I don’t understand why interest rates are zero and we are still paying able-bodied people not to work. But hey - I work in tech startups, so keep the ridiculous easy money flowing so all the rich can get richer shrug
During the pandemic, wealthy people have seen massive gains through huge increases in asset values without doing any work, too. Generally speaking, wealthy people have seen much larger increases in net worth during this pandemic than the working poor. Why is the problem with the economy poor people staying home on unemployment rather than monetary policies creating an asset bubble that the already well off primarily reap?
The actual problem is that despite all this money washing around, real wages for many people have not went up at all.
>"Corollary: With the interest rates so low, I don’t understand how wages are so low that collecting unemployment is more attractive than working."
Greed, really. Corporations are unwilling to admit the new reality of the labor market yet. Every Taco Bell near me has been closing early or completely unable to operate due to lack of workers. Meanwhile Chick Fil A is thriving, and I've never seen them so heavily staffed. Turns out if you pay your employees, it's actually a competitive advantage.
Unemployment has been especially generous recently. And the low interest rates aren't juicing the economy as much as it could be due covid being a drag on the economy.
If you can make half to 3/4 your salary doing whatever you want, or an extra 25 to 50% by working 40 hours a week, a lot of people don't feel the need to work. Also an argument against UBI. If people have their bills paid, many don't feel like working.
You're overestimating the generosity of unemployment benefits, and you're underestimating people's work ethic when given unrestricted (strings-free) transfers.
In the first instance, unemployment benefits do not typically replace "half to 3/4 of your salary," and under ordinary circumstances US benefits are greatly limited in duration. Those for whom the "half to 3/4 of salary" replacement is more correct are also those who started on the low end of the salary scale, and I daresay the working poor should not be the subject of your ire.
On the second point, your assumption -- while common enough -- has not been replicated in modern-day UBI trials. On the balance, those have shown somewhere between no change and small positive changes to work intention over the existing set of social benefits, which on one hand tend to require demonstrating job-search effort but on the other hand tend to be withdrawn beginning with a low earned salary level.
In particular, I have seen no modern-day research demonstrating that providing a fixed benefit creates an indolent class.
We (in the US, at least) are paying able bodied people not to work, precisely in order to have them not work. The policy being that it is better for the entire society if all the laid-off service economy people (retail, hospitality, entertainment, restaurants, etc.) stay home. If we did not pay them, they would find other work, which would require them to leave home. Which would be counter to the public health policies. Staying home is the _point_ of the policy, not a side-effect.
Airlines are still working at skeleton staff. Most of the country has little/no indoor restaurant seating. Sporting events are highly limited. Concerts and Conferences aren't happening - or even scheduled to happen in most cases.
The current federal Unemployment extension is thru Sept 6. Which might be a bit pessimistic, but IMO better to leave some margin for safety.
This is very important, because otherwise UBI would have the bad incentives of our current unemployment program. Avoiding those bad incentives is the entire point of the "U" in "UBI."
Low interest rates means pensions and sovereign wealth funds that have targets for growth (usually 7 to 10% for pensions) must chase riskier assets.
> Only nine of the 73 funds studied had an assumed rate below 7.5 percent in 2014, but about half had adopted rates below that percentage by the end of fiscal year 2017.
The only possible way to come even close to 7.5% is to buy equities or exotic assets like VC funds farther out the risk curve.
The easy money is everywhere, and fixed income is taking it on the chin.
And for people without money, everything good in life - high quality education, housing, food, healthcare, etc. - is only going up.
The best possible move for poor people is to get into as much debt as possible, as the amount they owe will decrease as inflation helps them. But I don't really like the idea of an even larger debtor society than we have now.
