If You Consider Yourself a Liberal, You NEED to Know What an Auto Stabilizer is


I’m getting really sick and tired of Republicans sitting on their couches, watching Sean Hannity, and ripping on people who collect unemployment. It gets even more tiring when they controlled the house, senate, and presidency and didn’t do a damn thing to curb the use of unemployment benefits. You only ever hear about people abusing the welfare system when a democrat occupies the White House. They think our $20 trillion dollar debt has more to do with minorities collecting unemployment, rather than the $700 billion per year on military expenditures.

What frustrates me even more, is when people on the left defend unemployment benefits as a moral issue. We give people welfare because it’s the right thing to do. That’s true. The problem is, it will never convince a right-wing conservative that unemployment is a good program. To make a good argument for why most major countries choose to help unemployed people, you must first understand the business cycle.


The Business Cycle

There is an economic argument for why we pay people who lose their jobs! Most recessions begin because there is some sort of “shock” to the economy.

Recession of 1907: A run on the Knickerbocker Trust Company kicked off the banking panic of 1907

Great Depression 1929: Stock market crash that cause the market to drop 25% in 4 days in 1929.

Recession of 2008: Lehman Brothers bankruptcy that caused the stock market to drop 22% in 8 days in September of 2008.

Recessions are not caused by these singular events, rather, they are catalysts for a recession. The economy already had major problems leading up to these events.

After there is a shock to the economy, people begin to lose their jobs. As people lose their jobs, they start to spend less, and bills don’t get paid. When bills aren’t paid, businesses lose money, and begin to lay off more people. This begins a negative feedback loop where unemployment creates more unemployment.


Why do we pay unemployed people?

To stop the current wave of unemployment from causing more unemployment, the government will give money to workers who have been laid off. This allows workers to continue paying their bills as they come due. The unemployment benefits have a two-pronged effect. It helps the worker who was laid off, and it helps the landlord, the electric company, the grocery store, and other businesses who were selling goods and services to that worker.


What is an Auto stabilizer?

The amount of unemployment benefits we hand out as a country is tied to how many people are unemployed. For example, if people start losing their jobs, the amount of unemployment we pay goes up. If the economy gets going, and people start finding work, then the amount of unemployment we pay will go down. Unemployment benefits have a built-in system where it increases spending as the economy gets worse, while cutting spending if the economy gets better.


Conclusion

We pay workers who have been laid off because it helps the overall economy fight recession, not particularly because we feel bad for people (although I do generally feel bad for workers who have been laid off). It’s not middle-class workers who cause the recessions, its Wall-Street bankers and speculators. Yet, it is the working class who suffer by losing their jobs. Don’t let the oligarchs in Washington blame our country’s problems on poor people.

Chris Weber

current events

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