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>It was also controversial from the beginning, with the Right raising moral hazard arguments that it would encourage people to become and remain unemployed, as

by SilasX 6y ago

>It was also controversial from the beginning, with the Right raising moral hazard arguments that it would encourage people to become and remain unemployed, as if that were an option for most recipients. I don't get it -- you're talking like the concern was dubious, even as we see that prediction came exactly true.[2] And yes, not seeking re-employment, or not asking to return to work is an option; see all the stories about employers being unable to get employees to return to work because they'd take an income cut [1]. And, to be sure, that may be the desired outcome, that people stay away from work while receiving some income, so as to mitigate the epidemic risk, while preserving financial security. That's a fair argument to make. But the moral hazard concern was 100% correct, that it would layer on an extreme disincentive to work that overcorrects well beyond the incentives we might actually want. >Federal spending doesn't come from money laying around, in the first place, it comes from money the government decides to have because it wants to spend it. Even if you buy into the mythology of the fisc, marginal spending comes out of borrowing at, typically, very low interest rates (currently, IIRC, at negative real interest rates), It's true that the federal government can borrow on favorable terms and so it's probably prudent to borrow now for epidemic mitigation -- especially at negative nominal rates! -- but that doesn't make it "myth" that the federal government is not some infinite pot of real resources that will be able to indefinitely cover these expenses; eventually they have to hit a wall. We can debate where that point will be, but it's not mythical. [1] https://www.newsweek.com/baltimore-restaurant-owner-cant-get-employees-return-because-they-make-more-unemployment-1503808 https://www.newsweek.com/baltimore-restaurant-owner-cant-get... [2] Even on HN, it was like pulling teeth just to suggest this was a real effect to worry about; see this thread where I tried to point out the effect: https://news.ycombinator.com/item?id=22640082 https://news.ycombinator.com/item?id=22640082

Klinky 6y ago
Is there a number for the "real resources" you note? What is the limit and who's keeping track? Also maybe the issue is the sad state of low-income jobs, and the lack of hazard pay continuing to encourage people to risk their lives. Again, risk their lives, because the pandemic is NOT over. "Come back for low pay, no medical benefits and be at serious risk of dying or being maimed yourself, or infecting a loved one." It's kinda gross that is not considered the real moral hazard here.
- SilasX 6y ago
  >Is there a number for the "real resources" you note? What is the limit and who's keeping track? Why do you ask? I was just making (what should be) an uncontroversial point that there's a bound at all, because someone was dismissing all concerns of affordability of any program on the grounds that: >>>Federal spending doesn't come from money laying around, in the first place, it comes from money the government decides to have because it wants to spend it. i.e. trivializing those concerns the federal government can (in several senses) print money. So why the extreme scrutiny and demand for rigor? Is it that bad to concede this very minor point? Remember, it allows that we could have plenty of slack to cover situations like this, just that you can't totally dismiss the concern because of a complex variant of "lol money printer go brr". >Also maybe the issue is the sad state of low-income jobs, and the lack of hazard pay continuing to encourage people to risk their lives. I think I addressed that: >>And, to be sure, that may be the desired outcome, that people stay away from work while receiving some income, so as to mitigate the epidemic risk, while preserving financial security. That's a fair argument to make. But either way, we shouldn't be creating situations in a position where working more reduces your net pay.
  - Klinky 6y ago
    I am asking about your note on "real resources" because you seemed to indicate this is a limiting factor, but if you can't quantify or know where the "real resources" limit is, then it's not a very good argument. Like how do we calculate the relationship between the funny money we print and the real resources it's tied to? I don't think they're coupled at all.
    - SilasX 6y ago
      Mitigating a real problem requires real resources. Printing money does not give you infinite access to real resources. Thus, there is a bound to what real resources you can apply to a real problem by printing money. What's so controversial here?
      - Klinky 6y ago
awinder 6y ago
This money ends in July (or has to be renegotiated), so the moral hazard maybe could apply to a few weeks during re-opening (a rounding error). Or maybe it saves a ton of money for these businesses if re-opening goes south and we have to retreat. If you care about moral hazard you should be frying bigger fish imho. Also may this finally dispel the myth that servers get made whole with tips. This owner is putting out the numbers, 2400/month is 15/hr, the servers would be making 50%/66% of that so 7.50 to 10 an hour. Minimum wage is $11 in maryland.
- SilasX 6y ago
  >This money ends in July (or has to be renegotiated), so the moral hazard maybe could apply to a few weeks during re-opening (a rounding error). It applies to the entire time someone could be doing other SIP-compatible work.
  - awinder 6y ago
    Ok so my heart goes out to the 5 possible business owners nationwide who that may have applied to, but that is a completely unserious argument.
    - SilasX 6y ago
      Pretty much everyone is capable of working more than one occupational role, and almost always a SIP-compatible one. Where do you get "business owners" as the relevant category? Are you sure you're taking this discussion as seriously as you expect others to?
      - awinder 6y ago
        And in which a SIP-compatible role was open and available, which is probably 5 businesses when unemployment went from 4% to 20%. Moral hazard exists everywhere, especially for people who have known the word longer than 6 months.
        6y ago
LordDragonfang 6y ago
>[1] https://www.newsweek.com/baltimore-restaurant-owner-cant-get-employees-return-because-they-make-more-unemployment-1503808 https://www.newsweek.com/baltimore-restaurant-owner-cant-get... "I can't get my employees to come back because that would mean they would be making less money. I can't envision any solution to this problem" If an employer wants employees to risk their lives as the quarantine lifts and the second wave continues to spread, they need to offer more money.
- SilasX 6y ago
  You're missing the problem. It's that they lose the unemployment by coming back to work. Even if they were paying (any reasonable definition of living wage plus hazard pay), the unemployment payment structure still disincentivizes them. It means their pay would have to be some $600 over and above the regular amounted needed to compensate for the inconvenience and utility of work. So they're effectively "taxed" at over 100%. At that point, it's not the employer's fault for not offering enough. At the very least, they could just make it so that unemployment (i.e. same logic as behind the UBI -- have social benefits, but don't [significantly] contract them as you work more).

by SilasX 6y ago

Klinky 6y ago

Is there a number for the "real resources" you note? What is the limit and who's keeping track? Also maybe the issue is the sad state of low-income jobs, and the lack of hazard pay continuing to encourage people to risk their lives. Again, risk their lives, because the pandemic is NOT over. "Come back for low pay, no medical benefits and be at serious risk of dying or being maimed yourself, or infecting a loved one." It's kinda gross that is not considered the real moral hazard here.

SilasX 6y ago
>Is there a number for the "real resources" you note? What is the limit and who's keeping track? Why do you ask? I was just making (what should be) an uncontroversial point that there's a bound at all, because someone was dismissing all concerns of affordability of any program on the grounds that: >>>Federal spending doesn't come from money laying around, in the first place, it comes from money the government decides to have because it wants to spend it. i.e. trivializing those concerns the federal government can (in several senses) print money. So why the extreme scrutiny and demand for rigor? Is it that bad to concede this very minor point? Remember, it allows that we could have plenty of slack to cover situations like this, just that you can't totally dismiss the concern because of a complex variant of "lol money printer go brr". >Also maybe the issue is the sad state of low-income jobs, and the lack of hazard pay continuing to encourage people to risk their lives. I think I addressed that: >>And, to be sure, that may be the desired outcome, that people stay away from work while receiving some income, so as to mitigate the epidemic risk, while preserving financial security. That's a fair argument to make. But either way, we shouldn't be creating situations in a position where working more reduces your net pay.
- Klinky 6y ago
  I am asking about your note on "real resources" because you seemed to indicate this is a limiting factor, but if you can't quantify or know where the "real resources" limit is, then it's not a very good argument. Like how do we calculate the relationship between the funny money we print and the real resources it's tied to? I don't think they're coupled at all.
  - SilasX 6y ago
    Mitigating a real problem requires real resources. Printing money does not give you infinite access to real resources. Thus, there is a bound to what real resources you can apply to a real problem by printing money. What's so controversial here?
    - Klinky 6y ago

awinder 6y ago

This money ends in July (or has to be renegotiated), so the moral hazard maybe could apply to a few weeks during re-opening (a rounding error). Or maybe it saves a ton of money for these businesses if re-opening goes south and we have to retreat. If you care about moral hazard you should be frying bigger fish imho. Also may this finally dispel the myth that servers get made whole with tips. This owner is putting out the numbers, 2400/month is 15/hr, the servers would be making 50%/66% of that so 7.50 to 10 an hour. Minimum wage is $11 in maryland.

SilasX 6y ago
>This money ends in July (or has to be renegotiated), so the moral hazard maybe could apply to a few weeks during re-opening (a rounding error). It applies to the entire time someone could be doing other SIP-compatible work.
- awinder 6y ago
  Ok so my heart goes out to the 5 possible business owners nationwide who that may have applied to, but that is a completely unserious argument.
  - SilasX 6y ago
    Pretty much everyone is capable of working more than one occupational role, and almost always a SIP-compatible one. Where do you get "business owners" as the relevant category? Are you sure you're taking this discussion as seriously as you expect others to?
    - awinder 6y ago
      And in which a SIP-compatible role was open and available, which is probably 5 businesses when unemployment went from 4% to 20%. Moral hazard exists everywhere, especially for people who have known the word longer than 6 months.
      - 6y ago

LordDragonfang 6y ago

>[1] https://www.newsweek.com/baltimore-restaurant-owner-cant-get-employees-return-because-they-make-more-unemployment-1503808 https://www.newsweek.com/baltimore-restaurant-owner-cant-get... "I can't get my employees to come back because that would mean they would be making less money. I can't envision any solution to this problem" If an employer wants employees to risk their lives as the quarantine lifts and the second wave continues to spread, they need to offer more money.

SilasX 6y ago
You're missing the problem. It's that they lose the unemployment by coming back to work. Even if they were paying (any reasonable definition of living wage plus hazard pay), the unemployment payment structure still disincentivizes them. It means their pay would have to be some $600 over and above the regular amounted needed to compensate for the inconvenience and utility of work. So they're effectively "taxed" at over 100%. At that point, it's not the employer's fault for not offering enough. At the very least, they could just make it so that unemployment (i.e. same logic as behind the UBI -- have social benefits, but don't [significantly] contract them as you work more).