Friday, February 7, 2014

Why Work Disincentives Matter

The usual partisan catfight has broken out again, this time because of a CBO report saying that Obamacare will destroy 2.3M jobs by 2021. It's disappointing to notice that both sides are ignoring the elephant in the room. There's work to be done.

There's snow to clear off the roads, fires to put out, garbage to be collected, potholes to be filled and all the other myriad things that governments do. A great deal of that is paid for by employment related taxes. Drop a few million jobs and the work is still there for the most part which means that the remaining working population is going to have a heavier load per capita.

The Democrats have an obvious interest in ignoring the basic facts. It destroys their chosen spin that people are liberated by not having to work.

It's much less clear why the GOP isn't mentioning it. They seem to be assuming that everybody understands this without having to explain it. That's a bad bet in today's information environment.

There are two ways to fix our unemployment problem. The first is to increase labor demand by legalizing work, reducing barriers to job creation and making company formation easier. The second is to reduce supply by making people less interested in going out and getting a job, leaving more jobs for the rest of us. The Obama administration seems just fine with the latter approach. That's unfortunate.