LARRY SUMMERS, 20 YEARS AGO AND NOW

This is a nice little refutation of the wingnut claim that all unemployment benefits do is prolong unemployment, a line of reasoning that goes back to Von Mises.

The Economic Case for Extending Unemployment Insurance
Posted by Lawrence Summers on July 14, 2010 at 09:03 AM EDT

Some opponents of providing relief to unemployed families have been making the fallacious claim that unemployment benefits are a cause of the unemployment we are face today. Some of them have even taken an article I wrote two decades ago, under different economic circumstances, and used excerpts out of context to suggest that I share their view.

This is a misreading both of my research and of the economic situation today.

In an economy that is as demand constrained as ours, whatever small changes in search intensity may be associated with unemployment insurance are not the reason for the persistence of joblessness. With five unemployed Americans seeking work for every job opening available, there can be little doubt that the overwhelming cause of unemployment is not a lack of will among the jobless to find work, but a lack of work opportunities.

Opposing extending unemployment benefits will do nothing to put people back to work. It will not result in an increased number of job openings to apply for. And it will not result in a higher level of employment. What it will do is create a more difficult situation for thousands of families hit hardest by the economic crisis and cut off a powerful channel for spurring economic growth.