This Unemployment is Killing Us!

Most Americans think inflation is bad for everyone while unemployment is bad only for the unemployed. In reality, the reverse is more the case – unemployment hurts us all and inflation hurts some but helps others. “Okun’s law” estimates that every 1% increase in the US unemployment rate reduces real output by 2%. That is, the pie we all have to eat shrinks by 2% when 1% of the labor force loses their jobs. Moreover, a study of the social effects of unemployment prepared for the Joint Economic Committee of Congress in 1976 – back when congress still cared about such things – estimated that a 1% increase in the unemployment rate led to, on average: 920 suicides, 648 homicides, 20,240 fatal hearts attacks or strokes, 495 death from liver cirrhosis, 4,227 admissions to mental hospitals, and 3,340 admissions to state prisons –each tragedy impacting a network of connected lives.
– Robin Hahnel, The ABC’s of Political Economy; A Modern Approach (2002)

An increasingly “progressive” family member -who entertains himself by reading micro and macro economic theory from left and right- read that aloud to me, and both of us had a chuckle at the glaring irony: by focusing so relentlessly on passing his health care initiative -while the nation focuses on jobs, and their scarcity- President Obama is increasing the strain on our healthcare system and the citizenry who depend upon it.

It’s a funny old world, isn’t it?

I am a little swamped with work, but please, discuss! We’ll file this under “Remaking America.”

Update:
Megan McArdle wonders what can be done about job-creation.

Glenn Reynolds starts to answer

About Elizabeth Scalia
  • http://withouthavingseen.blogspot.com Ryan Haber

    But hey, unemployment increases the demand for nationalized insurance, doesn’t it? So that’s a good thing, right? I mean, if you’re a socialist with a gaping idol-worship complex fixated on the French.

    Don’t get me wrong. I love the French. Beautiful culture. We are indebted to the Brits for common law and trial by jury and all that. We could learn a lot from the Germans, especially their (relative) fiscal conservatism. Italian food is amazing. The West is built on Greek thought. And so on.

    But how anyone ever got to think we should imitate those failing states so mindlessly is beyond me. For sixty five years they have been increasingly propped up by American economic output (Marshall Plan, anyone?) and defense (NATO’s commitments are what percent American?). At least our Defense Secretary is calling them on it with regard to Afghanistan.

    But Europe has nationalized healthcare, so it must be good. No?

  • Myssi

    Wow. I knew that unemployment in my community affected me, personally, but I don’t think I realized just how much. However, I work in healthcare and have no trouble believing that the stress of being unemployed or having a family unemployed directly affects people’s health.

  • newton

    I don’t know how the whole health-care bill turmoil is affecting everyone specifically, but I know one thing which is closer to home: every time I’m coming close to recovery, it seems something else that’s worse happens.

    My left foot has been in pain since it started sixteen months ago. I noticed back pain returning after my childbirth and couldn’t do much. I started going to a chiropractor to adjust my back, when he also finds something in my neck. (“No symptoms don’t mean no problem. You will have problems soon,” he said.) I seemed to be improving when the chiropractor made me have an MRI late November. I had it done, thinking nothing would come out of it. Two weeks later, he lets me know the results: a herniated disk in the lumbar spine, causing sciatica. Surgery is the last resort. I was devastated: just when I thought I was close enough to recover, I get this punch in the gut.

    I found online a spine surgery center in Dallas where they can do minimally invasive spine surgery. I was already scheduled to get it done mid-March. But three weeks ago, I had a major muscle spasm in my neck and left shoulder, which transferred to my neck proper and caused major dull headache, from the back to my sinuses. It has been happening for eleven to twelve days already. I went to my doctor yesterday: he suspects that I have a pinched nerve in my neck, which is affecting just about everything else. Wonderful: problems in two parts of my spine. I’m going to see a neurologist in two weeks. Needless to say, I had to cancel my lumbar spine surgery to figure out what is going on in my neck.

    As of right now, I’m having that headache again. The pain seems to travel around my neck and my upper back. I have to make an effort to keep going with all this. Just when I thought I was going to be on my road to recovery, once again, I’m set back even further than I ever thought. I’m totally devastated: I’m turning 37 and the mother of two little girls (one of them just turned 1), and yet I’m becoming as useless as a broken mop.

    And it’s quite lonely to be in this position. I cannot take my girls to the park as other moms do. I cannot do much of anything with them nowadays. After five to ten minutes walking, I start limping in my left leg. And now, this. I’ve been crying to Heaven like crazy lately because I believe something terribly wrong is happening to me. I plead to God not to separate me from my little girls.

    My older one, my first Little Fig, has been asking me “Are you falling apart?” She has heard me saying it… which is exactly how I have been feeling in the last twelve days.

    I’m so sorry to carry on with this rant in this thread, but I just needed to tell someone, anyone, about this.

    [Newt, sorry to hear you're going through all of this, which is particularly rough with two little ones I will keep you in my prayers -admin]

  • http://runswithangels.wordpress.com/ Bender’s Cheerleader

    That’s awful, Newton. Be assured of lots of prayers for you and your family.

    There are many, many people who are going to be profoundly affected by health care reform – we all know someone who is going to suffer from it; to what degree is the question.

    God bless!

  • Mila

    Newt, you will be in my prayers too. As the mother of two women about your age, each of them with two little ones of their own, a little older than your children, I can appreciate what you’re going through. May the Lord bring you health soon.

  • newton

    Y’all have no idea about how your messages comforted me.

    Thank you.

    And may God bless you all.

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  • Manny L.

    My prayers will be with you too Newt.

    Ryan Haber – Right on!!!

    I’ve been predicting a double dip recession (I’m no economist, so take it with a grain of salt) since the so called trillion dollar “stimulous” program. If anyone thinks that having shovel ready jobs for unemployed white collar workers was going to solve unemployment, I’ve got a bridge to sell you. Are secretaries and bankers supposed to fill pot holes?

  • Greta

    Having spent 30 years in healthcare, I can’t tell you how this entire ongoing battle for government take over of healthcare has impacted the industry. Best way for government to fix healthcare is to develop a plan to get government totally out of healthcare including medicare, medicaid, and all the other programs. They all come with massive problems, red tape, low fees for the services provided, and all the other insurances follow their lead in what the cover and how much they pay with the exception that they pay better than the government and this keeps many providers alive.

    If you want to see the impact of government on any industry, you need go no further than healthcare. The so called reform will go a long way to making care worse for everyone.

  • dry valleys

    On about Jim Bunning (R-Obviously) standing in the way of unemployment benefits being extended.

  • http://zachriel.blogspot.com/2005/07/liberal-v-conservative.html Zachriel

    Glenn Reynalds: What to do about long-term unemployment? Cut taxes and deregulate, for a start. . . . .

    That was tried during the Bush Administration. Lack of oversight allowed the bubble economy to get out of hand, then explode, while tax cuts and the ensuing deficits hampered the ability of the U.S. to respond to the crisis once it developed.

    Manny L: I’ve been predicting a double dip recession (I’m no economist, so take it with a grain of salt) since the so called trillion dollar “stimulous” program.

    The problem was that at least $10-20 trillion “disappeared” from the U.S. asset sheet. A $1 trillion stimulus is very minimal considering the depth of the problem. However, that has to be balanced against the danger of long term deficits, and the politically decrepit U.S. political system.

    The bail-out and stimulus was absolutely required to prevent a complete global meltdown. The question is whether the U.S. system is disciplined enough to begin turning fiscal policy around over the next two or three years, once the recovery beings in earnest. That will require substantial taxes and spending cuts.

    In Classical economics, fiscal policy is set so that government budgets remain in balance. That means during boom times, tax cuts; during bust times, tax increases. However, the lesson of history is that tax increases during busts deepens the economic crisis; while tax decreases during booms overstimulates the markets, leading to bubbles and collapse. This is what happened during the Bush years. As the economy expanded, they cut taxes and interest rates. That, and lax regulatory oversight, led to the worst economic catastrophe since the Great Depression.

    Countercyclical fiscal policy is an important component of modern economic theory. That means spend during the crisis, but cut later. Here’s a chart that shows the structure problem.

    Also, keep in mind that this is not a problem without solutions. The U.S. had a balanced budget and was on the way to paying down the debt just a decade ago.

  • Doc

    Zach, I recommend a healthy dose of Thomas Sowell and Walter Williams to overcome that nasty case of MSNBC syndrome. I’d just add that the porkulous seemed absolutely necessary to reward Democrat contributors and key congressional districts. Not much else.

    Oh, one more thing. Rich Lowry’s Legacy contained one of the best refutations of the Clinton economic miracle myth that I’ve read.

    The Clinton boom rode the tech bubble that was accelerated by Y2K. Every company I dealt with at the time had no restraints on tech spending if it could be attributed to staving off the Y2K catastrophe. There was an inevitable massive reduction in business tech spending following the Y2K non-event, which led to the recession that W inherited.

  • Sally June

    Anchoress, those statistics you quote sharpened my focus wonderfully. Now when I hear about uneployment, I will be praying for all those tho are suffering “collateral damage.”

    newton, as a mom who recently went through several years of harrowing health problems (falling apart, indeed), be assured of my prayers for you and your family.

  • Manny L.

    Bank bail out was necessary (90% done under GWB, by the way), stimulous, like most historical stimuli, was a waste of money, and that goes for both tax cut and spending types. This being a trillion dollar waste.

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