Sunday, March 07, 2010

Obamanoics Hurting The Economy

The Obama admin's economic policies are hurting the chances of a true recovery. Here is a nice analysis from Clusterstock.

'Over the next several months, thousands of individuals will face the end of their federal unemployment benefits. The typical interpretation of this reads these people as becoming the hopelessly jobless. Expect to see a lot of specualtion about whether the unemployment numbers are concealing the actual number of jobless people. That speculation is half-right. What's really happening, however, is that resources locked out of the jobs market start to re-enter the market. As long as unemployment benefits continue to pay people not to learn new skills or accept lower wage jobs, the recovery will remain anemic. The misallocation of human capital will remain stuck in place.

Of course, if the economy is not recovering, the loss of unemployment benefits can be devastating. We need to create new jobs in new businesses to soak up those now entering the jobs market. This is a tough task, especially since as many as 400,000 workers could be re-entering the jobs market. But it's a two-way street: employers who know that they will not face a labor crunch can more easily expand operations as the workforce expands due to the end of unemployment benefits.'

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