Two headlines from this morning’s WSJ.
1. April Jobs Report to Show Record Unemployment.
2. Businesses Struggle to Lure Workers from Unemployment.
Remember Fight for Fifteen? It passed without a fight. The Federal supplemental unemployment benefit is $600 a week. Notice that for a 40-hour week that works out to $15 an hour. And that is on top of state unemployment benefits.
The new minimum wage is a tax on small business that in many cases more than offsets the benefits from the main form of assistance they were offered, the Paycheck Protection Program.
The CARES act is creating the world that the left wants. It certainly is not the world that I wanted.
I wanted banks to offer credit lines to individuals and businesses. Instead, lending has been nationalized and concentrated at the Fed, where the highest priority is buying Treasury debt and other priorities are the municipal bond market and corporate debt markets.
I wanted states to cut back on extravagant public sector pay, benefits, and featherbedding, because the private sector is suffering enough already. Instead, the Federal government is giving huge handouts to the states, which will ultimately be paid for by taxes and inflation that hurt the private sector.
I see a secure future for Big Tech, Big Finance, and Big Government. The CARES act turns everything else into rubble.
The CARES act passed with one dissenting vote. At the time, I called it the worst legislation in history. I stand by that call.
Whether or not it is the worst legislation in history (and I could be convinced that it is), it is remarkable that there was only a single dissenting vote.
Actually there were a number of dissenting votes in the House, none in the Senate.
Republicans are socialist. Democrats are communist.
As for “the worst legislation in history”, I’m glad Kling hasn’t forgotten that claim. It still seems rather exaggerated. Isn’t CARES a temporary, one time $2 trillion spending package? The 2009 stimulus package was ~830 billion. I generally agree with Kling on fiscal issues, but I’d like to hear more why this legislation is particularly bad.
One of Kling’s favorite pundits, Tyler Cowen supported Elizabeth Warren for president in 2020. He wrote, “[Elizabeth Warren] has the worst economic and political policies of any candidate in my adult lifetime.”, yet he still clearly supported her candidacy.
Elizabeth Warren’s policy proposals made this $2 trillion CARES act look like pocket change. Yet, pundits like Tyler Cowen gave them full support. If you want to convincingly advocate for fiscal responsibility, you can’t do that.
And if unemployment is 15% in August, what then? Still temporary, or not?
The USA will get no fiscal responsibility until Dems call for it, and maybe not a huge amount then.
Perhaps when Reps start giving lots more gov’t cash to Rep voters, like married working folk with kids, the Dems might complain a bit. Until interest rates rise, increasing the level of debt will be seen as the lowest cost way for gov’t to buy votes, er, do popular gov’t programs.
Most normal folk work because they live a lot better when they have jobs than when they don’t. Lots of lower-paid workers live only a little better, materially, with a job. Free money means far more folk will say they can’t work and ask for free money.
The Dems want to make free money poverty more comfortable. Reps should be for policies that result in those who work making more money than those who don’t. Plus getting more folk to work — usually making free money to be only temporary.
Heritage and AEI and George Mason failed to have a good set of lending policies off the shelf, ready to be activated the same day that a National Emergency was called. One with details that have been pre-discussed as to the agreeable numbers in the offer of “credit lines to individuals and businesses.”
It’s too late for this emergency, but not completely. More loans, with behavior strings, less giveaways. And far, far, less to other gov’t groups and big businesses.
This is not a new problem.
.,
The attraction of welfare has enabled several generations of poor black persons in blue states to turn down low-wage jobs. Welfare was better.
Daniel Moynihan and Charles Murray have written about the social pathology which this created.
Under George Bush, there was at least a discussion of a compassionate conservatism.
Designing welfare programs is devilishly hard, even in quieter times than now.
We will all remember the one time ASK agreed with AOC!
Kling’s ranting makes me want to read Cowen’s love letter to big business.
We were bound to make mistakes in huge (multi-trillion-dollar) programs, but had to do something and quickly to avoid even worse economic disaster. People who work in physical (i.e. non-white collar) jobs don’t have the luxury of working remotely from home. Don’t disagree that CARES is flawed and that we’ll have a big mess to clean up afterward, but we were and may still be in an emergency that begs for attention. Now that circumstances appear to have past the critical/life-support stage, let’s get the next steps right.