Friday, April 29, 2011

Why I Don't Like Lawrence Summers

Lawrence Summers blamed unemployment insurance for causing increased unemployment.

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. These government assistance programs contribute to long-term unemployment in two ways.

First, government assistance increases the measure of unemployment by prompting people who are not working to claim that they are looking for work even when they are not. The work-registration requirement for welfare recipients, for example, compels people who otherwise would not be considered part of the labor force to register as if they were a part of it. This requirement effectively increases the measure of unemployed in the labor force even though these people are better described as nonemployed—that is, not actively looking for work.

All those people unemployment right now really aren't looking for work. If they stopped living like fat cats off of unemployment checks corporations would not have to pay for insurance.

Obama could have appointed anyone to his first director of the National Economic Council and he chose Summers. Sad.

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