Sunday, August 2, 2009

Extending Unemployment Compensation

The NYTimes has two articles that discuss unemployment compensation, which pays an average of $ 300 per week to unemployed workers. The current maximum period to collect unemployment compensation, applicable in about half of the states, is 79 weeks. For many workers, upwards of 1.5 million, these benefits will run out in a few weeks. Now what? Congress, in its wisdom, will extend the period for collecting long term unemployment benefits, under the guise that these benefits are "temporary."

In the real world, US unemployment rates will continue to rise. Worse, there is little chance that unemployment will return to single digits for a generation, given the Obama legislative agenda. This will create a new, permanent entitlement -- unemployment compensation -- for more than ten percent of the workforce. Perhaps, "the rich" can pay for this along with health care and everything else.

The story in the NYTimes is instructive in other ways. They quote a woman currently collecting unemployment compensation, whose husband still has a job, as saying that she is concerned because her college-bound child can't afford a new laptop (and her other child can't go to the movies)! So, unemployment benefits are now a means to fund college-bound students and their needs (and movies for siblings)! That's a far cry from a family barely hanging on. What poverty means to the NYTimes is truly amazing!

Everything is becoming an entitlement. Less and less are people held to account for their own failure to save during the good times just in case there may be bad times. In the Obama world, bad times are a result of bad people doing bad things, though history shows that economic cycles are as old as history itself. Making everything an entitlement and holding no one accountable for their own foolishness is a prescription for economic disaster.

There is another NYTimes article discussing the saga of "John Galt" depicted in Ayn Rand's famous book "Atlas Shrugged." As noted in the NYTimes article (about BB&T), that book predicted the current political climate where government consumes the private sector, leading to permanent economic stagation. Probably, worth a read.

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