A case for government intervention: unemployment

[Victor Danilchenko]

This is my first stab at a middlingly simple economic analysis, so bear with me.

Humans in general are risk-averse; this is why insurance industry exists. The expected (average) outcome of a risky situation being the same as the expected out come of a non-risky situation (i.e. 50/50 chance of losing $10K or winning $10K, vs. nothing happening), the risk itself has negative utility. This fact is further compounded by diminishing marginal utility of wealth.

Together, these two factors imply that society-wide welfare would be greatly increased by availability of some sort of protection scheme for risks. In fact, we have insurance for a vast number of eventualities; but not all of them are insurable. What conditions are necessary for insurance to be viable in a given domain? The standard list goes like this:
The occurrence of insured events must be independent: me suffering X should have no causal relationship to you suffering X.
Probability of the insured event should be less that 1.
The average rate of the insured event's occurrence must be predictable.
There must be no adverse selection. "Adverse selection" is when the insuree is able to conceal from the insurer his or her true risk. If adverse selection is a factor, then the insurance company is forced to charge average premiums of everyone, high- and low-risk; this means that the low-risk individuals would find it inefficient to be insured, and leave the insurance, thus driving up the cost of servicing the remaining higher-risk individuals, in turn driving up the premiums, which in turn causes the next layer of low-risk individuals to leave, etc; resulting in a downward death spiral of the insurance market.
There must be no moral hazard. Moral hazard is similar to adverse selection, except that it's the situation where the insuree is able to influence frequency of accurence and/or duration of the insured event. Presence of the moral hazard in a given insurance domain similarly tends to cause the downward death spiral of the insurance market.

Note that the problem posed by adverse selection and moral hazard aren't merely a question of inefficiency, but rather of creating a sort of downwards vicious cycle that is causes by iterative abandonment of the insurance by increasingly higher-risk individuals.Examining various insurance domains in light of these considerations is instructive. Healthcare for example is susceptible to moral hazard somewhat, but the moral hazard can be controlled by the insurance companies double-checking the medical records, and/or instituting efficient co-payment and coverage rates, and/or getting proactive and forming HMOs. Nonetheless, we see the inefficiency cost that the medical insurance industry has to put up with, in the form of both inefficiently high premiums and the proverbial reluctance of the HMOs to actually treat serious problems.

Onwards to unemployment!

Unemployment is a significant risk, and we would want it similarly covered. Furthermore, not only does the occurrence of unemployment carry great negative utility for the individual, it also incurs negative externalities -- the loss of excess production over labor cost, the abandonment of various financial obligations (such as house foreclosures), the bread-winner's family would suffer from privation, society would have to suffer higher crime rates, and in the worst-case scenario, society would have to pony up the cost of disposing of the bodies. No matter which way you slice it, society pays for uninsured unemployment indirectly.

So we want to have unemployment insurance, right? Nice try. Unemployment, turns out, is suspectible to three out of five problems listed above:
Society-wide unemployment rate fluctuates with economy, making occurrences of unemployment be causally dependent upon each other.
The average rate of unemployment is predictable only in the short term (and would become even less predictable under libertarian-style market); in the long term, it's no more predictable that the rate of inflation.
The moral hazard in unemployment insurance is virtually uncontrollable. It's basically impossible to account for me telling my boss that I would work a week for free, if she lays me off afterwards; similarly, it's essentially impossible to tell the difference between legitimate but lengthy search for a good job, and mere procrastrination.The former two problems, with luck, merely cause inefficiency; but the last one in effect sounds a death knell for the very possibility of unemployment insurance.

Of course, the ultimate test is reality. It's a telling fact that not even in US, the least welfarish of the 1st-world states, there is no unemployment insurance. In fact, AFAIK, there has never been a successful unemployment insurance industry anywhere!

So what do we do? We want to mitigate the negative utility for both individual and society which are inherent in the risk of unemploymenmt; but for technical reasons, private unemployment insurance seems impossible. The solution? Compulsory government unemployment support scheme. In fact, it probably couldn't be a true actuarial insurance for technical reasons, but it can accomplish the goal -- alleviate the detrimental effects of risk of unemployment; and the fact that it would be compulsory is what would make it possible to defeat the monster of moral hazard -- instead of causing the death spiral due to iterative departure of low-risk individuals, compulsory unemployment "insurance" would merely pay the inefficiency price, and not a very big one at that. The moral hazard doesn't have to be effected by a large segment of the insuree population, you see, and indeed most people who collect unemployment do so honestly.

So what are we left with? Our choices basically are either to left unemployment risks go uncontrolled, and pay the exorbitant price in both individual negative utility, and in negative externalities; or to have the government intervene and provide some sort of compulsory unemployment support scheme. I know which one I would choose...

Quod Erat Demonstrandum.

[Argo Nimbus]

Originally posted by Victor Danilchenko
Of course, the ultimate test is reality. It's a telling fact that not even in US, the least welfarish of the 1st-world states, there is no unemployment insurance.


Actually, the State of Nebraska (and I would assume every other State in the US) has what it calls "unemployment insurance". In Nebraska this is administered by an Office of Unemployment Insurance Services. The insurance is compulsory and paid for by employers through a tax on payroll. The insured receives up to six months of weekly checks based on length of previous employment and wages earned. The checks I've seen amount to 40 hours at $5.95 per hour, or $238. This terminates after six months unless Congress votes an extension.


most people who collect unemployment do so honestly.


Okay, so you're not totally unaware that "some sort of compulsory unemployment support scheme" already exists?


So what are we left with? Our choices basically are either to left unemployment risks go uncontrolled, and pay the exorbitant price in both individual negative utility, and in negative externalities; or to have the government intervene and provide some sort of compulsory unemployment support scheme. I know which one I would choose...

Quod Erat Demonstrandum.


So what is the issue? Is it that current levels of unemployment benefits are not adequate?

--- Argo

[Victor Danilchenko]

Argo Nimbus

Actually, the State of Nebraska (and I would assume every other State in the US) has what it calls "unemployment insurance". In Nebraska this is administered by an Office of Unemployment Insurance Services. The insurance is compulsory and paid for by employers through a tax on payroll.This is how it works in all US states, AFAIK; but the key words here are 'cumpulsory' and 'administered by OUIS...'. It's a compulsory state-run scheme, just what I advocate. It might be an actuarial insurance, but I rather suspect that it's 'insurance" in name only.

Okay, so you're not totally unaware that "some sort of compulsory unemployment support scheme" already exists?My whole point is that it should exist, just as it does.

So what is the issue? Is it that current levels of unemployment benefits are not adequate?the issue is that libertarians are against government intervention of this sort. This is really an argument with libertarians, which fact I guess I should have made more clear.

[shanek]

There are two causes of unemployment.

One is called "natural unemployment." It's unemployment that just happens. Even in a booming economy, there's going to be a natural amount of unemployment because people change jobs, and may be out of work for a bit while they do so. So there may always be 1-2% unemployment, but it's a different 1-2% every few weeks or so. The other form takes place in the downswing of the business model. For about 3-6 months usually (unless government actions extend the recession like it's been doing lately), the economy drops below the level of total production, and you have unemployment until it ramps up again. This is part of the business model. In both cases, the unemployment is there for a reason, and you couldn't stop it even if you wanted to.

The other cause of unemployment, and the only cause of major long-term unemployment is, you guessed it, GOVERNMENT!

One of the big things the government does to cause unemployment and even underemployment is related to its "desire" to stop the big, evil corporations from exploiting workers, making them work in "sweat shops" for "slave wages." What they don't understand is that these are crucial entry jobs for people starting careers. Even if you don't make much money, one major benefit you get is work experience. Another is on-the-job training. This is crucial in advancing your career to the next level. Being "exploited" is the smartest career move one can make!

When the government regulates a minimum wage, it creates unemployment and hurt those it supposedly helps. Here (http://papers.nber.org/papers/W5224.pdf) [PDF file] is a study from David Neumark and William Wascher of actual payroll records before and after a minimum wage hike in New Jersey. They found that "the New Jersey minimum wage increase led to a 4.6 percent decrease in employment in New Jersey relative to the Pennsylvania control group." Prof. Kevin Lang of Boston University did a study (http://www.epionline.org/lang.pdf) [PDF file] of the effect of minimum wage laws and found, "When the minimum wage is set above the level that would be offered by low-wage firms in the absence of legislation, low-wage jobs become attractive to some high-quality workers... The employment rate for low-quality workers will generally fall as may their expected wage."

This makes perfect sense if you study basic economics. Look at the supply/demand model for the job market. When the minimum wage is greater than the equilibrium wage (which is the only time it has any effect at all), you end up with the supply (the number of potential employees) being greater than the demand (the number of jobs available). Hence, unemployment. Also notice that the supply is greater than it was at the equilibrium. Who do you think those extra potential employees are? They're the ones who can demand the higher wage! And when you're an employer, of course you're going to hire the most qualified of all the applicants. So those who can only demand a lower wage, instead of being helped, are being put out of jobs!

It snowballs from there. Let's say your neighbor, Fred, wants his house painted. A local high school girl, Janie, offers to paint his house for $4/hr. Fred agrees. That summer, she turns 16 and goes for her first summer job. She has an advantage of her peers—she has work experience! She can have Fred give her a recommendation and have a greater chance of getting the job. And so on. Once she graduates, all of this work experience might let her easily start a career, say, as a bank teller. The glowing recommendations from Fred and all of the employers she worked for as a result of Fred's recommendation give her an advantage over other applicants and she has a much better chance of being hired.

But if the government steps in and says, "No, you have to pay her $6/hr," Fred might decide that it's not worth it; the paint job can last another two years or so. So Janie doesn't get that first job with Fred, doesn't have a recommendation going into that summer job, and her entire career is hurt as a result! All to keep mean, evil, nasty Fred from "exploiting" her.

Fred himself might also be harmed. Let's say that he's an unskilled worker working in a factory for $5/hr. The factory has two pay schedules: $5/hr for unskilled workers, and $6/hr for skilled. With the new $6 minimum wage, Fred gets a pay raise. Good for him, right?

But the skilled workers are having problems making the same amount of money as the unskilled, and rightly so. So, the factory raises their pay to $7 to avoid losing them to other factories. Wow! Everybody's benefitting from this minimum wage, right?

Not so fast. With the increased costs of employee wages, profits are down. Maybe they're even in the negative. So the company has no choice but to raise prices, meaning we all pay more. The minimum wage leads to inflation. But it's worse than that; the higher price of the goods reduces demand for the product. Now, the company isn't producing as much and is forced to cut back. They have to let workers go. Who do you think they're going to lay off, the skilled or the unskilled? And even if they decide to lay off a bit of both, the skilled workers are in a much better position to get new jobs than the unskilled. So Fred might find himself out of a job, all to stop him from being "exploited" by the factory owners.

Also, according to Masanori; Hashimoto, MINIMUM WAGES ON-THE-JOB TRAINING, (Washington: American Enterprise Institute for Public Policy Research, 1981) p. 2, and Walter Williams, STATE AGAINST THE BLACKS, (New York:New Press, NcGraw Hill, 1982) p. 37, blacks and other minorities are harmed the most by minimum wage laws.

The layoff effect also takes place because of the cost of regulatory compliance. As I have shown in other threads, even the smallest regulation can have enormous costs to businesses. More costs mean less (or no) profits, the raising of prices, and the laying off of workers. W.G. Laffer III, in How Regulation Is Destroying American Jobs, using statistics from the US Dept. of Labor's Bureau of Labor Statistics, concluded that for every Federal regulator that is hired, more than 150 private sector jobs are destroyed!

If you really want to solve the problem of unemployment, and reduce the risks of job loss, then get the government out of the economy!

[Tmy]

There is never a lack of minimum wage jobs. If you lose your job because minimum wage went up another 15 cents, you can just go down the street and get another minimum wage job.

Whats teh fed minimum at nowadays??

[Victor Danilchenko]

Shane,

Would you please consider staying on topic? Government's contribution to unemployment is not the issue here; with or without government intervention, unemployment would happen at non-trivial level, and would still have to be addressed. Would you please not change the subject, and address my economic arguments for unviability of private unemployment insurance?

Don't use this topic as the soap-box to rant abut evils of government -- just address the topic itself, if you would, please. I made a specific point, and I would like that point answered.

[shanek]

Originally posted by Argo Nimbus
Actually, the State of Nebraska (and I would assume every other State in the US) has what it calls "unemployment insurance". In Nebraska this is administered by an Office of Unemployment Insurance Services. The insurance is compulsory and paid for by employers through a tax on payroll.

It's "unemployment insurance" in NC, too. And if NC is anything to go by, state governments have given themselves a monopoly on this market. No one else could sell unemployment insurance if they wanted to!

[shanek]

Originally posted by Victor Danilchenko
Would you please consider staying on topic?

The topic, as YOU titled it, is "A case for government intervention: unemployment." I am taking the contrary viewpoint.

But I'm glad you gave my extensively argued and sourced arguments, which took me over an hour to compile and type, a full nine minutes of thought and consideration. :rolleyes: Your bias is plain for all to see.

Government's contribution to unemployment is not the issue here; with or without government intervention, unemployment would happen at non-trivial level, and would still have to be addressed.

As I showed in my post, without government intervention the only unemployment is the small amount necessary for total economic growth and cannot be avoided no matter how much one tries.

But, as usual, you're being a complete weasel on the topic...

[Victor Danilchenko]

shanek

It's "unemployment insurance" in NC, too. And if NC is anything to go by, state governments have given themselves a monopoly on this market. No one else could sell unemployment insurance if they wanted to!is it your contention then that private unemployment insurance could have existed if not for the state's legal monopoly on unemployment insurance? Can you reference specific laws mandating such a monopoly -- and can you address my economic arguments for unviability of private unemployment insurance?

The topic, as YOU titled it, is "A case for government intervention: unemployment." I am taking the contrary viewpoint.Then support it by demonstrating how my argument is unsound. As it is, you instead make a point that is, once again, completely irrelevant to what I said.

Your bias is plain for all to see.I made a specific argument; your repeated refusal to address it is telling, IMO.

As I showed in my post, without government intervention the only unemployment is the small amount necessary for total economic growth and cannot be avoided no matter how much one tries.But I never made any claims about avoiding unemployment; my point was that only the government is capable of mitigating its deleterious effects. Since by your own admission a measure of unemployment would have existed regardless of government policy, the question is what to do about it; I gave an answer. If you want to dispute my answer, please do so, instead of evading and changing the subject.

But, as usual, you're being a complete weasel on the topic.Why am I not surprised by the fact that you have once again manifested the amazing combination of prodigious lack of comprehension, and bulletproof self-righteousness? You didn't even understand what i wrote... :rolleyes:

[Michael Redman]

Unemployment insurance is a Federal Government program (remember when in January, folks around the country stopped getting benefits because Congress "forgot" to authorize them?) The program is administered by the states within guidelines set by the Feds, and (I think) completely funded by the Feds, but actually workings of the program vary from state to state. You'll notice that states are not talking about cutting unemployment benefits due to their present economic difficulties.

It seems to me that strong economic expansion requires a pool of unemployed, but qualified workers. The market, on it's own, will allow those without jobs to starve to death (or force them to commit crime to feed themselves), rather than provide support to keep them alive until they are needed. A free market required unemployment, and yet does not provide for the need of the unemployed. The market needs government to keep these people alive and law-abiding until industry needs them.

At least, until we remove all government regulation of business, and allow them to practice the most profitable method of labor: slavery. Then, it will be in the interest of the business to feed the worker, even in periods of economic downturn. Until then, however, I'll stick with government sponsored unemployment insurance.

[shanek]

Originally posted by Victor Danilchenko
is it your contention then that private unemployment insurance could have existed if not for the state's legal monopoly on unemployment insurance?

It could have, yes. People are worried about unemployment, just as they are worried about fires etc.

Can you reference specific laws mandating such a monopoly -- and can you address my economic arguments for unviability of private unemployment insurance?

If I do, will you take more than nine minutes to consider it? Or will I be wasting my time with you, as always?

Then support it by demonstrating how my argument is unsound.

I did. I also showed how the government is responsible for most of the unemployment we're currently experiencing. Fixing the problem would be a lot better than throwing money at it, wouldn't you agree?

As it is, you instead make a point that is, once again, completely irrelevant to what I said.

It's not at all irrelevant! The idea is to help as many unemployed people as possible, isn't it?

I made a specific argument; your repeated refusal to address it is telling, IMO.

I did address it. Your refusal to acknowledge my addressing of your argument is, as usual, quite telling.

But I never made any claims about avoiding unemployment;

Weasel, weasel, weasel...giving jobs to the unemployed is better than just giving them money, is it not?

my point was that only the government is capable of mitigating its deleterious effects.

And my point is that it should not do the things that cause the deleterious effects in the first place!

Since by your own admission a measure of unemployment would have existed regardless of government policy, the question is what to do about it; I gave an answer. If you want to dispute my answer, please do so, instead of evading and changing the subject.

Your quesiton was not, what to do about the small amount of unemployment that maturally exists in an economy. Your question was, what to do about unemployment, period. You're the one who's being evasive, and ignoring every single point I've made.

[shanek]

Originally posted by Michael Redman
It seems to me that strong economic expansion requires a pool of unemployed, but qualified workers. The market, on it's own, will allow those without jobs to starve to death (or force them to commit crime to feed themselves), rather than provide support to keep them alive until they are needed. A free market required unemployment, and yet does not provide for the need of the unemployed. The market needs government to keep these people alive and law-abiding until industry needs them.

Once again, you're ignoring the fabulous work of charities, who as I have repeatedly shown would have more than enough resources to help those in need were the government not taking 48% of the National Income in taxes. Why do you people keep ignoring the free market creation of charities?

At least, until we remove all government regulation of business, and allow them to practice the most profitable method of labor: slavery.

How do you get the insane idea that slavery is the most profitable method of labor?

[Thanz]

Originally posted by shanek


Once again, you're ignoring the fabulous work of charities, who as I have repeatedly shown would have more than enough resources to help those in need were the government not taking 48% of the National Income in taxes. Why do you people keep ignoring the free market creation of charities? \

Do you have a link to where you have explained this in greater detail? Or, if you have it handy, can you just post it again?

Thanks.

[Victor Danilchenko]

shanek

It could have, yes. People are worried about unemployment, just as they are worried about fires etc.So address my economic argument for why private unemployment insurance is not viable!!!

If I do, will you take more than nine minutes to consider it?Sure, provide evidence that private unemployment insurance doesn't exist primarily due to government forbidding its existence, and i will consider it. I doubt you will find any such evidence.

I did. I also showed how the government is responsible for most of the unemployment we're currently experiencing. Fixing the problem would be a lot better than throwing money at it, wouldn't you agree?but you can't fix the problem; some rate of unemployment is unavoidable. the question is, what do we do about those unemployed?

It's not at all irrelevant! The idea is to help as many unemployed people as possible, isn't it?And market cannot help them all, or even enough of them.

Dude, you are totally missing the point.

Suppose we have a libertarian government; no regulations creating unemployment, and the unemployment rate is, say, 2% (ridiculously low BTW). And so we all libertarians get together and ask ourselves: gee, these poor 2% of unemployed suffer some pretty hefty hardships, and the negative externalities thereof create a drag on the economy. What can we do to improve things? Then i get up and give my schpiel about how only government unemploymenr protection scheme can help. Mind you, this is in an environment where you cannot blame government regulations for creating extra unemployment (a most debatable point, but not one I want to discuss in this thread).

As you can see, my argument doesn't depend on current extant welfare state; it's a theoretical argument that applieds to any possible state with non-zero unemployment rate, even a libertarian one. You blaming government regulations and minimum wage completely misses the point!

You are like the campaigning politicians in a televized debate:

"Mr. Candidate, what is your position on universal healthcare?"
"My history as a successful administrator of the 2000 olympiad in Salt Lake City speaks for itself!"
"Mrs. Candidate, what is your position on universal healthcare?"
"I was extremely successful in running the state finance office, and uncovered major fraud at the Big Dig!"

That was a paraphrase of our local MA governor's debates. You sound almost as bad: "My argument is that government intervention is required to alleviate unemployment hardships for those unemployed, as private unemployment insurance is impossible. What do you say to that?" "Government is bad, it creates unemployment!"

I did address it.No, you didn't. You addressed some other argument that i am completely unaware of. I didn't argue about who or what created unemployment; I argued about how this exdtant and unavoidable problem is to be made less damaging to individuals and society. Since my argument is not conditional on USA-style regulatory state, you answering my argument by blkaming state regulation is completely, totally irrelevant.

Weasel, weasel, weasel...You know, you really sicken me. I thought you had a modicum of integrity and intelligence left.

giving jobs to the unemployed is better than just giving them money, is it not?You can't give jobs to all of them; and the rest will still suffer, and create negative externalities for the economy. The fact that market economy and scientific progress greatly improved healthcare, does not alleviate the need for health insurance, does it?!.

And my point is that it should not do the things that cause the deleterious effects in the first place!And if it doesan't, if we lived in your libertopia, unemployment would still exist; and what would you want to do about it?

Your quesiton was not, what to do about the small amount of unemployment that maturally exists in an economy. Your question was, what to do about unemployment, period.yes -- and cutting unemployment rate does not address "unemployment problem, period" -- it merely reduces its scope; just as having good hygiene does not address the problem of what to do when you do get sick.

[Michael Redman]

Originally posted by shanek


Once again, you're ignoring the fabulous work of charities, who as I have repeatedly shown would have more than enough resources to help those in need were the government not taking 48% of the National Income in taxes. Why do you people keep ignoring the free market creation of charities?Charities are great. If they took care of all the folks that needed help, I would agree that government should not get involved.

But they don't.How do you get the insane idea that slavery is the most profitable method of labor? Were all slaveholders of the past insane? No. Being free market actors, they did what was in their best interest, right? Did slavery die out because it became unprofitable? No.

[Thanz]

Originally posted by Victor Danilchenko

Suppose we have a libertarian government; no regulations creating unemployment, and the unemployment rate is, say, 2% (ridiculously low BTW). And so we all libertarians get together and ask ourselves: gee, these poor 2% of unemployed suffer some pretty hefty hardships, and the negative externalities thereof create a drag on the economy. What can we do to improve things? Then i get up and give my schpiel about how only government unemploymenr protection scheme can help. Mind you, this is in an environment where you cannot blame government regulations for creating extra unemployment (a most debatable point, but not one I want to discuss in this thread).


First, I don't think that government policies are the sole cause of unemployment, as shanek does, but I think that in the libertarian utopia that shanek dreams about the 2% unemployment rate can be effectively ignored. The idea being that while 2% of the population is always unemployed, it is not the same 2% all the time. It is just frictional unemployment - the time between jobs. And I think that shanek would say that time is limited - say, 2 weeks or one month - so the deleterious effects don't really emerge.

In such a world (where anyone who wants a job can find one rather quickly) I don't think that there would be much demand for unemployment insurance.

However, while I don't profess to know the history, wouldn't you expect there to be private unemployment insurance before the governement stepped in to do it if it were economically feasible? Or, wouldn't insurance companies be lobbying to get the business if it could be a moneymaker? I certainly haven't heard of any insurance industry lobbying for unemployment insurance. If there was money to be made there, I'm sure they would lobby hard to get it.

[shanek]

Originally posted by Thanz
\

Do you have a link to where you have explained this in greater detail? Or, if you have it handy, can you just post it again?

I found one after running a search. There's one I posted with more detailed figures, but I can't find that one right now but this one will do:

http://www.randi.org/vbulletin/showthread.php?s=&postid=326608#post326608

Notice that a_unique_person had nothing to say after that. In fact, that post pretty much killed the thread. :D

[reprise]

In the US, is the minimum wage tied in any way to age?

[shanek]

Originally posted by reprise
In the US, is the minimum wage tied in any way to age?

No.

[shanek]

Originally posted by Victor Danilchenko
So address my economic argument for why private unemployment insurance is not viable!!!

I DID!!!!! :mad:

but you can't fix the problem; some rate of unemployment is unavoidable.

And even desirable. Remember that this natural unemployment doesn't harm the unemployed—they're changing jobs! Presumably to a better job! Why do you refust to get this through your head???

Suppose we have a libertarian government; no regulations creating unemployment, and the unemployment rate is, say, 2% (ridiculously low BTW). And so we all libertarians get together and ask ourselves: gee, these poor 2% of unemployed suffer some pretty hefty hardships,

No, they don't, because it's a different 2% every few weeks! But you apparently don't want to know, as you only spent at the most nine minutes glossing over the post where I explained all of this!

and the negative externalities thereof create a drag on the economy.

No, they don't. Natural unemployment improves the economy by providing competition in the workforce. Unemployment is only bad when it goes above this amount, and that is where all of the other factors I mentioned come in.

[Victor's typical irrelevant blather deleted]

No, you didn't. You addressed some other argument that i am completely unaware of.

I pointed out how the economy naturally uses unemployment as a growth and balancing factor, thus rebutting your main point. I then went on to explain the reason why unemployment is such a problem! If it weren't for these government regulations and programs, the only unemployment in the economy would be the levels that are there naturally—AND THEY AREN'T A PROBLEM!!!!

I didn't argue about who or what created unemployment; I argued about how this exdtant and unavoidable problem

BUT IT'S NOT EXTANT AND UNAVOIDABLE!!!! If we get rid of these government programs, we get rid of the problematic aspects of unemployment!

READ MY FSCKING POST!!!!!

I'm really getting sick and tired of you...

You can't give jobs to all of them;

The free market can!

and the rest will still suffer, and create negative externalities for the economy.

See, there you go continuing to spew the same thing over and over again with no regard for anything I've said!

The fact that market economy and scientific progress greatly improved healthcare, does not alleviate the need for health insurance, does it?!.

The need for health insurance is because government programs drive the price skyward. We've been over that one, too. But you don't want to know; you don't even want to consider anything that might interfere with your pathetic little delusions.

And if it doesan't, if we lived in your libertopia, unemployment would still exist; and what would you want to do about it?

Nothing, because the natural amount of unemployment that exists in the economy is A GOOD THING!!! It means people are switching jobs!!!!

Sheesh.... :mad:

[shanek]

Originally posted by Michael Redman
Charities are great. If they took care of all the folks that needed help, I would agree that government should not get involved.

But they don't.

Because government takes almost half the national income in taxes. Do I really need to post the Giving USA figures yet again? Why do people keep ignoring that?

Were all slaveholders of the past insane? No. Being free market actors, they did what was in their best interest, right? Did slavery die out because it became unprofitable? No. [/QUOTE]

The free market was causing slavery to die out at the time the Civil War began. And the free market did end slavery in many countries; in fact, only two countries, the US and Haiti, used violence to end slavery. Industrialization was making slavery obsolete and unnecessary. It really only hung around as long as it did because it was a status symbol.

[shanek]

Originally posted by Thanz
First, I don't think that government policies are the sole cause of unemployment, as shanek does,

I never said that. I said in my very first post here that there's a natural amount of unemployment in the economy due to people changing jobs and the adjustments in the downswing of the business cycle as it drops below the lefel of full production.

However, while I don't profess to know the history, wouldn't you expect there to be private unemployment insurance before the governement stepped in to do it if it were economically feasible?

That's assuming that the government actually waits until there is an actual problem before stepping in, a fact very much not in evidence.

I certainly haven't heard of any insurance industry lobbying for unemployment insurance. If there was money to be made there, I'm sure they would lobby hard to get it.

Who's going to pay extra for private unemployment insurance when they're already being forced to pay for government unemployment insurance?

[BillyTK]

Originally posted by shanek
The free market was causing slavery to die out at the time the Civil War began. And the free market did end slavery in many countries; in fact, only two countries, the US and Haiti, used violence to end slavery. Industrialization was making slavery obsolete and unnecessary. It really only hung around as long as it did because it was a status symbol.

This was true to some extent in the UK; owning slaves was made illegal pdq in response to lobbying, but this was an expedient decision because few people in the UK owned slaves anyway. Criminalisation of the slave trade came later (not too sure on the dates), when human rights and slavery economics finally intersected.

[BillyTK]

Originally posted by shanek
Nothing, because the natural amount of unemployment that exists in the economy is A GOOD THING!!! It means people are switching jobs!!!!

Sheesh.... :mad:

Unemployment rates in the UK are often a product of the global economy, with multinational corporations consolidating their positions by withdrawing investment. There's other factors as well--such as the running down of existing industries in the face of global competition, and this has resulted in entrenched unemployment, in which people can expect to be unemployed for months or even years.
Whilst we have a minimum wage, but it has only been in existence for approx. 5 years here, and the factors I just outlined have been happening for the past two decades. Also, research so far (http://society.guardian.co.uk/socialexclusion/story/0,11499,901821,00.html) indicates that the minimum wage has not had the negative impact that was expected.

So in this case, would you agree or disagree that it's better to allow the government to manage unemployment benefit? If you don't want to commit because it's a different scenario to the US situation you've been discussing, that's fine! :)

[Victor Danilchenko]

shanek

I DID!!!!! :mad:No, you didn't. My argument is that private unemployment insurance is not viable for purely technical economic reasons. You have so far said nothing about the reasons I listed thast make private unemployment insurance impossible. the closest you came to doing so, was claiming that private unemployment insurance is illegal in NC; but you neither proved that, nor proved that the same is the case in other states, nor explained why there was no private unemployment insurance before such laws came info effect.

What you have been concentrating on, so far, is blaming the government for the current unemployment rates, and sayin gthat without government's intervention, unemployment wouldn't be a problem; but that has nothing to do with my argument, as the same economic problems that would render private unemployment insurance impossible in our economy, would also render it impossible in a libertopia -- and you are deluded if you think that the only unemployed in libertopia are the ones who are voluntarily switching jobs.

And even desirable. Remember that this natural unemployment doesn't harm the unemployed—they're changing jobs! Presumably to a better job! Why do you refust to get this through your head???First of all, this addresses only those unemployed who left voluntarily; those don't get unemployment support anyway. Unemployment support is for those who had been laid off or fired -- and they would still exist under libertopia.

Secondly, the fact that some rate of unemployment is desirable for economy, doesn't mean that it's desirable for economy to have the unemployed individuals undergo severe hardship due to unemployment. The two are distinct points -- how to lower unemployment rate to a value that's a good compromise between benefitting the economy and benefitting individuals, is a distinct question from what to do to help those who are unemployed.

No, they don't, because it's a different 2% every few weeks!Well, that depends on the real situation, doesn't it? People who leave jobs voluntarily, would presumably get re-hired soon. Those who get laid off, might -- but then it's not that simple. Some may be laid off for purely local economic reasons, and would find a job as easily as those who leave voluntarily. Others may get laid off due to a recession or depression -- and guess what? it's a lot harder to find a job then. So now we are talking a possible loss of mortgage, privation, and possible a vicious downwards financial cycle.

No, they don't. Natural unemployment improves the economy by providing competition in the workforce.Did you notice the word "externalities' there? shane? I didn't say that unemployment itself is bad for the economy -- I said that externalities of indivduals' unemployment are bad, such as increased crime rate or defaults on financial commitments. My argument is not about lowering unemployment rate, but about alleviating the hardships suffered by unemployed individuals!

Are we going to go through this BS again? In the last couple of threads, you started off by refusing to understand what the fsck i was saying, it took me, like, a dozen posts to merely explain it to you, and then you accused me of moving the goalposts. Are we going to go through the same farce again here?!.

I pointed out how the economy naturally uses unemployment as a growth and balancing factor, thus rebutting your main point.What the fsck are you talking about? Dude, you really have no clue what it is you are answering to! I never even touched the question of changing the unemployment rate. For pete's sake, let unemployment rate stay at natural level -- my point is about alleviating the hardships of unemployment, not about reducing the chance of unemployment occurring.

I then went on to explain the reason why unemployment is such a problem! If it weren't for these government regulations and programs, the only unemployment in the economy would be the levels that are there naturally—AND THEY AREN'T A PROBLEM!!!!They are not a problem for economy because the government already takes care of the negative externalities -- you don't necessarily see the temporarily unemployed foreclose on their mortgages or resort to crime or begging. had the government unempoloyment program not been in place, your natural unemployment rate would have incurred such effects -- as it had during the industrial revolution, before the emergence of the modern welfare states.

I say that unemployment incurs hardships, and that we should attempt to alleviate those (not by fiddling with unemployment rate, though); you respond that unemployment is good for the economy. Your answer has nothing to do with my argument!

BUT IT'S NOT EXTANT AND UNAVOIDABLE!!!! If we get rid of these government programs, we get rid of the problematic aspects of unemployment!No, we won't. There will still be people who get fired in depression and can't find a job fast enough, or people who get fired from a well-paying job and can't find anything but a minimum-wage job fast enough. If you think in your libertopia nobody would suffer from unemployment, you are deluding yourself.

The free market can!No, it can't. the free market needs a pool of unemployed individuals to exert downwards pressure on wage rates; otherwise wage rates get inflated, profits decrease, and economic growth slows down, resulting in an increas eof the unemployed pool anyway.

Free market won't function by having only those be unemployed who are so during a week or two of transitions between jobs. if a job is that easy to get, then wage rates get inflated.

See, there you go continuing to spew the same thing over and over again with no regard for anything I've said!Do you understand the word "externalities"? A certain unemployment rate is good for economy; the unemployed individuals' foreclosing on their mortgages and/or turning to crime is not good for economy.

You are the king of not addressing the argument. Since you seem to have realized that you can't argue for viability of private unemployment insurance, your strategy now is to argue, against all reason, that unemployment insurance is not actually needed anyway, except due to government meddling. Talk about weaseling...

The need for health insurance is because government programs drive the price skyward.the need for health insurance is because your average individual doesn't want to face the risk of having to pony up $30K for a necessary operation out of the blue, as my wife did when she was for one year (talk about bad luck!) without the insurance. Even if the price of the same operation would have been $10K in a libertopia, that would still be too much.

Insurance is needed because humans are risk-averse. Period. Whether it's insurance against health costs, natural disasters, or robbery, insurance companies exist because people want the protection from risk, because such protection from risk increases their utility, even as it costs them a small extra $$. People similarly want financial protection from the risk of hardship due to unemployment -- but guess what? this is something the market cannot provide, for reasons I explicated (and which reasons you enver even tried to address).

There is demand for insurance. Market supplies it -- but not in certain dopmains, where private insurance is impossible for purely technical reasons having nothing to do with government intervention. Unemployment is one of such un-insurable risks. End of story.

We've been over that one, too. But you don't want to know; you don't even want to consider anything that might interfere with your pathetic little delusions.Funny, I was going to say the same thing about you...

Nothing, because the natural amount of unemployment that exists in the economy is A GOOD THING!!!I never disputed that it's good for economy; doesn't mean that it's good for individuals who are unemployed, though.

It means people are switching jobs!!!!No, it means that some are switching jobs voluntarily, and some are fired or laid off, and some are in the dump due to depression. The latter two kinds are the ones who need some measure of protection during unemployment -- but recognizing that would force you to admit that the market cannot address their need, that only the government can do so.

So why don't you just skip the BS, and tell me why you think private insurance is possible -- or concede that yes, indeed, government is the only entity that can handle the problem of hardship due to unemployment? Your evasiveness and intellectual dishonesty are really annoying. Act honorable just for once, and either offer a relevant counter-argument, or concede that I was right!

[Victor Danilchenko]

shanek

That's assuming that the government actually waits until there is an actual problem before stepping in, a fact very much not in evidence.the government did wait -- until 1930's; we had industrial economy, with its resulting unemployment rates and problems, long before that -- but we never had unemployment uinsurance. We had all other kinds of insurance, and people wanted them, but not unemployment -- don't you wonder if this could be because unemployment is an un-insurable risk, for technical reasons I listed?

Who's going to pay extra for private unemployment insurance when they're already being forced to pay for government unemployment insurance?People buy private health insurance even though employed provide health insurance already. There is demand -- but there is no supply, and can be no supply, because unemployment is not an insurable risk. Similarly, people buy private retirement plans, even though there is SS, and SS contributions are mandatory.

You always argue that governmenbt intervention is inefficient -- well then, wouldn't that lead to emergence of more efficient market alternatives, had such alternatives been viable? This is what happened in many other domains where government providesd services -- we have private retirement, private schools, private universities, despite all of those things also being provided by the government; but not private unemployment insurance!

You really have to face reality and admit that certain industries may fail to exist because the market simply cannot address certain market demands, such as the demand for unemployment insurance. You cannot start by assuming that market is omnipotent, and conclude that non-existence of private unemployment insurance implies that there is no demand for it, for whatever reason.

[shanek]

Originally posted by BillyTK
Unemployment rates in the UK are often a product of the global economy, with multinational corporations consolidating their positions by withdrawing investment.

Consolidation shouldn't cause unemployment, especially in the case of foreign investment. Foreign investment is always balanced out by trade.

Understand that the free market DOES NOT like unemployment. It means you're producing at less than total production, and the market will always try to balance out at that. If anyone gives you a reason why the free market is responsible for anything other than the natural rate of unemployment in the business cycle, you should be very, very skeptical of that claim as it defies all economic theory.

I'm unfamiliar with the UK situation, so I can't really examine these claims properly, but the same economic principles should apply there as well as anywhere.

[shanek]

Originally posted by Victor Danilchenko
No, you didn't.

Yes, I did! I explained how government monopolizing the industry is the reason why it's not viable! But as usual, you stick your head in the sand because you don't want to hear.

but that has nothing to do with my argument, as the same economic problems that would render private unemployment insurance impossible in our economy, would also render it impossible in a libertopia

Ignoring your continued (and pathetic) use of the term "libertopia" I will reiterate that unemployment insurance will be unnecessary in a libertarian society because unemployment wouldn't be a problem! And again, if you had actually taken more than NINE MINUTES to gloss over my post, you would have read that!

First of all, this addresses only those unemployed who left voluntarily; those don't get unemployment support anyway. Unemployment support is for those who had been laid off or fired -- and they would still exist under libertopia.

Only as a result of the downswing of the business model, as I mentioned before. I also elucidated how government regulations and the minimum wage spark much of the layoffs that happen now.

Secondly, the fact that some rate of unemployment is desirable for economy, doesn't mean that it's desirable for economy to have the unemployed individuals undergo severe hardship due to unemployment.

:rolleyes: What's the fscking poingt? YOU HAVEN'T LISTENED TO A WORD I'VE SAID!!!

I'm sick and tired of taking all of this personal time to do research and post extensive explanations only to have pigheaded weasels like you ignore me!

The two are distinct points -- how to lower unemployment rate to a value that's a good compromise between benefitting the economy and benefitting individuals,

The economy will do that naturally, if only it's left alone, as I described in great detail above.

Others may get laid off due to a recession or depression

Which, again, would be in the downswing of the business model and qould quickly get rehired as things ramp back up!

I said that externalities of indivduals' unemployment are bad, such as increased crime rate or defaults on financial commitments.

Those only come with being unemployed for extended periods of time.

My argument is not about lowering unemployment rate, but about alleviating the hardships suffered by unemployed individuals!

And my argument is that the type of natural unemployment that exists in the economy DOES NOT RESULT IN THOSE HARDSHIPS!!!

I hate repeating what I've said in the earlier post. Will you please just fscking READ IT????

No, we won't. There will still be people who get fired in depression and can't find a job fast enough, or people who get fired from a well-paying job and can't find anything but a minimum-wage job fast enough. If you think in your libertopia nobody would suffer from unemployment, you are deluding yourself.

And if you think that government can affect that in any way without making it worse, you're deluding yourself.

No, it can't. the free market needs a pool of unemployed individuals to exert downwards pressure on wage rates; otherwise wage rates get inflated, profits decrease, and economic growth slows down, resulting in an increas eof the unemployed pool anyway.

Why do you constantly make such completely erroneous claims about the economy? You're only showing people how little you know.

I've explained this to you many times before: Unemployment happens in the downswing of the business cycle because the economy has dropped below the rate of total production, the level it's constantly aiming for. It is the UNDERPRODUCTION which causes the problem, and this leads to the creation of more jobs and the raising of wages to balance it out!

Why, after having it explained to you so many times, and being given so many references, are you still making these completely false statements about economics?

The free market WANTS EVERYONE TO HAVE JOBS. You can't have total production if you have unemployed!

You are the king of not addressing the argument. Since you seem to have realized that you can't argue for viability of private unemployment insurance, your strategy now is to argue, against all reason, that unemployment insurance is not actually needed anyway, except due to government meddling. Talk about weaseling...

That has been my argument all along, and if you'd actually taken more than nine minutes to consider my post you would have realized that!

the need for health insurance is because your average individual doesn't want to face the risk of having to pony up $30K for a necessary operation out of the blue, as my wife did when she was for one year (talk about bad luck!) without the insurance. Even if the price of the same operation would have been $10K in a libertopia, that would still be too much.

BUT the lower price of health care means that medical insurance would be cheaper and have better coverage! We've been over that before, too!

But with the small amount of natural unemployment in a free market economy, it's usually much more efficient to save yourself for a rainy day than to purchase insurance. That's called "self-insuring." And yes, people even today self-insure against the risk of unemployment!

I never disputed that it's good for economy; doesn't mean that it's good for individuals who are unemployed, though.

It's good for them, too, for reasons I gave above.

So why don't you just skip the BS, and tell me why you think private insurance is possible -- or concede that yes, indeed, government is the only entity that can handle the problem of hardship due to unemployment? Your evasiveness and intellectual dishonesty are really annoying. Act honorable just for once, and either offer a relevant counter-argument, or concede that I was right!

:rolleyes: You refuse to consider even one single post, asking me again and again what I described in there, and you tell me to act honorably?

[shanek]

Originally posted by Victor Danilchenko
the government did wait -- until 1930's;

Oh, you mean when GOVERNMENT caused the biggest span of unemployment the country has ever seen? :rolleyes:

we had industrial economy, with its resulting unemployment rates and problems, long before that -- but we never had unemployment uinsurance.

Not even of the government kind. What does that tell you? Well, if you're as closed-minded and pig-headed as Victor, you assume that there are all these miserable people the evil market is meanly stepping all over. But if you're someone who actually understands how the market works, you'll know that it didn'ty exist in any form because people didn't want or need it!

We had all other kinds of insurance, and people wanted them, but not unemployment -- don't you wonder if this could be because unemployment is an un-insurable risk, for technical reasons I listed?

Or because people didn't need it, for reasons I listed?

You always argue that governmenbt intervention is inefficient -- well then, wouldn't that lead to emergence of more efficient market alternatives, had such alternatives been viable?

No, because as I have explained the government makes such alternatives inviable! Either they directly give themselves a monopoly, or by taking the money out of the economy for it make it difficult for there to be a market for it.

we have private retirement,

Because people realize that SS is a fraud that isn't going to give them a return on their "investment."

private schools,

Because of the lack of quality in government schools.

Really, Victor, do you even THINK about what you say? Ever?

[BillyTK]

Originally posted by shanek


Consolidation shouldn't cause unemployment, especially in the case of foreign investment. Foreign investment is always balanced out by trade.
On a macro-social level, maybe. But on a micro level, I don't think so.
Understand that the free market DOES NOT like unemployment. It means you're producing at less than total production, and the market will always try to balance out at that. If anyone gives you a reason why the free market is responsible for anything other than the natural rate of unemployment in the business cycle, you should be very, very skeptical of that claim as it defies all economic theory.
I'd be more suspicious of people who anthropomorphise the free market ;) :D
I'm unfamiliar with the UK situation, so I can't really examine these claims properly, but the same economic principles should apply there as well as anywhere.
No problem. Thanks for your comments and your honesty! :)

[shanek]

Originally posted by BillyTK
I'd be more suspicious of people who anthropomorphise the free market ;) :D

Yeah, obviously it's a literary license. It just makes it easier to talk about. Obviously, the free market doesn't "want" or "like" anything; it just is.

[Victor Danilchenko]

shanek

Yes, I did! I explained how government monopolizing the industry is the reason why it's not viable!No, you didn't; you merely asserted it, but you offered no proof that the unemployment insurance industry is monopolized by the government so as to exclude competition. You always argued that natural monopoly is no barrier to competition, how come you change your tune here?

I will reiterate that unemployment insurance will be unnecessary in a libertarian society because unemployment wouldn't be a problem! And again, if you had actually taken more than NINE MINUTES to gloss over my post, you would have read that!Dude, i did read your post, but it didn't take even 2 minutes to think about it. In your post, you spent one (1) paragraph mentioning in passing the natural rate of unemployment hypothesis, and 5then spent the rest of the post ranting about how current high rate of unemployment is government's fault.

First of all, you got basic facts wrong anfd skewed. Friedman's natural unemployment rate hypothesis is just a hypothesis, and a rather controversial one at that. Secondly, NRU hypothesis includes two types of unempoloyment under "natural rate" -- frictional unemployment (which is what you have been concentrating on, to the exclusion of everything else) and structural unemployment (caused by change in industrial landscape, rendering some jobs obsolete and necessitating workers' re-training).

So now, instead of your silly "all unemployment is people changing jobs" assertion, we have:
Frictional -- "good" -- unbemployment. Probably no more than a couple of weeks in most cases.
Structural -- "bad" -- unemployment; could be weeks, could be mnonths, depending on the re-training requirements.
Cyclical -- "very bad" -- unemployment, due to economic depression cycles; can last for months.I don't care about frictional unemployment. People who leave their jobs to look for better jobs, or people who are laid off for local reasons (e.g. one specific company failing), aren't the ones in real trouble. the real troubled unemployment is the one experienced by the latter two classes. You completely ignored the second class (structural unemployment) in your paragraph-long treatise, and you mentioned the third type in passing, but then went on to ignore its existence anyway.

Oh, and let me cite Milton Friedman at you:
"In the years since [1946], unemployment has averaged 5.7%. In the years from 1900 to 1929, when government made no pretense of being responsible for employment, unemployment averaged 4.6%. So, our unemployment problem is largely government created.".

Yes, 'largely' -- that would be the difference of 16%. 84% of unemployment is due to market, 16% due to government -- sounds plausible to me... and 4.6% nowhere near your figure of 1-2%... :)

I'm sick and tired of taking all of this personal time to do research and post extensive explanations only to have pigheaded weasels like you ignore me!What fscking research? Only the second paragraph of your entire post was anywhere near being relevant to my argument, the rest was simply standard libertarian anti-government ranting.

Which, again, would be in the downswing of the business model and qould quickly get rehired as things ramp back up!You call 3-6 months 'quickly'? Three to six months without a paycheck will send many families into mortgage foreclosure, or even the poor house! What world are you living in?

Those only come with being unemployed for extended periods of time.indeed. And three months without a job because your skills are obsolete, or six months without a job because economy is in the slump, is pretty "extended" a period.

And my argument is that the type of natural unemployment that exists in the economy DOES NOT RESULT IN THOSE HARDSHIPS!!!Only because your argument only considers frictional unemployment, and ignores existence of structural and cyclical unemployment.

I hate repeating what I've said in the earlier post. Will you please just fscking READ IT????I read your post, dude; you seem to have some bizarre ideas about what that posts says, though.

And if you think that government can affect that in any way without making it worse, you're deluding yourself.Ah, just as I thought. You assume, a-priori, that government interference can be only detrimental, all facts and reason notwithstanding. :rolleyes: news at 11.

Why do you constantly make such completely erroneous claims about the economy? You're only showing people how little you know.No, I am showing people that I am familiar with more than one specific economic hypothesis (which you yourself couldn't even get right, by 'forgetting" about the structural component of NRU).

I've explained this to you many times before: Unemployment happens in the downswing of the business cycle because the economy has dropped below the rate of total production, the level it's constantly aiming for. It is the UNDERPRODUCTION which causes the problem, and this leads to the creation of more jobs and the raising of wages to balance it out!yes -- months later. What happens to the unemployed during those months? What happens to their families, their loans, their houses, their living standard, their employability? Some will weather the storm; others won't. had private unemployment insurance been possible, it would be taken out -- but it cannot exist, as I had demonstrated in the very first post.

The free market WANTS EVERYONE TO HAVE JOBS. You can't have total production if you have unemployed!Underproduction is a form of inefficiency -- and so is over-consumption. Too low an unemployment rate leads to inefficiency due to underproduction, too high an unemployment rate leads to inefficiency due to underproduction. When unemployment rate is high, wages go down, profits go up, and production increases, taking up the labor pool slack; when employment is too low, wages go up, profits decrease, and economy slows down, loosening the demand on the labor pool and increasing unemployment.

The market does not "want" everyone to have jobs. it "wants" enough people to not have a job, so as to create the efficient equilibrium between inefficient underproduction and inefficient overconsumption.

That has been my argument all along, and if you'd actually taken more than nine minutes to consider my post you would have realized that!yes, i do realize it -- and I realize that you have, once again, failed to actually address my argument, instead going off on a tangential issue where you feel you have a stronger position. You seem to be afraid to tackle the issue of the economic viability of private unemployment insurance...

BUT the lower price of health care means that medical insurance would be cheaper and have better coverage!yes, but there still would be a demand for medical insurance, which is my fscking POINT! There is demand for insurance on any risky domain, because humans are risk-averse. Unemployment is a risk, but it happens to be one of the risks which are not insurable. had it been insurable, there would be insurance for it, just as there is insurance for healthcare, retirement, etc.

But with the small amount of natural unemployment in a free market economy, it's usually much more efficient to save yourself for a rainy day than to purchase insurance. That's called "self-insuring."Self-insurance is actually inefficient. What makes actuarial insurance efficient is that, because it averages risks out across the population, it's able to chanrge the actual expected risk cost plus administrative cost. Self-insuring, due to not averaging the risks out, is extremel inefficient. What if you start saving, and the deleterious event happens two months down the road? What if you start saving, and the event never happens, thus costing you a better use of your money? How much do you save -- how do you strike a balance between saving too much (costing you $$, but minimizing risk) and saving too little (costing you less, but increasing the chance of suffering the risk's impact fully)?

Yes, you can self-insure; but people generally don't do that, because actuarial insurance is far more efficient at ammortizing risks. Insurance industry exists for a very sound economic reason. it just so happens that unemployment is not an insurable risk.

Oh, you mean when GOVERNMENT caused the biggest span of unemployment the country has ever seen?Whatever caused it, the point is that no private insurance company successfully offered unemployment insurance.

Not even of the government kind. What does that tell you?It tells me that libertarian lunacy had to be overcome before the society would consider the economic benefits of the welfare state.

Yes, it took the government many decades to eventually provide unemployment protection; but the marklet, which is supposedly more nible than the government, failed to do so ever -- and not because there was no demand (there's always demand for risk aversion), but because actuarial unemployment insurance is technically impossible.

So why don't you instead cut the BS, and show how my argument for unviability of private unemployment insurance is unsound? Enough evasions.

But if you're someone who actually understands how the market works, you'll know that it didn'ty exist in any form because people didn't want or need it!:rolleyes: Just as I said -- you simply assume that market is perfect (your disingenuous protestations notwithstanding), and when market fails to provide a demanded service, you conclude that there must never have been demand for it in the first place. the possibility that the market cannot provide such a service, doesn't seem to enter your mind, even though I offered an argument for just such a conclusion.

How come this sounds so much like xian apologetics, arguing from pre-determined conclusion back to premises?

Or because people didn't need it, for reasons I listed?the reasons you listed are false -- because you considered only one of the three standard types of unemployment. One of the other two types (cyclical) you even mentioned yourself, but you immediately forgot about it when you went on to proclaim how being unemployed in laissez-fair economy doesn't hurt anyone. It's a magical world, where cyclical unemployment of months' duration is not a problem for anyone!

No, because as I have explained the government makes such alternatives inviable! Either they directly give themselves a monopoly, or by taking the money out of the economy for it make it difficult for there to be a market for it.And the excuses keep coming...

how come there was no private unemployment insurance before the governmemtn steppeed in? Oh, i forgot, there was 'no demand' for it... :rolleyes:

How come market creates alternatives in so many other domains, even though government stuck their hands into them very deeply -- such as education or retirement? Is market so weak that it cannot solve this problem sufficiently better than the government, in order to make a viable alternative even in the face of mandatory unemployment insurance participation? That sure worked with retirement benefits and with education, how come not with unemployment?

Really, Victor, do you even THINK about what you say? Ever?A better question would be, do I think about what I do? Like, for example, what was I thinkin when I thought I could possibly get a straight, honest answer out of you?

[Valmorian]

Originally posted by Victor Danilchenko

How come market creates alternatives in so many other domains, even though government stuck their hands into them very deeply -- such as education or retirement? Is market so weak that it cannot solve this problem sufficiently better than the government, in order to make a viable alternative even in the face of mandatory unemployment insurance participation? That sure worked with retirement benefits and with education, how come not with unemployment?



You know, the amusing thing is that this entire thread could be boiled down into this one paragraph. It's an excellent point, Victor. I'm very curious about why the private sector hasn't provided unemployment insurance options. I know that >I< would certainly be using them if they were available.

[Valmorian]

Originally posted by Victor Danilchenko

Oh, and let me cite Milton Friedman at you:
"In the years since [1946], unemployment has averaged 5.7%. In the years from 1900 to 1929, when government made no pretense of being responsible for employment, unemployment averaged 4.6%. So, our unemployment problem is largely government created.".




I'm curious. Is there some reason why 1900-1929 was picked?
What was the average unemployment between 1930-1945?
What about earlier than 1900?

Is there something about the economic environment that is significantly different after 1946 OTHER than Government involvement in employment?
Could it be that there is correlation here and not causation?

I really don't know, I'm just curious. :)

[shanek]

Originally posted by Victor Danilchenko
No, you didn't; you merely asserted it, but you offered no proof that the unemployment insurance industry is monopolized by the government so as to exclude competition. You always argued that natural monopoly is no barrier to competition, how come you change your tune here?

I'm not! We're not talking about a natural monopoly here! We're talking about a government monopoly!!!

Dude, i did read your post, but it didn't take even 2 minutes to think about it.

It's clear you didn't take any longer than that. But with all of the claims, all of the source material, that amount of time is clearly inadequate for anyone who calls himself a skeptic.

[snip lots of claims with nothing to back them up&mdash;he complains about me just asserting things (although I sourced mine), and then does the same thing.]

So now, instead of your silly "all unemployment is people changing jobs" assertion,

Never said that. Stop lying.

You call 3-6 months 'quickly'? Three to six months without a paycheck will send many families into mortgage foreclosure, or even the poor house! What world are you living in?

I've been out of work for longer than that. So have other people I know. None of us got put in the poor house.

Underproduction is a form of inefficiency

Right, and that's why the market quickly works to correct it. It only happens because it's impossible to know exactly where the level of total production is.

It's nowhere near the downward spiral you're trying to make it out to be.

There is demand for insurance on any risky domain, because humans are risk-averse. [/b]

Not when the prices are low enough to not make it worthwhile. Do you really think there'd be aby demand for medical insurance if every doctor or hospital visit cost 5&cent;? There's a point at which it just isn't worth getting insurance. Above that point, there's demand for insurance, and so the market would provide it. Below that point, and no one wants it anyway. People only want the insurance because otherwise the costs of dealing with it are so much. Any cheaper than that, and people will self-insure or just pay as they go.

Self-insurance is actually inefficient.

BS. Many people, many companies, including large corporations in many cases decide to self-insure. The money is set aside, it actually bears interest, and the interest goes back into the budget. If you can afford the initial outlay to put the money into the separate account to begin with, then this is a much more desirable option than paying an insurance company as you go.

Whatever caused it, the point is that no private insurance company successfully offered unemployment insurance.

And the cause is just irrelevant, huh? Stick your fingers back in your ears, Victor...

It tells me that libertarian lunacy had to be overcome before the society would consider the economic benefits of the welfare state.

It tells me you don't like answering direct questions.

Yes, it took the government many decades to eventually provide unemployment protection; but the marklet, which is supposedly more nible than the government, failed to do so ever -- and not because there was no demand (there's always demand for risk aversion), but because actuarial unemployment insurance is technically impossible.

Provide historical data from around the turn of the 20th century showing this demand. Or was there demand simply because you believe there should have been?

:rolleyes: Just as I said -- you simply assume that market is perfect

No, I don't; this is your BS you spew up every time you don't want to consider one of my points.

The bottom line is, YOU HAVE NOT SHOWN THAT THERE ACTUALLY WAS SUCH A DEMAND. And as YOU are the one making the claim, it is up to YOU to support it.

And the excuses keep coming...

That's an answer, not an excuse!

how come there was no private unemployment insurance before the governmemtn steppeed in? Oh, i forgot, there was 'no demand' for it... :rolleyes:

You haven't shown that there was!

How come market creates alternatives in so many other domains, even though government stuck their hands into them very deeply -- such as education or retirement?

Several reasons. Most importantly being the fact that government did not grant themselves a monopoly in education or retirement.

[shanek]

Originally posted by Valmorian
What was the average unemployment between 1930-1945?

Pretty bad, because of the Great Depression.

What about earlier than 1900?

I don't know if there are even statistics back that far.

[shanek]

Here's one more "irrelevant, off-topic" (doubtless according to Victor) point about unemployment insurance: it, in and of itself, may be detrimental to the economy as a whole and employers and workers in particular.

Dwight R. Lee and Richard B. McKenzie, in Failure and Progress: The Bright Side of the Dismal Science (Cato Institute, 1993), wrote: "Those who experience unemployment feel pain&mdash;but because of that pain they are likely to obtain new employment in which they provide more value to consumers... [Unemployment is] to the economy what physical pain is to the body,... letting people know when the resources they are using in one activity would be more productively used in another activity."

In other words, unemployment (and the fear of unemployment) serves as a driving force moving people into more productive jobs, creating economic growth. The problem with unemployment insurance, even privately run, is that it would take out the fear and reduce the drive to get a new and better job. My mother worked in the NC Employment Security Commission for decades, and she said it was amazing how many people found jobs within the last few weeks of their eligibility. Without the benefits, there isn't as much of a desire to go out and be productive.

[corplinx]

I was downsized at the end of march. Today I finally went to the unemployment office to start recieving unemployment. I found out that unemployment is some sort of scam. You pay all this money in and the limit of what you can get back is 275 dollars in my state. In other words, someone making half what I did gets their fair share but I don't. I guess people riding the line of the upper tax bracket don't have house notes.

sorry for being offtopic, but its sorta ontopic in that government unemployment _sucks_ because it will never be free from politics and class warfare bullsh1t.

Cut unemployment and let my employer pay me more instead, thats the only way I'll get my fair share.

[Cain]

Even Milton Friedman believes in unemployment insurance.

Anyway, I wanted to post this in Victor's Libertarian thread, but I kept forgetting:

http://zmag.org/cartoons/toons//85.jpg

[BillyTK]

Originally posted by Cain
Even Milton Friedman believes in unemployment insurance.


Didn't he also suggest negative income tax as a form of guaranteed basic income. And my cats are definitely libertarian, but only where their rights are concerned (wrt my rights, they're stalinists I swear!).

[Libertarian]

Victor said: So what do we do? We want to mitigate the negative utility for both individual and society which are inherent in the risk of unemploymenmt...



If you want MORE of something, you subsidize it. Take a look at the unemployment and workers compensation rates in the U.S. (where, as numerous people have pointed out above, unemployment "insurance" exists). NOW take a look at the rates in European countries where there is a much more robust system for paying people when they're not working. Get the picture?

If you want more of something, subsidize it. And for god's sake, don't call this idea "simplistic." It is simple, yes, but sometimes the answer IS simple.

Sincerely,
Libertarian (spell it with a big "L" or a little one, I'm both!

[Victor Danilchenko]

shanek

I'm not! We're not talking about a natural monopoly here! We're talking about a government monopoly!!!if by 'government monopoly' you mean legally created monopoly, then you have repeatedly failed to support your assertion that such exists.

Furthermore, can you make up your mind? Does private unemployment insurance fail to exist because government legally prevents it, or because there is no demand?

It's clear you didn't take any longer than that. But with all of the claims, all of the source material, that amount of time is clearly inadequate for anyone who calls himself a skeptic.What fscking source material? You spent the entire post ranting about how government creates more unemployment, and one (1) paragraph actually explaining why unemployment without government interference wouldn't be a problem. You didn't reference your claim about impact of frictional unemployment at all, nor your claim about the composition of unempoloyment pool absent government intereference. Your sources were irrelevant references arguing that government regulation creates more unemployment. those aren't relevant!

Once again, you cite absolutely irrelevant material, and then parade your citations around as proof that you "researched the subject". Sheer lunacy. Why don't you actually research answers that address my argument? But had you done so, you would have had to reveal that even the originator of your beloved NRU hypothesis would disagree with you.

And is there a reason why you failed to address my correcting your mangling of NRU hypothesis? is there a reason why you failed to address the fact of structural unemployment, for example, or to admit that yes, you made a booboo there?

I've been out of work for longer than that. So have other people I know. None of us got put in the poor house.And could that be because you got unemployment support -- or because you purposefully left your previous job for some reason, having first made provisions for reducing the deleterious impact of such a move?!.

Right, and that's why the market quickly works to correct it. It only happens because it's impossible to know exactly where the level of total production is.Why have you snipped my point to overproduction? Why do you ignore the fact that market couldn't, mathematically, be deviating from optimum in one direction only -- underproduction? You make it seem as if market oscillates between underproduction and efficient production -- just comes up against a stop, and BANG! stops there. There have been numerous cases, including recetnly in US economy, when labor market got exhausted and wages went up beyond their normal value, eventually depressing the labor market in an unemployment backlash. Remember the roaring late 1990s, when anyone could get a high-paying job? Remember how the wages were driven inefficiently high, unemployment was inefficiently low, and everyone knew it?

It's nowhere near the downward spiral you're trying to make it out to be.I didn't make it out to be a spiral, dude; I never mentioned anything of the sort. I made it out to be a pendulum, with "give" on both sides of the optimum -- sometimes labor supply gets too low and wages get inefficiently high, and sometimes it's the other way around. However, admitting that would force you to concede that the picture you are painting -- of the "natural unemployment" rate being about the lowest unemployment can go -- is ridiculous.

Not when the prices are low enough to not make it worthwhile.Ah yes, under libertopia, everyone would be so rich that they wouldn't need to worry about piddling concerns like risk...

Do you really think there'd be aby demand for medical insurance if every doctor or hospital visit cost 5&cent;?yeah, and if cars cost $1 each, we wouldn't care about liability insurance. :rolleyes:

Do you really think the medical services would cost that low unde libertopia? get fscking real. I will be the first to admit (in fact, I had said so in the very first post) that medical insurance costs are inefficiently high, which has overall inflating effect on cost of medical services; but even I I, generously, allow for two-fold or three-fold reduction is medical costs under libertopia, that would still drive people to seek medical insurnace -- it's just that medical insurance would be cheaper as well.

There's a point at which it just isn't worth getting insurance.But healthcare doesn't come anywhere near t5hat point, and neither does unemployment.

Above that point, there's demand for insurance, and so the market would provide it. Below that point, and no one wants it anyway.Yes, there is no insurance for losing your lollypop, but only because administrative overhead of such would be ridiculously high compared to payoffs, thus driving premiums insanely out of proportion with the expected risk value. This is not th ecase th emoment you move out of the completely trivial price range. there is insurance for pretty much anything else that's insurable. There would have been insurance for unemployment too, had it been an insurable risk; but it's not. Why don't you just skip the BS, and address my technical asrgument for why unemployment insurance couldn't exist?

BS. Many people, many companies, including large corporations in many cases decide to self-insure.[/quoter]Companies, yes, because they can average out their own numerous costs; this is not the case for insurable risks on individual levels.

[quote]The money is set aside, it actually bears interest, and the interest goes back into the budget. If you can afford the initial outlay to put the money into the separate account to begin with, then this is a much more desirable option than paying an insurance company as you go.that depends on the magnitude and expected frequency of th einsured event's occurrence. If you live on the egde of a flood zone and your house gets flooded once a year, you can "self-insure" for damages; it would be irational to do otherwise for a risk with probability of 1, because then the insurance company would charge more per year (due to administrative overhead) that you would per yourself to repair your house every spring.

Contrawise, it would be ridiculous for you to self-insure against a hurricane if you lived in mid-west -- only a small numer of houses get destroyed each year, but the magnitude of damage is monumental. You would have to put aside the entire cost of the re-building house, and chances are that the fund wouldn't get used anyway! In this case, as in vast majority of cases, it's far more efficient to spread the risk via third-party insurance. Same goes for medical services -- nobody wants to keep $1M in stock in case they need a life-saving heart surgery, yet this is what medical selkf-insurance would require.

Why the fsck am I educating you on the basics of insurance? You always act like an economics buff, yet you repeatedly demonstrate that you don't understand economic theory, and instead are a "stamp collector" of economics, collecting libertarian evangelical trivia without understanding the economic theory behind it.

And the cause is just irrelevant, huh?yes, it's relevant -- it shows that even though there is demand for risk aversion, this particular risk is not an insurable risk.

It tells me you don't like answering direct questions.i did answer the question. it took that long for society to mature enough to recognize the value of social safety net. Governments move slowly, and it's no surprise. What's curious is that the market never stepped up to the task of providing unemployment insurance, a fact which you ignore by concluding (begging the question, really) that there was no demand.

Provide historical data from around the turn of the 20th century showing this demand. Or was there demand simply because you believe there should have been?No, demand is always there, because humans are always risk-averse. For any insurable risk outside the completely trivial (like the loss of your lollypop), there would be insurance market. The rate and magnituide of the risk would determine the size of the market and the relationship between premiums and payoffs, but it wouldn't have effect on the market's sheer existence. We have insurance for, like, everything -- but not for unemployment, even though unemployment is a common and extremely deleterious risk, mandating strong demand for insurance.

The bottom line is, YOU HAVE NOT SHOWN THAT THERE ACTUALLY WAS SUCH A DEMAND. And as YOU are the one making the claim, it is up to YOU to support it.Yes, I have shown it. What you haven't done, is argue that private unemployment insurance is possible. Instead, you simply assume that every demand meets a suppy, and conclude that the lack of supply of private unemployment insurance indicates lack of demand. This arguing from assumed conclusion to premises is SOOO xian apologetic, it's not even funny.

You haven't shown that there was!yes, I have; I have soundly argued that there is demand for unemployment protection due to humans' risk-averse nature. Even if the demand was small, there would have been a small market for priuvate unemployment insurance; but there isn't any. There is health insurance for pets, but there is no unemployment insurance -- for you to claim that the latter fact is due to lack of demand, is simply intellectually dishonest demagoguery.

Several reasons. Most importantly being the fact that government did not grant themselves a monopoly in education or retirement.You keep claiming that government granted itself legal monopoly on unemployment protection, but you aren't supporting this claim. How come?

[Victor Danilchenko]

Libertarian

If you want MORE of something, you subsidize it. Take a look at the unemployment and workers compensation rates in the U.S. (where, as numerous people have pointed out above, unemployment "insurance" exists). NOW take a look at the rates in European countries where there is a much more robust system for paying people when they're not working. Get the picture?Avoiding created "unempoloyment trap" (where earning extra $1 loses you more than $1 in unemployment benefits) is a purely technical matyter; unemployment trap is not inherent in the very idea of unemployment support, and thus unemployment support doesn't have to encourgae unemployment. The unemployment support has to be structured so that the unemployment income U (which includes unemployment services, such as medical benedfits) + value of leisure L have to be less that the employed income E + value of reduced leisure L' (and remember, leisure has diminishing marginal utility as well). As long as U+L < E+L', unemployment wouldn't get "subsidized".

If you want more of something, subsidize it. And for god's sake, don't call this idea "simplistic." It is simple, yes, but sometimes the answer IS simple.No, this is simplistic. Simply paying unemployment benefits doesn't necessarily encourage people to not seek jobs (imagine if the unemployment benefit was $1); higher unemployment benefit might encourage them to take a little longer to seek a better job, but this is very possibly actually good for economy, as it will lead to each individual being more efficient a propducer of value due to having found a job better fitting to theri skills. You don't generally want unemployed RNs to become McD's burger-flippers, after all -- and you don't want RNs to become burger-flippers just because they are desperate to buy groceries (we might want themn to become burger-flippers if there is oversupply of RNs for whatever reason, but not merely because they are desperate).

Contrawise, negative externalities of unemployment (default on financial committments, crime, destitution, etc.) most definitely have a negative impact on eocnomy.

So the question is not if we should have unemployment protection, but how and how much of it we should have.

[shanek]

Victor: I will not acknowledge you any further in this thread until you actually read my posts, consider my sources, and respond to them accordingly. I am sick and tired of bending over backwards, making arguments, sourcing them, taking hours of personal time to do so, only to have you p*ss all over them without a second thought.

[Valmorian]

Originally posted by shanek
Here's one more "irrelevant, off-topic" (doubtless according to Victor) point about unemployment insurance: it, in and of itself, may be detrimental to the economy as a whole and employers and workers in particular.



While I think some of your points are interesting Shanek, Victor is right, you ARE going off on tangents here.

I do wish you'd supply the reference that suggests that U.I. is a government monopoly due to law. Why aren't there private unemployment insurance companies? Are there laws to prevent their formation or not?



Dwight R. Lee and Richard B. McKenzie, in Failure and Progress: The Bright Side of the Dismal Science (Cato Institute, 1993), wrote: "Those who experience unemployment feel pain&mdash;but because of that pain they are likely to obtain new employment in which they provide more value to consumers... [Unemployment is] to the economy what physical pain is to the body,... letting people know when the resources they are using in one activity would be more productively used in another activity."



Um, that's an interesting way to put it. Of course people who lose their jobs because of a company collapsing (for example) could be using their skills more productively in another job. I'm still not sure what this has to do with U.I., though, since it does take time to get that new job, and not everyone is fortunate enough to have enough money to survive between jobs.




The problem with unemployment insurance, even privately run, is that it would take out the fear and reduce the drive to get a new and better job.


Isn't this a little like saying that car insurance takes the fear out of car accidents and therefore reduces the amount of caution one takes when driving?

In any case, this is obfuscation. There is obviously a demand for unemployment insurance, why isn't there a private sector supplier for such?



My mother worked in the NC Employment Security Commission for decades, and she said it was amazing how many people found jobs within the last few weeks of their eligibility. Without the benefits, there isn't as much of a desire to go out and be productive.

An anecdote? Well, hell, I know people who have been trying to get a job for ages and have been unable to do so. So what?

Provided that U.I. supplied enough money to cover basic living expenses, you're supposing that this removes the impetus to get a better job? Isn't this kind of anti-free market of you? What about the desire to improve one's standard of living? Isn't that supposed to be part of the driving force behind the market?

[Victor Danilchenko]

shanek

Victor: I will not acknowledge you any further in this thread until you actually read my posts, consider my sources, and respond to them accordingly.i did, I did, and I did; the appropriate response was a lack of response, because your sources argue that government regulations increase unemployment -- a point wholly irrelevant to what I am arguing about. i would have examined and responded to your sources supporting the contention that Friedman's "natural unemployment" has no deleterious effect on unemployed individuals, nor incurs negative externalities, except that you didn't support that claim at all; nor have you supported your claim that government granted itself legal monopoly on unemployment insurance. You didn't to anything to support those claims of your which bear even tangential relationship to the topic -- you only supported the claims hwich are wholly irrelevant, but which I presume you feel you can advance with confidence.

For that matter, you basically completely ignored my entire original post. To this moment, you haven't done anything to address my argument about private unemployment insurance being impossible for technical reasons. So if anyone should get huffy because the core argument is getting ignored, it's me.

I am sick and tired of bending over backwards, making arguments, sourcing them, taking hours of personal time to do so, only to have you p*ss all over them without a second thought.Argue smarter, not harder. Spending three hours answering argument X won't do you any good when I didn't actually advance argument X. is it any wonder that your response to X gets ignored, then? i will not let you derail the topic to discussing your pet subject -- how terrible government is screwing the economy; start a new thread if you want to rant abotu that, and post your PDF references there. In this thread I want to talk about [un]viability of private unemployment insurance.

[Victor Danilchenko]

Valmorian

I do wish you'd supply the reference that suggests that U.I. is a government monopoly due to law. Why aren't there private unemployment insurance companies? Are there laws to prevent their formation or not?yeah, I am still waiting on those references too.

Isn't this a little like saying that car insurance takes the fear out of car accidents and therefore reduces the amount of caution one takes when driving?Yup. that's exactly it. What Shane effectively advocated is social engineering -- let the bastards suffer so that they would look for a job harder. He is ignoring the fact that purely economically, unemployment insurance would have appeared had it been possible.

In any case, this is obfuscation. There is obviously a demand for unemployment insurance, why isn't there a private sector supplier for such?not only that; I gave a detailed economic argument for why there cannot be such, and Shane hasn't said anything that would actually address that argument. He is simply trying to pretend as if that original argument -- which is raison d'etre of this thread -- doesn't exist. I spent time (on the order of days and weeks, not hours!) reading up on economic theory, researching the topic, and he simply ignores that argument's existence.

Provided that U.I. supplied enough money to cover basic living expenses, you're supposing that this removes the impetus to get a better job? Isn't this kind of anti-free market of you? What about the desire to improve one's standard of living? Isn't that supposed to be part of the driving force behind the market?Well, markets are oimnipotent when that suits Shane, and limited and unable to compete with government's provision of services when that suits shane. Note how when confronted with the fact that private alternatives to mandatorily financed government services (such as SS or education) exist, he switched his position to claiming that there's no demand for unemployment insurance.

Shane has been arguing very dishonestly in this thread -- I suspect because I have prepared a case which he cannot address with the outcome which he would prefer. He claimed that his mind can be changed by evidence, but that claim is exposed as a lie here; it's not an honest statement of methodlogical commitment to reality, but rather a shameless ploy to gain credibility by claiming open-mindedness.

[Victor Danilchenko]

Oh, and let's not forget that the libertarian idol, Milton Friedman, advocated a welfare state -- a very austere one limited to relief of destitution, but a welfare state nonetheless. Milton's negative income tax is exactly a form of welfare, a mechanism for wealth transfer from the rich to the poor.

As an economist, Friedman realized that it's cheaper for society to relieve destitution than to pay its negative externalities...

[Libertarian]

Originally posted by Victor Danilchenko



So the question is not if we should have unemployment protection, but how and how much of it we should have.



Alas, Shanek, isn't this the problem with a lot of the programs we're saddled with today? The question of "IF" is never asked, only "HOW" or "WHEN".

[Victor Danilchenko]

Libertarian

Alas, Shanek, isn't this the problem with a lot of the programs we're saddled with today? The question of "IF" is never asked, only "HOW" or "WHEN".Whether that is true or not, does nothing to revive your argument that we shouldn't have unemployment support because it subsidizes unemployment.

Yes, with many programs, we should ask "if" rather than "how" and "when"; but we already aksed "if" about unemployment support, and the answer is "yes".

[shanek]

Originally posted by Valmorian
I do wish you'd supply the reference that suggests that U.I. is a government monopoly due to law.

There isn't a single one covering it all; it's different in every state. In NC, it's Chapter 96 of the NC General Statutes, which expressly directs the Employment Seurity Commission authority over unemployment payments "under the police powers of the State, for the
compulsory setting aside of unemployment reserves to be used for
the benefit of persons unemployed through no fault of their own."

Any private unemployment insurance company would be seen to be acting in contrary to the authority of the state, with the above mentioned police powers being used to that effect. Also, you don't have the choice of not paying into the system even if you'd never remove a dime frome it.

I'm still not sure what this has to do with U.I., though, since it does take time to get that new job,

Because as I pointed out, most people simply wait until their benefits are about to expire. That makes it clear that they most likely could have gotten a jub much earlier if they had the incentive to do so.

Isn't this a little like saying that car insurance takes the fear out of car accidents and therefore reduces the amount of caution one takes when driving?

No, because with accidents you have problems other than monetary&mdash;being hurt or killed, having to do without a car for a period of time, etc. With unemployment insurance, what real incentive is there to get a job right away when people are paying you to essentially jump thorough a couple of easy hoops?

Provided that U.I. supplied enough money to cover basic living expenses, you're supposing that this removes the impetus to get a better job? Isn't this kind of anti-free market of you?

Since what we're talking about is no part of the free market at all, this accusation baffles me.

[shanek]

Originally posted by Victor Danilchenko
yeah, I am still waiting on those references too.

Too bad. You must be eighteen different kinds of stupid if you think I'm going to bend over backwards for you anymore after the way you've treated me. I gave the references to Valmorian because he/she/they/whatever has never treated me in such a fashion.

He is ignoring the fact that purely economically, unemployment insurance would have appeared had it been possible.

You have not done one single thing to show that that was the case. Where's the figures on demand for unemployment insurance before 1930? Where are they, Victor? That's vital to your claim! Where's the evidence, Victor?

[shanek]

Originally posted by Libertarian
Alas, Shanek, isn't this the problem with a lot of the programs we're saddled with today? The question of "IF" is never asked, only "HOW" or "WHEN".

And the dog's name was, BIN-GO!!!! :D

[Victor Danilchenko]

shanek

Too bad. You must be eighteen different kinds of stupid if you think I'm going to bend over backwards for you anymore after the way you've treated me.After the way I treated you? I spent days -- not hours, days -- preparing the titular argument of this thread, and you ignored it completely. I simply kept asking you to address it -- but those requests went similarly ignored. Now I will follow your suit, and leave in a huff; but let the world know that I first gave you ridiculously plentiful chances to actually show a sign of understanding and integrity, and address the argument on which I spent so much time and effort -- chances which you completely and dishonestly ignored.

I gave the references to Valmorian because he/she/they/whatever has never treated me in such a fashion.the reference you gave is, as usual, utter BS. The quote gives the state the power to forcibly collect unemployment benefit -- it does not forbid private unemployment insurance. No matter how much you would wish to read it that way, that's not what it says; and I betcha if you check other state laws, you similarly won't find anywhere the laws that actually make private unemployment insurance illegal. Don't bother considering that, though -- reality never stopped you before, why should today be any different?!.

You have not done one single thing to show that that was the case.Of course I have, you liar! I argued how any significant insurable risk gets insured -- but some risks are uninsurable, and unemployment is one of them.

Where's the figures on demand for unemployment insurance before 1930?How do you measure in a free-market economy demand for something that the market cannot provide? Show me figures proving demand for unbreakable cars that get 2000 mpg and cost $10! You can't, can you? and yet I am sure you will agree that the demand is there.

I did provide both the argument for why it would be demanded (because unemployment is a risk, and humans are risk-averse) and why it would be impossible; and you addressed neither argument. Your whining and lying and weaseling makes it painfully obvious that you have no answer, and so you engage in obfuscation. How fscking typical. I expected this sort of dishonest, deceptive behavior from you, but I wished to give you the benefit of the doubt; and my better nature was proven wrong. The cynical Victor wins once again.

Where are they, Victor? That's vital to your claim! Where's the evidence, Victor?All around you. There's insurance for pretty much anything that's insurable. If the demand is small, there may be few insurance companies offering that insurance -- but there are no insurance companies offering private unemployment insurance. It takes a dishonest libertarian liar like yourself to claim with a straight face that there is no demand for unemployment protection, and that there wasn't any before New Deal -- but dishonesty never stopped you before when you are on a crusade to defend your religious faith from truth and reality. You never even got the balls to admit that you were wrong about unemployment composition under free market -- that you ignored structural unemployment completely, and that you basically ignored cyclical unemployment; nor have you ever admitted that your 1-2% unemployment figure was utter BS (turns out that according to Friedman, average rate of unemployment between 1900 and 1930 was 4.7%, not 1-2% as you so dishonestly claimed it would be).

When do your lies in the name of your religion stop, shane? When will you shed any pretense to basing your beliefs on reality, and admit that it's simply an article of religious faith for you? When will you admit that your claim to open-mindedness was a deception, that there is no fact that would change your mind?

I am sick of your lies, your lack of intellectual integrity, your begging the questionsd and your religious apologetics. I decided to give you a chance and take you off the ignore list, but you could neither maintain an honest intellectual discourse nor keep a civil tongue, nor for that matter even understand that the method you conducted the conversation by were uncivil and would only lead to more strife. You are a faith-blinded self-deceiving liar, shane.

Good bye, shane. May your lies for your faith keep you warm at night. You are going onto my ignore list for good.

[Libertarian]

Actually, I DO believe that if you took away auto insurance, accident rates would decline.

And, actualy, I DO believe that if you doubled unemployment benefits, unemployment would rise.

Does anyone seriously argue otherwise?

[Mahatma Kane Jeeves]

FYI:
Reader's Companion to American History (http://college.hmco.com/history/readerscomp/rcah/html/rc_088200_unemployment.htm)

Once arrived, the problem proved to be tenacious and difficult to solve. Beginning in the 1870s, unemployment became a persistent feature of economic life in the Northeast and the Midwest, and it became a national phenomenon no later than the depression of the 1890s. From the Civil War until World War II, unemployment rates ranged from roughly 4 or 5 percent in good years to more than 15 percent during the troughs of the worst depressions. But such figures (which reveal only the percentage of labor force members simultaneously jobless) understate the breadth of the phenomenon. In all likelihood, between 20 and 25 percent of working Americans experienced some unemployment during the average year, and they tended to remain jobless for roughly three months. During depressions, up to 40 percent of the labor force was laid off in the course of each year for spells averaging more than four months. The problem was most severe during the downturns that began in 1893, 1907, and 1920, and it reached its nadir during the Great Depression of the 1930s—when roughly 25 percent of the labor force was simultaneously jobless, with many of the unemployed remaining out of work for a year or more.

[Victor Danilchenko]

Libertarian

Actually, I DO believe that if you took away auto insurance, accident rates would decline.

And, actualy, I DO believe that if you doubled unemployment benefits, unemployment would rise.

Does anyone seriously argue otherwise?Yes. I don't think that people drive carelessly because they are covered by auto insurance -- there are after all significant financial penalties associated with causing an accident, in addition to the risk of injury and death.

I do think that unemployment rates would rise if you doubled unemployment benefits, but that's a simpolistic thinking. The unemployment rate increase would be because the equation I presented earlier (U+L < E+L') would be violated for more people. This doesn't mean that a well-designed unemployment protection program would harmfully affect unemployment rates.

[Victor Danilchenko]

Mahatma Kane Jeeves

Ah, a fascinating read; thanks. I wager it won't change Shane's mind, though.

[Mahatma Kane Jeeves]

The article on poverty is very interesting also.

[Victor Danilchenko]

Mahatma Kane Jeeves

The article on poverty is very interesting also.I actually bookmarked the entire Reader's Companion, and was planing to peruse the interesting-seeming articles later; thanks for the pointer.

[shanek]

Originally posted by Victor Danilchenko
After the way I treated you? I spent days -- not hours, days -- preparing the titular argument of this thread, and you ignored it completely.

NO I DIDN'T!!!! I'm refuting the MAIN POINT behind your arguments! If I do that, I don't have to address the arguments themselves! I'm refuting what you are assuming as given AND ARE REFUSING TO CONSIDER!!!

the reference you gave is, as usual, utter BS. The quote gives the state the power to forcibly collect unemployment benefit -- it does not forbid private unemployment insurance.

Yes, it does! By vesting the power solely in the commission, they are forbiding private sector unemployment insurance!

I argued how any significant insurable risk gets insured

And IGNORED my arguments to the contrary! And refused to answer my DIRECT QUESTIONS and requests to provide evidence!

How do you measure in a free-market economy demand for something that the market cannot provide?

Oh, for crying out loud, it's done all the time! Find a newspaper article, essay, SOMETHING from someone bemoaning the lack of unemployment insurance!

Show me figures proving demand for unbreakable cars that get 2000 mpg and cost $10! You can't, can you?

I can show that there's demand for more fuel efficient cars at lower prices! You're wanting me to quantify something when I never asked you to quantify the demand for unemployment insurance! And you wonder why I call you a weasel!

If you can't show the evidence, your argument isn't backed up. If your argument isn't backed up, my refutation stands. That's how it works.

[Victor's typical bigoted insults deleted]

[shanek]

Good post, MKJ! (See, Victor? THAT'S how it's done!

Originally posted by Mahatma Kane Jeeves
Once arrived, the problem proved to be tenacious and difficult to solve. Beginning in the 1870s, unemployment became a persistent feature of economic life in the Northeast and the Midwest, and it became a national phenomenon no later than the depression of the 1890s. From the Civil War until World War II, unemployment rates ranged from roughly 4 or 5 percent in good years to more than 15 percent during the troughs of the worst depressions. But such figures (which reveal only the percentage of labor force members simultaneously jobless) understate the breadth of the phenomenon. In all likelihood, between 20 and 25 percent of working Americans experienced some unemployment during the average year, and they tended to remain jobless for roughly three months.

Ya hear that? Three months&mdash;exactly the figure I gave for natural unemployment.

During depressions, up to 40 percent of the labor force was laid off in the course of each year for spells averaging more than four months. The problem was most severe during the downturns that began in 1893, 1907, and 1920, and it reached its nadir during the Great Depression of the 1930s—when roughly 25 percent of the labor force was simultaneously jobless, with many of the unemployed remaining out of work for a year or more.


Okay, we've already discussed how the government created the Great Depression in other threads. As for the rest, note the figures&mdash;four months or more. Not the several months to years we have now.

You may think that being unemployed for three or four months is a bad thing. That's fine. You might think it's better for those persons to be working at a job. And I would agree. But how can there be any argument for the continuation of a "cure" that has made the disease worse?

[shanek]

Originally posted by Victor Danilchenko
Yes. I don't think that people drive carelessly because they are covered by auto insurance -- there are after all significant financial penalties associated with causing an accident, in addition to the risk of injury and death.

But in the case of low speed accidents where there's no real chance of injury, and where the person isn't causing the accident, just failing to prevent it, don't you think that in those cases there might not be the incentive to stop the accident? After all, there wouldn't be much damage done, and you could score some easy insurance money that way...

[shanek]

Originally posted by Victor Danilchenko
Mahatma Kane Jeeves

Ah, a fascinating read; thanks. I wager it won't change Shane's mind, though.

Why should it? It agreed with what I said! :confused:

[Thanz]

Originally posted by shanek


But in the case of low speed accidents where there's no real chance of injury, and where the person isn't causing the accident, just failing to prevent it, don't you think that in those cases there might not be the incentive to stop the accident? After all, there wouldn't be much damage done, and you could score some easy insurance money that way...

What the heck do you mean, easy insurance money? Most people have some sort of deductible for repairs to their car. If the accident is their fault, their rates may go up. An accident will cost the person money. There is no easy insurance money. And I can't think of anyone that wants to go through the aggravation of a car accident, no matter how minor.

[Michael Redman]

If anyone is interested in how unemployment insurance actually works in this country:

http://workforcesecurity.doleta.gov/unemploy/uifactsheet.asp

[Valmorian]

Originally posted by shanek

There isn't a single one covering it all; it's different in every state.



Yeah, I would imagine that it would be a state-enforced law. I don't doubt that there probably are some laws like this. I guess my question should have focused more on:
"Are there any private sector suppliers of Unemployment Ensurance anywhere in the world?"



Any private unemployment insurance company would be seen to be acting in contrary to the authority of the state, with the above mentioned police powers being used to that effect. Also, you don't have the choice of not paying into the system even if you'd never remove a dime frome it.



I'm curious, I wonder if any company has ever even tried to supply unemployment insurance?




Because as I pointed out, most people simply wait until their benefits are about to expire. That makes it clear that they most likely could have gotten a jub much earlier if they had the incentive to do so.



How do you know this? I know I sure didn't wait.. I was looking for a job the next day the last time I was out of work, even though unemployment insurance applied to me.



No, because with accidents you have problems other than monetary&mdash;being hurt or killed, having to do without a car for a period of time, etc. With unemployment insurance, what real incentive is there to get a job right away when people are paying you to essentially jump thorough a couple of easy hoops?



What incentive? How about more money? Isn't this the same incentive that is supposed to encourage workers in a free market to strive for better positions, to educate themselves, etc?



Since what we're talking about is no part of the free market at all, this accusation baffles me.

The point I was making is that saying someone receiving U.I. would never go looking for another job is quite contrary to the usual 'free market is good' arguments.

If people will do the least amount of work required to simply survive, how would new companies form? Why would anyone risk losing all that money? They could just always take the safest path and stay solvent instead of risking it on a potential loss.

[Libertarian]

Originally posted by Thanz


And I can't think of anyone that wants to go through the aggravation of a car accident, no matter how minor.


True. BUT, people will take on the RISK of an adverse consequence if that consequence diminishes. Everyone (including you) is constantly making these decisions, on a daily basis.

I don't want to crash my motorcycle. No one does. But if you take away my helmet, I will drive more carefully.

I don't want a speeding ticket. Yet I am always driving over the speed limit. I'm making rough calculations, almost subconciously, that if I can save 10 minutes per day by driving faster, then it's worth the RISK of getting an occasional speeding ticket. Especially since the last ticket I got was several years ago.

[shanek]

Originally posted by Thanz
What the heck do you mean, easy insurance money? Most people have some sort of deductible for repairs to their car. If the accident is their fault, their rates may go up. An accident will cost the person money. There is no easy insurance money. And I can't think of anyone that wants to go through the aggravation of a car accident, no matter how minor.

Read what I wrote: I was speaking of a person deliberately not preventing a low-speed crash. The deductible wouldn't apply, their rates won't go up, it won't cost them money, in fact, they can easily get money for repairs from the other person's insurance company.

[shanek]

Originally posted by Michael Redman
If anyone is interested in how unemployment insurance actually works in this country:

http://workforcesecurity.doleta.gov/unemploy/uifactsheet.asp

In the majority of States, benefit funding is based solely on a tax imposed on employers. (Three (3) States require minimal employee contributions.)

Doncha just love how they spin that? Here's a hint: If your employer pays it as a result of hiring you, it's coming out of money that would otherwise be paid to you. Make no mistake: You are paying for unemployment insurance, you can't opt out, and you can't take that money anywhere else or self-insure it.

[shanek]

Originally posted by Valmorian
I'm curious, I wonder if any company has ever even tried to supply unemployment insurance?

Not to my knowledge.

How do you know this?

From my mother, who worked with the NC ESC for decades.

I know I sure didn't wait.

I didn't say every single person would wait.

What incentive? How about more money? Isn't this the same incentive that is supposed to encourage workers in a free market to strive for better positions, to educate themselves, etc?

It has to do with the additional work vs. the benefit you receive. When you're getting paid for essentially doing nothing, it would have to be quite a bit more money to get you back in the workforce. And people with higher paying jobs experience less unemployment.

The point I was making is that saying someone receiving U.I. would never go looking for another job

When did I say "never"?

If people will do the least amount of work required to simply survive,

When did I say that they would?

[schplurg]

Furthermore, can you make up your mind? Does private unemployment insurance fail to exist because government legally prevents it, or because there is no demand? I'm definitely no economic mastermind, but why would anyone pay for privatized unemployment insurance while the government is already taking it out of our checks? And don't tell me they arent. A business owner I know (my stepdad) was complaining that "he was paying for all my bills" while I was on unemployment recently. I countered that the money is being equally paid out by me, in that if he didn't have to pay for unemployment insurance, that my paycheck may have been a little fatter. He agreed.

To me, the arguement that the fact that there is no private unemployment insurance proves that there is no demand is hogwash. As I said, I'm no expert and I'm willing to be proven wrong.

[Jaggy Bunnet]

Private unemployment insurance certainly does exist in the UK. A simple Google search provides dozens of links to providers. For example:

www.unemployment-insurance.co.uk

And that is in addition to the compulsory government run system. It is most commonly used to cover mortgage payments during periods of unemployment as the government benefit would come nowhere near to covering these due to a combination of low benefits and high house prices.

As the UK shows it is possible for such insurance to exist, the interesting question is why it does not exist in the US. In the UK, the existence of a government system does not prevent a private system existing. My guesses:

Government system pays higher benefits than the UK, meaning there is no need for private insurance.

Government system provides benefits that are sufficient for the majority of workers, but not all. However those with higher salaries/outgoings have a high expectation of being able to get a new job quickly. As a consequence, they do not put a high value on such insurance.

[Michael Redman]

The fact that the state is in the unemployment insurance business does not necessarily mean that private actors would be illegally stepping on their toes if they tried to do the same thing. Take a look at supplimental Medicare policies, for example. The fact that the Federal Government provides medical insurance to all people of retirement age does not in any way prevent private medical insurance from offering additional benefits.

In fact, we do have forms of private unemployment insurance in this country. Many creditors offer credit protection that pays bills under certain circumstances, including unemployment, in which an individual's income is disrupted. I don't know if there is any full income replacement insurance, but I haven't looked much. I think more research into the facts needs to be done before a resolution to this question can be found. Simply crafting well reasoned arguments, absent the actual facts, just leads to endless fighting.

[shanek]

Originally posted by Michael Redman
The fact that the state is in the unemployment insurance business does not necessarily mean that private actors would be illegally stepping on their toes if they tried to do the same thing.

In and of itself, no. When it becomes a function of the police powers, as it is in NC, then it is.

I was just reading today about how the NC ESC was starting to crack down on this. There were a dozen different companies (which they didn't name) involved. Apparently, any form of unemployment insurance not run by the ESC is considered fraudulent by the State of North Carolina.

That must be why they named it the ESC...because you can't ESCape from it!

Take a look at supplimental Medicare policies, for example. The fact that the Federal Government provides medical insurance to all people of retirement age does not in any way prevent private medical insurance from offering additional benefits.

But they are still limited in the services they can get. The services have to be available under Medicare, even if they aren't going to use Medicare to pay for it, and any doctor that goes along with it can have his license revoked.

In fact, we do have forms of private unemployment insurance in this country. Many creditors offer credit protection that pays bills under certain circumstances, including unemployment, in which an individual's income is disrupted.

But you'll notice that they don't pay the money to the insured person; they pay the bills directly, and the bills paid are approved in advance. That's how they get around it. Plus, it's not available in all states. You can't get it in North Carolina, for example; you can only get it if you sign up for it and have them pay your bills for you while you are still employed.

[Victor Danilchenko]

schplurg

I'm definitely no economic mastermind, but why would anyone pay for privatized unemployment insurance while the government is already taking it out of our checks?Why would anyone pay for private retirement if they already had SS? Why would anyone pay for private schools and universities if they already had free public schools and cheap public higher-ed?

The libertariuan party-line is that those things exist because government is so inept, that even with the taxes mandatorily collected to support those institutions, it's still more efficient for many people to pay for market alternatives. However, this argument mysteriously becomes "why would anyone pay for X if government already provides it?" the moment a difficulty is reached.

the answer is that people would have paid for private unemployment insurance despite government program, the same way they pay for private retirement or education; and they certainly would have paid for it before government unemployment insurance was created. The market may have been small, but it would have existed. The simple undisputed (yes, so far undisputed) fact is that private unemployment insurance ios impossible for purely theoretic reasons having nothing to do with specific economic and government infrastructure of any specific country.

To me, the arguement that the fact that there is no private unemployment insurance proves that there is no demand is hogwash.Yup. it's the argument that assumes the conclusion (that market can meet every need) and then argues back to the premises (that if there is no market for X, that must mean that there's no need for X).

if you read the very first post in this thread, that is where I argued why private unemployment insurance is in principle impossible.

[Jaggy Bunnet]

Victor - in case you missed my earlier reply, unemployment insurance DOES EXIST in the UK.

Therefore for you to state as an undisputed "fact" that it is impossible for such insurance to exist is blatantly untrue. Or do you just ignore evidence that destroys your theory?

[Victor Danilchenko]

Jaggy Bunnet

Victor - in case you missed my earlier reply, unemployment insurance DOES EXIST in the UK.I didn't miss it -- I am researching it now. I do find it curious that it seems to be unique to UK, and I am trying to figure out why. My suspicion (as yet un-confirmed) is that in UK, the government underwrites unemployment insurance.

I did do a Google search, and all other hits on the first two pages were to government unemployment programs.

Therefore for you to state as an undisputed "fact" that it is impossible for such insurance to exist is blatantly untrue. Or do you just ignore evidence that destroys your theory?I stated that it was undisputed before I read your post. Currently, I am trying to figure out whether your finding actually disputes my argument at all -- if the government under-writes the insurance company's risk, that only confirms my argument, rather than disputing it.

[Victor Danilchenko]

Haven't found anything yet, but all the hits are from UK, no matter which way I search; and coverage seems to always be restricted to UK citizens only. This lends credence to my supposition that there's something that UK government does that enables unemployment insurance.

Edited to add: One hint of an answer do far, from here (http://www.ukinsurancenet.com/unemployment_insurance):

A particular government sponsored initiative, is encouraging people to buy mortgage unemployment insurance.

Doesn't say anything about what initiative that would be, though.

[shanek]

Originally posted by Victor Danilchenko
Why would anyone pay for private retirement if they already had SS? Why would anyone pay for private schools and universities if they already had free public schools and cheap public higher-ed?

Because SS is a fraud, and the government schools are of much lower quality. This has been asked and answered, Victor. Why do you continue to ignore these points?

the answer is that people would have paid for private unemployment insurance despite government program,

You have yet to provide one iota of evidence for this.

The market may have been small, but it would have existed. The simple undisputed (yes, so far undisputed)

Only if you ignore all of my posts on the matter, which you do.

[shanek]

Originally posted by Victor Danilchenko
I didn't miss it -- I am researching it now. I do find it curious that it seems to be unique to UK, and I am trying to figure out why. My suspicion (as yet un-confirmed) is that in UK, the government underwrites unemployment insurance.

Well, our government also subsidizes private retirement savings and medical insurance, so this would blow your other argument out of the water.

[Jaggy Bunnet]

I suspect the reason it exists in the UK is related to the unusually high percentage of earnings that goes on mortgage payments due to very high house prices and high levels of home ownership. Government benefits provide a flat rate amount which is currently £53.95 per week. As this is barely subsistence level, people insure to avoid losing their homes in the event of becoming unemployed.

Why do you assume that its existence in the UK is due to government intervention rather than specific economic circumstances or benefit rules? Do you have any evidence to support this? These are commercial companies taking on risk and earning a return. No government underwriting.

Edited to add: The only government "sponsorship" I can see is that the benefits can be tax free if the policy is correctly structured. However this would only impact on pricing and does not change the underlying economic analysis.

[Victor Danilchenko]

Jaggy Bunnet

Why do you assume that its existence in the UK is due to government intervention rather than specific economic circumstances or benefit rules?Well, for one, because theory is against the possibility of private UI; and for two, because of the peculiar fact of such private UI being available in UK only, and for UK residents only. Had the lack of foreign market penetration been due to lack of demand in the face of foreign governments' UI programs, there would have been no reason to a-priori deny insurance to foreigners or non-permanent-residents of UK. As it is, the participation requirements are suspiciously similar to the old UK government UI program before privatisation.

Do you have any evidence to support this?No -- and I said as much; stop fishing for compromat. However, the available facts form a highly peculiar patterns. I am looking for evidence now.

[shanek]

Originally posted by Jaggy Bunnet
I suspect the reason it exists in the UK is related to the unusually high percentage of earnings that goes on mortgage payments due to very high house prices and high levels of home ownership. Government benefits provide a flat rate amount which is currently £53.95 per week. As this is barely subsistence level, people insure to avoid losing their homes in the event of becoming unemployed.

That would make sense. Mortgage payments are usually lower here and the government benefits much higher. According to Yahoo!, that amount is currently equivalent to $88.35, whereas most US state unemployment benefits max out at $300 or more, depending on how much you made in 4 of the last 5 quarters.

Why do you assume that its existence in the UK is due to government intervention rather than specific economic circumstances or benefit rules?

Because otherwise he'd have to admit that he's wrong about something.

[Jaggy Bunnet]

Originally posted by Victor Danilchenko
Jaggy Bunnet

Well, for one, because theory is against the possibility of private UI; and for two, because of the peculiar fact of such private UI being available in UK only, and for UK residents only. Had the lack of foreign market penetration been due to lack of demand in the face of foreign governments' UI programs, there would have been no reason to a-priori deny insurance to foreigners or non-permanent-residents of UK. As it is, the participation requirements are suspiciously similar to the old UK government UI program before privatisation.


For the avoidance of doubt, this has not arisen as a result of privatisation (in the sense of the government program being transferred to the private sector) but rather exists alongside that scheme.

Perhaps the reason they restrict availability to UK permanent residents only is to reduce their exposure to fluctuations in economies other than the UK?

In addition most other European countries benefits appear to be based on previous earnings and therefore the drop in income will be much less severe than in the UK.

http://europa.eu.int/comm/employment_social/missoc/2002/missoc_235_en.htm

Not sure what compromat is and can't find it in various online dictionaries - could you expand?

[Victor Danilchenko]

Jaggy Bunnet

I have located some sources that may be useful in understanding the current UK situation, but I will need to take a library trip for them. Give me a couple of days.

For the avoidance of doubt, this has not arisen as a result of privatisation (in the sense of the government program being transferred to the private sector) but rather exists alongside that scheme.the state unemployment benefits in UK were cut sharply around 1996, as I understand, as an explicit move to privatisation (or "privatisation", as remains to be seen).

Perhaps the reason they restrict availability to UK permanent residents only is to reduce their exposure to fluctuations in economies other than the UK?then why deny insurance to non-permanent residents? This smells of regulatory limit rather than a market one.

Not sure what compromat is and can't find it in various online dictionaries - could you expand?"Compromat'' is russian political slang for a dossier of compromizing material, effectively "weaponized" documents, records, quotes, etc. Compromat was usually collected in order to discredit the opponent, or harm them in other ways, by causing them to be fired, arrested, and other such jovial outcomes. The "poisoning the well" logical fallacy is a form of compromat application.

your hasty allegation of me ignoring your post because your evidence disagreed with my position, was textbook attempt at collecting compromat.

[Jaggy Bunnet]

Victor - thanks for the clarification. It was not intended in such a way, I simply read the last post on the thread at the time where you claimed that the assertion was undisputed and assumed (obviously wrongly) that you had read the preceeding posts disputing it and ignored them rather than not yet read them. I apologise.

As to denying benefits to non permanent residents, I have given my best guess. I also think they might have difficulty in making such a term stick as it may well be illegal under European law if it comprises discrimination based on residence.

Might be interesting to know if there is anything similar in Ireland as it appears to be the only other European country with a fixed rate of benefit as opposed to being earnings related.

[heath]

I assumed that unemployment insurance was only for mortgage repayments. Seems that it does cover income per se as well.

The impetus for it being offered in the UK seems to be legal changes to the welfare system in 1995.

source (http://redundancy-protection.unemployment-insurance.uk.com)

edit: oops. had the link twice

[Jaggy Bunnet]

Heath - thanks for the interesting bit of history.

I also thought it was only available for mortgage payments but some of the policies don't require a mortgage at all and others will pay amounts in excess of the premium. I suppose there is no reason for it to only apply to mortgages (after all if you don't pay the rent you will be out of the house a lot quicker than if you don't pay the mortgage) so it makes sense to have pure income replacement.

Had a google for anything similar in Ireland (appears to have fixed not income dependent level of government benefit) and NZ (unemployment income low as a %age of employed income) but could find nothing. Is it really just the UK that has private unemployment insurance? If so, why?

[Victor Danilchenko]

Jaggy Bunnet

Had a google for anything similar in Ireland (appears to have fixed not income dependent level of government benefit) and NZ (unemployment income low as a %age of employed income) but could find nothing. Is it really just the UK that has private unemployment insurance?AFAIK, germany has been making noises about privatising unemployment insurance; but i don't know where they are now in that regard.

If so, why?I think a better question to ask would be, why does UK have private UI, when nobody else in the world does? if private UI is financially viable, there's no reason why the much mor capitalistic US wouldn't have had it for decades.

[heath]

My guess is the non-mortgage insurance grew from the mortgage insurance system triggered by the law change.

Insurance companies probably realised that the risk of real redundancy is pretty low compared to the premiums, so a good earner. Quiting or being sacked isn't covered (for pretty obvious reasons).

The massive class divide here might encourage those that can afford to insure themselves to do it. That may be the difference between the UK and other 1st world countries. (I was [and still am] quite shocked by how classist the UK is)

[Jaggy Bunnet]

According to this report:

http://216.239.39.100/search?q=cache:sAKNgNXpWukJ:www.issa.int/pdf/helsinki2000/topic2/2cebulla.pdf

about six per cent of the German population claim to have private unemployment insurance. The report itself notes that this is higher than the market penetration claimed by the insurers and that the difference may be due to individuals not understanding what insurance they actually have.

[Valmorian]

Originally posted by shanek

I didn't say every single person would wait.



I'm not so sure that even a majority of them would wait. Perhaps they would, but I wouldn't assume so.



It has to do with the additional work vs. the benefit you receive. When you're getting paid for essentially doing nothing, it would have to be quite a bit more money to get you back in the workforce. And people with higher paying jobs experience less unemployment.



It depends upon how much you're getting paid for doing essentially nothing. If you're getting enough money to just live at subsistence level, then any job that pays better than that would be incentive to go out and work, I would think.




When did I say "never"?



"Never" or "wait a while", either way the point is unaffected. There are pressures to be employed, through improving one's quality of life.



"If people will do the least amount of work required to simply survive,"

When did I say that they would?

This quote of yours suggests it: When you're getting paid for essentially doing nothing, it would have to be quite a bit more money to get you back in the workforce.

Provided that UI is enough to help you get by while looking for a new job, I don't see the problem.

[shanek]

Originally posted by Valmorian
Provided that UI is enough to help you get by while looking for a new job, I don't see the problem.

This whole post of yours revolves around one concept that I can use to answer it: Incentive. Someone who's getting money for sitting around and doing nothing does not have the same incentive to go out and get a new job as someone who's not making money at all.

And I don't understand why that concept really needs to be explained.