One of the proposals we hear for stimulating our economy is extending unemployment benefits. If a worker has been out of a job for 26 weeks, the benefits typically stop. Extending payments for a full calendar year will supposedly improve the economy.

Why does it make the U.S. more competitive and vibrant if we tax working Americans to give money to non-working Americans? In a cyclical recession, an unemployed guy in Michigan could reasonably wait around for a year until things picked up and he could find a job again. Those extra 26 weeks of unemployment benefits enabled the guy to stay in the same house and be available when his skills were needed, oftentimes by his former employer.

Whatever we’re in right now, however, doesn’t seem to be part of a business cycle. We handed over most of society’s wealth to our least productive citizens (realtors, mortgage brokers, Wall Street mediocrities). We raised taxes until business moved offshore. We dumbed down our schools until companies could find better educated workers in countries where people live very comfortably on $5,000 per year. Do we seriously believe that Michigan is going to bounce back within our lifetimes, much less within the proposed 52 weeks of extended unemployment payments?

An unemployed worker in Michigan needs to move somewhere with a lot of new jobs being created and not too many highly skilled unemployed people competing for those jobs (state-by-state statistics). Certainly he is going to have to move to another state. Possibly he may need to move to another country. Handing out 52 weeks of cash instead of 26 weeks seems likely only to delay the inevitable. The guy will be a bit better rested when he finally does move, but he will also be out of practice from not having worked for a year.

Could it be that extending unemployment benefits is a sensible practice that worked in cyclical recessions, but we’re now trying to apply it after a major structural shift in the U.S. economy?