All this talk of
unemployment is preposterous. Think of it. We live in a world with lots of
imperfections, things that need to be done. It has always been so and always will
be so. That means that there is work to be done, and therefore always jobs.
The problem of unemployment is a problem of disconnect between those who
would work and those who would hire.
What is the
disconnect? It comes down to affordability. Businesses right now can't afford
to hire new workers. They keep letting them go. Therefore, unemployment is
high, in the double-digits, approaching 17% or more. Among black men, it is
25%. Among the youth, it is 30% or higher. And the problem is spreading and will
continue to spread so long as there are barriers to deal-making between
hirers and workers.
Again, it is not
a lack of work to be done. It is too expensive to pay for the work to be
done. So ask yourself, what are those things that prevent deals from being
made?
Let me list a few
barriers:
- The
high minimum wage that knocks out the first several rungs from the bottom of
the ladder;
- The
high payroll tax that robs employees and employers of resources;
- The
laws that threaten firms with lawsuits should the employee be fired;
- The
laws that established myriad conditions for hiring beyond the market-based
condition that matters: can he or she get the job done?;
- The
unemployment subsidy in the form of phony insurance that pays people not to
work;
- The
high cost of business start-ups in the form of taxes and mandates;
- The
mandated benefits that employers are forced to cough up for every new
employee under certain conditions;
- The
withholding tax that prevents employers and employees from making their own
deals;
- The
age restrictions that treat everyone under the age of 16 as useless;
- The
social security and income taxes that together devour nearly half of contract
income;
- The
labor union laws that permit thugs to loot a firm and keep out workers who
would love a chance to offer their wares for less.
Now, that's just
a few of the interventions. But if they were eliminated today, and it would
only take one act of Congress to do so, the unemployment rate would collapse
very quickly. Everyone who wanted a job would get one.
Depending on the
credibility of the new approach, businesses would begin hiring immediately.
It would be a spectacular thing to behold. However, the new approach would
have to be certain and not something to be reversed in a couple of months. No
one wants to invest in employees only to have their investment taken away. So
there could be no expiration date on the new laissez-faire approach.
What is the
objection to this approach? I seriously doubt that many people would dispute
that it would work to end unemployment. But many people say, oh, this won't
do at all. It is not just jobs we want. It is good-paying jobs!
If that's the
case, you have to understand what is being claimed here. People are saying
that it is better that people be unemployed rather than being exploited at
low wages. If so, it all comes down to your definition of exploitation. If
$10 per hour is exploitation, we should be creating even more unemployment by
raising the minimum wage. We could dis-employ all but a few by raising the
minimum wage to $1,000 per hour.
In a market-based
labor contract, there is no exploitation. People come to agree based on their
own perceptions of mutual benefit. A person who believes it is better to work
for $1 an hour rather than sit at home doing nothing is free to make that
contract. In fact, a person who works for a negative wage – who pays
for an internship, for example – is free to make that deal too.
I propose to you,
then, a definition of exploitation that comes from the writings of William H.
Hutt: violence or threat of violence implied in the negotiation of anything
affecting the life of a worker or employer. In that sense, the present system
is exploitation. Workers are robbed of wages. Employers are robbed of
profits. Poor people and young people especially are robbed of opportunity.
Read any account
of economic history from the late middles ages through the 19th century and
try to find any evidence of the existence of unemployment. You won't find it.
Why is that? Because long-term unemployment is a fixture of the modern world
created by the interventionist state. "We" try to cure it and
"we" ended up doing the opposite.
So it is hard for
me to take seriously all the political plans for ramping up intervention in
the name of curing unemployment. There is no voluntary unemployment in a free
market, because there is always work to be done in this world. It is all a
matter of making the deal.
All that stands
between the present awful reality and 0% unemployment is a class of social
managers unwilling to admit error. How much higher does the rate need to get
before we admit the error of our ways?
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