Monday, July 12, 2010

Downscale Work and the Unemployed

Today Bob Oakes was the guest host (sounds like an oxymoron -- I mean that he was filling in for host Tom Ashbrook) on the excellent radio program On Point. The result is a one-hour program that I recommend everyone listen to in its entirety -- podcast it or whatever needs to be done to hear this thorough examination of the current debate about the extension of unemployment benefits.

James Sherk of the Heritage Foundation makes the strongest possible case for curtailing these benefits and the fallback position of funding them by cutting some other part of the stimulus spending. For this he relies on the assertion that private-sector spending is the only way to create wealth and on a very twisted view of the history of the Great Depression and government spending. He even cites the Marshall Plan as an example of private-sector investment -- a real head scratcher.

Fortunately, sociologist Katherine Newman (at that time on the faculty at Princeton, now a dean at Johns Hopkins) was one of the other guests. (She can also be heard on Bill Moyers Journal.) Throughout the discussion, she makes the case that at critical times in the business cycle -- such as the Great Depression and such as right now -- it is wise for government investment in a social safety net and in job creation. She deftly diffuses many of the myths surrounding both government spending and the nature of unemployment and the unemployed. She makes a very strong case for the need to prevent the deterioration of human capital that can result from long-term recession.

I only found the program lacking in one detail: Sherk asserted many times that the new health-care reform bill contributes to unemployment by making employers nervous about the addition to the tax burden of hiring new workers. Newman points out several flaws with his reasoning, but I would go further. The health-care reform bill contributes to unemployment because it does not go far enough. If we had a single-payer system like all other wealthy countries, employers would be able to calculate the cost of workers easily (salary + taxes). Even after "reform," employers calculate a bit differently (salary + taxes + unknowable cost of health insurance).

Please don't just be satisfied with my summary, though. This program is an economic education that is worth one hour of anybody's time.

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