Economics

Unemployment and Jobs.

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The Pelosi Congress extended unemployment benefits in 2009 to a maximum of 53 weeks. This has been renewed until the new Republican Congress after 2010, unable to get Obama to negotiate, allowed the extra benefits to lapse.

Federal unemployment benefits that continue for 26 weeks after a person uses up the 26 weeks of state unemployment benefits ended Saturday, so now some 1.3 million people won’t be getting their $1,166 (on average) monthly check. By June, another 1.9 million will be cut off.

Many in the federal government are talking about the need to extend benefits. President Obama labelled it an “urgent economic priority” and called a couple of senators to pressure them to bring the matter up when the Senate reconvenes next week, and is urging Congress to extend the benefits for another three months. Senate Majority Leader Harry Reid has promised a vote no later than January 7 for the three month extension. Gene Sperling, the head of Obama’s National Economic Council, lamented the end of the federal aid…

Disaster was predicted.

Amazingly, the disaster did not happen. In fact, job growth went up.

Just looking at the economy’s overall size, you wouldn’t think that the last year was much different from any of the others since the recession. The U.S. economy grew at about the same rate in 2014 as it did in the previous four years — less than 2.4 percent, according to the Federal Reserve’s most recent projection. Yet last year was different. People started going back to work. The percentage of Americans working, more or less stuck in a ditch since 2009, increased from 58.6 percent in December 2013 to 59.2 percent last month. Employers added an average of 246,000 positions a month, about 3 million jobs overall.

What happened ?

Economists will debate what happened, but one of the more controversial theories is that Congress’s decision not to extend federal unemployment benefits at the end of 2013 encouraged those out of work to settle for more poorly paid jobs, giving firms a better reason to expand and hire new workers. That’s the conclusion of a new working paper from the National Bureau of Economic Research. The authors, Marcus Hagedorn of the University of Oslo, Iourii Manovskii of the University of Pennsylvania and Stockholm University’s Kurt Mitman concluded that the reduction in benefits created 1.8 million jobs last year — more than half of the total.

That article is from the Washington Post so, of course, they provide rebuttals.

This is an interesting result which contradicts much prior research indicating that shortening benefit duration had little impact on employment growth (e.g. here, here, here, and here). It is worth testing this result with an alternative data series. HMM use the Current Population Survey for the state level data and the Local Area Unemployment Statistics (LAUS) for the county level data. These series are both problematic for this sort of analysis.

Oh yes, other interpretations can be found. The leader of this new (1999) Democrat think tank is a leftist economist with a reliable view for the Washington Post to cite. His credits include: “He writes a weekly column for the Guardian Unlimited (UK), the Huffington Post, TruthOut, and his blog, Beat the Press, features commentary on economic reporting. His analyses have appeared in many major publications, including the Atlantic Monthly, the Washington Post, the London Financial Times, and the New York Daily News. He received his Ph.D in economics from the University of Michigan.”

The Wall Street Journal also weighs in on the report.

Assuming that the pre-2014 trends would have continued among the two groups, the authors find that “the cut in unemployment benefit duration led to a 2% increase in aggregate employment, accounting for nearly all of the remarkable employment growth in the U.S. in 2014.” They then confirm these results with a second experiment that compares adjacent counties in different states whose economies are otherwise equal except for their unemployment benefits.

Notably, job growth improved most in states and counties that offered the most generous benefits before Congress took away the punch bowl. This suggests that the extra jobless benefits reduced the incentives for businesses to create jobs and for jobless workers to fill the vacancies.

Of course, Obama is now bragging about the new job growth.

Mr. Obama is now taking credit for 2014’s job gains that his policies inhibited, much as he is for the boom in oil and gas drilling that his Administration resisted. Thus comes the opportunity for a late-term “Seinfeld” economic epiphany. Imagine the possibilities if the President realized that everything he thought about economics is wrong.

Unlikely.

Rape Culture

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The country is going through one of the increasingly common episodes of hysteria in modern times. In the 17th century, there was the period of The Salem Witch Trials.

From June through September of 1692, nineteen men and women, all having been convicted of witchcraft, were carted to Gallows Hill, a barren slope near Salem Village, for hanging. Another man of over eighty years was pressed to death under heavy stones for refusing to submit to a trial on witchcraft charges. Hundreds of others faced accusations of witchcraft; dozens languished in jail for months without trials until the hysteria that swept through Puritan Massachusetts subsided.

The episode was begun by what sounds like hysterical symptoms occurring in the daughter of the new minister. Before it was over, a number of people of the village of Salem had been accused of witchcraft and 19 were executed and five others had died.

SALEMCLR

Suspected witches were examined for certain marks, called “witch marks,” where witches’ “familiars” could nurse. The hysteria ended as quickly as it began. By the end of 1692, it was over and all surviving accused were released.

The period of the hearings in America after World War II, in which many were accused of being communists, the so-called “McCarthy period,” is often compared to this era and a left wing playwright, Arthur Miller, wrote a play called “The Crucible,” which made the connection between the Salem trials and Senator McCarthy’s accusations the theme.

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What is going on with Ferguson, MO ?

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The Grand Jury gas returned a “no bill” in the case of the Policeman Darren Wilson and the riots have erupted as anticipated. We still have silly demonstrations around the country. Even interrupting Christmas tree lighting.Why ?

I have been following this all along, and even see some merit in some of the resentments of the black residents. That does not excuse rioting, of course.

We know a lot more about what happened now and it does still not explain why this continues today. A lot of what is happening just doesn’t make sense.

Here is one possible explanation.

SO WHY ALL THE FERGUSON HOOPLA? Last time the Dems and Sharpton made a big deal of a shooting, it was the Trayvon Martin case, hyped to keep up black turnout for 2012. But now there’s not an election. So why Ferguson, and why now? Polling indicates that most people aren’t all that sympathetic, and protests that tie up Interstates, etc. aren’t going to attract swing voters.

So why now ?

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Medicine as a government benefit.

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Obamacare is having serious trouble as I have discussed. The success stories, like California, are an example of what I have called Medicaid for All.

“It’s a total contradiction in terms to spend your public time castigating Medicaid as something that never should have been expanded for poor people and as a broken, problem-riddled system, and then turn around and complain about the length of time to enroll people,” said Sara Rosenbaum, a member of the Medicaid and CHIP Payment and Access Commission, which advises Congress.

Most of the new enrollees are Medicaid members and those enrolled in “private insurance” learn that they have severely restricted choice of doctor or hospital.

Now we have a new development.

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What next for health reform ?

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It looks to me that the Supreme Court will have little justification for continuing the Obamacare program as it exists. The Halbig decision should kill it off. It is clear that the IRS subsidies to federal exchange subscribers are illegal.

The only statement anyone has found in the legislative history that addresses this point comes from the Act’s lead author, who affirmed that Congress did intend to withhold tax credits in federal Exchanges. During a September 23, 2009, mark-up of his bill, which ultimately became the PPACA, Senate Finance Committee chairman Max Baucus (D-MT) refused to consider a Republican amendment regarding medical malpractice on the grounds it fell outside the Committee’s jurisdiction. Sen. John Ensign (R-NV) protested, asking how Baucus’ bill could do other things that lie outside the Committee’s jurisdiction, like direct states to create Exchanges. Baucus responded the bill creates tax credits, which are within its jurisdiction, and makes eligibility for those tax credits conditional on states creating Exchanges. Conditional necessarily means that Baucus intended to withhold tax credits in states that did not create their own Exchanges.

I just don’t see how the Court can ignore that history. The political left has been on a rant about Congressional intent since the decision was announced.

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