Wednesday, February 29, 2012

Deutchland unter keine

Al Roth brings to our attention an interesting example of the doctrine of unintended consequences. The pith of the story is that two government policies have intersected to produce unseemly results.

1) Germany has recently legalized trade in prostitution.
2) Unemployment benefits are forfeit if a job-seeker declines a position.

When offered a perfectly legal job at a brothel, "A 25-year-old waitress who turned down a job providing 'sexual services'' at a brothel in Berlin faces possible cuts to her unemployment benefit under laws introduced this year."

I may be wrong, but this looks like an example of coercion by human agency. The threat of withholding an expected benefit is intended to reduce or prevent free-riding (though see the motion picture Trainspotting and Spud's magnificent performance at a job interview for an example of how to game this particular regulation), but this is predicated on the assumption that any job is both privately and socially preferred to no job at all. Clearly, this is not the case with this story.

 In a counterfactual world without publicly-supplied unemployment insurance and without Germany's extensive labor market interventions, there would be no EE violation here. The young lady would simply tell the madam where to gently place her offer of employment and continue onward in the search for work.

Also, I beg you pardon my off-color pun. I assure you it was completely unintentional.
Also also, I speak next to no German, so if I botched the title, please let me know so I can edit it.

1 comment:

  1. "unter" takes dative, so I suggest "Deutschland unter keinem"


Do you have suggestions on where we could find more examples of this phenomenon?