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Wednesday, August 4, 2010

Unemployment Benefits Extension

In the past two years, Congress has occasionally passed an extension of unemployment benefits. There's a public dispute, as Republicans try to block the law.

"Unemployed people get more money." is logically equivalent to "Higher taxes for everyone who has a job." There's no free lunch. If Congress gives money to people in group X, then everyone not in group X pays higher taxes to compensate.

The mainstream media proclaims "Those scumbag Republicans are blocking the unemployment benefits extension. What about the unfortunate unemployed people?" They don't say "Hooray! Everyone who has a job should thank those Republicans for keeping their taxes down."

The unemployment benefits extension is financed via deficit spending. There is extra inflation, in an amount equal to the extra unemployment spending.

Unemployment insurance is a disincentive against finding a job. Suppose your old job paid $5k/month, your unemployment check is $2k/month, and you're offered a job paying $3k/month. The value of the job isn't $3k/month; it's only $1k/month. You give up the unemployment benefit when you accept the job.

Unemployment benefits encourage abuse. You can collect unemployment while simultaneously having an off-the-books job. Is that immoral? The State doesn't have legitimate claim to any property, making the answer "Not really. If you abuse State welfare programs, you're merely claiming unowned property." Still, I wouldn't do it. (Even though I've been fired a bunch of times, I never successfully collected unemployment. I only bothered applying once.)

Unemployment insurance is a great State control program. Unemployment insurance forces idle workers to register with the State. The "official unemployment rate" is based on unemployment claims.

Unemployment insurance is funded via taxes. An employer's unemployment insurance tax rises whenever he fires a worker. By raising the cost of firing someone, the State makes it harder to hire someone. Unemployment insurance really hurts businesses that hire seasonal workers.

Unemployment insurance drives out private unemployment arrangements. People are already paying for State unemployment via taxes. This crowds out mutual-based unemployment charities or arrangements.

Unemployment insurance is funded via a payroll tax. It isn't a deduction. The employer pays it. Like Social Security and Medicare, the tax comes out of the pool of money otherwise available for salaries. Workers get lower salaries due to the cost of unemployment insurance. The tax is invisible to most people, because your employer pays it. If there were no unemployment/Social Security/Medicare taxes, then workers would get a pay increase approximately equal to the cost of the tax.

The fact that the employer pays it, makes it seem like it isn't a real cost. State parasites love hidden indirect taxes. The slaves are less likely to notice hidden indirect taxes.

People say "Politicians are being so generous, by extending unemployment benefits." It's very easy to be charitable with other people's money!

"An unemployment benefits extension" is logically equivalent to "Higher taxes for everyone who has a job." The mainstream media never explains this correctly.


Dorothy said...

Total bull, my friend.

I have no choice, the state makes me pay for unemployment insurance!

I don't want it. I have never used it. Nevertheless, I am forced into it by the threat of state violence. It is theft, because taxation is theft.

I am paying all my working life. And this collection won't stop, I will pay forever, even if I never use it!

So, why, I ask you, shouldn't I in turn, expect the state to pay me, if I am unemployed? Why are you protecting the interest of the state?

I expect to be paid until I find job, regardless of how hard I am looking for it, because I PAY regardless of how hard I am trying to stay employed!

The fact that I have never been fired, because I take care of my jobs, doesn't matter. I am equated to that of the crappiest worker.

Then why when I am unemployed, shouldn't I be equated to that of the hardest looking for job?

You want it one way only, huh? I pay forever, but receive only if and when I am fired, and then only for some time? How convenient for the state!

Tell me, what is the way for me to ever recoup my payments if I am never to be fired?

Now, if you had offered me a choice of never paying into this communist system, then I wouldn't pay, and therefore wouldn't have any claim on payments.

Supporting unemployed in their claim to open-ended payments, is my only hope of crushing the communism by wearing it out. Looking for a compromise that would allow the system to "work" will achieve just that, the system will continue to work!

Seeking this compromise is the biggest and dumbest mistakes of conservatives.

Anonymous said...

The real solution is to stop off-shoring jobs to China and India.

Or simply let people own some land and let them grow their own crops. Free them for having to claim welfare benefits, so that they can pay taxes. Take them out of the system; let them grow their own crops and give them a solar panel so they don't have to pay big electricity bills. Solar panels are supposedly good enough now to power laptop computers.

I paid taxes all my life and on the one occasion when I got sick and couldn't work I found I had a useless government doctor and so didn't get welfare benefits. The company I worked for were scum-bags and they were too mean to wait for me to get better. Scumbags all around.

It was an accident at work that temporally incapacitated me, so the clowns at work were even more evil.

dionysusal said...

>Unemployment insurance is funded via a payroll tax

This is no doubt spliting hairs, but (at least in the "state" where I reside), some employers, instead of being "rated" (taxable) have to reimburse the state dollar-for-dollar for unemployment benefits paid out to their layoff victims. Please don't ask me how I know this as it's a source of embarrassment for me.

In a truly free market, unemployment insurance would be a legitimate service if it was offered on a take-or-leave-it, voluntary basis. Employers could offer it to their employees and have them contribute to it, or they can have it for everybody and pay a little less in wages. All things being mostly equal, I would prefer to work for a company that had unemployment insurance over one that didn't, even if it meant a little less take-home pay. But there should be that choice, unlike now where it's compulsory/pay-or-get-shot.

Master Doh-San said...

"Politicians are being so generous, by extending unemployment benefits." It's very easy to be charitable with other people's money!

The problem -- as Maggie Thatcher so aptly pointed out -- is that, after a while, you run out of other people's money.

Bas said...

Right now I am receiving unemployment benefits, simply because I have no choice. The government made the decision for me by forcing me into this system.

Here's a few first steps towards fixing unemployment:

1) Abolish minimum wages,
2) Abolish personal and corporate income taxes,
3) Repeal union laws.

This will also slow down jobs going to China/India.

Anonymous said...

The solution is for money to be more evenly distributed so people have the resources to FORM THEIR OWN BUSINESSES INSTEAD OF BEING UNEMPLOYED.

You can't have capitalism without capital. You can't have capital without well paid jobs.

The government takes all the surplus resources in the form of taxes. So when you end up unemployed after two decades of work, you have NO MONEY TO FORM YOUR OWN BUSINESS.


Scott said...

Yeah, unemployment is a forced insurance system. It's absurd to say the problem is with people collecting benefits that they have paid for.

A reasonable libertarian argument would be to say the system should be dismantled, or at least made completely voluntary.

Your argument here is like saying nothing about forcing people to buy health insurance under Obamacare, then arguing that it is wrong for them to get their medical bills paid. It's so ridiculous that it can't be taken seriously as an argument.

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