The Obscenity Of The Right-Wing Professoriat
I have the questionable distinction of appearing on Larry Kudlow’s CNBC program several times a week, arguing with people whose positions under normal circumstances would get no serious attention, and defending policies I would have thought so clearly and obviously defensible they should need no justification. But we are living through strange times. The economy is so bad that the social fabric is coming undone, and what used to be merely weird economic theories have become debatable public policies.
Tonight it was Harvard Professor Robert Barro, who opined in today’s Wall Street Journal that America’s high rate of long-term unemployment is the consequence rather than the cause of today’s extended unemployment insurance benefits.
In theory, Barro is correct. If people who lose their jobs receive generous unemployment benefits they might stay unemployed longer than if they got nothing. But that’s hardly a reason to jettison unemployment benefits or turn our backs on millions of Americans who through no fault of their own remain jobless in the worst economy since the Great Depression.
Yet moral hazard lurks in every conservative brain. It’s also true that if we got rid of lifeguards and let more swimmers drown, fewer people would venture into the water. And if we got rid of fire departments and more houses burnt to the ground, fewer people would use stoves. A civil society is not based on the principle of tough love.
In point of fact, most states provide unemployment benefits that are only a fraction of the wages and benefits people lost when their jobs disappeared. Indeed, fewer than 40 percent of the unemployed in most states are even eligible for benefits, because states require applicants have been in full-time jobs for at least three to five years. This often rules out a majority of those who are jobless – because they’ve moved from job to job, or have held a number of part-time jobs.
So it’s hard to make the case that many of the unemployed have chosen to remain jobless and collect unemployment benefits rather than work.
Anyone who bothered to step into the real world would see the absurdity of Barro’s position. Right now, there are roughly five applicants for every job opening in America. If the job requires relatively few skills, hundreds of applicants line up for it. The Bureau of Labor Statistics says 15 percent of people without college degrees are jobless today; that’s not counting large numbers too discouraged even to look for work.
Barro argues the rate of unemployment in this Great Jobs Recession is comparable to what it was in the 1981-82 recession, but the rate of long-term unemployed is nowhere as high. He concludes this is because unemployment benefits didn’t last nearly as long in 1981 and 82 as it they do now.
He fails to see – or disclose – that the 81-82 recession was far more benign than this one, and over far sooner. It was caused by Paul Volcker and the Fed yanking up interest rates to break the back of inflation – and overshooting. When they pulled interest rates down again, the economy shot back to life.
The Great Jobs Recession is far more severe. It’s continuing far longer. It was caused by the bursting of a giant housing bubble, abetted by the excesses of Wall Street. Home values are still 20 to 30 percent below where they were in 1997. The Fed is powerless because consumers cannot and will not buy enough to bring the economy back to life.
A record number of Americans is unemployed for a record length of time. This is a national tragedy. It is to the nation’s credit that many are receiving unemployment benefits. This is good not only for them and their families but also for the economy as a whole, because it allows them to spend and thereby keep others in jobs. That a noted professor would argue against this is obscene.
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Bravo Mr. Reich, from Canada. We have our problems in Canada but not as severe. We are close and interested observers.
We have to ask this: “How can the American public conspire against themselves as it has? Is it really all about money? Is it really about the “haves” against the “have nots”? How about a decent life for all, instead of winner takes all system? Is this the motto: “the pursuit of happiness” being carried too far? Or am I really being too simple?”
We have noted that a recent well known American visitor offered this opinion:
“Canada is America, done right.”
I don’t know if this could be true, but I would appreciate any comments. We overlap in so many ways.
Our best wishes to America in overcoming its problems.
Canada is simply a much better country than the US.
The US stands alone in the world with its notion of rugged individualism and denigration of the poor. We are the least egalitarian country in the first world. One cannot look to his family or to the goverment if he has a problem.
It is a competitive place and survival of the fitest is the rule. The rich become richer as they have the keys to Congress and the White House. We had a very progressive tas program in this country until Reagan became president. Now the rich accumulate more and the middle class is shrinking. That is the same middle class which was the engine of capitalism from 1945 to 1982. Now the wealth is spread about like it is in a third world country. The top 5% have about 90% of the wealth.
If I was a little younger I would be headed toward the Maritimes and seeking permanent residence.
Professor Reich–
I watched with pain and irritation as Kudlow shepherded Barro to the last word, and I could feel your frustration at the end.
But I also thank you for trying to bring some reason into the dark corners of the Kudlow mind (and his show and others like it).
And then he had the nerve to bring on that billionaire nut case Steve Forbes to tout the Teabaggers.
Keep up the good fight, and let’s hope the electorate can see through the fog.
Mr. Reich,
While I don’t necessarily or typically agree with your position on many of the issues discussed, I do enjoy seeing you on Kudlow and have developed considerable respect for you and your opinions. However, you are really off base on this one and have unfortunately demonstrated the same malignant arrogance and myopathy for which the left is so prone.
Since your article fails to explain – or disclose – that in fact drawing unemployment is much easier than you lead people to believe. In Michigan, eligibility is determined by earning enough money in the first four of the last five quarters of employment (and exceptions / alternative qualifying conditions exist). Quite a disparity from the three to five years you suggest. Moreover, employees are only required to earn a minimum $2,871 in wages in at least one quarter of the base period, but must have wages in at least two quarters. As the owner of a seasonal business, my employees are eligible for unemployment after working less than one year. Many business owners can also attest that some employees do in fact favor maintaining their unemployment benefits rather than working, and many commit fraud against the state and the employer by collecting their benefits while working other jobs under the table.
The irony, I have sacrificed my financial welfare and leveraged my future in attempt to maintain my business and support my employees. Yet, after two years of this economic turmoil, it is I who is losing my home and who is having to close my business. Where’s the bailout money now, Mr. Reich? What program do people like I qualify for to save our homes? What government program is going to pay off student debt obligations eighteen years after the fact while the government throws money at recent graduates simply for finishing school?
So, the real world? While I don’t necessarily agree with Mr. Barro either, anyone who bothered to step into the real world would see the absurdity of your premise, the arrogance of your remarks, your lack of appreciation to Kudlow and the disgusting disconnected agenda that the left-wing, psychotic liberals/progressives are proffering to cripple and destroy our great nation. You are right. The social fabric of our nation is coming undone. This administration is doing a fine job of ensuring that.
Still look forward to seeing you on Kudlow. Have a great week.
P.S. really bad analogies by the way