Unemployment Benefits – A Thought Experiment

Jeffrey Carlson of Grand Rapids, Mich., a former insurance salesman and father of six, says he is motivated to find work, despite the $1,650 a month he collects in unemployment benefits. That money does not go far given his rent, child support, utilities and credit card bills. Carlson, 44, said he has applied for numerous jobs with no luck and has spent $40,000 in savings.Carlson, who made $50,000 a year before he was laid off, said watching Bunning and other senators debate whether to extend unemployment benefits was painful and infuriating.

“I paid into the system for 25 years and now I need it,” he said. “People are being put through the emotional heartache and anxiety of not knowing if it’s going to keep coming. There are too many people who need it and are depending on it.”

2010 The Washington Post Company

I don’t know the specifics and details of the federal-state unemployment insurance system. My brief glimpses of it from my job are unpleasant enough. However, assume for a moment that Mr. Carlson did indeed “pay into” a system for 25 years with the expectation that he would be able to withdraw from it when he needed the money.

Unemployment Benefits

Why the hell didn’t he just set up a private savings account, deposit the money there, and know it would stay safe no matter what happened? Having done that, he’d be assured of the following:

  • It would always be his money, rightfully earned.
  • It would be immediately accessible and traceable.
  • It would be easily inherited by his family if he died.
  • It would be available to use in case of an unexpected emergency and not limited to unemployment situations.
  • Given a large enough balance and a decent bank rate, he might earn substantial interest.

If the alternative to the above is a politicized, unaccountable, and completely out-of-his-hands system…why would anyone take the government option? How could you live knowing strangers are operating your safety net and are liable to change its terms and conditions arbitrarily? Why subject yourself to the spectacle of some hack grandstanding on your future a thousand miles away?

I can tell you a few reasons.

One, because the government option isn’t really an option. It’s based on a tax and taxes are not optional. You or your employer are forced to pay into the system. If those payments are not made, the fifty-ton bureaucratic paper grinder lurches into operation with the expressed ultimate intent of physically seizing individuals and their assets to punish noncompliance. That grinder is the sole reason why I pay taxes. I don’t want to be arrested and I don’t want my property stolen outright.

Two, because most people are counting on that state aggression to force participation. These folks either won’t or can’t save for themselves and are expecting the government option to provide where they cannot. They embrace the Sicilian Mafia phrase pagare tutti, pagare meno. Because those who would not voluntarily pay are threatened with violence if they do not, many people pay less than they normally would if they were acting responsibly. Since they don’t have to deal with hundreds of thousands of individuals gritting their teeth over the taxes and all they have to do is sign up for the money (often after receiving government-paid training to learn how to sign up for the money!), what’s not to like?

Three, because some people actually swallow the political swindle hook, line, and sinker. They are akin to the knowing group above, but differ from those folks because they trust the person claiming to represent them and they trust the talking heads filling in the rhetorical details. Flag-waving, democratic glory-blindness, or raw egalitarianism; not really important which one.

Four, because some people are simply too irresponsible, busy, ignorant, or shallow of thought to even consider a diversified savings plan. It’s just another vague thought-cloud in the back of their minds competing with their next case of Bud Light, what to cook for dinner inbetween picking up the kids and finding a plumber for the sink, whether human evolution is real, and what the heck is up with those brown foreign people fighting with each other all the time. Retirement and building an emergency fund? Oh, yeah, get right on that…mmm, reality TV…*slouch*

All the planning I do starts with the assumption the government will not give me a penny. Not a penny of the money it threatened out of me for decades and not a penny threatened out of anyone else.

Even excluding my sarcastic egoist anarchism, this doesn’t seem like such a radical concept. My confusion is doubled when people are already “paying into” a government system and therefore can already afford to set aside a portion of their money to take care of themselves. This isn’t even an unemployment thing. It applies to any situation where you face an uncertain future with a non-wealthy income.

I don’t get it.

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