Government interventions

http://money.cnn.com/2008/11/20/news/economy/jobless_claims/index.htm





This article, talks about the fact that the unemployment rate in the United States is increasing. The US department of labor reported that the number of people signing up for state jobless benefits has increased to 542,000, the highest since 1992. The labor department also reported that the economy lost 240,000 jobs during October alone bringing the total count of jobs lost to 1.2 million for the year. The job losses can be explained by the recent global recession and companies trying to cut down their supply costs. Bob Brusca, an economist, predicted that the job market getting even worse in the near future.



This article has to do with government interventions that take place when third-party effects and income differentials come into play. With reduced employment the positive third-party effects associated with a healthy job market are not felt as prominently. For instance, an employed population with money to spend can afford to pay taxes, and make purchases that will ultimately prove good for the economy. To control the effects brought about with job losses the senate have already taken a vote to extend state jobless benefits at the expense of government taxes. Distributing incomes efficiently is essential to avoid a rising poverty level and a weak economy.



The global recession has created job losses, economic instability, and deficits in numerous countries across the world. The ripple effect and opportunity cost of this recession affected everyone to some extent. The recession which decreased the output of industries forced them to make job slashes, which in turn, made it harder for families and individuals to find new jobs and retain financial stability. The money, which we pay through our taxes, and will now be used to support some of these people could have been used on something more beneficial for everyone. In addition, if the situation continues heading downward as it is now, the world may even be thrown into a depression.