I wrote last year about a tour of a local “food mission” that I took and I went again this year. The organization is in Daytona Beach, Florida and is a church supported mission that helps to feed the poor and homeless. The mission is a totally volunteer operation run by mostly retired folks that can donate time to keep the little operation open. They are able to serve about 500 families each month giving them food, toiletry items, and some clothing. I was with a tour group of supporters last week and we had a look around.
One of the leaders of the mission volunteer group gave a presentation to the various people who were there to see the operation. The speaker asked a group of middle school kids a very hard question, one that he claimed no one ever gets right till they hear the answer. He said that in Daytona Beach, Florida there are a some annual events such as the Daytona 500 or “Bike Week” that causes the population to explode to many times its normal size for the duration of the event. These events cause the number of people who line up for free food and items to drop. The number goes down as the population of the town goes up. Why? Why is it that during Speed Week, Bike Week, or the 500 the number of people who will line up on the sidewalk to wait their turn at free food goes down?
The man gave the young people countless attempts to guess the reason until he finally answered that during these huge events there is more work to be had than normal in town. Work for the unskilled. Work for the homeless. Work for the down and out. Work that these people can get! And they would much rather work than be fed free. They want to find work.
It is heart breaking to know that the U.S. government at all its levels uses its minimum wage laws, health insurance requirements, countless regulations, and so on to make a large percentage of America chronically unemployed. Everyone knows that the unemployment situation is very bad even if the official figures lie and understate the problem. Ludwig von Mises pointed out that in a totally laissez faire market there would be nearly no unemployment. There would be some people between jobs or some who were unable to work for various reasons, but any who wanted to work and were physically and mentally fit would be able to find work.
Government spending cannot create additional jobs. If the government provides the funds required by taxing the citizens or by borrowing from the public, it abolishes on the one hand as many jobs as it creates on the other. If government spending is financed by borrowing from the commercial banks, it means credit expansion and inflation. If in the course of such an inflation the rise in commodity prices exceeds the rise in nominal wage rates, unemployment will drop. But what makes unemployment shrink is precisely the fact that real wage rates are falling. ~ von Mises
Government intervention into the market place can never help the overall economy, it can only help the favored at the expense of the rest of us. But government can certainly hurt the economy. It can destroy the economy.
Concerning unemployment itself, it is the minimum wage laws and unemployment benefits programs, both supposedly designed to help workers, which directly lead to higher costs of employment and hence to higher joblessness and misery. Economists have known for generations that embracing those policies implies embracing many additional people being without jobs even as the favored are aided in some ways. The infuriating thing is that it is not a lack of work to be done but that it becomes too expensive to pay for the work to be done.
Lew Rockwell once gave a short list of barriers to employment:
- 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 by Rockwell is just a few of the government interventions that impoverish the people at the expense of the favored — the cronies of the powerful. If the government interventions on the above list were eliminated today we would see full employment. Not the fake “full employment” that government has claimed in times long past, but the situation where everyone who wanted a job could get a job.
It is time to end the welfare state and let people go to work. People naturally like to be useful and to voluntarily cooperate with others. It is time to again try the laissez fair system that built the Western world in the first place.