When Unemployment Runs Out, the Unemployed Get Cranky

Q: How can a government that has done such a horrible job of managing the economy keep its citizens from revolting en masse?

A: Spend like there's no tomorrow.

Unfortunately for the government, and the unemployed masses, tomorrow is almost here.

In December, the unemployment extension, which allowed people to continue receiving unemployment benefits for 99 weeks after losing their jobs, will run out, immediately dropping tens or hundreds of thousands of Americans from the unemployment rolls, and eventually dropping many more.

Up until now, the government has managed to keep a lid on the anger of Americans by keeping the unemployed fed with foodstamps and kept money in their pockets with extended unemployment benefits. But these are stopgap measures that count on a rebounding economy to get people back to work. However, our economy shows little signs of a rebound, and people continue to lose their jobs.

In an era when banks receive billions of federal dollars for a job poorly done, Americans are fully justified in their anger towards their government. Our economy is crumbling while our legislators twiddle their thumbs, while devising new ways to reward corporate failure.

Now that the unemployed are about to feel the full force of the crappy situation we're in, we can expect their anger to grow.

Notice that even though this is the worst economy since the Great Depression, we haven't seen any bread lines or droves of unemployed workers flooding the streets. This is a testament to the effectiveness of food stamps and unemployment checks at hiding the devastation. But once we run out of money for those programs, things will get ugly.

I'm not thrilled about the prospect of a breakdown of social order, but this is the bed we made, and come December, we will have to lay in it.

The Economy is Fucked: In Graph Form

We all know the economy is bad, so I'm not shattering any illusions. But the bad news is that its getting worse, especially for those most deeply affected: the unemployed.

This is a graph of the median length of unemployment for those looking for work, and it stands at nearly 5 months. So half of all those looking for jobs have been looking for over 5 months--and they aren't finding anything.

The government likes to release its unemployment statistics, and their current number is 9.3%, which gives a much rosier picture of the situation than truly exists. Like any good statist government, they have to massage the unemployment numbers to make it look like they are doing a good job, even when they aren't.

The real unemployment picture is much darker.

This graph shows the ratio of non-government jobs to the population as a whole, basically how many jobs per capita. This ratio is a true measure of unemployment, as it accounts for those who have given up looking for work or for other reasons aren't counted. You have to go back to before my birth (1985) to see a worse time to find a job in America.

Of course, I don't want to be overly dramatic, there is one sector of our economy that is doing quite well, and appears unfazed by the economic destruction taking place. That sector would be the government.

Despite its crumbling tax base, our government is having no problem steadily adding jobs, and putting an increasing strain on those who can still find work in the private sector. While our economy is taking a hacksaw to jobs, our government is happy to continue piling them on. This would be great, if it wasn't for the fact that the rest of us have to pay for those jobs. These government jobs aren't creating wealth and they aren't helping the recovery. In most cases, government jobs destroy wealth, and that's the last thing we need right now.

But why, you may ask, is the economy struggling so much? What makes today different from yesteryear? That is a question with many answers.

First, too much bureaucracy. Our economy and employment live and die on small businesses. If entrepreneurs have to fill out a thousand documents and apply for a thousand permits before they can open up a new small business, they may not even try. It isn't worth it to start a business, especially in this economic climate. The problem goes much further than this, of course, but fixing this would be a start.

Instead, Obama has added even more complexity and paperwork to the already overburdened businessman with the health care bill. He simply doesn't understand that paperwork can slow economic growth, or even set it backwards.

Second, too much uncertainty. Our government has never taken such direct control of our economy. It would be tolerable if that control was producing results, but it isn't. Instead, our economy must constantly adjust to the trillion dollar whims of Congress or the Fed, and this constant adjustment means no one can possibly plan and invest for the future. Without this investment, our economy stagnates and sheds jobs, waiting out the turbulence so it can start investing again.

With trillions in bailouts saving huge companies from their own mistakes, the laws of economics no longer apply. Companies are waiting for bailouts, or sitting tight and waiting for the economic picture to make sense, but either way they aren't expanding and adding jobs.

Third, too much debt. Our government is running up debt like a psychopathic teenager with a credit card. Our leaders have ignored the consequences of a debt based economy for decades, and now those consequences are upon us. We spend nearly a half a trillion on interest for our national debt every year. We have now taken on the debt of Fannie Mae and Freddie Mac, which totals into the tens of trillions of dollars. That isn't even counting our un-paid-for obligations to Social Security, Medicare, ObamaCare, and, oh yeah, Two Wars.

Business leaders are not blind. They see this massive debt obligation, and they know it means at least one of two things: Much higher taxes, Drastically cut government services, or Both. Either way, this is perhaps the worst time to start a business in the history of this country. Even if you can eke out a living, or if you're lucky a profit, you can be assured that most if not all of your success will be soon taxed away by our spendthrift government.

Congress, seeing the desperate situation and the looming mid-term elections, have passed another round of unemployment benefits. I liken this to attempting to bail out a sinking ship with a coffee mug. You might buy yourself a minute or two, but the ship is still going down.

Hope vs. Reality: The Economic Stimulus [UPDATE]

The graph says it all. Recovery Plan Fail. [via Innocent Bystanders]

Government Forecasts

One could make the argument that the Recovery Plan is in fact hurting the economy by increasing unemployment. I'm not making that argument since it is far more likely that the government is just bad at predicting the economy.