The Truth About Spending And The Stimulus

Republicans regularly criticise Obama’s stimulus plan, claiming it was an ineffectual waste of money. The internet is full of people arguing it failed to work, that unemployment is still high and growth is low. However what few people realise is that the stimulus did work. Without unemployment would be higher and growth lower. In fact the only problem is that it was too small to solve the greatest crisis since the Great Depression. Continue reading “The Truth About Spending And The Stimulus”

Do Generous Welfare Benefits Lead To High Unemployment? (Short Version)

(This is a shortened version of my last post. Essentially I shortened it, removed all the technical economic terms and put into plain English. If you want to see my sources and the evidence I base this article on then see the last post.)

It is commonly stated as fact that generous unemployment benefits leads to high unemployment. The argument is that people won’t bother getting a job if they can get paid for not working. It is often declared that there is more money on the dole than in a job and that the only problem with the unemployed is that they lack motivation. However there is little or no evidence to support this belief. Countless studies have been done without finding the supposedly large disincentive effect. In fact countries with generous welfare benefits (such as Sweden and Denmark) have on average lower unemployment. Continue reading “Do Generous Welfare Benefits Lead To High Unemployment? (Short Version)”

Do Generous Welfare Benefits Lead To High Unemployment? (Long Version)

(This was originally written as a college essay. For this reason it is 3,000 words long and contains a lot of economics terms references. It is meant as a help for anyone who wants an in-depth study of the topic with supporting facts and figures. For a short version in plain English see here. The essay was marked the best in my class of 80 students. It won the Undergraduate Award 2012 in Economics along with someone from Yale. I’m not trying to boast but I’m over the moon.)

Abstract

This paper discusses the conventional wisdom that unemployment benefits create a disincentive to work, the so-called “welfare trap”. It examines if higher benefit levels or longer benefit durations lead to higher unemployment rates. Surprisingly, it finds that the disincentive effect is negligible to non-existent. A wide range of different studies have found little or no disincentive effect. The orthodox economic view which states that workers will quit their jobs if they will receive more money from unemployment benefits has been found to be naive and unrealistic. Despite the large number of people who believe it to be true, it simply is not supported by evidence. Continue reading “Do Generous Welfare Benefits Lead To High Unemployment? (Long Version)”

John Maynard Keynes Quotes

Keynes is one of the most famous economists of all time and the one whose ideas will get us out of this recession. So here is a collection of some of his best quotes.

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The boom, not the slump, is the right time for austerity at the Treasury.

Look after unemployment and the Budget will look after itself

In the long run we are all dead. Continue reading “John Maynard Keynes Quotes”

Immigrants And The Welfare State

It is common to hear people groaning about how immigrants are supposedly abusing our welfare system. There are numerous anecdotes (but never actual facts) involving immigrants being put ahead of natives. Allegedly, hordes of undeserving lazy foreigners are robbing us blind while the government stands idly by. None of this is supported by the evidence. In truth, study after study has found that do not harm the local economy but rather benefit it. There are twice as many natives (as a percentage) on welfare in Ireland as immigrants. Continue reading “Immigrants And The Welfare State”

Immigrants Don’t Steal Our Jobs

It is common to hear people complain about immigrants taking the jobs of locals. The logic behind this is simple; if an immigrant has a job then that is one less job for a local. It is therefore deduced that a large influx of immigrants would be disastrous, leading to mass unemployment and a decline in the standard of living. However this is not supported by the evidence. There are several examples of huge numbers of immigrants entering a country within a short period of time, yet the economy does not collapse. Continue reading “Immigrants Don’t Steal Our Jobs”

What Is The Real Unemployment Rate?

Unemployment is a major issue that isn’t far from the news. According to official figures, America has an unemployment rate of 8.3% and Ireland has a rate of 14.7%. However some argue that these could be underestimates and the true figure could be as high as 15% in America and 25% in Ireland. The government has a natural interest in the unemployment rate being as low as possible; with some claiming they openly twist the numbers to suit themselves. This is a contentious issue with an election coming up and some claim unemployment could decide who the next President of America is. So what is the real rate of unemployment? Continue reading “What Is The Real Unemployment Rate?”

Politics and Economics Cartoons

Sometimes just talking about politics and economics can be a bit dry so here’s some good cartoons to lighten it up a bit while still making a good point.

More or less sums up how stock markets work.

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Continue reading “Politics and Economics Cartoons”

Why Austerity Isn’t Working

Einstein once defined insanity as doing the same thing over and over again and expecting different results. For four years the government has being cutting spending and raising taxes. For four years we have been told it is the only way to reduce the deficit, restore growth and create jobs. Yet four years later we still have a large budget deficit, high unemployment and the economy is still contracting.  Continue reading “Why Austerity Isn’t Working”

How To End The Recession

We are in the midst of the worst recession since the Great Depression. It is therefore logical that we should see how that recession was ended for solutions to our current problems. It was solved by Continue reading “How To End The Recession”