Richard Vedder: The Wages of Unemployment

In today’s Wall Street Journal

“Most Americans recognize the need to reduce government spending to rein in the national debt. But there is another reason to cut government spending for specific programs: If more people have less incentive to stay out of the work force, they might seek jobs and help spur economic growth.”


  1. It’s not so much a matter of incentive as it is following the math all the way through. They can’t spend what they don’t first take from the private sector. So they take capital from the private sector, which destroys private sector jobs, and then funnel it through a bureaucracy and give handouts to the people who – big surprise – don’t have jobs. It’s a self-fulfilling prophecy. The market economy for jobs is like a game of musical chairs – except that, as long as you leave the game alone, the chairs don’t get “removed” – just moved around. It’s a nice thought to create a new chair in the government dole sidelines for the person who is temporarily out of a chair, but that chair is actually removed from the game.

    It’s like the argument with tax rates and investment – the issue is not whether I’d still invest my $85 if the capital gains tax rate were 30% instead of 15% – it’s that, if it had been 30% all along, I’d have only $70 to invest.

  2. Vedder of course wrote the book on unemployment measures: Out of Work: Unemployment and Government in Twentieth-Century America (Independent Institute Book) by Richard K. Vedder and Lowell E. Gallaway (Jul 1, 1997)

  3. “The national income accounts suggest that about 70% of U.S. output is attributable to the labor of human beings.”

    Where does this statistic come from? I’ve often heard that around 70% of the economy goes to consumer spending, but this seems to suggest that a similar portion comes from labor. Doesn’t it all come from labor?

Leave a Reply