4 ms·

Even common sense needs to be validated though. There are always "common sense" solutions that end up being wrong, often because they are an overly simplistic m

by bumby 5y ago

Even common sense needs to be validated though. There are always "common sense" solutions that end up being wrong, often because they are an overly simplistic model. There was an interesting outcome of some states stopping benefits because common sense said that would make people more pressured to go back to work. This was essentially a large-scale economics experiment. "25% of the workers who lost their benefits in June had gone back to work by August. Now, in states that left the benefits in place, 21% of unemployed people found jobs. So there was only a four percentage point difference when these benefits went away...And what this means is those states that ended benefits early, they turned down billions of dollars in federal unemployment aid, and it ended up backfiring for their local economies."[1] The "common sense" solution to helping their economy may have actually hurt their economy. [1] https://www.npr.org/transcripts/1034965231 https://www.npr.org/transcripts/1034965231

silexia 5y ago
That 4% difference is absolutely massive. Further, these benefits have to be paid by someone somewhere. These benefits are being paid by all the rest of us in the form of inflation eating way our income.
- brandmeyer 5y ago
  > That 4% difference is absolutely massive. 4% of the entire workforce is massive. 4% of unemployed workers who were previously receiving unemployment benefits is irrelevant. If you zoom out, you'll see that the biggest drops in unemployment benefits weren't in the 2021Q2, they were in 2020Q4. https://www.statista.com/statistics/284857/total-unemployment-benefits-paid-in-the-us/ https://www.statista.com/statistics/284857/total-unemploymen...
- bumby 5y ago
  We could probably debate whether 4% is "massive" in the context of COVID unemployment levels, but I'll sidestep that because I don't think it will actually resolve anything. What I think is the better question is whether that 4% dip was better for the respective economies in the context of the aid they had to give up. It seems to me it probably wasn't a good tradeoff if the goal was to improve the economy. I also understand it may be a moral argument rather than an economic one, but that's another one that could probably be debated without resolution. >These benefits are being paid by all the rest of us in the form of inflation eating way our income. I agree, but that's also the price to be paid by living in a society. We could just remove all safety nets whatsoever and deal with whatever instability results, but I don't think that's in most people's best interest. The point of the discussion is finding the right balance that provides a moral yet stable economy.
  - murgindrag 5y ago
    I expect inflation to remain high for a while, and I think concerns about it (if not for self-fulfilling psychological, which are very real and significant) are overblown. I think this stimulus, and the resulting inflation, DID help the economy, relative to the alternatives. The critical thing was to avoid structural damage: - Businesses going under - People losing jobs - Mortgages going under ... and so on. All of this DOES directly impact the productive output of the economy. Inflation does distort the economy a little bit. It makes some of us poorer (those with cash), some of us richer (those with debt), and leaves some neutral (this with hard assets). But I think this distortion pales relative to the alternative.
    - silexia 5y ago
      Business is going under is actually a good thing. It frees up market space for new entrepreneurs and new businesses to be able to get going and make newer better offerings. The last two recessions all of the big companies have been bailed out, which means that we have the same bad practices and bad CEOs still in charge of our economy. Let them go bankrupt and then we will have fresh ground for entrepreneurs to flourish.
      - bumby 5y ago
        >Let them go bankrupt and then we will have fresh ground for entrepreneurs to flourish. I agree to this in some contexts, but I also think it's sometimes used with too broad of a brush. It seems to ignore the time lag that means sometimes things can get really bad before they get better. Sure, allowing banks and automotive manufacturers to go under could create "fresh ground for entrepreneurs to flourish." But it could also create decades of depression/recession effects before that flourishing happens. We're currently seeinng the supply chain effects that people didn't really anticipate well. As someone from the rust belt, there are an awful lot of tangentially related manufacturers who will also go away with the automotive sector, which has ripple effects in a ton of other industries. Protracted economic depressions tend to create "fresh ground" for despots to "flourish" as well.
  - reedjosh 5y ago

by bumby 5y ago

silexia 5y ago

That 4% difference is absolutely massive. Further, these benefits have to be paid by someone somewhere. These benefits are being paid by all the rest of us in the form of inflation eating way our income.

brandmeyer 5y ago
> That 4% difference is absolutely massive. 4% of the entire workforce is massive. 4% of unemployed workers who were previously receiving unemployment benefits is irrelevant. If you zoom out, you'll see that the biggest drops in unemployment benefits weren't in the 2021Q2, they were in 2020Q4. https://www.statista.com/statistics/284857/total-unemployment-benefits-paid-in-the-us/ https://www.statista.com/statistics/284857/total-unemploymen...
bumby 5y ago
We could probably debate whether 4% is "massive" in the context of COVID unemployment levels, but I'll sidestep that because I don't think it will actually resolve anything. What I think is the better question is whether that 4% dip was better for the respective economies in the context of the aid they had to give up. It seems to me it probably wasn't a good tradeoff if the goal was to improve the economy. I also understand it may be a moral argument rather than an economic one, but that's another one that could probably be debated without resolution. >These benefits are being paid by all the rest of us in the form of inflation eating way our income. I agree, but that's also the price to be paid by living in a society. We could just remove all safety nets whatsoever and deal with whatever instability results, but I don't think that's in most people's best interest. The point of the discussion is finding the right balance that provides a moral yet stable economy.
- murgindrag 5y ago
  I expect inflation to remain high for a while, and I think concerns about it (if not for self-fulfilling psychological, which are very real and significant) are overblown. I think this stimulus, and the resulting inflation, DID help the economy, relative to the alternatives. The critical thing was to avoid structural damage: - Businesses going under - People losing jobs - Mortgages going under ... and so on. All of this DOES directly impact the productive output of the economy. Inflation does distort the economy a little bit. It makes some of us poorer (those with cash), some of us richer (those with debt), and leaves some neutral (this with hard assets). But I think this distortion pales relative to the alternative.
  - silexia 5y ago
    Business is going under is actually a good thing. It frees up market space for new entrepreneurs and new businesses to be able to get going and make newer better offerings. The last two recessions all of the big companies have been bailed out, which means that we have the same bad practices and bad CEOs still in charge of our economy. Let them go bankrupt and then we will have fresh ground for entrepreneurs to flourish.
    - bumby 5y ago
      >Let them go bankrupt and then we will have fresh ground for entrepreneurs to flourish. I agree to this in some contexts, but I also think it's sometimes used with too broad of a brush. It seems to ignore the time lag that means sometimes things can get really bad before they get better. Sure, allowing banks and automotive manufacturers to go under could create "fresh ground for entrepreneurs to flourish." But it could also create decades of depression/recession effects before that flourishing happens. We're currently seeinng the supply chain effects that people didn't really anticipate well. As someone from the rust belt, there are an awful lot of tangentially related manufacturers who will also go away with the automotive sector, which has ripple effects in a ton of other industries. Protracted economic depressions tend to create "fresh ground" for despots to "flourish" as well.
- reedjosh 5y ago