Wednesday, December 1, 2010

The hot topics lately are the failure of the Congress to extend unemployment benefits and the “Bush” tax cuts. There are arguments on both sides for each of the proposals. In a recent article in the Huffington Post, two democratic Representatives from Florida and California have stated that the unemployment benefits are necessary in these difficult economic times. Historically, the government has never stopped unemployment benefits for displaced workers during a recession. We have heard from politicians on both sides that these are unique and unprecedented times which require different and novel solutions.

On the other side there are the supporters of extending the current tax cuts into the future to spur business. Let’s be clear that there will not be any new tax cuts just an extension of the current rates. Various members of the current administration will claim that tax cuts for the wealthy do not spur the economy. Trickle down economics does not work and the rich don’t need a break is their cry. The major problem with these solutions lies in the fact that they are the same old solutions to the same old problems.

The unemployment system is beginning to resemble the old welfare system. Originally welfare was titled “Aid to Families with Dependent Children.” It has been well established that this system created a feeling of hopelessness and inactivity. It didn’t pay to try to get off the system rather it was more productive to figure out how to exploit the system further. Parents lost control over their children and failed to take an active role in planning their future leading to an overburdened system.

Today the unemployment system has much the same effect. I know a person who lost their job, applied for and began receiving unemployment benefits. The amount of the benefit was minimal and the party began looking for work. The person took a job with the US Bureau of the Census going door to door to interview residents about their responses or lack of response to the census. The money was good but the job was only temporary. When it ended the person wanted to resume the prior unemployment claim and receive benefits from the worked performed for the census bureau. They were told that this recent employment could not be included until one year after the start of the original claim. Only then could these additional earnings be utilized. The only upside to the temporary work is that the benefit period was extended because of the work. At the same time the debate rages over the extension of benefits my friend received a notice the they may be eligible for the 20 week extension of benefits from the federal government. Sure enough the benefits were extended and this person has no more incentive to work.

The abstract idea of providing citizens with a safety net in difficult times is a very sound one. The practical implementation of these ideas is the problem. Its seems that our best politicians, advisers and bureaucrats can’t figure out a way to implement these programs. In my favorite movie, “My Man Godfrey” he title character is discussing a business venture that they had created to help the “forgotten men”. These men appeared to be bums or derelicts. Upon further explanation it would turn out each was not what they appeared to be but rather ordinary men down on their luck. When questioned by this partner about dividends the main character says “we’re giving 50 men employment in the summer and shelter in the winter isn’t that enough? It was clear through the actions and statements of the various characters that the upper class and the down trodden had very little in common until the two crossed paths. One happy to have a job and the other happy to be served. Clearly if we serve each other then we will achieve great thins.

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