Archive for October 3rd, 2009

Where are the jobs?

October 3, 2009

We are in a “jobless recovery”, according to certain left-leaning politicians. First the economy will recover, and then we will see some jobs reappear.

To economists, they talk about “hope”, namely, the hope that there is a bottom to this recession. They see signs of it because the rate at which we are losing jobs is slowing down.

Of course, there is always a bottom to any economy: 0. Zimbabwe is fast pursuing this course, quite successfully, I might add. However, they are a still a long way away from it. North Korea is probably closer to 0 than any other country, and that’s only because they have slaughtered the vast majority of their country with their socialist policies.

Economics isn’t a hard topic, once you understand the fundamentals. And the fundamental is this: economic freedom. When people are allowed to interact with each other in whatever way they please (within certain logical limits to prevetn fraud and abuse), the economy does well. When you curtail those freedoms, then the economy does poorly.

It’s pretty easy to see this. Leave a farmer to his purposes, and he will soon find a way to obtain the land, tools, and material needed to farm. Stay out of his way and he’ll soon grow 100 bushels of wheat an acre at an extraordinary profit. Of course, it won’t be smooth sailing, but as long as the farmer applies his intellect and endurance to all the problems he’ll face, and as long as he is motivated by the promise of keeping the fruits of his labor, he’ll find a way to overcome them.

If we throw in arbitrary restrictions on the farmer, things get worse. Tell him what he can and can’t plant, and when, and his job gets really hard. Tell him to set aside a fraction of his land as a nature preserve, and it gets even more difficult. Tax him on his profits, or take it away in the name of feeding the poor, and he loses all will to work. Pretty soon, he’ll give up farming and go find something else to do.

Some restrictions are reasonable. Asking him to label—correctly—the food that he grows, or asking him to take measures to ensure that water from his land doesn’t flow into his neighbor’s field in a storm, or asking him to refrain from using certain harmful chemicals and practices, and the net benefit is positive. Of course, these things are easy to explain and easy to enforce. Many of them don’t even need to be encoded into law since any farmer will understand and adhere to the practices when taught.

That’s economics in a nutshell. Leave people to their devices, and they will figure out a way to profit. Interfere, and things don’t go so well.

There are several ways that we are interfering with people today.

At the top is taxes. We take money from people, especially money they earned. Taxes are always wrong, even when they are used for a good purpose. Governments should always work to reduce taxes to the bare minimum, and then some.

Next is borrowing. By taking money out of the banks, money that would otherwise be loaned to businesses, we are hurting our economy.

Then there is spending. By hiring people out of the economy or diverting people’s attention away from real profit-making endeavors, we are only hurting ourselves with limited productivity. What’s worse is when businesses spend their time buttering up politicians rather than finding a need and fixing it.

Don’t forget regulations. Some regulation is good, but too much is a disaster. Regulations that help people get things done faster and more simply will benefit our economy, regulations such as weights, labelling, and measures. Regulations that are too complicated or distract from the business at hand are not.

But behind the scenes is another profit killer, tort. The numerous lawsuits that fly around the country are a major cost to every business. Our tort system is badly broken. We need real reform to limit damages and limit the types of cases that can be heard.

Imagine living in a world where the total tax burden from all governments was less than 5%. Imagine living in a world where the federal and state budgets were measured in millions, not trillions. Imagine living in a world where the best bet for your money wasn’t government bonds (which didn’t exist) but private bonds. Imagine living in a world where regulations for an industry were contained in a two-page pamphlet and described simple things everyone could easily understand and live by. And finally, imagine living in a world where you didn’t wake up at night in a cold sweat, worried that your hard-earned profits would disappear in baseless lawsuits.

This is the world we should be working for.

This is the world where jobs are so plentiful and productive that labor was our most valuable commodity. This is the world where goods would be cheap and everyone could be a millionaire.