Paul Krugman has been arguing that unemployment benefits actually create jobs even though an economics textbook he coauthored states that the consequence of this policy is to exacerbate unemployment by incentivizing people not to work. A few people have been calling him out on this (myself included; here also). His response is to call those pointing out his self-contradiction “idiots” (or “stupid“) even while acknowledging once more that “Everyone agrees that really generous unemployment benefits, by reducing the incentive to seek jobs”, can exacerbate unemployment. His argument is that this incentive is “irrelevant” because workers choosing to remain jobless and collect unemployment benefits do not contribute to unemployment because even if they did want to find a job, they couldn’t, because the jobs don’t exist.
Now, one could debate the merits or lack thereof of that argument. But what I want to point out is how the fact that Krugman, in his efforts to advocate unemployment benefits, has also tried to argue that they don’t create an incentive for people not to find work. He has argued that this idea is “completely wrong” and based on “research” that is “two or more decades old” and “has not stood the test of time” — even though his own textbook from 2009 states that “public policy designed to help workers who lose their jobs can lead to structural unemployment as an unintended side effect” because it “it reduces a worker’s incentive to quickly find a new job”.
One may therefore witness how, when appropriately called on one of his bluffs, Krugman’s response is to try to shift attention away from his own dishonesty in trying to deny it even while confirming that “Everyone agrees” it is true and engaging in name-calling of anyone who pointed out his self-contradiction.
So just for the record:
“People respond to incentives. If unemployment becomes more attractive because of the unemployment benefit, some unemployed people may no longer try to find a job or may not try to find one as quickly as they would without the benefit….
“A high minimum wage can cause structural unemployment. Generous unemployment benefits can increase both structural and frictional unemployment. So government policies intended to help workers can have the undesirable side effect of raising the natural rate of unemployment.”
— Paul Krugman, Robin Wells, and Kathryn Graddy, Essential of Economics, 2nd Edition (New York: Worth Publishers 2011) pp. 7, 345
“In addition, public policy designed to help workers who lose their jobs can lead to structural unemployment as an unintended side effect.Most economically advanced countries provide benefits to laid-off workers as a way to tide them over until they find a new job. In the United States, these benefits typically replace only a small fraction of a worker’s income and expire after 26 weeks. In other countries, particularly in Europe, benefits are more generous and last longer. The drawback to this generosity is that it reduces a worker’s incentive to quickly find a new job. Generous unemployment benefits in some European countries are widely believed to be one of the main causes of ‘Eurosclerosis,’ the persistent high unemployment that afflicts a umber of European economies….
“A high minimum wage can cause structural unemployment. Generous unemployment benefits can increase both structural and frictional unemployment. So government policies intended to help workers can have the undesirable side effect of raising the natural rate of unemployment.”
— Paul Krugman and Robin Wells, Macroeconomics, Second Edition (New York: Worth Publishers 2009) p. 210, 213
