Patterico's Pontifications


Nancy Pelosi, Economist

Filed under: Economics,Politics — DRJ @ 5:32 pm

[Guest post by DRJ]

Speaker Nancy Pelosi says unemployment benefits stimulate the economy:

PELOSI: “Now let me say that unemployment insurance — we talk about it as a safety net and the rest. This is one of the biggest stimuluses (I know, not a word) to our economy. Economists will tell you this money is spent quickly, it injects demand into the economy. It creates jobs faster than almost any other initiative you can name. Because, again, it is money needed for families to survive, and it is spent.

So it has a double benefit, it helps those who have lost their jobs, but it is also a job-creator. It is impossible to think of a situation where we would have a country that would say we’re not going to have unemployment benefits, and the only people who want them are people who don’t want jobs. That’s just so contrary to what our country is about, and I reject that misrepresentation of the motivation for people to be on unemployment insurance.”

This Ezra Klein post explains why liberals want direct government spending like unemployment benefits. It’s satisfying because you are providing help to specific people and it gives more immediate bang for the buck.

Unemployment benefits stimulate the economy if the alternative is jobless people who have no money to buy food and other necessities. On the other hand, unemployment benefits aren’t as good for the economy as people paying for what they need with income earned from jobs. But what if the jobs are lower-paying or equal pay to unemployment benefits, leading recipients to choose unemployment benefits? What should society encourage in that situation?

That issue doesn’t seem to be on liberals’ radar, and conservatives are portrayed as heartless and judgmental for raising it.


16 Responses to “Nancy Pelosi, Economist”

  1. “economy” is Nancys safe word…

    EricPWJohnson (cedf1d)

  2. Pelosi thinks that unemployment benefits are fossil fuels.

    SPQR (26be8b)

  3. If unemployment benefits are the fastest and most effective form of stimulus (as Pelosi tells us), why would the Democrats oppose rushing every remaining cent of the current stimulus to this task?

    Nancy, why do Dems steal food from the mouths of children?

    Little Miss Spellcheck (75b7f0)

  4. DRJ – Dylan Matthews wrote that piece at Ezra’s place. The bang for the buck calculation was based on a black box Moody’s econometric model presented to Congress in April about the effects of various stimuli on GDP ONE YEAR after they are implemented. I question the model and its assumptions.

    daleyrocks (1d0d98)

  5. Unemployment benefits stimulate the economy if the alternative is jobless people who have no money to buy food and other necessities.

    No. That same logic would mean that breaking windows would stimulate the economy, because those replacing the windows would have to be paid. It ignores the fact that the money to pay them is taken from someone else for a non-productive purpose. It is not stimulative.

    To be clear: I’m not saying that we should never pay unemployment benefits to anybody, I’m saying it is a fallacy to say that doing so stimulates the economy.

    Anon Y. Mous (5ac901)

  6. nancy pelosi
    name roll off tongue easy
    but then vomit spew

    ColonelHaiku (9cf017)

  7. Anon Y. Mous,

    I think it would be fair to say it may not be the most productive use of the funds or it prevents government from using those funds for other purposes, but giving money to people to spend is a stimulus.

    DRJ (d43dcd)

  8. Doesn’t this harridan realize that nowadays the Internet magnifies the effect of saying stupid things?

    Blacque Jacques Shellacque (cf2f34)

  9. I doubt Nancy has ever heard of the broken window fallacy. The original author was Bastiat but Hazlitt’s book would be a great gift for Obama.

    Mike K (82f374)

  10. The San Francisco Golden Gate Bridge cost $35 million to build in the 1930s. That is about $529 million in 2010 dollars. Nancy’s $787 billion stimulus bill, now expecting to cost $862 billion, should have built the equivalent of about 1,600 new Golden Gate Bridges. Yet, instead of new infrastructure that would benefit us for generations, we have virtually nothing to show for Nancy’s $862 billion “investment.”

    Perfectsense (1904c1)

  11. “Nancy Pelosi”

    Industrial grade stupid.

    Dave Surls (ef0656)

  12. Colonel write funny
    Make me laugh
    But not pee myself

    Leonardo DaFinchi (8c0a12)

  13. I’m waiting for the day when some enterprising newsman will yell out, “And where does the money come from, Mrs. Pelosi?”

    Patricia (160852)

  14. Pelosi and most of the democrats (and only dems) Deem and Passed the budget for 2011.

    They haven’t even written such a budget. They now are spending without even budgeting first, with no accountability. Things are completely out of control at this point.

    Conservatives can be portrayed as heartless on unemployment past 99 weeks, but the liberals are trying hard to not be portrayed for anything they actually want to do. What good is a House that doesn’t even vote on spending budgets?

    Dustin (b54cdc)

  15. DRJ:

    I know this post is a little old, but today’s WSJ has an article by Laffer that makes the point much better than I did.

    Anon Y. Mous (5ac901)

  16. #15 Anon Y. Mous: From your link,

    The Democratic retort is that the economy today is so different from the past that we have to suspend our traditional understanding of economics.

    What, in all the history of the world, suddenly people use money differently than they did last week? Or 35,000 weeks ago?

    I think maybe Democrats don’t really understand economics all that very much.

    EW1(SG) (edc268)

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