HASENMILLER: New bill treats symptom of problem, rewards for lack of social contribution
September 29, 2009
During one warm Thursday afternoon in one of my classes a couple of weeks ago, my classmates and I apparently looked a bit tired and lethargic. My professor responded by telling us that we needed some sugar to wake us up and proceeded to throw handfuls of candy at us.
Now, maybe years of economics classes and column writing have subconsciously trained me to look at everything in terms of the incentives, but the first thing that went through my head was, “Wow! If go to class tired, I get free candy!”
If this thought was shared by many of my classmates, and then actually acted upon, my professor’s strategy could have very counterproductive results.
My next thought was, “I wonder if I can use this as a metaphor for a column.”
Sure enough, within a few days, Democratic Representative Jim McDermott gave me the perfect opportunity.
On Sept. 22, the House of Representatives passed Rep. McDermott’s Unemployment Compensation Act of 2009 with bi-partisan support by a vote of 331 to 83.
This act intends to extend the Emergency Unemployment Compensation (EUC) program’s benefits from 33 to 46 weeks for states considered “high unemployment states.”
A high unemployment state is one which has a total unemployment rate of at least 8-and-a-half percent or an insured unemployment rate of at least 6 percent. Currently, 29 states would qualify.
Rewarding tiredness with candy is not an effective way to motivate students to be less tired, similar to how rewarding unemployed with money is no way to motivate people to find jobs.
It’s the same philosophy as why the United States refuses to cooperate with terrorists. It may be better to reward the terrorist with $100 million to not blow up a building full of people, but if we give in once, more terrorists are going to try it in the future.
To pay for this bill, the Act will extend a $14 per-employee, per-year tax on employers, though it seems counterintuitive the act deemed necessary by a high unemployment rate would pay for itself with a tax on employment.
This tax is similar to what it would be like if the people who weren’t tired in my class had to buy the candy for all of the people who were: Yet another incentive to be one of the tired ones.
For politicians it’s not about fixing the problem, or even about not making it worse. It’s about politics.
Some people want a handout, politicians want votes and we get stuck with the bill.
If politicians really want to combat unemployment they should eliminate, not extend, unemployment insurance. The lack of alternatives that this would create would increase the supply of jobs, thus lowering the price of labor and increasing the quantity of labor purchased by firms, otherwise known as employment.
And it wouldn’t even take our tax dollars to do it.
– Blake Hasenmiller is a senior in industrial engineering and economics from DeWitt, Iowa.