Sunday, February 07, 2010

Even employed benefit from social safety net

One thing I hear often from the Ayn Rand sheep is that they don't want to pay for a real social safety net because people ought to be rugged individualists and stuff. Thing is, they're hurting themselves when they say shit like that.

One thing I’ve repeatedly noted on here is that the lack of a social safety net in this country is what has rendered the current downturn so severe here. I mean, look. Arizona pays $240 per week MAX unemployment compensation, which won't even pay the CORBA bill for health insurance, much less mortgage and car payments. The downturn wasn’t this severe in Germany, or in France, or in Japan, or any other 1st world country. Just here. The biggest reason for the collapse in consumption here in the USA (but not anywhere else) has been that people are stashing money away as fast as they can in case their own job is next on the chopping block, thereby making it a self-fulfilling prophecy. But people are scared that if they lose their job, they’ll lose everything — and are doing what is rational when there is no social safety net to back them up, which is exactly the wrong thing to do if we’re trying to keep people employed.

In other words, even employed people benefit when we have a real unemployment insurance system for the unemployed, one that would pay your health insurance and mortgage and car payments while you look for a new job, instead of the current ridiculous thing where no state pays enough unemployment compensation to keep you from losing everything when you lose your job. They benefit because it increases the chances they'll *keep* their jobs, rather than have to make sure their resume is up-to-the-minute up-to-date for fear their job is going the way of the dodo. This fucked-up "unemployment insurance" mess, if fixed, would benefit *everybody*, even the Randbots. Yet they'd rather shoot themselves in the foot than admit that government has a place in smoothing out the fluctuations of the business cycle. Typical. Just typical. Ideologues. Every single one of'em, more interested in imposing their ideology upon the rest of us than in, like, actual REALITY. No different from the old Soviet commies, in other words. Which is why, like the old Soviet Union, the United States is currently in a slow-motion collapse. Once ideology becomes more important than reality for a nation's leaders, that's pretty much The End. Alas.

- Badtux the Economics Penguin


  1. barcalounger7/2/10 11:10 AM

    You, an employer, are advocating a better social safety net? I'm shocked, shocked I tell you! I thought the idea behind our present system was to keep the employees so afraid of losing their jobs so then they would act like sheep and would be easier to control.

    I've seen several proposals for full employment programs, styled on the WPA of the 30s. They make more sense than the present unemployment system we have now.

    The Fed is supposed to control employment,too, in fact it's part of their mission statement. Another reason I didn't want Ben Bernanke reappointed, he did such a dismal job on umemployment.

  2. @barcalounger:

    Bernanke stated that he was more concerned about fighting inflation than unemployment. Since he has secured his employment for another term, I'm sure he'll keep his laser focus on inflation, since unemployment (for him) is a few years away...

  3. Ideology trumps common sense every time.

    Thanks, BT.


  4. Here in the great commie state of Massachusetts, the max amount for unemployment comp. is $650 a week, which if it's not the highest in the country it's certainly up there. After being laid off last February the MA safety net kept me off the streets and I didn't have to burn through my savings. Fortunately after almost six months I found a job.

    If I lived in AZ the $240/wk would have helped but if I had no savings and a debt load things would have been very bleak. $960/mo wouldn't cover my rent here. Maybe in AZ it would but the cost of living can't be THAT much lower esp. with having to run the AC most of the year if you don't want to die of heat stroke.

  5. @42: I can assure you that $240 a week here in PHX wont do much for you. A good 1 Bedroom Apt goes for around $450/month. Figure in other expenses, and you are digging into savings from month one (if you had savings). This is a 'right to work' state - which means you can be fired (oops, that's 'laid off') if your boss decides it's your lucky day - no reason needed. This state is very "business friendly", which can translate into 'worker unfriendly', and is another reason why folks who have a job happy to have it, even if it sucks, 'cause it beats unemployment.

  6. Lounger, employers benefit even more than anybody else, because keeping consumption up keeps their profits up. Not that the short-sighted beancounters who run most employers see it that way -- they seem to think it's a zero-sum game, where any money that goes to employees is money they don't have. But the economy is a circle -- money goes from employers, to employees, who then go buy shit with it from... err... employers. Making sure that money *continues* going in that circle, rather than some of it heading off into savings accounts to create ad-hoc "unemployment insurance", is in the best interests of employers especially... and expect the majority of employers to see it that way about the time that cows fly.

    Marc, Barca: The primary and most important job of the Fed is maintaining a stable money supply. Once you hit the zero boundary -- where we are now -- the Fed has no way of affecting employment. That requires fiscal policy -- government spending on things that create employment. I'm reluctant to endorse a large-scale WPA direct employment program right now (though the decrepit state of our national parks and national forests certainly means there's a need for at least a small one), but there's a lot of things the government could do that would directly result in employment, that are being done at too small a scale to really matter.

    42: You're making me want to move to Massachusetts despite the crappy weather and the fact that you morons elected a Rethuglican rather than a Demothuglican.

    Marc - it's interesting that I had to move away from Arizona to find a good job. Interesting how that works, that so-called "business friendly" states seem to be friendly only to low-wage call centers and shit like that. Every single job in my area of expertise moved away from Arizona and they were all gone by early 2004.

    In short: "business friendly" practices that rape employees and destroy social nets are bad for business as well as for employees. 'Nuff said.

    - Badtux the Big Picture Penguin

  7. Instead of calling it "unemployment insurance," it should be called "starvation insurance." If you get it, and a lot of unemployed people don't, it will keep you fom starving to death (and maybe deciding to kill a lot of people before you're too weak to get revenge.) But that's all it's good for.

  8. In the early 80s I became unemployed in AZ. Having worked in Tucson for 7 months, I signed up for AZ unemployment. Got turned down and had to file against my previous job in California. Way better, CA paid almost twice as much a week as AZ's lousy $85 a week.

    Many years ago I read a Sci-Fi story where there were people whose only job was to go out and buy stuff. With people buying stuff, that kept others busy making stuff to buy. Made sense to me and still does.

    The way it is now, it turns into a death spiral. People get laid off or are afraid they will be laid off and they stop spending which leads to more lay-offs because you don't need people to make stuff if it isn't selling.

    I compare the economy to a house. If the house is cold, you don't shove the fuel down the chimney, you start a fire in the furnace in the basement.


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