Saturday, February 14, 2009

De-stimulating the desire to work

The stimulus bill will include large appropriations to the welfare state; just what we need to create jobs, eh government. The editors over a Nationalreview.com posted a pretty good article on this atrocity.

I think that when dealing with economics it is very important that we not forget, and re-learn if necessary, the most basic laws of microeconomics and human action. The two economic laws that I believe to be most self-evident are that people respond to incentives and decisions are made at the margins. Government enjoys distorting both of these economic laws, via minimum wage laws and welfare.

Expanding the welfare state is the antithesis of creating jobs. Why should we give an incentive (or increase that incentive) to not work, when we are supposedly attempting to create jobs? If you can only make $300 (although temporarily as income will likely increase as a result of hard work) working but pocket $350 not working, it's not hard to figure which decision will be made. This is also why the unemployment numbers are often skewed. If adding more people to the government dole is creating jobs, then I guess this will be a success.