Fearless Reason

The word “humanity” is widely used to describe the noblest and most uniquely human qualities one can possess. One with great humanity is often admired for their charity, compassion and empathy. Those who best exemplify these characteristics are sometimes held out as saints, while those deficient in them are derided as inhuman. Though personal humanity is admirable, too much charity, empathy and compassion on the part of governments leads to inhuman results.

Unemployment in the United States is at 8.6%, with real unemployment thought to be much higher. Though this number is lower than the previous 9% unemployment, this slight drop is largely credited to the fact that many people have simply stopped looking for work. Of the 13.3 million American’s out of work, 5.7 million are classified as long-term unemployed, accounting for 43% of all unemployed persons. In addition to the 7.6 million Americans unemployed, 1.1 million people are classified as “discouraged workers,” which means they have not looked for work in 4 weeks of more, because they believe there is no work for them.

These startling numbers lead one to wonder how these people are supporting themselves if they are not working. The long and short answer seems to be government assistance. One in six Americans is receiving some kind of assistance from the government. Enrollment in Medicaid and food stamp programs are at record highs, while unemployment insurance rolls remain at elevated levels. With many people depending on more than one program.

Approximately 46 million people receive food stamps, and in 2010 a record 18.3% of the nation’s total personal income was a payment from the government for Social Security, Medicare, food stamps, unemployment benefits and other programs. Also, in 2010, wages accounted for the lowest share of income – 51% – since the government began keeping track in 1929. With Americans recieving an average of $7,427 in benefits each, up from an inflation-adjusted $4,763 in 2000 and $3,686 in 1990. In 2009 American dependence on government grew by 13.6%, with American dependence on government being 14 times greater than it was in 1962.

In a very real sense the Federal government has insulated the American people from the worst of the “Great Recession.” But at what cost? The United States’ debt currently stands at $15 trillion, and is expected to increase an average of $3.96 billion per day. In May of 2010 the International Monetary Fund (IMF) ranked the United States second among the countries that must reduce their structural deficit or risk financial calamity. The IMF predicts that U.S. public sector debt will equal 100% of gross domestic product (GDP) by 2015 unless immediate action is taken to cut the deficits by an amount equal to 12% of GDP. Even Greece needs to cute its deficits only by 9% of its national output.

As you can see there is a very strong correlation between unemployment, government assistance and the national deficit. When people do not work they become dependent on the government, and as more people collect benefits instead of paying taxes the government must go in ever more debt to pay the benefits. The result is a very real and dangerous disconnect between the real economy and people’s everyday lives, which postpones economic hardship for the present only to face exponentially greater hardship in the future.

Our modern sensibilities have lead many to believe that it is the government’s duty to protect us from economic hardship, pain, and suffering. So it is with sympathy and understanding that the Democrats assume their traditional role of supporting the “working man,” and advocate the extension of long-term unemployment benefits and other government assistance, while Republicans grudgingly give into these demands – fearing the political fallout if they do not. Our general sense of humanity causes us to prompt the government to intervene and protect us from hardship, but this humanity also blinds us to what must be done.

Social safety nets like long term unemployment benefits give people a luxury they previously did not have; which is to wait for work they want rather than take the jobs available. The liberal inclination is to say this is a good thing. That it allows people to spend their time looking for a job suited to their skill set, rather than work short term in a job they are ill suited for. However, I would argue this seeming act of humanity engenders dependence, is fiscally irresponsible, and obstructs economic recovery.

Ironically, in this time of economic stagnation news stories abound of employers with jobs but no employees to fill them. Though it is true many of these jobs are difficult, dirty or in undesirable locations, they nevertheless are good jobs at which one can make a decent living. However, the fact that these jobs are difficult and dirty is a deterrence for many, who grew up in a service economy with the belief that manual labor is somehow beneath them. So, rather than take one of these jobs that they are “unsuited for,” many sustain themselves with unemployment benefits and other government assistance while searching for that clean and easy office job that their college degree or upbringing has caused them to expect.

There is something to be said for the motivating power of desperation. Being faced with the possibility of an empty stomach and no way to keep a roof over your head tends to make people willing to take any job, no matter how “ill suited” they may be for it, or how undesirable the location. As seen in books like Steinbeck’s “Grapes of Wrath,” during the Great Depression people were willing to do whatever was necessary to survive. They went to where the work was, no matter how menial or how far away.

Providing people with the luxury of foregoing available jobs in order to wait for their ideal job adversely effects the larger economy in several ways. For one, it allows people’s expectations of what the economy should be dictate their vocation rather than economic demand. That means rather than work at what is needed, people are inclined to forgo available work in order to search for a job in their desired field. Simple logic and economics will tell you that without demand for a product or service there can be no economic return. Another adverse consequence of people letting their expectations get out of touch with demand is that the parts of the economy that would normally recover first after a recession will be unable to do so for lack of sufficient workers. Only stagnation can result when a society allows expectations to trump actual supply and demand.

A better use for the money being spent on long-term unemployment benefits and other social safety nets would be economic policies that encourage people to take the jobs available, either through training or a tax credit to businesses that would encourage them to pay the relocation costs for new employees. In this way, rather than paying people not to work, we would be paying people to move to where the jobs are.

We are blinded by our humanity, and it is our collective good intentions that will pave the road to economic hell. European countries have had high unemployment rates and robust social safety nets for decades – a trend that is now causing economic calamity amongst their governments. The path to economic recovery lies in the American traditions of self-reliance, entrepreneurship and innovation – not dependence and debt. We must show that we have the stomach to bear the short term pain of our current economic hardship if we are to achieve long term prosperity. It is a delusion to believe you can insulate people from the real economy through government spending. This leads only to crippling national debt and stagnant economies. Human suffering is a tragedy, but governments cannot and should not be the guarantors of every individual’s happiness and prosperity.