|
Jobs do not simply appear with increased demand. Increased demand always doesn't equal increased net revenue that can be turned into pay for a new worker.
Unemployment increases demand, but unequally across the economy and typically not where politicians want us to believe that it increases demand. This is thin reed on which to rest one's argument; there are better ones for extending unemployment.
Most economic growth comes not from reinvesting in an existing business but in creating new start-ups. Most growth between recessions comes from start-ups founded during the waning months of the first recession. There's been a notable dearth of start-ups. People blame lack of bank loans, but that's not most of it: Banks have reported lower rates of applications.
Start-ups are risky. The risk means that the rate of return on successful ones need to be even higher. If the state of the economy, tax rate, health-care and energy costs, and regulatory burden including effects on energy costs are unknowable you can't begin to calculate what a possible rate of return is going to be. Since the risk is usually in the first couple of years, it's not unreasonable to provide some temporary certainty. However, I think the tax-rate uncertainty, while "in the mix," is only part of the story and not necessarily the largest part.
Unemployment and low-wage employment increase demand, but not where the politicians want us to infer that the demand is increased. You don't find the unemployed busy buying new houses, new basic or luxury appliances, demanding new services. You find the unemployed buying food, basic clothing, continuing to pay for shelter, utilities, and transportation and buying the cheapest imported manufactured goods they can. With a high unemployment rate and uncertainty, the people who take in the unemployed's payments tend not to buy new houses, new appliances, etc., beyond what they reasonably believe they need and their buying becomes increasingly "low-scale," whatever their actual income. Saying that unemployment payments translates into new cars, driers, houses, tourism, etc., etc. doesn't follow, either logically or statistically however much we may want to make that leap of faith. There are better arguments for extending unemployment, even if they are often no more convincing than the arguments against extending unemployment.
|