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Are economic lifelines slowing fiscal growth?

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    Impact of unemployment aid on recovery

  • Duration 3:48
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So -- -- with over twelve million Americans still out of work unemployment benefits and food stamps are often seen is life lines for those struggling to put food on the table.

Well what those measures meant to help people during the recession are actually prolonging it because you -- asked the question at some point is.

-- -- -- That's what our next guest argues in his new book the redistribution recession how labor market distortions contracted the economy -- Well against my -- he joins me now live from Chicago good morning to professor.

Good morning thanks for inviting me of course is so one -- -- things that that I have been interested in over the last couple of years is.

This continual.

Unemployment.

Redistribution.

Claim you know continuing to give it out.

What member of congress.

Is going to vote against.

Continuing to do what I -- to be the new normal in our society.

That is definitely the politically correct answer is.

It is -- all lot of help to people or foreign who are out of work.

And there's definitely advantages to that -- big disadvantage in terms of economics is.

The more people can -- when not working in the last reason they have to find work on their own.

The last reason they have to retain a job that they may have an ally.

And we know from lots of experience over the decades and in especially in Europe the more help you give people don't work the less people work.

-- why -- half of America not believe what you just said.

-- I think they believe that.

It's a balance you know it is that as I said there's an advantage to helping people you're you're helping people that's that's -- health is good by itself.

On the other hand you're taking away incentive it's a balance and arguably -- Democrats won a few elections and -- rebalancing the direction of more help and less efficiency and in the direction of more help and a smaller economy that's what we got.

So well we've been going through this time period where we continue to have this outrageously high unemployment rate.

And we continue to give out more and more benefits for longer periods of time we watched food stamps go up dramatically.

We watch disability claims go up dramatically.

And now we're looking at this fiscal cliff and we're talking about raising taxes there really won't put a dent in any of that -- So what's cancer.

What did the -- I always make is let's go back to.

If the programs we have five or six years ago when there was a safety -- five or six years ago if you lost your job.

In 2006.

You got something you got somehow.

But not the type to help the people been getting since then so I say let's just go back to that situation and then maybe we have a hope of having a labor market go back.

To the way it was five or six years ago.

-- yeah but -- tech inspection my first question which politician.

Republican or Democrat.

Is going to do what you just said.

Not the ones from my district.

I mean it there there in a -- are they not Republicans and Democrats are both in a bind.

Because who's going to be the one to come to the podium and say let's stop those unemployment benefits.

There is a -- and it is.

You know the Europeans have worked this out before they -- so found that.

The helping now a lot of help for unemployed is politically popular.

Economically damaging but politically popular and so they did it for decade upon decade upon decade to continue to do it.

-- yeah I'm not optimistic that we're gonna go back to were we were five years ago but it's.

It's -- it's feasible in terms of economics for sure.

All right very interesting discussion professor of economics somebody who knows a lot about -- -- -- -- again thanks for your time this morning.

Thank you.

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