How
To Fix the Jobs Problem by Llewellyn H. Rockwell,
Jr. - January 29, 2010
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
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 agreement 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 Middle
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"
tried 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 involuntary 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?