Incentives To Not Work Are Working

The axiom goes, “If you tax it, you get less of it. If you subsidize it, you get more of it.” A number of times throughout our history we have seen that axiom proven true. Starting prior to the Great Depression, and running the gamut from FDR's numerous 'recovery' programs in the 1930's, LBJ's Great Society programs in the mid 60's, and extensions of those programs that placed ever greater burdens on the taxpayers supposedly for the benefit of the poor, we've seen the government providing all kinds of incentives for people to remain poor and unemployed.

The welfare programs as envisioned by Woodrow Wilson and FDR and attempted by LBJ did more to subject otherwise productive Americans to abject poverty than any economic or natural disaster. Of course I would expect proponents and recipients to claim otherwise. But history shows many of the programs designed to 'help' the poor did nothing more than trap them into government subsidized poverty with little hope of getting out from under the government thumb.

One of the more insidious programs that has been turned into a political football recently has been unemployment compensation.

While in and of itself unemployment isn't necessarily a bad thing, the extension of benefits that have been piled on one after another have been used for political gain and not for the benefit of those receiving them.

All these serially extended benefits have done is work as an incentive not to work. That isn't supposed to be the way unemployment works. They were supposed to be a short term temporary bridge between jobs. But they are in danger of becoming more long term and, if some in Congress had their way, to become permanent. That would be a disaster for the American economy, just as a similar program devastated the the British economy as increasing numbers of unemployed ended up staying 'on the dole' rather than actively seeking work.

Democrats seem to think that extending jobless benefits for another 20 weeks is a big political winner. Iowa Senator Tom Harkin recently roared, "Is there any compassion at all left with Republicans for people whose checks are going to run out?" New York's Chuck Schumer calls Republicans "inhumane."

But do these Senators really think it's compassionate to give people an additional incentive to stay out of the job market, losing crucial skills and contacts? And how politically smart is it for Democrats to embrace policies that keep the jobless rate higher than it would otherwise be? How many Democrats share Mr. Harkin's apparent desire to defend a jobless rate near 9% (today it is 9.7%) in the fall election campaign.

Yeah, that ought to be a real winning campaign strategy. “If you vote for me I'll make sure the likelihood of you actually getting a job remains small because we'll do what we can to discourage you from looking for one.”

Whenever jobless benefits have been extended in the past, any recovery in the jobs market has slowed because the unemployed won't start looking for jobs in earnest until just before their benefits run out. All extending the benefits does is move that time out by weeks or months and add to the cost of providing those benefits.

If Republicans were really cynical, they'd let the new benefits pass and run against the higher jobless rate in the fall. In any case, no one should be surprised that when you subsidize people for not working, more people will choose not to work.

'Nuff said.