Framing the Dialogue

Demonomics

I am not sure whether “Demonomics” is Demon Economics or Democrat Economics.  It is probably a distinction without a difference as some of the recent comments by leading Democrats defy logic.  I have to wonder how these people not only got as far as they did, but stay in positions of power.  Perhaps the biggest example has been how the Democrats have been hawking another extension of Unemployment Compensation payments.  House Speaker Nancy Pelosi postulated that,

“It injects demand into the economy.  It creates jobs faster than almost any other initiative you can name.”

Her theory is that when families have money to spend it stimulates the economy and creates jobs.  I agree with her up to the point where the money that these families have is taken from other families who then have much less to spend.  Remember that government takes its cut to administer the funds and their overhead is high.  This economic sophism is not unlike the Broken Window Fallacy where a crowd extols the fact that a baker has his storefront window broken by vandals.  The crowds begin to believe that forcing the baker to replace his window will stimulate the economy.

Having recently endured a period of unemployment, I can attest to the benefit of Unemployment Compensation and how much it helped for those months.  We were more fortunate that we had a fair amount in savings and my wife works because we needed every penny to supplement the payments.  Essentially my unemployment compensation payments covered the costs of health insurance and our mortgage payments.  I didn’t have a lot of discretionary spending so I am not sure what Ms. Pelosi is talking about…I suspect that she doesn’t know either.

The Republicans and Obama recently came to an agreement to extend the Bush tax cuts for two years, but to get Obama to agree he got an extension of unemployment benefits for an additional thirteen months.  While Obama claimed that we needed the benefit extension to save people who are out of work one of his agencies released a report that puts this in question.  Investors Business Daily reported that,

“The same day the White House cut a deal for 13 additional months of unemployment aid, the Labor Department released data showing that more than 3 million jobs are going unfilled. These are jobs employers are actively trying to fill, not just slots they’re leaving open until business improves.”

It seems that there were an estimated 3.4 million job openings at the end of October.  It seems that there are jobs Americans won’t do when unemployment benefits are available.  Statistics show that many unemployed workers actually find jobs as their benefits end. 

Perhaps the most bizarre utterance from a Democrat also came from Ms. Pelosi when she claimed that for every dollar spent on unemployment $2 is returned to the economy.  Someone please explain how the government takes a dollar from us,  supports a monstrous bureaucracy, gives it to the unemployed and somehow that dollar is doubled.  The only thing I can think she can possibly be talking about is that The Fed will print more money thus doubling the amount though each dollar will be worth half as much.

Is there any doubt about why America is in this position when you have someone like Pelosi is such a postion of power?

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