There’s an awful lot of BS in the economic debate these days.
One example of BS is the idea that the bailout of the banks was not really a bailout.
Another is Casey Mulligan’s idea that unemployment remains high because the social safety net is too generous.
Of course, most people work hard despite a generous safety net, and 140 million people are still working today. But in a labor force as big as ours, it takes only a small fraction of people who react to a generous safety net by working less to create millions of unemployed. I suspect that employment cannot return to pre-recession levels until safety-net generosity does, too.
There are many ways to challenge the BS of such an argument. One is ethical: why should we make the economic circumstances of those who are unemployed even more miserable than they already are by cutting unemployment benefits and anti-poverty programs? Another is Keynesian: the social safety net props up aggregate consumption by allowing those who are unemployed to pay at least some of their bills and to purchase at least some of what they need. There’s even a neoclassical argument: with a social safety net, workers and employers can wait to find the appropriate match, thereby increasing productivity.
A fourth argument is factual: there simply aren’t enough job openings for all those workers who are currently searching for a job. According to the Bureau of Labor Statistics [pdf], and as can be seen in the chart above, even though the ratio of unemployed persons per job opening ratio trended downward since the end of the official recession, it was still at 4.2 in September 2011.
That’s 4.2 workers searching for a job for every available job in the U.S. economy. No cutback in the social safety net, no matter how savage, no matter how desperate it makes those workers, will succeed in finding them all jobs.
Mulligan’s argument, like so many other neoclassical proposals in the economic debate these days, is pure and simple BS.