Saturday, November 23, 2013

Not all economists are bullsh*tters

Unfortunately, when dimwits like Todd Hirsch are given a soapbox in Canada's national newspaper of record from which to broadcast their foolishness, the entirety of the dismal science is cast into disrepute.

This tends to obscure the good work done by many fine dismal scientists in colleges and universities around the world. Too often their research produces results that deviate from accepted wisdom, and therefore their work tends to be ignored by mainstream truism peddlers like the Globe and Mail.

Take for example the truism that extending unemployment insurance benefits prevents people from taking jobs. That's an unquestioned nugget of wisdom in conservative policy circles. But is it true?

Some of the best research done on this topic can be found in a paper by Jesse Rothstein, Unemployment Insurance and Job Search in the Great Recession. It's a bit of a slog, in true academic fashion, and has lots of busy charts and graphs, so let me spare you the trouble. Rothstein concludes that yes, there is some minuscule impact on job search, but it is in the range of .1 to .2 percent; for all practical purposes a statistically insignificant amount.

The underlying truth is that virtually everyone would prefer to have a job. Blaming unemployment insurance for joblessness is like blaming aspirin for the common cold. It's unvarnished foolishness, but it is a core article of faith in conservative policy-making circles everywhere.

Economists like Hirsch aren't studying the economy; instead, they use the presumed credibility of their credentials to burnish half-truths in the interest of promoting an anti-worker agenda.

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