The Market Fundamentalist

If Obama wants to create jobs…

http://www.amconmag.com/headline/1287/index.html

The hopes of the Democrat Party for the next election lie in a recovery that allows the unemployment figure to well below the over 10% mark it has now.

That 10% mark is a minimum number. Many put the real number at 17-22%. Among blacks, even higher.

Now that the health care plan is on the “back burner”, and most people think cap’n'trade legislation as well, the focus will be on the economic recovery. And the central planners are hard at work to propose ways to “solve” the problem.

Dennis Kucinich has proposed that the government offer early retirement via expanded social security benefits so that the older workers can be replaced by younger workers. How this central plan will actually expand jobs is not clear. But, Kucinich obviously believes that JOBS are simply SLOTS that you can fit any old human being into without losing a step. Replacing experience with youth–that’s the ticket!

Meanwhile, only a few days after publishing its excellent cover story study debunking the MYTH OF THE VIOLENT IMMIGRANT, (see: http://www.amconmag.com/article/2010/mar/01/00022/), the AMERICAN CONSERVATIVE MAGAZINE has reverted to form by publishing Pat Buchanon’s sister, Bay, in an article that proclaims that the way to create jobs is to …what else?…CUT DOWN ON IMMIGRATION. She trots out the old sawhorse that immigrants are “competing” for our NATIVES’ jobs. Like anyone owns a right to a “JOB” that someone can “steal”.

Both Kucinich and Bay Buchanon are promoting the same economic fallacy: that there is a fixed number of jobs, a PIE if you will, that government can allocate by restricting competition, or merely by cutting up the pie differently.

The economy is not a stable entity like a pie, it is the dynamic interaction of millions of self motivated individuals, that can grow or diminish like any ORGANISM.

In a modern economy, jobs are a contract that carries with it a bundle of rights and responsibilities. But the important thing to remember is that the contract is for PRODUCTION. The ultimate beneficiary of any job is neither the employer, or the employee, but the CONSUMER. In semi free market American capitalism, the Consumer is still king, if a greatly weakened monarch by attacks from the state.

Central Planning, by either the left or the right, will never CREATE JOBS. Only the ability of entrepreneurs to meet consumer demand will create jobs. And consumer demand is relatively low now, as we are in a CORRECTION from massive BUBBLES caused by the state, and its unholy alliance with FRACTIONAL RESERVE BANKING and a STATE CONNECTED SINGLE CENTRAL BANK.

What this means is that even though there are still an infinite amount of human needs to fulfill, the ability to serve them is hampered by the INABILITY OF THOSE WHO WOULD CONTRACT TO HAVE A MEETING OF THE MINDS.

The primary lack of an ability to contract is the barriers to contract that the STATE has raised, directly or indirectly. These barriers are in the form of the usual suspects: Taxation, Regulation, threats of litigation, threats of more legislative interventions, etc.

The last major recession that the US had in an atmosphere of regulatory freedom occurred in 1921, when World War I ended. The war spending boom was now a bust, and the boys came home to glut the existing job market. Unemployment shot up to over 10%.

In that instance, President Harding did almost nothing. What he did do was significant-he instituted an across the board tax cut, that included defense spending. Nothing else. No bailouts, no stimulus package, nothing. Unemployment decreased rapidly, and in about a year the economy was humming again, into the ROARING TWENTIES. The history books do not mention the GREAT DEPRESSION OF 1921.

President Hoover, on the other hand, was a PROGRESSIVE to the core. He instituted the current model of BIG GOVERNMENT INTERVENTION to combat the Stock Market Bubble’s collapse. He raised taxes, signed the SMOOT HAWLEY TARIFF, exhorted businesses to keep wages high, and used the bully pulpit to claim “Prosperity is just around the corner”.

His successor, Franklin Roosevelt, used the same interventionist tactics, although he added his own wrong headed ideas, like ending gold backed notes and contracts, and replacing it with paper money. He tried to centrally plan the economy MUSSOLINI style, but the Supreme Ct voided the NRA as unconstitutional. He tried massive public works, packed the Supreme Ct, empowered unions, and finally, he entered World War II over the objection of the America First Movement. Nothing worked, until after the war. WE DO READ ABOUT THE GREAT DEPRESSION OF 1929 in our history lessons, because it lasted about FIFTEEN YEARS.

Since World War II, the US has followed the same interventionist, Keynesian path to correct the boom and bust cycle that it creates itself through fractional reserve banking, managed by a government connected central bank, and the other regulations that impede the ability of employers and employees, buyers and sellers, to FREELY CONTRACT.

In the first 150 years of the modern capitalist economy, unemployment almost never happened. Yes, there were booms and busts, due again to fractional reserve banking and its alliances with the state, either at the federal or the state level. But they were generally short lived, quickly corrected. Economists never bothered to study unemployment, because it so seldom happened.

In the twentieth century, OTOH, unemployment became a constant concern. In America, we still hope to keep it at 5% officially. In Europe, with its expanded Welfare State, chronic unemployment of at least 10% is a given fact of life. In both societies, the youth and minorities fare much worse.

How can we really CREATE JOBS? Economists like the late British economist WH HUTT (see :http://mises.org/store/Keynesian-Episode-The-P198.aspx) and more modern American economists like Richard Vedder and Lowell Gallaway ( see: http://mises.org/store/Out-of-Work-Unemployment-and-Government-in-Twentieth-Century-America-P295.aspx) who have studied unemployment propose solutions that are very much in line with the recent article by Lew Rockwell ( see: http://mises.org/daily/4083) ” HOW TO FIX THE JOBS PROBLEM”.

It consists of a program that includes:

Unemployment is not due to 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
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The high payroll tax that robs employees and employers of resources
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The laws that threaten firms with lawsuits should the employee be fired
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The laws that established myriad conditions for hiring beyond the market-based condition that matters: can he or she get the job done?
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The unemployment subsidy in the form of phony insurance that pays people not to work
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The high cost of business start-ups in the form of taxes and mandates
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The mandated benefits that employers are forced to cough up for every new employee under certain conditions
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The withholding tax that prevents employers and employees from making their own deals
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The age restrictions that treat everyone under the age of 16 as useless
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The social-security and income taxes that together devour nearly half of contract income
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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.

The Marxists who control the government would never approve these free enterprise reforms, because they still labor under the paradigm that PROFIT = EXPLOITATION. Until that notion is gone from public discourse, and centralized banking and state control of the money and currency is abolished, we will still endure BOOMS AND BUSTS , or periods of feverish economic activity followed by a crash that results in high unemployment for years. And more misguided government interventions that only make the problem worse.

Brendan

This entry was posted on Monday, February 1st, 2010 at 12:59 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

If Obama wants to create jobs…

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