The government causes unemployment

American government enforces the unnatural conditions of unemployment and homelessness. Most people are unaware of this and can not even imagine how the government would do such a thing. Today I will attempt to explain unemployment.

 

Let us begin with the fact that long term unemployment is a new phenomenon:

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. ~ Lew Rockwell

 

We live in a world where there are always many more things that need to be done than there is time to do them. I could hire 100 men today and keep them busy for a month just getting me caught up if I could afford them.

 

 

It has always been true that there were more things to be done that we have people and time to do them —  and it will always be so. This means that there will always be jobs. Unemployment is a problem of getting those who need things done together with those who would like to work.

 

The essential problem is affordability. The government makes it very expensive for a business to hire new workers. In fact, it is so expensive to have workers that business is letting people go and even looking to use robots instead of people. The problem is getting worse and will continue to do so long as there are barriers to deal-making between those who would hire and those who would like to work.

 

It is not lack of work. Rather it is the cost of getting the work done. So what makes the cost of hiring people so high? Government is the reason that cost is so high.

 

Lew Rockwell once listed a few of the reasons the cost of employment is so high. This list is far from being exhaustive:

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.

 

The US could “be great again” if just these government interventions were eliminated. There would be employment for all who were able to work. Congress and the President could eliminate these barriers to employment easily.

 

Given a new laissez-faire approach; the hiring of new employees would be breath taking to behold. But some would object to this approach. What would be the objection to this approach? Many would say that we need “good paying jobs” and not just jobs. They would claim that being unemployed and dependent on government is much better to working for what you are worth.

 

There is no exploitation in a market-based labor contract. Humans would freely come to agreement based on their subjective view of the benefits of the proposed arrangement just as von Mises told us in “Human Action“.

 

Exploitation is violence or threat of violence implied in the negotiation of anything affecting the life worker or employer. So, everyone in our system is exploited by the government and the onerous regulations and laws that rob the unemployed of wages, businesses of opportunity to hire workers.

 

Everyone is robbed of opportunity. The government is the thief.

Comments

George N Romey Added Jun 19, 2017 - 7:43am
Based on your theory people would have jobs but wouldn't earn enough to support themselves.  Our bigger problem than unemployment is underemployment, which all of us pay for.  Companies that have a business model that exploits people for slave wages has no business being in business.
 
 
Bill H. Added Jun 19, 2017 - 5:50pm
Correct, George
Sub-par wages and over-priced products and services curtail the population's buying power, therefore people purchase less, companies produce less, and in the long run, profits are down. This loop effect again causes companies to staff less, raise product and service prices, keep wages low, and offshore whatever they can. Here we go again...less jobs, lower buying power, higher prices, lower long-term profits. And the loop continues..................
When we get away from the narrow-minded bean counter spreadsheet mentality and implement what really works in business that has been well proven in the past, we may have a chance of real recovery. Corporations now treat their employees as an Excel function, forgetting entirely how to maintain and reinforce the real ideals that rewarded both the companies and the employees.
Peter Corey Added Jun 19, 2017 - 6:30pm
>Based on your theory people would have jobs
 
True.
 
>but wouldn't earn enough to support themselves. 
 
Why wouldn't they earn enough to support themselves? Are you claiming workers habitually live beyond their means?
Peter Corey Added Jun 19, 2017 - 7:03pm
>Sub-par wages
 
What's a "sub-par wage"?
Dino Manalis Added Jun 19, 2017 - 7:20pm
That's why we constantly need pro-growth policies; fiscal discipline; and a foreign policy that promotes peace; stability; and prosperity!
Patrick Writes Added Jun 19, 2017 - 9:16pm
"Unemployment is a problem of getting those who need things done together with those who would like to work."
 
Is it that simple? Workers often need training and experience. If they can't find 'suitable' candidates, most business prefer to go without than hire an empty suit off the street and spend years training him or her. 
 
And lately, even if there are suitable candidates, many companies don't want to pay them and prefer to import workers from overseas with the same or worse skills but who are cheaper. 
 
Things get even more complex when companies want to hire 2 part-time workers instead of 1 full time because it's cheaper in a host of ways. 
 
Then there are factors such as recession or deflation, if aggregate demand for tractors decreases, then tractor builders get let go. That reduces the demand for new cars, vacuums, toasters, which tractor builders often buy a lot of, which in turn reduces the demand on car manufacturers, vacuum builders, and toaster factories. So those workers get let go, and the cycle continues. 
 
In my opinion, unemployment is a complex phenomenon. It's not simple at all. 
Patrick Writes Added Jun 19, 2017 - 9:18pm
I'd agree there are unforeseen consequences to government action though. And that paradoxically often means legislation can have nearly the opposite effect from what was intended. 
Bill H. Added Jun 20, 2017 - 1:36am
Adjective
subpar (not comparable)

Of less than a traditional or accepted standard

Bob's grasp of English was subpar.


(golf) below par
(finance) Trading a price below face value.

Maybe I should have said "wages that do not match the cost of living".
Peter Corey Added Jun 20, 2017 - 1:50am
>"wages that do not match the cost of living".
 
Even worse than your earlier effort. 
 
You're claiming all workers, of all ages, everywhere in the US, are faced with exactly the same "cost of living"? And every worker has exactly the same set of "essential needs" as any other worker, that you can specify explicitly? You're pretending to be able to write down on a piece of paper something like the following:
 
Each unnamed worker has these needs:
 
X calories per day;
X ounces of water per day;
X pairs of dress pants;
X pairs of casual pants;
X dress shirts;
X casual shirts;
X pairs of socks;
X pairs of shoes;
$X for "average rent" or "average mortgage";
$X for "average health insurance coverage";
$X for transportation;
$X for pharmacy expenses
$X for meals (based on the first point above).
$X for telecommunication expenses;
Etc.
 
Something like that? And they're all very similar (perhaps identical) from worker to worker? Big workers? Little workers? Fat workers? Skinny workers? Athletic workers? Couch-potato workers? Those who are healthy as a horse? Those with asthma or COPD? They all have the same caloric needs, sartorial needs, etc.? And you're able — with your amazingly astute intellect — to distinguish between what someone really, really, really NEEDS, and what he merely WANTS?
 
Really? I mean, really?
 
You're either a tinpot dictator, eager to tell the majority of workers what they're entitled to ("Vote for me, everybody, OK? I'll take care of you and make sure that you get what's owed to you!") or you're just a crackpot.
 
Maybe you're a tinpot crackpot. 
 
Who knows.
John G Added Jun 20, 2017 - 2:12am
Lew Rockwell is a libertarian idiot.
The government is the only entity that can ensure full employment.
Capital can't and won't. It is antithetical to its interests.
Bill H. Added Jun 20, 2017 - 11:18am
Let's try again-
When people earn a decent wage, they are able to purchase more products. When more products are purchased, more are produced resulting in more jobs and profits which ideally are shared with the workers and the process keeps building on itself. There are many other spinoff benefits such as increased competition, satisfied workers, and the list goes on.
This is how we used to work before the scales were tipped in favor of the corporations which resulted in the economic imbalance of the machine we now see.
George N Romey Added Jun 20, 2017 - 12:27pm
Bill its this mentality if the free market has no bonds on it the free market will provide wonderful things to all.  The deregulation of the financial services industry occurred under this Greenspan/Rand mentality. The same system that gave us the meltdown and Bernie Madoff.
 
Its like thinking if you left your 2 year old to play near the road he/she would have enough wherewithal not to stray out into traffic.
Peter Corey Added Jun 20, 2017 - 1:04pm
>Lew Rockwell is a libertarian idiot.
 
John G is a crypto-fascist and a fraud. He has no "degree" in economics and knows nothing about the subject. He admires J.M. Keynes, whose economic bombast was also greatly admired by fascist leader Benito Mussolini.
Peter Corey Added Jun 20, 2017 - 1:15pm
>When people earn a decent wage, they are able to purchase more products.
 
Wrong.
 
Try this instead:
 
When prices of consumer goods decrease, any wage someone happens to be earning at the time automatically, and by definition, becomes a "decent" wage.
 
The lower prices become, the more one can buy at any wage.
 
Economic progress is — and always has been — a matter of "producing more with fewer resources", i.e., lowering the cost of producing something. Lower costs (which in many cases, though not all, are made possible by lower labor costs) initially lead to fatter profit margins for producers, which then lure competitors into the field. Competition among competitors will always lower prices for consumers, as well as bringing the initially fatter profits for producers back in line with the so-called "average rate of profit".
 
The key to economic progress for workers is to increase the purchasing power of their wage by lowering prices for goods they want to buy. Progress has little to do with increasing the size of the wage in numerical terms (the "nominal wage"). 
 
Guess what? If everyone's paycheck were to triple overnight, the only long-term effect would be that prices of most things would triple as people happily started spending their additional wealth. When prices triple, those workers are no better off than they were before, in terms of what they could afford to buy.
 
So you're wrong about a "decent wage." Lower prices create "decent wage" by increasing purchasing power; and lower prices are the product of higher productivity and greater efficiency.
Peter Corey Added Jun 20, 2017 - 1:19pm
>The same system that gave us the meltdown and Bernie Madoff.
 
Everyone agrees that Bernie Madoff was made possible by the SEC telling people, "Nothing to see here, folks. We've checked this guy out and he's legit. Move along, now. Nothing to see here." You've put your naive faith in a regulatory body, and it appears the regulatory body itself was the cause of Madoff not being "found out" by market participants until many of them had already been burned.
 
Most regulatory bodies have the exact opposite effect in the market from the one they promote about themselves.
John G Added Jun 20, 2017 - 2:49pm
Another Austrian nut job that thinks deflation would be a good thing.
Just incredible.
Peter Corey Added Jun 20, 2017 - 4:58pm
>Another Austrian nut job that thinks deflation would be a good thing. Just incredible.
 
See what I mean about being utterly clueless about economics?
 
I said nothing about deflation. I said PRICE DECREASES. Completely different. And if you don't understand the difference, then you know less about the subject than you pretend, and you pretend a great deal.
 
Where did you go to school, GooGoo? From where did you obtain your "degree" in economics?
Bill H. Added Jun 20, 2017 - 5:20pm
 
So Peter-
We have been on your road for quite a while and it just keeps getting worse. How about if we tried what worked prior to this mess, as I was discussing.
Of course, it would require an initial sacrifice from corporations, and we know that isn't going to happen in this business climate.
 
Peter Corey Added Jun 20, 2017 - 8:26pm
>We have been on your road for quite a while and it just keeps getting worse.
 
What, specifically, keeps getting worse? I don't understand your complaint.
 
Try to be concrete and specific if you choose to reply.
Peter Corey Added Jun 20, 2017 - 8:45pm
"Monetary Deflation" vs. "Falling Prices from Increased Productivity and Efficiency"
 
“ . . .  it is simply incorrect to think of falling prices per se as 'deflation.' The falling prices caused by more production share only one symptom of deflation—namely, the fall in prices itself. They do not share two further, essential symptoms of deflation—namely, the sudden reduction or total elimination of business profitability and the increased difficulty of repaying debts.
 
What accounts for the combination of these three symptoms of deflation together is not any increase in production or supply, but a decline in monetary demand— a contraction of spending—which occurs as the result of a drop in the quantity of money or at least a  slowing down of its rate of increase. A drop in total spending reduces prices. That is one of its effects. In addition, and totally unlike an increase in production and supply, it also reduces total business sales revenues. This reduces the availability of funds with which to repay debts. It makes it more difficult for the average seller to earn any given sum of money, because there is simply less money to go around. In addition, and again totally unlike an increase in production and supply, a drop in total spending reduces the general rate of profit, because while sales revenues fall immediately as a consequence of a decline in spending in the economic system, total costs of production in the economic system fall only with a time lag. For example, depreciation cost continues to reflect the larger volume of spending on account of plant and equipment that existed in the past.
 
Thus, deflation is a monetary phenomenon, not a phenomenon originating on the side of production. It should be thought of as a contraction in the volume of spending in the economic system, precipitated by a decrease in the quantity of money or slowing down of its rate of increase. For this is the underlying phenomenon that produces the cluster of symptoms that constitute deflation, not merely the one, isolated symptom, the fall in prices, that deflation shares with increases in production.
 
It is nothing less than absurd, indeed, vicious, to equate deflation with increases in production on the basis of their sharing this one, isolated symptom of falling prices while being of an absolutely opposite nature in connection with their effect both on the average rate of profit and on the general ability to repay debts. It is the wiping out of profitability and the sudden increase in the difficulty of repaying debts that is the substance of the evil produced by deflation. This has absolutely no connection with increases in production and the fall in prices brought about by increases in production. To view the fall in prices brought about by increased production as the same as deflation and depression is gratuitously to confuse the enormous economic good that is constituted by increases in production with the evil that is constituted by depressions. It is difficult to imagine a more profound or devastating error."
 
— "Capitalism" by economist George Reisman (Pepperdine University).
 
When productivity increases and prices decline, it does NOT mean that consumers want to buy fewer things; indeed, lower prices create an incentive for more consumers to buy more things — especially those things that were previously considered "luxury" items and too expensive for purchase by average wage earners.
John G Added Jun 21, 2017 - 2:10am
LOLz. That's just risible nonsense. Deflation occurs when price declines accelerate, usually due to a slow down in demand i.e spending.
Macroeconomics 101 Spending = income.
Peter Corey Added Jun 21, 2017 - 11:03pm
>Deflation occurs when price declines accelerate
 
HA, HA, HA, Hee, hee, hee! Price declines can only occur in one sector or industry as other sectors and industries experience a corresponding price increase . . . DUH!!! This occurs, genius, because people are not robotic in their consumer choices; they make different choices at different times, and they buy different things at different times: so a rise in yogurt prices will correspond, e.g., to a decline in beef prices, as farmers notice that people want more dairy products and less red meat.
 
An overall price decline can occur if production becomes more efficient and costs of production are cut: this would not somehow cause consumers to demand less of something if the price of a desired good (e.g., yogurt) were cut in half; on the contrary, now that it was half the price it was previously, more consumers can buy more of it. 
 
However, an actual contraction of aggregate consumer demand will also cause prices to decline but not for the same reason.
 
You see, your basic problem (aside from being a cretinous moron) is that you believe, against all logic, that if two effects are identical (e.g., "overall consumer prices decline everywhere in the economy") you mistakenly think that the cause must be the same. Wrong. You have it backward. It's true that if the cause of something were the same, the effects would be the same; but the reverse is untrue: if a bunch of effects (e.g., price declines) are the same, it doesn't follow that they were caused by the same thing: one price decline might have been caused by a sudden contraction of the money supply and contraction in consumer demand; another price decline might have been caused by productivity greatly increasing.
 
Good Lord. You truly are pathetically stupid in a special way.
 
By the way, from what school did you obtain your "degree" in economics? 
John G Added Jun 23, 2017 - 5:48pm
Another strawman burnt down.
You are a pathetic wingnut.
Peter Corey Added Jun 24, 2017 - 4:16pm
By the way, GooGooGaGa, from what school did you obtain your "degree" in economics?
John G Added Jun 26, 2017 - 4:45am
I've told you before, Corey. You were just too stupid.