I just stumbled on the latest unemployment figures. Interestingly, while the “official” number today stands at 7.4%, the “unofficial” number appears to be nearly three times higher! But whichever number it really is, it’s still a whole lot of people living in misery and uncertainty of the future. What’s up with that?
IT DIDN’T USE TO BE A PROBLEM
Unemployment didn’t really exist as an issue of any kind of social or economical import up until the times of the Industrial Revolution in Britain from about 1760 to around 1840. Sure, you always had some people looking for work, but their numbers in percentage terms were tiny – barely mentioned in the records of thousands of years. It was everyone’s individual responsibility to find work – and find it they invariably did.
Since the end of the 18th century, the vastly increased productivity the Industrial Revolution ushered in was here to stay. Not only did it contribute to consolidating Britain’s position as the world’s superpower at the time, but it had also – directly – contributed to the creation of what we know today as the “middle class“. That – and the resulting wide-spread mass prosperity (also among ordinary workers!) the likes of which has never been recorded previously in the history of civilization. Take that you Capitalism-bashers!
It may not always have seemed like it at the time – especially for those for whom the new ways meant hitherto unknown, though usually temporary, hardships – but we’re here as living proof that it did in fact happen.
But it wasn’t all roses either. The displacement and re-qualification of vast populations looking for better-paying work in the industrialized areas and the resulting social and political upheavals bore fruit in the form of social unrest, new ideologies, political and economic systems, and growing numbers of regulations – all of which had many by-products, one of which was unemployment on a mass scale.
HOW DO YOU DRIVE THIS THING?
If all you ever knew is a bicycle, then suddenly being forced to drive a car (without instructions) would be fraught with huge dangers for you.
This was humanity’s first exposure to the wonders of capitalism and no one knew how to deal with its benefits as well as dangers. Adam Smith’s “The Wealth of Nations” notwithstanding, the “free market” had an uphill struggle from the start in trying to assert itself. No one was going to take any chances.
The people were worried about the fallacy that they would be “replaced by machines” – not understanding the now-obvious benefits of increased productivity; the government, in the meantime, was dazzled by the ultra-rapidly increasing potential tax sources. And government likes shiny little things like that.
Meanwhile, the new phenomenon of a growing “middle class” slowly started emerging – along with the margins: the super-wealthy and the hopelessly poor. The latter two, largely thanks to government supported monopolies and cronyism, both of which are as old as political power itself.
THE ONLY CAR IN THE VILLAGE
If you had the only car in the village and no one’s ever even seen a thing like that before, you can bet that the village elders would soon devise some rules for it. They’d soon decree that you need 10 drivers at a time, 100 people to push and another 100 to break (refusing to accept that the car doesn’t need either). And then they’d reserve the cushy passenger seats for themselves. And, of course, the remaining population would be allowed to watch (for a fee), much to their eternal delight.
The irresistible temptation of government meddling in industrial relations, private affairs as well as business went into second gear with the advent of the Industrial Revolution and has been gearing-up ever since.
The revolution happened in spite of government policies to date. It wouldn’t even know how to bring such a revolution about – but now it purported to know how to manage it.
It may forever be an unresolved argument whether things would have been better had governments of the day taken a more enlightened, non-interfering stance, taking their cue from Adam Smith and his supporters. Today we’re paying the price regardless.
The few isolated cases where the free market was allowed to work have invariably proven the concept – the early US being a good case in point (various problems notwithstanding), but also places like Hong Kong, Singapore, recently also, once again, Sweden, to a lesser extent Rwanda, Estonia or even Chile, and a handful of others, plus, of course, the Internet! But even in all these cases the government was never completely out of the game.
Be that as it may – it is still beyond any serious dispute that it was government interference (a.k.a. “regulation”) which – wittingly or othwerwise – created the ever-growing and mind-boggling wealth inequality through its usual monopolistic cryony favoritism combined with its wholesale and de rigueur support of banking manipulations and market rigging.
It is also beyond any educated debate that the increase in people’s living standards, as well as decrease in poverty were already well-established and strong trends in all industrialized nations well before modern governments took it upon themselves to make things “better” – at which point these improvements either continued at the same pace, or actually slowed down. The futility of “good for you” legislation! The insatiable, mass migration to the US over the course of the past 2 centuries is but one “proof” of this – if any more was needed.
UNEMPLOYMENT IS A NATURAL CONSEQUENCE
It should now be clear that one of the multitude of consequences of government meddling – from taxes and levies on business to labor relations to minimum wages to regulating each breath you take – has been the creation of mass unemployment.
Policies, which insist on regulating both the producers and the workers, while favoring potentates who bankroll the very government that is supposed to regulate them, could only ever have that result.
A TEENY-WEENY LITTLE GOVERNMENT REDUCTION WOULD BE NICE
Modern liberals and progressives dare not imagine life without the state. They refuse to believe that egalitarianism and prosperity could ever be achieved – and maintained – without a strong, ever-intrusive government. They’re prepared to maintain that flawed intellectual position in spite of ample historical proof to the contrary – and even at the cost of their own steadily-decreasing individual liberties, continually-growing taxes and tariffs, endlessly creeping inflation, as well as the undeniable and transparent government favoritism – cronyism – accompanied by endless militarism, lies and profiteering – all courtesy of the Big Brother near you.
Meanwhile, proponents of the free market and individual freedoms – namely the libertarians whose numbers (thankfully) continue to grow even as disagreements between them also continue to multiply (exactly “how free” should freedom be) – insist that only a radical reduction in government will ever bring prosperity and true egalitarianism back. Oh, and unemployment will cease to be a problem.
Like most people, amateurs and specialists alike, I find myself caught between these two extremes. Instinctively, I strongly lean towards the “freedom” side, but I’m also not entirely confident that “small” government would be enough to stem the tides of negative market forces, most notably the criminals and opportunists who – now that they’d no longer be part of big government – would suddenly have to find something else to do…!
YO’ UNEMPLOYMENT MOMMA
Approximately 20% of the workforce in the US is employed by the Government – federal, state and local. In some states, much more than that. It is also estimated that another 10%-20% in the private sector directly or indirectly depend on government contracts.
Needless to say, the vast majority of people employed by the government would have little useful to do in a free market, through no fault of their own. They would be truly displaced if a free market revolution were allowed to happen overnight. They’d have to re-educate themselves and adjust to a lifestyle in which the average wage isn’t so much higher than what the typical private sector job has to offer, but rather is in tune with the fair laws of market supply and demand.
Even if they wanted to get a job in the private sector today, they’d find that their own past government work continues to make that increasingly more difficult, as the ever-increasing weight of senseless government regulations continues to disincentivize business everywhere!
Also their feeling of self-worth would be dealt a devastating blow. Here they are today believing they’re “serving” the public – in spite of the glaring evidence to the contrary – so they would suffer tremendously if the system were to suddenly change to one driven by free market rules. Their skill-set would need a rapid re-adaptation.
Oh, and just in case anyone is objecting that the US “is” in fact a free market economy, rest assured it’s further from it than it’s ever been. It’s a mixed economy at best. Unless, of course, you mean the “underground” economy, but that’s a whole different matter.
Back to our musing about employment by government: 20% is a huge number. These people with non-productive and public-wealth-decreasing jobs (around 22 million of them) but with personal means equal to at least half the remaining population will almost by definition defend the status quo to their last breath. It’s understandable. But it’s also helping to push this momma off the cliff.
BUT WHAT IF…
What do you think would happen, should the government suddenly be made to yield to pressures to cut itself down to size?
Ultimately, absent all the anti-business and anti-privacy regulations, you would see an economic boom on a scale never seen before. It’s just logic, if you think about it.
But before we’d ever get to that stage, we’d have to have a few years of transition. The rate of that transition would determine how soon a “new age” would dawn, but also the degree of hardship of the journey.
The success or failure of any such reform would depend on honesty of government (something no one in their right mind would ever count on) and on the resolve and basic understanding of the people who would hold that government to account.
If the average-educated person on the street could be made to understand how the world works and how it SHOULD work – it would be relatively easy to keep the government accountable – and small.
All the useless and overpaid jobs which the government creates today would give rise to new initiatives and true competition. All the government spending wasted on unsustainable wars and faux social programs would be halted and resources thus freed up could be used for the REAL benefit of the society as a whole. And before you know it, we’d even get honest money back, preferably based on a basket of commodities and other market-friendly sources. And then, at the end of the day, the government’s role would only become what it should have been to begin with: protecting your freedoms and defending you from ANY aggression – especially its own.