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February 9, 2010

Larry Summers Says Unemployment Benefits CAUSE Unemployment??!!

-- by Dave Johnson

See for yourself: Unemployment: The Concise Encyclopedia of Economics | Library of Economics and Liberty

To fully understand unemployment, we must consider the causes of recorded long-term unemployment. Empirical evidence shows that two causes are welfare payments and unemployment insurance.

[. . .] by providing an incentive, and the means, not to work. Each unemployed person has a “reservation wage”—the minimum wage he or she insists on getting before accepting a job. Unemployment insurance and other social assistance programs increase that reservation wage, causing an unemployed person to remain unemployed longer.

[. . .] Unemployment insurance also extends the time a person stays off the job.

. . . Another cause of long-term unemployment is unionization. High union wages that exceed the competitive market rate are likely to cause job losses in the unionized sector of the economy.

. . . There is no question that some long-term unemployment is caused by government intervention and unions that interfere with the supply of labor.


I haven't been able to locate the date this was written, but it references a 2003 paper so it is 2003 or later.
Why is this guy allowed anywhere near our government?

Posted by Dave Johnson at February 9, 2010 11:04 AM


Comments

LOL! Yeah - Summers is an awful train wreck of a human being. He's never done any meaningful research into problems related to class, the environment or anything remotely progressive IMO.

His track record (I almost spelled that wreckord) is awful too. Hurting Harvard's finances, making sexist comments etc. etc.

Summers is IMO an acolyte of Marty Feldstein who is a very influential right wing economist. He was a Republican back in the 80's but rejected supply side economics and begrudgingly became a Democrat.

There are no progressives voices on the economy in the Obama adminstration. Jared Benstein is there but he is technically there to advise Joe Biden.

I like Obama and prefer him to McCain and am glad he won the election but he seems to have an unhealthy obsession with taking GOP ideas and finding ways to make them work rather than you know..just objectively finding answers.

-Michael

Posted by: Mike Stone [TypeKey Profile Page] at February 9, 2010 2:44 PM

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