Article: the Folly of Subsidizing Unemployment

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  • Published : January 26, 2012
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Introduction
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. 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...
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