Every dime spent by a poor person goes into grocery stores, clothing stores or gas stations etc. The gas station, grocery sore or clothing store use that money to pay employees and keep their businesses going. That employee uses that money for food and clothing too. The money gets circulated throughout the economy. Every step a little gets filtered away but it multiplies through the system.
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Then why dont you extend unemployment benefits to 499 weeks, instead of just 99 weeks?
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Why dont you double the amount on the unemployment checks?
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Why dont you give out unemployment checks to everyone who has no job? If unemployment benefits are so great, why not expand it?
The answer to all 3 questions, obviously, is because unemployment benefits do NOT stimulate, and actually unemployment benefits actually hurt the economy. Unemployment benefits are a net DRAIN on the economy, and they add to our already HUGE debt. Besides, unemployment benefits contribute nothing, and create nothing, as to the goods or the wealth of a society.
Furthermore, do you have any idea what happens in a society when you pay millions of people to NOT work?
That’s why Obama’s tax cut was returned to the taxpayers as a lower withholding rate instead of a rebate check. When you give a person a check for $250, he’s liable to pay down debt or put it in the bank. $5.00 a week will more likely be spent. It has a higher multiplier than the lump sum.
Please give a cite showing that there are enough jobs today for all who wish them. This is GQ, after all. The last I heard was that there was an average of five people for each opening.
I don’t know about you, but if my taxes were raised a dollar, it would come right out of savings, not consumption. The money I put into savings bids up the price of stocks, since there are not enough good investment opportunities, given the surplus of supply, to make increasing production worth it. A dollar from me transferred to an unemployed person who will spend it will definitely increase consumption, and thus production, and that will create jobs.
Limits on the term of unemployment insurance make sense in a full employment or near full employment environment - not with nearly 10% unemployment, much higher fo the lower education rungs.
The Multiplier Effect is an ancient theory that now is obsolete in current day America. In the old days, prior to the 1970’s, the Multiplier Effect actually worked, because when Americans spent more, they bought more consumer widgets, which were made in American factories, the factories then had to increase output and in order to increase output the factories had to create more jobs and hire more Americans to build more and more American made widgets.
The Multiplier Effect does not work anymore, since the United States no longer manufactures very many consumer goods. Spending more money and buying more goods that are made in China does not create any new factory jobs in the USA. You can buy all the Chinese widgets that you want… and not “1” single American factory worker will get called back to work.
IF you spend $5 a week on goods "Made in China" or “Hecho in Mexico”, then all it does is to help the Chinese and Mexican economies. It creates jobs in China and Mexico, but not in the USA.
When come back, learn economics.
Even if the United States had a zero manufacturing sector, that doesn’t mean the multiplier would not exist, it means the multiplier might be smaller, because the Marginal Propensity to Withdraw (due to higher imports) would be larger. However, going out and buying Mexican or Chinese goods would create, at the very least, retail jobs.
The answer, of course, is that nothing is free. Extending unemployment benefits may be a good moral choice or a good political choice, but we cannot pretend that this action has no costs.
The biggest issue with extending unemployment benefits isn’t that the multiplier is small (although it probably is) but that doing so necessarily causes unemployment to remain high, or higher than it would have been. This was the subject of much study by Christopher Pissarides and Peter Diamond - they shared the 2010 Nobel Prize in Economics with Dale Mortensen:
I think when things like this come up you need to address UNDERemployment.
I have not had a regular job in nearly 3 years. I can get temp jobs, but these suck. I can pay my rent, my food, my Internet and bus fare. That it is it. I can barely afford anything else. I need to see a doctor, a dentist, and get a lot done, I can’t do any of this.
I applied with 400 people to get Christmas work. I got it. They hired FIVE people. I work 24 hours a week. This is it. Furthermore, no one but the GM and Ops Mgr at that store works 40 hours. Full time at that store is 30 hours. Virtually no one else gets health benefits from this store.
You get benefits if for six months you average over 36 hours per week. OK if you do overtime a lot you can manage to scrape up some health benefits for the next enrollment, of which you pay $50/check for health, no dental, no life insurance, no 401K, nothing.
OK you see the problem. It’s not unemployment, it’s UNDERemployment.
I’ve never had issues getting temporary, low paying, jobs. It’s just always not enough hours. To make matters worse, schedules are put out at the last minute so it’s hard to combine two jobs.
This is why people who have jobs don’t understand when they see signs at Walmart, Target, McDonalds, etc, saying “Help Wanted.” Yes, they do want you, for a couple, three days a week.
That’s the reason I feel, that people aren’t getting unemployment today. There are so many unemployed people it’s so easy to find qualified people and give them as little work as possible.
I’m sure that if this is so obviously true, you could provide cites to reputable mainstream economists who say so.
However, the immediate flaw in your logic is glaring. What percentage of the money that is received by those getting UI is spent on consumer goods not made in America and what percentage is spent on food, rent or mortgages, or consumer goods or other disposables that are made in America or owned by American corporations? All surveys of consumer behavior show that spending on consumer goods lessens during recessions, with more money being redirected at essentials. Essentials are overwhelmingly local.
So your basic argument fails utterly. Under the most favorable interpretation all we could say is that while the current multiplier for UI is 1.63, in the past it was even higher.
That says absolutely nothing about the relative value of today’s UI multiplier compared to other ways of adding dollars into the economy. Moody’s Analytics provides an econometric model that gives those numbers. If you think those numbers are wrong, back that up with numbers from a similarly reliable model. Your assertions of what reality should look like are not cites.
There are few nice things in your cite you left out.
and
While it is no doubt true that unemployment insurance raises the rate - by making it easier for people to wait for a job up to their abilities, for instance, are you saying that reducing or eliminating it would result in a major reduction in the unemployment rate in today’s economy?
BTW, the person you quoted was not a winner of the prize. Were you inferring he was? I’d think that the actual winners would say that unemployment insurance helps to cover income and consumption loss from the time spent in finding a job due to the matching issues they discovered in their work.
“If” that was true, then why do we “need”, why are we bringing in millions more immigrant each and every year?
“IF” we didn’t have plenty enough, a surplus of, good jobs that are currently unfilled because companies cannot find job applicants for those jobs, then it would not make any sense to import millions and millions of more job seekers from foreign countries.
The flaw in your logic is that the Chinese economy is booming, and job creation in China is exploding. At the same time, all the money that you have spent on unemployment benefits in America over the past several years has not reduced unemployment in the United States.
You can talk theory all you want, but the proof is in actual results.
We average just over one million new immigrants a year of all ages. People turning 18 and presumably entering the job market average about 4 million per year. (You can change that to 22 if you want to limit it to those of college graduate age.
With the current unemployment rate at close to 10%, approximately 20 million Americans are actively seeking full-time employment. Underemployment is higher.
By any measure, immigration is an insignificantly small variable in the overall American job picture. The foreign-born total only 1/8 of the population.
In addition, employment is not a big pot from which any ladle will scoop out a candidate. It is specific to skills and industries, economic conditions and time periods. A higher percentage of immigrants have college degrees than those native-born. (Although it is also true that a higher percentage have no high school diploma.) This makes immigrants selectable for certain jobs.
Still. almost nothing about employment as a whole in the U.S. can be explained by immigration. Employment is overwhelmingly a function of the native-born.
UI is not supposed to reduce unemployment. It is supposed to make unemployment endurable. It does what it is intended to do. That it doesn’t do something bizarrely unintended is totally irrelevant.
Even I can see this is fallacious. You’ve not demonstrated a causal link between unemployment benefits and higher unemployment, and you’ve not given any information about how the Chinese administer unemployment benefits (clue: it’s not hugely different to the American system).
Your post could just as easily argue for literally anything, thus:
Or alternatively
Or even…
Although I concede that last position may be a little more reasonable 
Post Hoc Ergo Propter Hoc
ETA: Great minds and all that
That was a year and a half ago. The trend hasn’t changed.
First of all, while the winners of the prize might favor extended benefits, they wouldn’t make the mistake many in this thread make and assume that these benefits don’t have a cost.
Secondly, you seem to be considering credit measures and stimulus as equivalent to extended unemployment benefits. Why would you assume that this is so? Might one favor one or another of these things and not the other - or even regard them as having different priorities?
I’m not opposed to extending the benefits, so long as we are clear about the various tradeoffs involved.
Of course it has costs, who would deny that?
Why are you maintaining that UI extension and stimulus are two different things? Extending UI is a stimulus, and economists consider it a pretty good one. Certainly better than additional tax cuts for those making over $250,000.
Immigration has EVERYTHING to do with it. All you gotta know is to know math in order to figure it out. Even a grade schooler can figure it out.
Immigration, just over the past 10 years alone, is responsible for over 13 of the unemployed today.
http://www.prnewswire.com/news-relea...110046719.html
Fewer Jobs, More Immigrants: Despite Loss of 1 Million Jobs, 13.1 Million Arrived 2000-09
*WASHINGTON, Nov. 23, 2010 /PRNewswire-USNewswire/ – New Census Bureau data collected in March of this year show that 13.1 million immigrants (legal and illegal) arrived in the previous 10 years, even though there was a net decline of 1 million jobs during the decade.
*
Your link isn’t working at the moment so I can’t see everything you’re basing this on, but according to the Bureau of Labour Statistics, America ended November with 15.1 million unemployed. Is it really your contention that all but 2 million of America’s unemployed are illegal immigrants?