Both Obama and Romney are saying that as our next president they would improve the American economy. Neither is saying he would bring us full employment, so I thought that I might explore a little plan to aid the next president just in case he wants one — and reads this. But the plan is mainly what to stop doing rather than some grand program so it will fall on death ears no doubt.
I have been told that one can read any account of economic history from the late Middle Ages up through the 19th century and you will find no evidence of the existence of unemployment. There just was not any unemployment for the able bodied men and women who wanted to work. Long-term unemployment is caused by the interventions of the modern nation-State.
The “humanitarians” claim that it is better that people be unemployed rather than being “exploited” at low wages. In a laissez-faire market there in no “exploitation”. People are hired and are paid for what they produce for the employer. Once upon a time many teenage boys in America pumped gas at a service station for their spending money as a first job. They learned many things besides just having a job. But the State caused the retailers to stop full service gas due to minimum wage laws plus child labor laws. Are teenage boys better off unemployed? If someone says that $10 per hour is exploitation should we create even more unemployment by raising the minimum legal wage to $20?
In a market-based labor contract where both parties agree to the terms of employment there is no exploitation. Exploitation is simply violence or threat of violence implied in the negotiation of anything affecting the life of a worker or employer. Many would rather be in the workforce than to sit at home doing nothing productive. Some might even rather pay the employer to have a job if they see it as an internship.
There are many governmental interventions into the market that cause unemployment. Government erects barriers to gainful employment that has given us the notion that “full employment” is over 7 percent! Lew Rockwell once provided a partial list of barriers to employment in modern America:
- 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.
That list is not a full list of barriers to real full employment, but it does list most of the worst interventions by government into the market. If you want to see America with an population that is fully employed, then the elimination of the above barriers to employment would do the trick. How hard would it be? No constitutional amendments would be necessary; only the repeal of certain laws. Congress could do it in a week if they were not so economically ignorant.
We could see a vastly improved America within six months. Will we? Doubtful.