I'm sick of hearing propaganda from Moscow Mitch and the
Goon-in-chief about unemployment benefits encouraging people not to work. What
utter bilge. I would like to see either of those corpulent rodents make do on
unemployment benefits, assuming of course that they could actually collect any
in Kentucky, where our previous governor gutted the system. If republicans
cared about anything but lining their own pockets, they would realize how
overwhelmingly stressful losing a job can be. First, they ship Americans’ jobs
to the third world, then they blame American workers for being lazy. Absolutely
Dickensian in their callousness and cruelty.
Listen to the NYTimes’ Paul Krugman on the subject:
“Anyone who is willing to work and is serious about it will
certainly find a job. Only you must not go to the man who tells you this, for
he has no job to offer and doesn’t know anyone who knows of a vacancy. This is
exactly the reason he gives you such generous advice, out of brotherly love,
and to demonstrate how little he knows the world.”
So begins B. Traven’s 1927 adventure novel “The Treasure of the
Sierra Madre,” the basis for the classic John Huston movie. Traven, it turns
out, knew more about economics than any member of the modern G.O.P. caucus — a
group whose members believe that cutting unemployment benefits and thus forcing
people to seek jobs at all cost will somehow conjure more jobs into existence.
Today’s column was about the failure of Senate Republicans and
the Trump administration to come up with any meaningful plan to deal with the
expiration of special pandemic aid to the unemployed. Much recent economic
research has investigated how much effect this aid had on incentives of workers
to seek jobs, with the apparent answer being not much. As I argued, however,
this question is largely irrelevant: no matter how hard workers look, they
can’t take jobs that aren’t there.
But there is an objection one might raise: the number of jobs on
offer isn’t a fixed quantity. You could imagine that desperate workers would be
willing to accept wage cuts, and that reduced wages might induce employers to
expand their workforces. This isn’t an argument that politicians are likely to
make openly — “Vote for Trump! He’ll slash your wages!” But might it have some
validity?
Well, no. And John Maynard Keynes explained why. (Incidentally,
I don’t recommend reading Keynes in the original. His “General Theory” is an
extraordinary intellectual feat, unutterably brilliant, but very, very dense.)
What Keynes pointed out was that while an individual worker may
indeed be able to get a job by accepting a wage cut — because they underbid rivals
for the job, or make it possible for the employer to underprice competitors —
the story is very different if everyone takes a wage cut. Nobody gains a
competitive advantage, so where are the job gains supposed to come from?
Indeed, if anything, benefit cuts that force workers to compete
over scarce jobs can hurt employment, by causing deflation that worsens the
burden of debt — a phenomenon my colleague and co-author Gauti Eggertsson calls
the “paradox of toil.”
Wait, there’s more. The Covid-19 recession, brought on by the
necessary lockdown of high-contact economic activities, has been terrible. But
it could have been much worse. Tens of millions of workers lost their jobs and
their regular wage income — and the job-losers were disproportionately low-wage
workers with little in the way of financial resources to fall back on. So
absent government aid they would have been forced to slash spending, leading to
a whole second round of job losses across the economy.
Unemployment benefits, however, sustained many workers’ incomes,
averting this second-round depression. So “paying people not to work,” as
right-wingers like to describe it, actually saved millions of jobs.
In short, things could have been much worse. And sure enough, it
seems that they are indeed about to get much worse.
