The Thursday, July 8, 2010 Wall Street Journal featured three excellent articles on subject matter relevant to the evolving economic Depression.  Should you have the time and interest I found them to be worthwhile.


Unemployment Benefits Aren't Stimulus

"Imagine what the unemployment rate would look like if unemployment benefits were universally $150,000 per year.  My guess is we'd have a heck of a lot more unemployment.  Common sense and personal experience indicate higher unemployment benefits will make unemployment less unattractive and thereby increase unemployment even in the Great Recession.  As the chart nearby clearly shows, since the 1970s there's been a close correlation between increased unemployment benefits and an increase in the unemployment rate.  Those who argue that things are different today don't have the data to back up their claims."



"No one opposes unemployment benefits as a transition aid for people to get back on their feet and find a new job.  Unemployment benefits are a safeguard for individuals down on their luck.  But to argue that unemployment benefits actually reduce unemployment is disingenuous at best, and could induce our government to enact policies that have the effect of destroying our nation's production base from whence all benefits ultimately flow."


The Right Way to Raise Wages

"From the beginning of his term in office Mr. Obama has made union priorities his priorities, most conspicuously by supporting the Employee Free Choice Act (EFCA).  This misleadingly named bill would replace the secret ballot with a signature on a card, the so-called card check, in union elections.  It would also require mediation if the union and the employer can't reach an initial union contract, and impose binding arbitration if mediation is unsuccessful."

"Those want more unionization claim it is necessary to raise wages. Instead it will further depress the economy.  My research suggests that if unionization rates returned to 1970s levels (roughly in the mid 20% range of the private work force), and if new unions could achieve the same wage premium as existing unions have achieved over nonunion workplaces, then employment could decline by about 4.5 million and real GDP could fall by about $500 billion per year.

Why? Unions raise members' wages by restricting competition, much as a business monopoly raises prices by restricting competition. Economists criticize business monopolies for raising prices above what they would be in a competitive marketplace, which reduces employment and output.  Unionization reduces employment and output much the same way by raising wages above underlying worker productivity."


Obama and the Spending Volcano

"The Democrats in Washington are beginning to look like a tribe of volcano worshipers, living in the ever-present shadow of Mount Obama, which has been spewing federal spending into the American atmosphere nonstop for nearly two years."

"An alerted electorate is also aware of what spending did to the fiscal health of California, New York, New Jersey, Illinois, Greece, Spain, Portugal and Italy."

"The Democratic election narrative now is that the Republicans were "obstructionist." Obstructionist?  What they stopped was next to nothing."