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| Incentivizing Inefficiency |
Recently, Barack Obama and his Congressional allies passed a bill which extends unemployment benefits to unemployed citizens who have exhausted their government-funded unemployment entitlement. My question? Why did this legislation even see the light-of-day, especially during a time when America is in desperate need for long-term economic solutions?
Obama’s legislation, which extends unemployment benefits by 14 weeks for those who have exhausted their funds and by 20 weeks for unemployed in states with 8.5% or higher unemployment, is, first and foremost, an extension of one more un-Constitutional federal program. Shouldn’t Obama, a supposedly well-read law student, grasp the fact that federal unemployment insurance is NOWHERE to be found in the US Constitution? Though I won’t bore the reader with this legal issue through this blog, I will briefly remind the reader that tyranny exists is absence of the rule of law.
The hard-hit states that are priveleged to receive 20 week extensions will mark areas in the United States where citizens can receive unemployment benefits for, a record-highest, 99 weeks. More importantly, this extension marks a time where US unemployment benefits are beginning to look more and more like the long-term, government-funded unemployment schemes in stagnating European economies.
How does Congress intend to pay for this extension of unemployment benefits? Taxing employers through the renewal of a payroll tax which was destined to expire. My main issue? The federal government has promoted and passed an uncontitutional, inefficient, costly, short-term, unemployment-rewarding statist legislation in place of a tax break on the very people who create jobs in the United States; employers. Barack Obama, faced with unemployment rates edging above 10% (5% unemployment is considered optimal by most macroeconomists), has decided to burden employers with one more government-imposed cost. Furthermore, subsidizing unemployment merely incentivizes the unemployed to remain that way longer.
The Democrats in DC do not seem to understand that removing resources from the private sector merely leaves fewer opportunities for growth within the private sector. Though punishment of fraud and enforcing of contracts by the government make conditions easier on businesses, government cannot survive without drawing upon private sector production. Therefore, why does the American Left generally assume that the government, which cannot exist without the private sector, is capable of producing anything? Afterall, public streets, public schools, public parks…..anything public, government-owned, is not an addition to the economy but, instead, a material representation of wealth that could have been utilized more productively by the private sector and was initially taken from the private sector. Public unemployment insurance is no exception. Public unemployment funds are funds that are taken from the private sector and distributed by government. In other words, the money that employers could have used to hire new workers, make new investments, pay off bad debt, purchase new equipment, etc. is taken through a payroll tax and used to incentivize the unemployed to remain unemployed until their money is exhausted.
If the government wishes to help the American economy grow again, the government needs to get active in getting out-of-the-way. The government can do this by not only cutting taxes, but, also, combining tax cuts with deep spending cuts, thus freeing-up private capital to be productively utilized in marketplace. Afterall, businesses and individuals in the marketplace, competing for profit and larger market shares, have to be rational in their fiscal behavior. Also, government needs to get serious about moving America away from a centralized banking system and towards a free market, commodity currency system. The Fed caused our current economic woes and has caused numerous economic catastrophes throughout American history by devaluing America’s paper money. Therefore, why is the Fed still given authority to print money, further devalue the dollar, and begin the build-up to another financial bubble, which always has to burst?
Eliminate government interventionism in the economy.
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Posted by gn235 on 2009-11-07 03:44:23 | Rating: | Views: 86
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