I’ve heard a few economic whoppers in my time, especially from the mouths of politicians, but this statement by Speaker Pelosi has got to be one of the most foolish yet.
Talking to reporters, the House speaker was defending a jobless benefits extension against those who say it gives recipients little incentive to work. By her reasoning, those checks are helping give somebody a job.
“It injects demand into the economy,” Pelosi said, arguing that when families have money to spend it keeps the economy churning. “It creates jobs faster than almost any other initiative you can name.”
This is the same Keynesian clap-trap that claims you can “stimulate” the economy through government spending. It’s the same theory that created a “lost decade” in Japan as they tried one Keynesian stimulus after another throughout the 1990’s. It’s the same theory behind the 2008 Bush rebate checks, which did not spur growth, and the Obama stimulus, which did not spur growth.
You don’t have to be completely against some degree of unemployment insurance, as a cushion against economic hardship, to recognize that there has to be a balance between safety nets and the danger of creating a disincentive for work. When you subsidize something, you get more of it. When you pay people not to work, you’re going to have more people not working. Jobless benefits have to be finite; they can’t simply go on forever.
The length of the unemployment benefits granted so far is already unprecedented, so it’s not surprising that we’ve seen evidence that people are choosing to stay on the dole rather than to take work. It is ludicrous for Speaker Pelosi to now argue that further encouraging such mooching is actually creating jobs. The only real job she’s interested in creating (or saving in this case) is her own. She clearly thinks that continuing to handout other people’s money is the best way for her and her party to stay in power. Only time well tell whether she is right on that account.
