Fox, WSJ's Freeman Ignore Economists To Dispute Economic Benefits of Unemployment Insurance

[Bill USA]

http://mediamatters.org/blog/2014/01/09/fox-wsjs-freeman-ignore-economists-to-dispute-e/197507

A Fox host and Wall Street Journal assistant editor disputed the existence of a multiplier effect with unemployment benefits -- which generates more dollars worth of economic activity than the dollars invested in the program by boosting consumption -- though the effect is well supported by economic research.

Unemployment benefits for the long-term unemployed expired at the end of 2013, abruptly cutting off benefits for 1.3 million Americans. Department of Labor estimates show it would cost approximately $25 billion to extend the unemployment insurance for another year, a step President Obama urged Congress to take during a January 7 speech in which he argued that such an extension would not only help people but help the economy and create jobs.

Wall Street Journal assistant editor James Freeman and Fox host Steve Doocy took issue with the idea that unemployment insurance benefits have a net-positive effect on the economy during the January 9 edition of Fox and Friends:

[div style="background: #EEDDDD;border: 1px solid #773333;" class="excerpt"]DOOCY: We heard this from the president the other day. Unemployment creates jobs. And?

FREEMAN: Yeah. It's hard to explain that one. The administration argument is that there's something called a multiplier, where when you put $1 of unemployment benefits into the economy it creates $1.80 in economic activity. So if this is true, this would suggest we should all stay home and the country will become wealthier by giving us unemployment benefits.

But economists agree that the economic benefits of unemployment benefits outweigh the cost. In what's known as the multiplier-effect -- which Freeman dismissed -- recipients of unemployment benefits reliably spend that money. In fact, Moody's chief economist Mark Zandi estimated that each dollar spent on unemployment benefits generates about $1.55 in economic activity. To put it another way, spending $25 billion on unemployment benefits would increase consumer spending and raise ("GDP" _Bill USA) by $37.8 billion, according to the Economic Policy Institute (EPI).
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[brett_jv]

1. Of course THEY dispute it ... it's part of their ideological dogma ...

They believe jobs are created and the economy driven ... by rich people getting richer.

In reality, in many ways, the opposite is true. Although of course there'd be such thing as 'taking it too far' (hence why their 'everyone should just stay home and collect unemployment then!' argument is a straw-man), generally speaking, the more that you take the accumulated money away from rich people and redistribute back down to the bottom of the food chain, the better is it for the economy.

Of course, with our capitalist system you DO need 'rich people' and through their wealth they do generate many, many jobs ... but there's a balance that needs to be struck in order for the economy to really thrive. A big reason the economy overall is struggling now is because SOOOO much of the money has accumulated at the top of the proverbial food chain, and those people are using the political power that the money affords them to buy off our government so it won't do anything substantial in the way of 'redistributing' their wealth back down to the bottom of the food chain.

Until such time as the average folks take back their government and start forcing the uber-rich to pay their fair share of taxes, we'll be stuck in an economic rut with lowering standards of living for the other 99% of people.

Prior to Reagan and the propaganda explosion of conservative radio and Faux Nooz and such, the majority of people probably understood these principles, but the rich have been hard at work promoting the idea that 'greed is good, rich people are why you get to have a job', so now 30+ years later, many many have no idea that this is largely bullshit.

[Bill USA]

2. Steve Jobs has been justly celebrated for his creativity and entrepreneurial skills ... But

there would never have been a DOW 30 Apple without many millions of 95%ers with money to shell out ~$3,000 - $4,000 (in the 1980s) for a personal computer. He still would have been just as clever but without buyers for your product (and new products often sell at a premium, let's not forget) no matter how clever you are, you're going to find it hard to be a big success and make tons of money in the process.

the skipper of the boat (or the designer/builder) thinks it's all his doing. But consumer spending is the wind that fills the sails and enables the 'boat' to go anywhere.