The United States has a problem with unemployment. We know there are too many unemployed, and we would like there to be fewer. The official count is that there are 29 million and some change getting unemployment benefits.
This is the number that agitates interest in more stimulus money, blowing out the deficit to be nice to folks during election season. Some 12.3 million of these people are getting regular unemployment insurance payments while the rest are on the Pandemic Unemployment Assistance program.
If that’s the number of people who need help, then, well, so be it. Reality is usually a pretty good guide as to what to do next. The thing is, that isn’t right. At least a third — probably closer to half — of those accessing PUA funds are mooching, not in the sense of just not looking for a job hard enough, but criminal claims for something to which they are not entitled. This alarming news comes from the New York Times, of all places, not normally thought of as the home of stories about welfare abuse.
The PUA program is easy to access, as it should be. The pandemic has created an emergency, and the procedure should be to just do anything and clean up the mess later. Better that 10 claims be wrongly filled than one innocent child go hungry, even if that ratio might be a tad extreme. But the ease of claiming unemployment means that the criminals have certainly latched onto how easy it is to claim.
For example, California thinks it has fewer than 2 million righteously on this scheme. The Labor Department thinks 7 million are being paid in California. Colorado thinks that 77% of new claims this summer were fraudulent. Montana thinks 6,000 are getting PUA funds in the state, but the federal government counts 60,000.
The loss to taxpayers isn’t as bad as one might think. PUA benefits are small and can only be accessed for a few weeks before having to prove eligibility and so on. Those concerned about fiscal responsibility can tolerate that.
It becomes a much larger problem when this total number of claimants is used as the justification for the next round of stimulus. But if we were using the real and correct numbers — unemployment numbers declining by as many as a million per week — then we would probably say that we don’t need more money for unemployment. The government passed stimulus measures, and they worked, so let’s all get back to work.
This is, though writ small, the basic politico-economic problem that afflicts all detailed plans for the management of the economy and society. It kills all such plans, from the new paternalistic Right of Oren Cass through to New York Rep. Alexandria Ocasio-Cortez and the Marxist Left. Those in the political center, the government, the political class, and even the bureaucracy just never have the information necessary to be able to make such plans. Here, we think there are 30 million people unemployed and at least 5 million, but probably closer to 10 million of them, are on the lam. That’s just not a valid base of evidence upon which to make plans about stimulating the economy to reduce unemployment.
Therefore, the best we can do is set basic and simple rules — rules of law, of property, and so on. For we never do have enough valid information to be able to do anything else. They even gave Friedrich Hayek the Nobel Prize for pointing this out. It’s just science, and we all always follow the science, right?
Tim Worstall (@worstall) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is a senior fellow at the Adam Smith Institute. You can read all his pieces at The Continental Telegraph.
