Man(government) Made Unemployment

Posted by Jason | Posted in Economics | Posted on 30-01-2010


I found this article by Llewellyn H. Rockwell, Jr. by way of the EconomicPolicyJournal. It explains that our unemployment issues are not just a matter of animal spirits. It comes from government intervention in the free decisions of employers and those looking for jobs.

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.

Read the Full Article at

Definitely click on the full article above. The rest of the article is as good as what’s above.

Think about it just on a very small scale. You don’t even have to take it to the extent of long term employment. Imagine if you are cutting your lawn. You look over, and you see your neighbor is replacing his roof. You yell over “Hey Jim. What are you doing home today?” He replies, “I got laid off last week.” You, “I didn’t know you knew how to replace a roof. Where does a computer engineer learn how to work on roofs?’ Jim replies, “I used to work on roofs during summers while in school. Speaking of, it looks like your roof is about due.” You, “Yeah, I’ve been meaning to get it done, but since they cut back my hours I haven’t been able to afford it. I can’t believe how much they charge for roofing.” Jim, “Yeah, there is a lot of money in roofing. I’d probably be better off it I stuck with roofing instead of computers. It’s been a bumpy ride.” You, “Jim, maybe we can help each other. Since I can’t afford to hire a roofing company, and you just got laid off, maybe I could hire you to do my roof. What do you say?” Jim, “Sorry bud. Have you seen all the laws and regulations in the construction trade now. You need a contractor’s license. You have to buy all kinds of special equipment for OSHA. Trying to meet all those requirements for one job would make me more expensive than the guys you already can’t afford. It’s almost like they errected these barriers to prevent competition from guys like me.” You, “Well maybe no one needs to know. It’s not like we’re selling crack here. Maybe we just say you are helping me with my roof, and no one needs to know I’m paying you.” Jim, “Six months ago, I would have done that, but I personally know a guy who almost went to jail because he paid people cash to work on his house. The IRS, damn gustapo, and the problem is you’d have to pay me cash if no one was going to know about it. It’s not worth the risk. I’ll just keep collecting my unemployment check, and hopefully I’ll find another job.”

So here you are. You need work done, which¬† you can’t afford because your hours have been cut back. Your neighbor needs work, but the two of you can’t come to an agreement because the tyrannical government we have puts a road block between every avenue of negotiation you attempt. Still think this is a Free Market?

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