Real World Economics / Politicians we...

Real World Economics / Politicians weigh own opportunity costs in r...

There are 2 comments on the TwinCities.com story from Jul 18, 2010, titled Real World Economics / Politicians weigh own opportunity costs in r.... In it, TwinCities.com reports that:

The question of how unemployment benefits affect the unemployment rate is one where one must pay close attention to the magnitude of incentive effects as well as what direction they are.

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A guy down the block

AOL

#1 Jul 18, 2010
Another thoughtful piece, Mr. Lotterman. I'm not as confident as you, however, that oposition to the extension of unemployment benefits for political gain is unconscious. Certainly, Democrats are consistently accused of the reverse - supporting extension only in order to curry favor with voters.

As you say, different people can come to different conclusions on the overall societal impact of any extension. As a member of the essentially unemployed who has the luxury of earning significantly more for a few hours work per week than the average worker, I am getting by without it. Too many others, however, are not. I'd like to think that the information you provide will cause those who oppose any further extension to re-think their positions. Unfortunately, that's not the way the human mind works.
Another Observer

Minneapolis, MN

#2 Jul 19, 2010
This piece shows why economics can never be reduced solely to a numbers game.

Economics is, in the end, about human behavior. Humans are not known for continually rational behavior (why are tobacco companies still thriving?). It is just an assumption that is made to simplify things.

The "numbers crunching" generally works only in a vacuum. A key phrase used in the article was "all other things being equal." All other things are not, however, equal. There are dozens-hundreds-of factors in play. The big one to deal with now is the unusually high rate of unemployment. If you cut unemployment benefits, how would that get someone working if there are no jobs?

Tracking behavior solely by numbers ignores the many factors that go into making a choice. Taking Germany as a paradigm for worker behavior in the United States ignores the profound social and cultural differences between the two countries. Europeans are accustomed to a government that provides a generous, if not lavish, safety net. Americans are not. Staying out of work and on the dole for years carries a stigma in this country that would not be easily overcome, no matter how generous the benefits are.

Lastly, public choice theory is, at best, a parlor game. It assumes the results ("politicians act for their own financial benefit"), and works backwards from their. How does it explain politicians like Robert Byrd or Jamie Whitten, bith of whom served in Congress for over fifty years without becoming particularly wealthy? How does it explain politicians like Senator Kohl in Wisconsin, who is already rich? It strikes me that there could be other factors at work.

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