Archived Story

Disincentives to work stymie economic growth

Published 12:12am Sunday, February 3, 2013

No one disputes that the nation’s ongoing recovery from the recession that began in late 2007 is the most sluggish since the Great Depression. The question of what’s causing the sluggishness and what should be done about it, though, highlights a deep ideological divide among Americans and their leaders.

Richard Vedder, professor emeritus of economics at Ohio University, makes a compelling argument that the anemic growth of the U.S. economy in recent years is a result of, instead of a justification for, expanded government aid in the form of food stamps, extended unemployment benefits and Social Security disability payments.

Writing in the The Wall Street Journal recently, Vedder said that this type of government support has made it more attractive not to work, which has led to a drop in the percentage of Americans in the work force and an attendant decline in economic output….

A number of other economists, including ones who have gone on to work for President Barack Obama, have noted a link between unemployment benefits and a disincentive to work….

Meanwhile, Congress just renewed the “emergency” unemployment benefits extension for another year as part of the New Year’s “fiscal cliff” deal, and federal-government policies in recent years seem aimed specifically at expanding, not paring, programs such as food stamps.

Government has no magic powers to instantly heal the economy. But policies that create disincentives to work and therefore inhibit growth can have the opposite effect.

The Columbus Dispatch

 

 

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