The Redistribution Recession – Why Public Policy Made Layoffs Cheaper

Writing in The Wall Street Journal, University of Chicago economics professor Casey B. Mulligan talks about his book The Redistribution Recession. According to the article, public policy intended to help both the poor and the unemployed actually reduced the incentives of people to work and businesses to hire.  Also, these same policies, subsidies and regulations had the perverse affect of making it easier to layoff existing employees.

I have said many times in the past in these words or similar words, whatever the government subsidizes, it gets more of.  Plus, whatever the government taxes, it gets less of.

Consider the food stamp program.  Potential food stamp recipients are no longer required to work and they are not required to show that they have no wealth.  Bottom line, virtually any unmarried person can sign up for food stamps and stay on indefinitely.  Is it any wonder why the food stamp rolls have skyrocketed in recent years?

The article cites the example of a recruiter, who has found that in contrast to the past, unemployed people apply for jobs, but often don’t take the jobs if offered.  They just applied to show their unemployment office that they were attempting to get a job.

Thanks to the American Recovery and Reinvestment Act of 2009, layoffs were made easier on businesses.  This law allowed businesses to layoff employees and not pay for former employee health benefits.  Instead, the Federal government could pick up the tab.  Hence, it encouraged layoffs.

Our weak, slow, and anemic recession has been largely a product of progressive socialist policies and programs.  Economic Freedom and Free Markets work so much better than Marxism and the policy of wealth redistribution.

I wish everyone a Happy Fourth of July.

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