In The Folly of Subsidizing Unemployment article written by Robert Barro, it contains information regarding the generous unemployment insurance package and how it compares to the unemployment rate. Is it worth subsidizing? The author expresses his views on the unemployment rate in 2010 in comparison to the worst unemployment rate ever, which was in 1982. Obama’s administration policy; is expanding unemployment insurance eligibility to 99 weeks from the standard 26 weeks.
This in return would cause higher taxes to pay for the insurance program associated with the unemployment compensation. Summary The current administration is to focused on government expansion these days, they believe the cost is ineffective because the tax deductions in the package had no cut effects in the marginal income tax rates that encourage investments, work efforts, and productivity growth. The cost is ineffective because the program subsidizes unemployment, therefore resulting in insufficient job searches, job acceptances, and levels of employment.
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The unemployment system has the largest extension ever for unemployed workers. The author blames the Obama administration, they should have predetermined that the extension is reckless and an all around bad idea. Expanding to 99 weeks was unwise both economically and politically incorrect. Normative Arguments The normative issues associated with the state of economy and or the current policy relate to what should be rather than what is. The expansion of employment-insurance eligibility is 99 weeks compared to the standard of 26 weeks.
People during this time should be resourceful looking for jobs and going to interviews, but instead people are taking the entire unemployment package as a vacation or keeping a low end job on the side. The peak of the unemployment rate in 2009 was 10. 1%, but the rate was higher in 1982 at 10. 8% with a less generous package than now. In 1982 at a rate of 10. 8% unemployment the duration of pay lasted 17. 6 weeks. Those unemployed longer than 26 weeks were at the 20. 4% long term unemployment rate which peaked in 1983 when the unemployment rate fell to 9. 4%, which then the mean of duration of unemployment reached 21. weeks and unemployment was at 24. 5%. Unemployment of less than 21 weeks plus the share of long term unemployment less than 25% (mean) in contrast to unemployment in today’s world. At the peak of unemployment in June 2010 was at 35. 2 weeks and long term reached 46. 2%. Positive Arguments The positive argument is information that supports the argument and has predictions about the economic relationships. The author does not agree with the Obama administration economists. They believe that if the insurance plan had been reduced unemployment would be reduced as well.
The dramatic expansion of unemployment-insurance eligibility to 99 weeks is the reason unemployment is so high, because people believe that it won’t run out, or this won’t happen to me. We agree that the demand for unemployment is ridiculous, and people need a smaller time frame and more rules/regulations in order for the government to restrict people from just living off of unemployment. People take it as a joke, or as it won’t happen to me, a job will come when the time is right but for now I’ll sit back and just wait for my check.
In conclusion, the research and statistics made the article stronger. It only addresses one side of the issue which is the negative side. The normative analysis could have a little more positive feedback analysis to give his opinion more of a backbone and core to his findings. The author could go into more detail about changing the system and how people could be more positive and not sit and wait till the check or job comes to them.
- Barro, Robert. “The Folly of Subsidizing Unemployment. ” The Folly of Subsidizing Unemployment (2010). Print.
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