The Economist (2014), approach to the issue concerning unemployment benefits allocated to the unemployed in the society is divided between the Republicans and the Democrats in the United States congress. In December disagreements between the two sides halted the progress towards the extension of the unemployment benefits. Due to the global recession, United States being the major trade hub, succumbed to the trend which led to the loss of jobs. Therefore in an effort to sustain the existing society, the government in 2008 initiated an unemployment benefits policy that was meant to safeguard the unemployed individuals in the society.

The article considers many approaches to the policy, evaluating the pros and cons that the policy triggers in different places. Notably, through the article a presentation is made of other countries that have implemented good supporting laws. In the United States Congress the Republicans argue that the allocated amount is not enough to cater for the entire unemployed United States population, and thus they do not consider the rising numbers of unemployed people in the country due to the countries nature that is motivated by the recession. The North Carolina approach to unemployment benefits is managed by policies that ensure that the entire population that benefits from the benefits do not swell up and increase with time. The effects of recession have been experienced in many countries in the world that depend on trade and benefit entirely bilateral trade. The reality of the matter is that recession has led to some country’s economies crumbling and countries becoming bankrupt for the case of Greece. The intensity of the matter and its impact to the world in general motivated the choice of the topic. The low income earners and those people who rely on unskilled labor are the main group affected by unemployment and thus the focus of the essay seeks to establish an alternative method that can be used to give the people in question better standards of living which is in form of handouts.

Division of labor and specialization

Different concepts can be used to access the situation leading to unemployment benefits. Extended unemployment benefits are mainly issued in the event that an unexpected occurrence occurs such as a recession that calls upon the government to sustain the presently existing labor force even after most of them are laid off due to the high cost involved in training. Four concepts have been gathered that seek to dissect the control of the level of unemployment and government interventions. According to (Smith, 2008), the nature of the economy influences the approach that most people have towards employment. In a small market people tend to be active and in some cases end up finding one or more jobs to satisfy their needs and obtain self-actualization. Division of labor and specialization is a concept that plays a role in eradicating the number of unemployment’s in the economy. The article acknowledges the fact that most companies tend to transfer their unskilled labor to countries with more population and easier cost of production in terms of reduced wages and salary. Specialization on the other hand ensures that an individual is a professional and therefore the aggregate demand for their services is readily available.

Aggregate demand and Aggregate Supply

Aggregate demand encompasses the extreme nature and diversity inemployment, which ensures that some professions are more preferred than others, hence creating demand. According to (Farmer, 2007), some policies are based on the general nature of human beings to demand essential commodities. As illustrated earlier, some governments issue extended unemployment policies to the public so as to influence the development of a cycle. Those that are given handouts end up acquiring products form retailers in the society and thus they tend to improve the performance of the economy and create more employment. Demand in some cases tends to be affected by other extraneous factors that go against the expected trend. In respect to this assertion it is evident that some business owners prefer hiring people who have had the latest interaction with the specific field of expertise. Aggregate supply on other hand has had a huge impact in the developed countries as many companies seek to decentralize their activities into markets where the production cost is low.

Incentives

Incentives are used to relieve firms of the huge burdens that increase the aggregate cost of a commodity hence affecting the different components of the process which also includes labor. According to (Nonhebel, 1988), the government may influence the trend in terms of an increase employment. Tax holidays and reduced taxation on raw materials are some of the changes that a government can make to ensure that the existing firms hire the available force. Generally, a reduction in expenses that are mainly witnessed when taxes are added, ensures that most firms falling under the above category increase their returns hence providing a surplus amount that ensures that an additional labor force is added. Some governments result to making deliberations with the existing companies to ensure that the present labor force is absorbed contrary to which the per capita income would be threatened. The use of incentives by the government to increase the standard of living is not only reflected on the wages and salaries but the individual purchasing power also increases due to the reduced prices that are influenced by the reduction in the cost of production (Knight, 1951).

Conclusion

In reference to the article under analysis, it is trivial that the government is the sole authority figure that has the ability to influence changes in the economy in terms of employment and exploitation of the public. Therefore, peaceful coexistence between different law making individuals should be exercised and hence a country’s economy and performance should not be politicized. Law makers should focus on making policies that are friendly, and support the new approaches to employment. Therefore the use of incentives and enforcements of law pertaining to training and development, of individual needs, ensure that the existing labor force is used locally or outsourced.

References List

Smith, Adam. 2008. Concise Encyclopedia of Economics. Print

NonHebel, C. (1988). Incentives. Century.

Farmer, R. E. A. (2007). Aggregate demand and supply. Cambridge, Mass, National Bureau of Economics Research. http://papers. Nberg.org/papers/w13406.

The Economist (2014), Unemployment benefits; Federal budget; Unemployment insurance; Economic policy; page 19-20.9190: United States; 1120: Economic policy & planning

Knight, R. (1951). Incentives. Manchester, Cotton Board.