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"Wanker Liberal Internet Commenter Offended That Government Dollars Should Carry Accountability - Just Shower Them With Dollars, Taxpayers Don't Mind, Macroeconomic Effects Irrelevant! Commenter Says"

See, I can play the "jam words in somebody's mouth" game too.

Out of curiosity, did you spend even a fraction of a second grappling with the hard questions raised by the post, or did you just jump straight to ad hominem? The question of whether we are burning immense wealth paying people to not work is a very important one.

I personally know two people who deliberately did not take jobs because they knew they could stay on unemployment, and I am not very social and don't really know all that many people to this degree. Is that really what this stuff is for? Maybe it's OK to grapple with that question just a wee bit, given that we're a few trillion in debt?

"I personally know two people who deliberately did not take jobs because they knew they could stay on unemployment"

The plural of anecdote is not data. :) Furthermore, unemployment insurance is something people pay into in the first place. I imagine it's not setting the government back a heck of a lot more than, say, the Bush tax cuts.

And cutting off people's ability to pay for rent, food, and a car seems like a pretty poor way of getting out of a recession. The fact is that millions of jobs have been lost and they haven't come back.

I guess ~9% unemployment is the new normal, though— them's that got shall get, and those that don't deserve whatever happens to 'em because they're lazy. If they weren't lazy, they'd pull themselves up by their bootstraps, ???, profit!

I have to ask a serious question here: what's the endgame here? You cut off unemployment insurance. What happens to the people who suddenly have _no_ money? Is the answer "not my problem"? I can't imagine how Americans expect to "win the future" if their default reaction to an entire class of their countrymen reads like Ebenezer Scrooge.

"The plural of anecdote is not data."

I'm not claiming it is. The point is that it's not a theoretical concern. It only takes one instance to show existence, I was actually being generous and giving two.

"And cutting off people's ability to pay for rent, food, and a car seems like a pretty poor way of getting out of a recession."

Second order effects, second order effects, second order effects. You are making the common-sense assumption that if you cut people's benefits off, they will simply have less money, and not change their behavior at all. That's not how it works. Common sense is not just wrong, it is pathologically wrong when thinking about the economy.

"what's the endgame here?"

Total economic collapse if we don't stop spending so much money on destroying wealth, no matter how good it makes you feel to do it. This is only a particular case of the general trend. You are also assuming that leaving people without unemployment assistance is more or less the worse-case scenario, and so I'm leading them into the worst case. It's not. Leaving people with no economy in which to get a job and no economy with which to give them assistance of any kind, government or voluntary, is, and that is distressingly close to on the table. How will a collapsed United States dollar render unemployment assistance? You have to think about the full consequences, not just the consequences to one particular instance of the problem at one particular point in time.

I personally strongly believe with what I believe to be good reason that all of this soft-headed money spending and wealth destruction is far worse for everybody that tightening our belts and making people work for things, so I reject your attempt at moral authority. The problem of not having enough wealth for everybody can not be solved by policies that destroy yet more wealth and we are perilously close to a wealth-destruction death spiral here, if we're not already in one, all in the name of helping people while actually utterly burying them. It's your policies that lead to ruination, not mine.

"Second order effects, second order effects, second order effects. You are making the common-sense assumption that if you cut people's benefits off, they will simply have less money, and not change their behavior at all. That's not how it works. Common sense is not just wrong, it is pathologically wrong when thinking about the economy."

So what happens, then, when they're evicted, can't make a car payment, and can't feed themselves? For starters, being evicted in a lot of cities is enough to make it _extremely_ difficult to find a new place. And libertarian pixie dust doesn't pay the rent.

I have to ask: have you ever _been_ on unemployment? I have. It's enough to keep you treading water. It's substantially less than the wages I had when I was employed. Do you imagine that people _enjoy_ barely making ends meet?

Now, I'm sure there are some people who can do it. Good for them. Recognize, however, that that's a privilege. They can afford to live with approximately half of whatever they were making before! They probably don't have a family, aging parents, or medical problems, nor any substantial debt.

"Total economic collapse if we don't stop spending so much money on destroying wealth, no matter how good it makes you feel to do it."

I don't even know what this means. I mean, I think I know what it's supposed to mean. If I consult my phrasebook, "destroying wealth" is usually code for "taxing the wealthy." The implicit assumption is that most rich folks earned their wealth rather than inherited it. I don't buy it. They were largely born on third base and concluded that they hit a triple.

I have no idea what this "soft-headed spending" refers to, either— if you're talking about the stimulus, well, I'm unsympathetic. If no one else is spending, the government can run at a deficit and mitigate the problem. Business was manifestly not stepping up. And personally I agree with Krugman, et al, that the stimulus wasn't big enough.

We're in agreement that belt-tightening is disastrous, but that is precisely what animates the author's sentiment. No matter how bad everyone wishes it to be so, the jobs are gone. Punishing those who had the misfortune to be caught in the blowback from Wall Street's epic failure seems misguided and counterproductive. Expecting folks who're already in the hole to pony up thousands of dollars to retrain themselves is the height of privileged thinking.

Bottom line: you won't "fix" unemployment by pretending the unemployed don't exist.

I'm not Keynesian. I think the past few years have disproved it. Actually I think the past few decades have disproved it and I can't help but be a bit cynical about how a superceded (for good and sufficient reasons) economic theory suddenly revived itself when the government needed it. Destroying wealth occurs when you pay money to sit on their hands. Currency is moving around, but it's not doing anything, and given that wealth is actually consumed to keep people alive (they eat, they live somewhere, etc), if they aren't generating enough wealth to even offset that consumption (let alone a surplus) then there's wealth destruction going on.

Look at the situation in isolation for a moment. Dollars go in to the unemployed house, a roughly equal number of dollars flow out, that all looks neutral. But that's just currency. Look at the flow of wealth. Food flows in and disappears. Housing is consumed. Wear and tear is put on possessions. Imagine if absolutely everybody in the economy is doing that, not because this is actually possible but because it shows the situation in stark colors. It doesn't matter how many dollars you pump into that economy, it can't work, the food and shelter and objects for possessions have to come from somewhere. That's the difference between "currency" and "wealth" in a nutshell. You can't fix the economy by shuffling money around and shutting down wealth production. (Nor is the government all that good at wealth production. How much mining does the government do? How much food does it grow? It's more complicated than that, but this is closer than most other ways of thinking about it.) So...

'If I consult my phrasebook, "destroying wealth" is usually code for "taxing the wealthy."'

No, not even close, when I say it. I actually mean real wealth is being consumed and not replaced, nothing to do with taxes. That's what actually matters, not little dollar symbols. An excessive obsession with the dollars while ignoring the wealth is arguably the main reason the government's response has been so inadequate. Taking money away from people generating wealth and shunting it into a wide variety of ineffective areas of the economy makes things worse, not better.

There's no way out of this entire problem, of which over-extended benefits is only one small part, without pain. You think you have a solution to easing the pain, and it does ease it locally, but your way generates more pain globally, and eventually that catches up to us. Like, the last couple of years and the ways things are going the next few years too. Again, I reject your attempt at moral authority. Your way leads to disaster, the one we're all but headed full bore for right now. That pain is necessary now is not because of my choices today, it is because of the choices already made. I'm not advocating pain, I'm announcing the fact it's already here. We've got a gangrenous limb and you're upset because I'm not willing to go along with the "keep pumping more anesthetic in and it's all fine because there's no pain" plan. Yeah, I'm not, but I don't think I'm the one with a morality problem when I suggest the gangrenous limb should be addressed sooner rather than later.

And to take the class, you still need to pay the rent, feed the kids, bus fare.

Still, why not encourage training for the unemployed? But if you don't pay 100% for it, the unemployed are in no position to take you up on it.

I was unemployed for awhile in 2008 and I can confirm that Illinois at least has work training programs for the unemployed. I can't attest to whether or not they are any good as I had marketable skills at the time.

After university, I was unemployed for a time and two things helped me to find new jobs and dramatically improve my income level: a) learning Perl on my own during the unemployment period* and writing two open source programs, thus demonstrating my skill with the language and impressing my first employer; b) getting a three month state-paid Java course (SCJP) and getting to know the Java-API and environment.

Self-motivation, training, a certain amount of luck - there are numerous factors to getting a good job. For some lazy slobs, it may be getting their welfare money reduced. But for others it may be getting a longer period of welfare and training so they can learn something new which allows them "to do what they love". I think it is not enough to talk about getting people into any kind of job, as if having a job, no matter what, is sufficient or necessary to justify their existence. We need to help people get into the right jobs, and those jobs need to be paid fair wages.

* Programming was(is) more fun than playing DAoC all day.

How much would it cost to take a three-day course with five skilled teachers ( http://philip.greenspun.com/teaching/rdbms-iap-2011 )? Maybe $2000?

If only Greenspun had thought this through - then he might have suggested something like this:

for people who’ve been unemployed for 12 weeks, simply pay for a year of education in programs with proven records of skills-building (I guess you measure by how many finished and were able to get jobs)

I guess ad-hominem attacks are a lot easier than addressing Greenspun's simple economic question: "Is the 99-weeks-of-Xbox system that Congress created more sensible than it seems?"

If Greenspun had thought it through he might not have suggested such ludicrous examples:

Subsidising the high costs of aerospace engineering training and certification to add a few people to the back of that unemployment queue (behind the people with a decade's experience and two decades' aviation enthusiasm) doesn't sound like a better use of funds than buying X-boxes. Maybe the existing unemployed engineers should revitalise their resume with study at efficient modern universities like the University of Phoenix?

If I wanted to contract non-nerd programmers to cut costs, the ex-clerk with the six month boondoggle programming course isn't going to get a look-in ahead of the cheaper outsourcing company staffed by smart graduates motivated enough to endure a CompSci degree in the hope they might one day impress the boss enough to make manager.

If Greenspun had thought it through he probably wouldn't be implying a shortage of demand could readily be addressed by investing in increasing the oversupply of mediocre job candidates. Or, working at the high end of the state-subsidised education market, maybe he still would...

I'm all in favour of state sponsored training, but he couldn't have made a much worse case for it.

If Greenspun had thought it through he probably wouldn't be implying a shortage of demand...

There is no longer a shortage of demand. Sales, consumption and production have more or less recovered to their pre-recession levels.

http://research.stlouisfed.org/fred2/series/INDPRO

http://research.stlouisfed.org/fred2/series/PCE

http://research.stlouisfed.org/fred2/series/RSAFS

http://research.stlouisfed.org/fred2/series/GDP

This would not have occurred if we had a shortage of demand. The only thing that hasn't recovered is employment - firms are meeting the same demand with fewer workers. This is why profits are up:

http://research.stlouisfed.org/fred2/series/CP

This also suggests that it will be very difficult to solve the unemployment problem - it appears that most of the laid off workers were completely dispensable (perhaps with some changes to business processes). If they provided little of value to their former employers, it will be hard to convince a new employer that they will provide value for him/her.

To clarify, I meant labour market demand. Either way, it appears that the employment problem isn't simply skill mismatch or geographical immobility; firms have effectively substituted for [US-based] labour and overall demand needs to continue to pick up to restore the health of the labour market.

If growth of the economy overall is needed to solve problems of structural adjustment reducing labour market demand levels, I'm not sure that churning out more mediocre database programmers through subsidised courses can be presented as an optimal solution. As I said earlier, I'm not remotely opposed to govt-funded training when advocated in less crass terms than Greenspun's, but if implemented badly the end results can make employees even more dispensable by commoditising skillsets that were previously an edge for those investing in their own education and dissuading newly-profitable employers from investing in training in areas where demand is picking up.

There are ~15MM unemployed people in the United States. Let's say we want to improve the lot of 20% of those people. To what program can we direct 3MM people for a year of skills-building that will result in those people, with some degree of certainty, becoming employable?

I'm not endorsing Greenspun's plan, I'm just pointing out that the original poster didn't even bother to read Greenspun's blog post.

I'm personally a proponent of imposing unpleasant conditions on unemployment insurance to reduce moral hazard and make minimally productive use of the unemployed. For example, we can build a physical (rather than virtual) border fence with mexico with labor costs close to zero - we do is select random able-bodied unemployed people and make working on the border fence a condition of receiving further benefits. (Or similar projects - for example, we can reduce the waiting time at the DMV to 0.)

Ask a few questions, and this argument is revealed to be nonsense.

How does unpaid ditch digging help unemployed find employment?

What is the effect of unpaid ditch diggers on employed earthmovers/DMV workers?

What happens if the unemployed are laid-off earthmovers/DMV workers?

This is just another conservative/libnerdtarian [sic] anti-social rant against lower-class people. Ditch-digging doesn't work, neither does job training. If the government doesn't want to interfere in job creation, the most viable alternative to prevent mass social unrest is to just give people money. The real waste comes from trying to spend it on ditch-digging and job training welfare programs.

Read Gordon Lafer's The Job Training Charade for the statistics, to understand what will happen to the US in the next 20 years, and for an answer to tptacek's original question (spoiler alert: such a program doesn't exist, because it's impossible).

If you're a conservative and steam starts coming out of your ears at the thought of the undeserving welfare queens getting your tax dollar hand-outs, think of it this way: they're going to have the freedom to spend it on whatever they want, no big government telling them what to do to keep their welfare check. Isn't that the essence of economic liberty?

How does unpaid ditch digging help unemployed find employment?

They become employed as ditch diggers at a wage equal to unemployment benefits. The effect on employed earthmovers/DMV workers is that their wages will probably be lowered. Let me point out (again) that I'm not advocating job training, since I don't think it will work.

My theory is that the only way to improve our employment situation is to lower wages, relocate workers, and accept that technology has made some people obsolete.

libnerdtarian

Calling me a nerd, while correct, adds no value to this conversation. Of course, I wouldn't expect a stupid bleeding heart liberal to understand that. (Notice how pointless the last sentence is?)

"They become employed as ditch diggers at a wage equal to unemployment benefits. The effect on employed earthmovers/DMV workers is that their wages will probably be lowered."

So you're advocating government creation of low-wage, dead-end make-work jobs on projects that don't create any value, and the destruction of current job wages and benefits through artificial government-subsidized worker oversupply.

This is the GULAG, but I don't understand what the ideological benefit for the inmates is. Oh yeah, and the GULAG actually created a lot of value from gold mining and timber-cutting.

"My theory is that the only way to improve our employment situation is to lower wages, relocate workers, and accept that technology has made some people obsolete."

The market is already doing all of that, why do you need to get the government involved? I'm arguing that the employment situation does not need improvement. We should accept the productivity improvements of technological change, and use it to work less. People playing x-box on unemployment benefits is a good thing.

This is the GULAG

No, it isn't.

People playing x-box on unemployment benefits is a good thing.

No, it isn't.

Moral hazard is not a fake "libnerdtarian" canard.

It's only a moral hazard if you define it to be. Who are you to tell people what they should do with the money they get from the government?

It is easy to get into long, pointless arguments if you redefine well-known terms to suit your agenda. You and I (I think) agree about unemployment benefits, but you represent my point of view badly, and I wish you'd stop.

Definition of moral hazard from Wikipedia:

"Moral hazard occurs when a party insulated from risk behaves differently than it would behave if it were fully exposed to the risk."

What is the behavior change of people if government provides money to the unemployed, and why is it bad?

If I am hungry and have no money for food I might be more motivated to go get a job.

If I have someone giving me money every week, that I can use to buy food, I might be less motivated to look for a job.

Why is having a job a good thing?

I see this got modded down already, so let's examine the question closer:

If you're reading this, chances are you're here because you've read Paul Graham's writing and want to be an entrepreneur. Paul Graham says that jobs are bad things (http://www.paulgraham.com/hiring.html) and you should be an entrepreneur instead.

The problem is that something like 90% of startups will fail. I bet there are more than a few people on HN who have worked on a startup while receiving unemployment benefits. So if you're on unemployment benefits and decide to do a startup under the table, there's at least some chance something good will happen.

The chance that nothing productive will come out of people working in the unemployment GULAG digging the Great Mexican Ditch (btw, wouldn't it be cheaper to hire Mexican laborers to dig it?) is 100%.

Of course, none of this applies to you, because you're a special entrepreneurial snowflake. No one you know or care about has ever, or will ever, be unemployed. But everyone else is supposed to be your wage slave, willing to move across the country to work on your social media startup, cleaning toilets for stock options (because, you know, janitorial services is a dead industry). Either that, or they're a welfare queen spending their days snowboarding and playing x-box while sipping champagne and smoking cigars rolled from your tax dollars.

And fuck their safety net and their medical care.

This is why I have no problem calling out "libnerdtarians" and other social conservatives. There's a surprising lack of self-awareness, empathy, and the ability to perceive things from other people's perspectives. Some people call it being a sociopath: http://addictinginfo.org/new/?page_id=342

The cost to turn unemployed clerks into construction workers is not close to zero. They would need training, equipment, supervision, health benefits etc. For this reason, when here in Germany someone suggested to get all those unemployed to shovel snow during the winter, the local politicians did not want any such workers - while the unemployed would receive next to nothing, the cost to the community would be higher than having professionals do the job. Forcing people down on their luck to work for free is going to put pressure on the wages of those who do the same work for a living.

Ok, so lets turn unemployed clerks/realtors into DMV clerks, and unemployed construction workers into construction workers on a border fence.

As for lowering wages, that's a good thing. Wage stickiness is a major contributor to recessions - this is one thing that Keynes, recalculationists, Austrians and ZMPists can all agree on. Downward wage pressure can help break the back of wage stickiness.

One mechanism for that might be by advertising for the positions to attract the right kinds of candidates for each type, and then paying them. :)

I don't see how there is any difference between

1) Preserving high wages by stifling the availability of workers and then charging a higher tax on the employed to pay unemployment benefits.

And,

2) Letting there be more competition for available jobs, forcing wages down, but employing more people.

If you believe that unemployment benefits habituate people to unemployment lifestyles, then reducing wages and increasing employment has the effect of "unsticking" people who would otherwise be locked into unemployment. That's the difference.

There isn't really a controversy about whether unemployment benefits incentivize unemployment. They clearly do. In the absence of beneits, people would very rapidly find ways of obtaining income. The point of unemployment benefits is to allow them to find better income streams; ie, not by selling blood. If all unemployment benefits do is delay the inevitable trip to the blood bank, they are indeed a poor idea.

Is your answer to my question, "I can't think of one"?

Yes - I don't believe that training or education is a particularly useful solution for the vast majority of the unemployed.

Again: "I'm not endorsing Greenspun's plan, I'm just pointing out that the original poster didn't even bother to read Greenspun's blog post."

My belief is that most of the unemployed should accept lower wages, less pleasant jobs, and many should relocate. (Government assisted relocation was another one of Greenspun's suggestions, BTW.)

Yes, the first 26 weeks are insurance, but the remaining weeks are federal welfare checks paid for with borrowed money.

It is a huge oversimplification to say that unemployment benefits are "paid with borrowed money". There is an economic calculation that pairs with the humane calculation behind unemployment benefits.

To wit: people are not going to be allowed to starve in any case (there is a floor to our society's capability of being coldly rational). Furthermore, becoming homeless imposes additional costs across the economy (simplest case: the direct expense of eviction, lost rent; more generally, deadweight loss to the whole economy). Finally, if a significant portion of those in the "welfare check" phase of unemployment will end up employed, but would not end up consistently employed without that cushion, society has to factor in the cost of additional long-term unemployed people.

I think it's okay to extend unemployment benefits to a longer period, but 99 weeks looks like it is excessive. Also, perhaps, people who spend longer than the 26 weeks on unemployment benefits should be taxed at a higher rate when they gain employment. It's a little like the risk-based system used in insurance. The risk that your reservation wage increases probably increases with the time you spend getting benefits, so just tweak future taxes based on that risk.