It is interesting to me how every issue or problem we face seems to get boiled down to a set of two mutually exclusive solutions. They generally never intersect, and one is typically status quo or expansion of the status quo. What I find very frustrating about this is it seems it is difficult to get alternate or blended solutions into the discussion, so that much like in geometry, real solutions can take “shape.”
Former President Bill Clinton has a new book that is full of new and different ideas for helping the economy get back on track. Not all of the ideas in the article linked here are new, nor do I agree 100% with every idea. However, the ideas are fresh. They might not even be new, but they are fresh. No one else is talking about them. One example that is appealing:
And in the near-term, Clinton says Congress should allow companies with earnings held overseas to repatriate that money at a tax rate below the usual 35% — say 15% to 20%.
If a company is able to prove they will use their repatriated profits to create new jobs in the United States, the tax rate should be dropped all the way to 0%.
With as much as $1 trillion in profits being held overseas, the scheme could create a nice chunk of revenue for the Treasury. Clinton says that money should be used to fund infrastructure grants to the states.
Think about that idea. It gives some to the business community and the conservatives asking for lower taxes on businesses. It gets more money in the American economy. It creates jobs. It increases tax revenues. And why isn’t every senator and representative drafting a bill today to get this done?
Another issue is the U.S. Postal Service and whether we should continue to subsidize postage and 6-day delivery to the tune of over $8 billion per year. Mail volume continues to decline, costs continue to rise and people continue to more and more use alternative ways to communicate. Yes, I know part of the problem is the way Congress changed the payments required to the pension fund. But, check the USPS’ own reports. Mail volume continues to go down. If they are servicing less mail every year, they need to start thinking about keeping the workforce and infrastructure at a proper proportion to the service they are delivering. Yet I see this petition popping up on my Twitter feed to save the 6-day delivery. I want to know why.
Here’s what I would propose. The USPS employs alot of people, and laying them off is probably not a good or practical thing to do at this point. However, it seems ludicrous to pay postal workers to do nothing and to continue to have the taxpayers foot the bill for a service that, while Constitutionally mandated to exist, probably needs to be pared back. (Note: Please read the link. I’m not suggesting postal workers do nothing all of the time. But the bizarre contract they have with the union costs the USPS millions every year to have workers literally sit and do nothing.) Why not scale back the postal service, and retrain those displaced workers to bury fiber optic cable throughout the United States. As people retire or leave for other jobs, you don’t replace them so that the program can be eventually eliminated. The fiber could then be sold to communication companies to deliver high speed communication services to communities all over the United States. Quick math says we could have 60,000 people at roughly $60,000 per year burying cable at a cost of $4 billion. That leaves $4 billion to buy the cable itself to leave it at a break even point. Based on estimates of cable costs (just the cable material), that could buy roughly 250,000-500,000 miles of fiber optic cable. It seems to me if we are spending the $8 billion anyway, we could be doing something more productive like this which provides the future infrastructure we need.
There are plenty of issues that likely have alternative solutions. Education, housing, energy, unemployment, health care and many others seem to always be presented as two-solution systems. Have we lost the ability to think creatively? Are we simply too apathetic to care? Why do we not want to form real solutions? Let’s hope that whoever wins a year from now will be more like President Clinton and at least be willing to discuss new ideas.
I am still seeing two issues come across the news and social media quite a bit in regards to Minnesota politics. One is the lack of a budget (vetoed by Gov. Dayton)/upcoming special session/tax rates. The other is the gay marriage amendment. My idea here today is to show how rampant the use of logical fallacies in defending each side, and to give a lesson on common logical fallacies so we can all spot them and make more informed decisions.
One of my favorite podcasts is The Skeptics’ Guide to the Universe. Their website carries a great explanation on what is a logical fallacy:
All arguments have the same basic structure: A therefore B. They begin with one or more premises (A), which is a fact or assumption upon which the argument is based. They then apply a logical principle (therefore) to arrive at a conclusion (B). An example of a logical principle is that of equivalence. For example, if you begin with the premises that A=B and B=C, you can apply the logical principle of equivalence to conclude that A=C. A logical fallacy is a false or incorrect logical principle. An argument that is based upon a logical fallacy is therefore not valid. It is important to note that if the logic of an argument is valid then the conclusion must also be valid, which means that if the premises are all true then the conclusion must also be true. Valid logic applied to one or more false premises, however, leads to an invalid argument. Also, if an argument is not valid the conclusion may, by chance, still be true.
Most of us will be guilty of using logical fallacies often. I am guilty of it myself, but for most of us it is done by accident. It takes reflection and discussion to uncover the fallacies and form a more sound, logical argument. Politicians are guilty of using logical fallacies purposely to advance their personal or party views.
Here is an egregious logic fallacy committed by AFSCME. The key statement here is this:
The Republican majorities are choosing to protect the richest 2 percent. They’re making sure these households – making $300,000 or more – don’t have to do their share to fix the state’s budget problems.
This claim falls under a few different categories. The first would be a False Dilemma. AFSCME’s assumption here is the only way to solve the state’s budget problems is to raise taxes on the rich. I haven’t looked at the budget in detail, but my understanding is the budget vetoed by Gov. Dayton was roughly a 6% increase in spending (with no tax increases). According to the BLS, inflation from 2010 was under 3%. If inflation stays at the same pace, then the 6% increase in dollars is a true increase in spending as well since the extra dollars should be able to buy more even when considering inflation. So is the state’s budget truly dire when we can increase spending without a tax increase? Yes, I know this could be construed as it’s own logical fallacy since government is only one sector of the economy and it is possible inflation in those sectors is much higher. The counter-argument to that is to then ask why is inflation higher in those sectors since the government is so heavily invested in those certain sectors of the economy, it could be partially due to their own doing.
The second fallacy of AFSCME’s statement is an example of an Appeal to Emotion, more specifically an Appeal to Spite. Saying the GOP is “protecting” the rich is a way of inciting an emotional class warfare. These people have way more than most people, and that “isn’t fair.” You could even say this is an Ad Hominem attack, saying the GOP’s position is wrong simply because they are protecting those people which most people hate.
Finally, AFSCME uses an Appeal to Belief that the rich don’t pay a fair share of taxes. Statistics on the federal level are readily available and reported. The top 1% of income earners pay 40% of federal income taxes and the top 5% of income earners pay 60% of federal income tax. The democrats want to tax the top 2% of Minnesota incomes on the premise that they don’t pay enough. Think of an analogous situation: If 100 people are in a bar and in total ring up a $5000 bar tab. 1 person in the bar pays $2000, 4 more people pay another $1000, leaving the rest of the people in the bar to pay just over $21, even though the average bar bill was $50. Did the first 5 people pay their fair share? Let’s say they each drove away in a Bentley, would you then feel cheated by how much of the bar bill they paid? Maybe you could make a moral argument that they should pay more, but claiming they didn’t even pay a fair share is simply a bad conclusion.
In the gay marriage amendment debate, I have heard 2 arguments for passing a gay marriage ban. The first one is the idea that being homosexual is biologically unnatural because it doesn’t lead to procreation and that it would be like saying “sand is food.” Human psychology and physiology is much more complex than simple procreation. While it is true that humans are animals and sex is mostly about procreation, Wikipedia has a great summary showing examples in other animals where sex is more than just a mechanism for procreation. To get very basic, it is unnatural for human males to be with only one partner in marriage. In many large mammal species, the biggest and strongest males get to breed with several females to best ensure the survival of the species. Another example where we go “against biology” is when men shave their face or women shave their legs. Biology intended that hair to be for warmth and protection. Should we ban shaving too because it is “biologically unnatural?”
Yes, that last question is a Straw Man argument, but I was employing it in this case as an exaggeration to prove a point that the “sand is food” argument is also the same type of argument. Homosexuality isn’t a biological “wrong” and cannot be explained that way. There are layers of biology, psychology, and other reasons beyond a simple “yes or no” explanation. So the “sand is food” argument doesn’t prove anything.
The other argument used is the past history of voting on this issue in the U.S. I haven’t looked at each vote and what was specifically addressed, but the claim is 34 votes banning gay marriage have taken place and all have had the outcome of supporting a ban. This is wrong based on both the Appeal to Popularity fallacy, as well as the Appeal to Common Practice fallacy. This is easy to explain. I am sure everyone remembers a parent saying to you, “If friend A and B jump off a bridge, are you going to as well?” Just because something is popular or has always been done doesn’t automatically make the position or action correct.
Both major parties are horrible at explaining their logic and presenting evidence for their positions on issues. Most usually want to ignore past data to support an idealistic position that is popular. For example, raising taxes on the rich sounds like a great idea in theory, but it never comes out in practice because we ignore the fact people will adjust their behavior to derive maximum benefit for the amount of work they do. It is human nature. If we taxed every dollar above $1 million at 95%, do you think many people are going to work much past that $1 million mark? Stated another way, if I make $1 million for working 6 months out of the year and make $2 million if I work 12 months, but I keep $500,000 if I work 6 months and keep $550,000 to work 12 months, how many months do you think I am going to work?
My example above doesn’t mean a tax increase isn’t warranted in this budget cycle. Maybe it does need to be part of the solution. But to say tax increases on the rich are always justified is wrong. It is also wrong to assume raising taxes will raise the revenue needed to solve the budget concerns.
If the GOP gets its budget passed in Minnesota, it does look like some people are going to lose their access to the social programs they rely on. That could affect them negatively in the short-term. However, we can’t simply look at the first layer of the consequences in a government policy and make our political decisions based on those outcomes. Taxing the rich gains us money in the short-term, but what if that change prompts a corporation to relocate? What if the rich work less or change their investments and the revenue doesn’t pan out to the projected amounts? What if a person dies due to lack of coverage?
As callous as it sounds, we do have to look at the cost/benefit in these decisions. People die more often because of the 70 MPH speed limit on the interstates in Minnesota than they would if the speed limit were 40 MPH. The higher speed limit saves everyone time (and time is money), thus costing less to transport goods, giving us more time for production, etc. We have chosen to set the speed limit at a reasonable human cost in balance with our own financial interest. Most insurance policies have a co-pay to prevent unnecessary trips to the doctor. Maybe someone skips going to the doctor because they think they just have a mild flu (rather than pay the $20) and end up dying when their infection quickly worsens. (Yes, this is more anecdotal because it is harder to quantify scientifically, but I thought it made some sense to discuss here).
Hopefully you are still reading and didn’t get too bored with some basic insights on logic. My point is to stress the importance of analyzing your political positions carefully, especially if you are perfectly aligned with the ideals of a particular political party. Be especially wary if your party or candidate uses an Ad Hominem Tu Quoque attack, where the attack is simply based on the fact the opponent changed their mind. Use your mind, think logically, discuss with a measured reason, and don’t be afraid to change your mind.
While serious issues get pushed to the back burner, it is obvious that the presidential campaign is underway as Donald Trump makes a fool of himself and President Obama uses his office to start countering political campaigns. I know mud-slinging and misinformation have been a part of campaigns since elections have been held, but the modern main-stream media really adds fuel to the fire. Has anyone ever heard of research. I start to wonder if media has any journalists left, or if they all are simply reporters. Political blogs are even worse. One egregious example is from a progressive blogger who tweeted, “When will [Michele Bachmann] produce her birth certificate and prove she’s from this planet?” Honestly? I don’t agree with Representative Bachmann on many things, including the fact she questioned President Obama’s birth certificate. Or there is this article asking Sarah Palin to produce her college papers. I think she is completely misguided and then tries to distract people by saying “Don’t let the White House distract you from real issues.” Then look at the “@” replies to her tweet. The political rhetoric is so childish it sickens me. This kind of childish rhetoric degrades the political conversation and provides no platform for compromise or discussion.
Let me get out a few facts about the “Birther” conspiracy. The people pushing need to understand the purpose of the “natural born Citizen” clause as stated in our Constitution. It was meant to prevent a dual loyalty, i.e. to prevent someone from making decisions that would benefit another country over our own. All presidents go through an extensive process within their respective parties, so any doubt as to a person’s loyalty would be exposed long before any election. The electors in the Electoral College also provide a buffer (albeit weak) to preventing a rogue candidate from being elected. This was one of the reasons the Electoral College was set up in the first place, because the Founding Fathers knew a pure democracy would never survive. Instead they set up a democratic republic – so if someone ever tries to tell you we are a democracy, make sure to tell them they are wrong. By having a “filtered majority,” we prevent mob rule and in a sense gain more control over our government.
Neither party seems to get it, because as the Republicans go after President Obama over his birth certificate, this Democratic blog seems to think the Constitution mandates the President to make us a moral beacon in the world. They are right that the job of the President is to “…preserve, protect, and defend the Constitution…,” but even our first President warned us to stay out of foreign entanglements. There are people in the world who don’t believe in the freedom we have in our country, and we can’t force them to change their mind. The President’s job is to make sure we always have our freedom here. It ends at our borders.
So, in the worst-case scenario someone were to be elected that was not a “natural born Citizen,” we would still have options. It would be obvious rather quickly if an executive was granting favors to a particular country or set of countries. The President can’t make law. Even the President’s ability to make war is a bit more limited since the Korean and Vietnam conflicts brought up the whole issue of a declaration of war. If the President were to be caught showing dual loyalty, he could be impeached by the House and brought to trial in the Senate. There are even mechanisms in place for the Vice President to take over temporarily if the President is thought to have lost his capacity to lead. We have a pretty good system to prevent a rogue President.
With President Obama specifically, conservatives really just need to stop. Use some logic. First, President Obama has hardly deviated at all from President Bush’s policies of spending and war-making. So, how is it that President Obama’s policies could be construed as anti-American? Second, let’s just say the “birther” campaign were to be successful, then we would get Joe Biden as President? Is his policy going to be that much different?
The bottom line on the “birther” issue is that it is pretty clear President Obama was born in Hawaii. Perhaps the information is not perfectly crystal clear, but I don’t think his loyalty is in question. If anything, it should show us that we need to improve our documentation of all people in the United States to prevent terrorism, identity theft, medical records, etc. There is a whole host of things that cold be improved if we came up with better ways to document, identify, and protect individuals. It also should show us that the “natural born Citizen” clause, along with the 14th amendment, should be reexamined and clarified.
One other campaign issue that is in full swing is the economy. Here again, both sides need to get off their power trip. A hardcore, left-wing website claims that Greece’s austerity measures have worsened their economy. There is a basic rule in any scientific study which is: Correlation does not equal causation. So Greece’s economy got worse, and it just so happens that Greece cut government spending, so it must be that reduction in spending that caused the economy to worsen. It’s not true. Think of it this way: If government spending could improve the economy ad infinitum, why doesn’t the government simply spend more? Does anyone really think that if the United States government doubled its spending that the economy would rocket off into massive growth?
The Democrats started with the mistake of stating that the economy would instantly improve if the stimulus plan was passed. Joe Biden promised that the stimulus would keep unemployment below 8% (it currently sits at about 8.8%). The Republicans are saying if we don’t cut spending and reform entitlements immediately that the U.S. will fall off a cliff. Is there anyone who can inject a dose of reality? They are even going so far as to say that spending cuts and lower taxes would immediately jump-start the economy. The Republicans also point to President Reagan’s tax cuts as a key driver to the economic boom in the 1980s that doubled the federal revenue. Although there is some evidence that is true, further supported by cuts in the 1920s and 1960s, tax policy alone doesn’t drive the economy.
The reality is there is a limit to how much revenue our government can collect and still be within the bounds of a free society. We have to understand there is a balance to taxation and freedom, and if taxes are too low or too high we put that freedom in jeopardy. In fact, the Reagan tax cuts actually made tax collections more progressive, i.e. the rich paid more as a percentage of tax revenues while the bottom 50% paid less. Treasury Secretary Andrew Mellon said of high taxes:
The history of taxation shows that taxes which are inherently excessive are not paid. The high rates inevitably put pressure upon the taxpayer to withdraw his capital from productive business and invest it in tax-exempt securities or to find other lawful methods of avoiding the realization of taxable income. The result is that the sources of taxation are drying up; wealth is failing to carry its share of the tax burden; and capital is being diverted into channels which yield neither revenue to the Government nor profit to the people.
Note: Link above is to another blog essay that has a nice mathematical example of balancing taxes with the freedom to invest.
We can’t keep spending at current levels, but we can’t just slash and burn without some thought into how to soften the landing. Tax policy, economic policy (i.e. the federal reserve and government borrowing), business regulation, personal freedom, and every other aspect of government affect the economy. We need reasonable taxes and regulation and a reasonable safety net combined with a large level of personal responsibility. The current major parties only want their own small part of that policy. It’s time they expand their minds. Whoever does it first will be getting my vote in 2012.
So I had a discussion tonight with some friends about the Wisconsin situation, government pensions, and pensions in general. I can’t say I am much more swayed in either direction. But the one thing I did realize is the issue with pensions in general is an individual doesn’t really have to think about it – which is a scary thought. Do we really know what the costs and implications of pension plans are?
I ran a quick calculation. There are some great calculators at this Financial Calculators website. I started with a worker making $32,000 today. I assumed a 2% COLA adjustment and a 2% step adjustment every year for 30 years. At retirement, that worker is making just about $101,000/year. That totals about $1.8 million of total pay over 30 years (this number is important in a minute) Taking the “high five” of that same worker and starting at a 90% of the high five average, that worker will start making about $93,000 in retirement, and assuming a 30-year retirement with a 2% COLA adjustment would end at $169,000 and will have drawn $3.95 million in retirement. If the pension did not exist, to draw that kind of wage in retirement would require about $1.9 million in an annuity making a 5% return. To save $1.9 million, a person would have to save $1,500 per month and get a rate of return of 7.43% annually. So to pay for this person’s pension, the company or government has to set aside an extra $18,000/year and get a pretty high rate of return in order to fund this person’s retirement. So just in pay and retirement benefits, this person is getting an effective wage of $50,000 the very first year and is getting a guaranteed return of over 7% on investment. This doesn’t include any other benefits such as health care.
I thought of 1 other interesting statistic to run today. Using the example of the above worker making $32,000 in the first year would require $18,000 per year deposited into an account making over 7% annual return, I thought I should see what that would add to the benefits as an average percentage. It comes out to about 32% of salary per year towards retirement benefits. The best retirement matching I ever had was 10% of my salary, and I had to be at that job 5 years before that took effect. I also didn’t make $32,000 / year.
I also thought I should point out a couple of articles. This USA Today article is a summary of federal pay versus private sector pay (it does not include benefits). Here’s one that takes into account education levels. And probably the best one is this one showing the comparison in each state of private and public compensation. I felt it was important to show the counter-point to those that claim government workers take lower pay now for the deferred compensation later. As I argue here, I think individuals should be responsible for their compensation later in life, and in exchange get paid what is appropriate now. It keeps things fair AND prevents long-term, unknown liabilities.
What does this all mean? I know for sure that in regards to the Wisconsin situation and government pensions in general, things have to change. This is an unsustainable model in the world of lengthening life-spans and increasing aging population. As I said in a previous post, the scariest part of the whole situation is we are at risk of leaving our parents and grandparents with nothing. People my age that continue to demand these type of benefits at this rate will eventually run everyone out of money. So what do we do?
A simple fix would be to start to immediately raise the retirement age. Now I am not saying this applies to everyone, but a nice steep graduation such that for every year you are away from retirement we add in the neighborhood of 1/3 to 1/2 a year to your retirement age. This would put pensions more in line with how they were intended – a 75% accumulation time to a 25% distribution time ratio. This would also go for social security and similar programs to keep them solvent as well.
A more dramatic fix would be to take pensions completely out of the realm of the employer. Pensions should be run by an association of participants or a similar organization. By leaving them with the employer, it subjects them to unknown liability. We end up with situations like GM or Chrysler where we all pay for those pensions through bailouts or a Wisconsin situation where the budget is beginning to be weighed down by retiree benefits. Instead, the pension fund would be funded with a finite negotiated dollar amount from the employer, and the association of employees would be responsible to keep it solvent and set the benefit levels. The other option is to leave individuals in charge of their funds, by having 401(k) or 403(b) accounts where an employer can match funds deposited, but again absolves the employer of long-term liability. Current pension participants could choose to either move their pensions to a group pension outside of the employer or move to individual plans and have a lump sum initial contribution made to their plan based on years of service.
The second option seems to work from an initial glance because employees and employers generally don’t have contracts that span the entire length of an employee’s tenure. Thus the pension, once implemented, becomes nearly impossible for an employer to change because of the long-term impact to the employee. This is one of the main reasons why airlines, car manufacturers, LTV steel and other mining operations, and other companies have all gone bankrupt. This leaves those employees without the benefits they were expecting. The only difference with government pensions is governments either can’t or have a harder time filing bankruptcy (depending on the level of government), thus the taxpayers end up on the hook.
To focus again briefly on Wisconsin, I don’t think the the Republicans or Democrats have handled themselves in a good way. Gov. Walker did indeed create the remaining shortfall for 2011 by cutting a few corporate taxes. However, those tax breaks only account for about 2% of 2012’s shortfall in Wisconsin. I do think both sides should have met, made their case, and perhaps compromise or come up with an entirely new solution (see my solutions above).
Just thought I should briefly comment on the “rights” to collectively bargain. This certainly is a right as in the right to assembly, but then the employer also has a right not to associate with your association – meaning at the end of a CBA, they can choose not to renew it and hire other workers. So this works both ways. Let’s make sure we have perspective.
Also, government unions have a conflict of interest. Unions were the largest contributors to the last 2 elections. Elections in turn are the choosing of the very boss/people they will later be negotiating with. Imagine you are sitting across from the table from the person you just helped hire and will also have a say in rehiring a few years down the road. Do you think that person would have an interest in giving in to whatever you want? Of course. This is why there needs to be a change with either unions involvement in elections or their involvement in government.
I think as a general rule, we need to get the federal government and each state government to work together to create long-term tax stability. Basically, let’s leave the rates alone and work our budgets around the dollars being collected. Then, as the economy grows, so to should the dollars flowing into government since most taxes are collected as a percentage. Tax stability is very important for business development and investment decision-making. The economy will have ups and downs, but its stability is further eroded by tax uncertainty.
Finally, a small word on government budgets and tax rates. They both need to be cut. But even before cutting taxes, we need to start with balancing the federal budget. This year we are expected to have a deficit of $1.6 trillion. Some justify it and saying we need it to stimulate the economy. Here’s the thing… that money would end up in the economy anyway. If government borrows money, the people or countries doing the borrowing treat it as an investment. Let’s just say the government balanced the budget right now. Those people with the $1.6 trillion still need a place for their money. So they put it in savings (which in turn can be borrowed to start new businesses, buy shares, etc), they buy stocks, they buy real estate….so it still stimulates the economy. There is only so much money that can fit under the mattress. Why does China borrow so much money to the US? Because we buy so much of their stuff. Think of it this way – when we buy stuff from China, we buy it in dollars (yes, it might get exchanged, but the reality is somehow they need to convert that money). So China needs to do something with those dollars – invest in American companies, buy American goods – or they can borrow it to us. If we stopped borrowing, they would have to find another place to put that money – which would be those very businesses that would stimulate the economy. We need a balanced budget and tax stability now.
I am really hopeful that people in America are starting to see we’ve over-promised and it’s time we get back to the American way of hard work and reducing the entitlement mentality. I also hope we are starting to move away from this political elite class and we can get some real problem solvers in. I think everyone can be on board with that.
As promised, I am going to try to start putting most of my political and social thoughts on a blog and allow people to come here from the various social networks optionally.
Forgive me in advance for not citing all of my sources or having my facts 100% correct. I will try to find resources as I can, but sometimes writing at 11pm makes one a bit lazy on the research front. Just know I do listen to various liberal and conservative media shows on my way to and from school, so hopefully I have retained some of what I have learned.
Now for the actual subject matter: I wanted to share some brief thoughts on the end of unemployment benefits for those called “99 weekers.” These are people reaching the limit of the very extended benefits Congress has provided to allow more time for people to find jobs in this tough economy. An initial extension was probably a good idea. I don’t know what the ideal amount of time is to extend these benefits considering the slow recovery of unemployment the last couple of years. However, I really do feel that at 99 weeks, we have reached an upper limit to these benefits.
Unemployment as it is set up by most states is a program that is supposed to be an insurance of sorts. Employers and employees pay into the system, and in certain circumstances people are allowed to collect benefits for up to 26 weeks until either they find another job or are rehired by their previous employer. States are actually supposed to stop paying benefits when the money runs out, which in this economy has happened almost everywhere. The federal government has provided some funds for these extensions, but the money is coming from the states’ general funds as well. This of course requires more deficit spending. Unemployment benefits are also based on your income before your separation (with some cap). This means if you make more money, your unemployment benefits are greater. This makes sense because you paid more in and your lifestyle is based on your income, there has to be some sort of scale.
The issue with extended benefits is you are encouraging people to turn down lower paying jobs. Several news organizations have provided anecdotal stories of people not looking for work outside their area or even turning down jobs because the money is better on unemployment. This seems like a bad way to run this system. This is also exacerbated by the fact that higher paying jobs are a much greater number of people on extended benefits. Some states are paying people as much as $900/week for unemployment benefits. I’ve been working for 18+ years and have never made that kind of money.
The real issue here is when do unemployment benefits become welfare payments. If someone is laid off for an extended period of time, they need to start making lifestyle changes. Maybe it is time to sell your house, downgrade your vehicle, or even consider more drastic measures like bankruptcy. These are difficult decisions, and I wouldn’t take them lightly. Yet, how long can you expect the government to support your lifestyle? I am not saying we should help these people, but we also need them to understand their lifestyle needs to change. We don’t want your or your kids to starve or be homeless, and I don’t think we will. But maybe it is time to sell your house, rent a small apartment. We can provide you with basic welfare assistance – but we can no longer afford to maintain status quo.
In the late 1970’s and early 1980’s, there was an extended slow down on the Iron Range of northern Minnesota. Many of my friends will probably remember or at least have heard about it. It was a tough time for all – some people lost their homes, home values fell, and people were in need. Yet, the Iron Range survived. President Reagan didn’t swoop in with extra benefits. Yet, Iron Rangers survived.
The same thing very well could happen in various pockets of the country if we start transitioning from lifestyle maintaining unemployment benefits to life sustaining welfare benefits. What I would hope would happen is it would help flush out some more of the troubled mortgages. Prices would fall. Felling prices in housing can provide benefits too. Housing becomes more affordable. Property taxes go down for families. Because those in homes are less likely to sell, they start treating their home more like a home and less like an investment. These can be long-term good outcomes for communities.
There are some that say that there are no jobs. I know things are slow. But even in the worst month of the last few years where there was approximately 900,000 jobs lost – that number is a net number. Roughly 4.8 million lost their jobs, but another 3.9 million were hired. It may take longer to find a job when there is a net loss, but it shouldn’t be impossible either.
It is time we start calling these extended benefits what they are – welfare. We need to encourage people to work. Is it fair for someone to make $15+/hour to sit at home on the government tab while someone goes to work everyday for a minimum wage @ $7.25/hour? I don’t want people to be on the street or starving, but we cannot afford to maintain everyone’s lifestyle forever. I think the right decision has been made, and will benefit the communities as a whole in the long term.