House Minority Leader Nancy Pelosi said back in December 2010 that unemployment insurance was the most powerful job-creating force known to man, insisting that it “returns $2 for every $1 that is put out there… It injects money into the economy, it creates jobs to help reduce the deficit.” 

Incidentally, during the same verbal eruption, Pelosi insisted that “history shows tax cuts do not create jobs.”  But Barack Obama just advanced payroll tax cuts as one of the only three ideas he has, during his big pivot to job creation!  I hope Pelosi can explain economics to him before he embarrasses himself any further!

As with the payroll tax credit, the unemployment benefit extension is not, by definition, a new strategy that the President would deploy to create an atmosphere of job creation.  We’ve been paying out huge unemployment benefits, lasting an amazing 99 weeks, all through the Obama Depression.  You might attempt to make the case that failing to extend these benefits could make things worse, but you can’t logically argue that extending them will magically begin creating jobs in September 2011, when it has failed to do so during the past two years.

The genius thinking behind the “unemployment insurance creates jobs” theory is that unemployed people will run out and spend their government money, thus stimulating expansion by the businesses they patronize.  Where do you suppose people who have been unemployed for over 99 weeks are spending their meager dole?  I would wager they’re taking care of essentials like paying the rent, paying off bills, and buying food and gas.  None of these are labor-intensive activities that would require many new employees to handle the custom of the long, long, long-term unemployed.

At a deeper level, this theory betrays a fundamental ignorance about the nature of wealth.  It’s not just about the money in your pocket – it’s what you did to earn it.  The labor you provide in exchange for a paycheck is a source of value.  By definition, it’s worth more to your employer than the money he paid you. 

That’s why “trickle-up” schemes that involve “stimulating” economic activity by handing out piles of government cash are always miserable failures.  They’re trying to manipulate the aspect of economics that liberals can easily see – money changing hands - while ignoring the larger component of wealth that lies beyond their grasp of their primitive theories.

The deadliest job killer in American history is talking up a “pivot” that involves nothing but three stale ideas that he’s already been pushing, at the expense of billions of taxpayer dollars.  He blasted thousands of jobs into dust with ObamaCare, and now he wants more money to fund welfare programs for the people he left unemployed.  Their dependency will, in turn, be used as an argument against future spending cuts, as Democrats exhort the hapless clients of Big Government to vote against the heartless deficit hawks who want to take their unemployment checks away.  Meanwhile, they’ll be scratching their heads and wondering why subsidizing unemployment hasn’t created as many jobs as they predicted.

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