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God Bless Professor McCulloch

March 3, 2010 at 10:33 am Matt Leave a comment Go to comments

A fantastic letter to the editor in The Dispatch:

Regarding the Friday Dispatch article, “Ohio has no idea how to pay U.S. back for jobless benefits,” the first rule to follow when you find yourself in a deep hole is to stop digging. It is basic economics that if you tax an activity, you tend to get less of it, while if you subsidize an activity, you tend to get more of it.

Unemployment insurance pays workers to be unemployed and funds this with a tax on employment. The natural outcome is fewer jobs and more unemployment. Experience rating only partially offsets the adverse incentives this program creates.

Since we all want more jobs and less unemployment, unemployment compensation is completely counterproductive.

Congress and the states have compounded this folly by extending benefits repeatedly during this recession, so that they now continue up to 99 weeks in most states, including Ohio.

Not surprisingly, the average duration of unemployment is almost 50 percent higher than any other time in the past 60 years. The Ohio fund is already $2 billion in the hole and is expected to grow to $3 billion by year’s end.

Unfortunately, Congress compels the states to participate in this program. However, if Nebraska can be exempted from the burden of expanded Medicare, there is no reason that Ohio’s congressional delegation shouldn’t be able to get us exempted from the burden of expanded unemployment.

Professor of Economics and Finance
Ohio State University, Columbus

Just like how Gov. Strickland described Sentor Jim Bunning’s efforts to block funding for additional unemployment benefits as “outrageous and hard-hearted“, there is no doubt he would say the same about the cold bucket of truth McCulloch just dumped in The Dispatch. And by discouraging people from taking work, people are not only less productive but they also become less employable the longer they are out of the market.

With teenage-unemployment officially being 26%, which the real numbers being much higher… especially among blacks, Gov. Strickland, as a long-time supporter of minimum wage increases, has a record of not knowing which policies by their very definition cause unemployment.

As it is, Ohio will not be able to pay back loans to pay for unemployment compensation, and will probably have to beg the Federal government to forgive the loans. But that won’t stop Gov. Strickland from going out on the campaign trail, telling you that the state will take care of you forever as long as you vote for him!

Instead, Ohio needs a governor like John Kasich who actually understand that to generate wealth and prosperity, Ohio must unleash the same entrepreneurs which Gov. Strickland would rather shake down to pay off voters with more unemployment compensation.

Related posts:

  1. More Irresponsible Fiscal Leadership from Gov. Strickland
  2. How Much Can Ohio Afford to Pay for Jobless Benefits?
  3. Ted Strickland, Wasteful Spending, and “Fair Minded People”
  4. Protectionism Blows up in Zack Space and Sherrod Brown’s Faces
  5. Ohio House Democrats Moving at Lightning-Speed to Further Damage Ohio’s Bond Rating

  • Joseph
    Nice in theory. Kind of hard not to take into account the fact that this advice is coming from a tenured professor who can't lose his job and will continue getting benefits from a state funded university for the rest of his life.
  • Yep, that's the way to do it Joseph. Don't debate facts- just go for the personal stuff. Alger Hiss did it to Chambers. Alinsky taught the modern left how to do it to everyone else.

    You are a pest.
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