A Recovery Stymied by Redistribution in The WSJ by Casey Mulligan
I met a recruiter—a man whose job it is to find employees for businesses and put unemployed people into new jobs—and he described the trade-off pretty well. Stacey Reece was his name, and he said that in 2009 his clients again had jobs to fill. But he ran into a hurdle he hadn’t seen before. People would apply for jobs not with the intention of accepting it, but to demonstrate to the unemployment office that they were looking for work.
As Mr. Reece described it, the applicants would use technicalities to avoid accepting a position. The applicants would take Mr. Reece through the arithmetic of forgone benefits, taxes, commuting costs and conclude that accepting a job would net them less than $2 per hour, so they’d rather stay home.
People remain unemployed longer, as Mr. Reece saw with his own eyes.
Friedrich Hayek’s “Use of Knowledge in Society” explains how economic information is not and cannot be fully known by a single person. That information exists “solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess.” Mr. Reece is one of those separate individuals. Most policy makers were not and are not aware of what Mr. Reece was seeing. Most of those who voted Democrats into the Senate, the House and the presidency were not aware.