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August 21, 2010 / Candice

Want To Lower Unemployment? Look to Denmark.

“When government accepts responsibility for people, then people no longer take responsibility for themselves.” – George Pataki

No, I’m not kidding. I’ve argued for a long time that extending unemployment benefits doesn’t do anything to benefit the economy. In fact, unemployment extensions only impede economic growth and decrease a person’s drive to look for work. I guess it’s rather somewhat ironic that I’m suggesting that we look at one of the biggest nanny-state countries in the world as an example of how we should be handling unemployment benefits. Or is it?

Denmark is one of the most notoriously socialist countries in the world. The citizens don’t seem to mind the 50% tax rate and big government benefits. They seem to appreciate the “support”. Most European countries are of similar ilk. The thing is, after years and years of failed socialist policies, many countries are faced with a real problem: THEY’RE FLAT BROKE! Look at countries like Spain and Greece, they’re about to collapse under the weight of their growing debt and growing demand for government services. They know the only way for them to survive is to cut expense, yet, the people are rioting in the streets demanding more benefits. Unfortunately, those governments can no longer afford to bailout their citizens. Just look at what Denmark is doing to curb unemployment benefits:

But now Denmark, which allows employers to hire and fire at will while relying on an elaborate system of training, subsidies for those between jobs and aggressive measures to press the unemployed into available openings, is facing its own strains. As a result, it is beginning to tighten up.

Struggling to keep its budget under control after the financial crisis, the government in June cut into its benefits system, the world’s most generous, by limiting unemployment payments to two years instead of four. Having found that recipients either get work right away or take any job as their checks run out, officials are also redoubling longstanding efforts to move Danes more quickly out of the safety net.

“The cold fact is that the longer you are out of a job, the more difficult it is to get a job,” Claus Hjort Frederiksen, the Danish finance minister, said during an interview. “Four years of unemployment is a luxury we can no longer allow ourselves.”

I realize that cutting the length of unemployment benefits from four years down to two years doesn’t seem like that big of a deal, but I’m more concerned with the rationale behind it. Denmark recognizes that as long as people are receiving a handout from the government they don’t have the motivation to go out and find a job. The thing is, it’s happening in the United States. Millions of Americans are without work. A large percentage of those people collect an unemployment check and, at times, those checks can be equal to the person’s working salary which pretty much negates the necessity to find employment right away. Now that congress has passed the newest extension of benefits, unemployed Americans can go up to 99 weeks, nearly two whole years, before their money runs out. And that’s only if congress doesn’t extend it again, but believe me, there are lobbyists working triple time to ensure that it happens.

Complacency is human nature. “If it ain’t broke, don’t fix it?”, right? Many people don’t feel the urgency or gravity of being unemployed until it’s too late to do anything about it. It takes weeks, and in this economy, months to a year or more of hardcore dedication to find employment. The problem is many unemployed Americans don’t even start looking for a job until they realize their unemployment money is almost gone. Unemployment insurance isn’t a pay check, it’s an extremely short term, emergency back up plan. It used to be that you only had 26 weeks to find employment, but now, instead of 6 months, you get two years to hang out at home, drive the kiddos to school instead of daycare, and live like you’re employed without actually having to show up to work. It’s nice, right?

It becomes a major problem when people suddenly wake up one day and realize, “Holy shit!! I’m BROOOOOOKE!!” They do everything in their power to try to stop the impending disaster, but by then, it’s simply too late. There are approximately 1.4 million Americans who have been out of work for 99 weeks or more, “99’ers”. It’s a devastating statistic. There’s hundreds of thousands of people who have similar stories to that of Alexandra Jarrin, a graduate student, and currently living out of a “pay-by-the-week” motel, eating ramen noodles and rice to survive. The fortunate, or unfortunate, thing is, she doesn’t have children so she doesn’t qualify for Welfare, but she does get food stamps. Those who have been unemployed so long that their benefits are exhausted do have the option of going on Welfare. But if you want my opinion, unemployment benefits past 26 weeks are Welfare benefits. I wish we’d just call things what they are instead of sugar coating to preserve some sense of dignity.

My argument is, desperation creates action. If you have a constant, government-funded safety net, what’s the point in doing anything more than necessary? If we remove the the life preservers, you’re either going to sink or swim. I know it sounds harsh, but there’s no other way. We simply cannot afford to keep paying people to be complacent. Sure, if you’re a politician, you want people to depend on you, because that’s how you get your votes. (It doesn’t matter the party, everyone loves their own big government subsidies.) If you know your money is running out, you’re going to do one of two things, take any job you can find to support yourself, or you’re going to stand in the welfare line. Those are really your only options.

This “summer of recovery” saw more Americans unemployed that even some analysts estimated. Obama’s failed economic policies are one of the driving forces behind the lack of jobs. Small businesses and big businesses alike are not going to be hiring people because the Obama Administration is scaring the hell out of them! Between the threat of letting the Bush Tax Cuts expire, the ATROCIOUS health care reform bill, and mounting government regulation on the financial sector, many businesses either cannot get more capital, or they refuse to spend what little capital they still have on more employees when the future is so uncertain.

The thing is, as Europe moves away from their “tried and failed” socialist policies, the United States government really needs to start taking good hard look at what we’re doing. The further we slide into socialism, the harder it is going to be to climb out. My fear is that, like with most addictions, we will have to hit rock bottom before we can really recover. Unfortunately, we have a culture of dependence which is doing nothing but speed up that descent. At some point, we will have to destroy the safety net and retrain an entire generation how to survive without a government subsidy. That could be the most impossible task in the history of the world, but I have to force myself to maintain hope that it’s possible or else I need to just give up and end it all right now. I’m kidding, but taking an “ignorance is bliss” approach doesn’t sound too bad these days.

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