Dec
22
Human wants are unlimited. There is no limit for the work to be done in this world. To assert otherwise would mean that we are in the Garden of Eden and have no need left to be satisfied. I don’t think that I have to state that we haven’t reached such a state and will never ever do so. It should follow from this that in a non-coercive society, there is no reason for involuntary unemployment. In a free society, free of government regulations and taxation, there would be employment for everyone who is willing to work.
Economists and other intellectuals who make a case for make work schemes pay no attention to this fact. I will let one among them to speak. “Take the case of education. There is an estimated under-supply of 400,000 schools. Can you imagine the number of jobs we would create if we decided to address this? Simply having one teacher per class, instead of the current one per five classes, would create two million jobs. The construction of the schools, canteen services for them, and all the eco-systems around each school would create millions of more jobs.” says the “brilliant” journalist, Sainath.
If there were truly an undersupply of schools, the market would have solved the situation (provided schools aren’t choked by government regulations which prevent them from making profits). Businessmen seeking profits would find the situation appealing and step in. The fact that they haven’t proves that it apparently isn’t the case. It is understandable that what Sainath would have meant is that there is a need for education. Need, however, is not demand. Need, to be demand, should be backed by adequate purchasing power.
“Government spending cures unemployment”, is an old fallacy in economics. It is backed by no theoretical or empirical evidence. The amazing naiveté with which the intellectuals push this theory is shocking indeed. I hope that everyone would agree that two and two equals four. If this much is understood, the fallacy in this view becomes evident. The government doesn’t create wealth. Everything that it spends is taken from the innocent tax payer-directly or indirectly. (Inflation is an indirect form of taxation.) If this very money which the government spends is let to the tax payer, he would have either invested it or spent it on consumption. Both would have created as much employment or more. There is no reason to believe that private spending creates fewer jobs than public spending. There is no reason to believe that a bureaucrat, who has only the moral responsibility, in general would spend the money more efficiently than the tax payer who has both moral and financial responsibility. Another fact which is being forgotten is that the money taken from the tax payer won’t be spent in the same manner the tax payer wants it to be spent. If it were so, there would be no reason for the government to step in. The tax payer would have managed by himself. The fact that the tax payer is being called to spend for some ventures is adequate proof that no one would willingly spend for these projects.
I have said that what the government spends is the money of the tax payer. How moral is it to tax individuals for ventures which they may not approve of? Wouldn’t taxing A to spend on B reduce incentives for both-the productive and the parasite? Wouldn’t taxation preventing employers from expanding production and prospective employers from being employers itself? Such coercive actions would indirectly lead to more unemployment, not less.
It is worth examining why the very problem of involuntary unemployment exists. If there is no limit for the work to be done, why should some people go without jobs? The answer is: Government regulations and labor union coercion. If a minimum wage is set at a particular rate, employees who aren’t worth that much would be laid off. The same goes for labor union coercion. Labor unions use coercion to prevent employees working a wage lower than they have decided. Intellectuals who advocate such measures are hurting the poorest among the workers-the very people they claim to protect!
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1 views8 Responses to “On Creating Employment”
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Prashanth Perumal Says:
December 22nd, 2008 at 7:52 pmI find this article very offensive, paying no heed to the basic right of education every individual deserves. The reason cited, that is, “lack of purchasing power backed demand” sounds so rude and heartless.
Why would it hurt to allow some economic laws to go for a nap, in order to allow for social welfare schemes? Are the “laws” of economics to be compulsorily followed, even, at the cost of human welfare? Should it be “people working for the market — to respect its’ “unfallible” laws”, rather than the other way round?
Prashanth Perumal Says:
December 22nd, 2008 at 7:57 pm“There is no reason to believe that private spending creates fewer jobs than public spending.”
There is reason to hard reason believe the government will, more often than not, make spendings on the most urgent needs of the economy. Market failure is not a new devil to inhabit economies.
Fisherman Says:
December 22nd, 2008 at 11:30 pmMr perumal
The objection here is simple. The welfare of PEOPLE should not be at the cost of right of a PERSON.
How can you ignore the right of an individual, and talk about right of the people?
Are people like a herd of sheep to you, without a distinct face?
deadmanoncampus Says:
December 23rd, 2008 at 7:30 am“There is reason to hard reason believe the government will, more often than not, make spendings on the most urgent needs of the economy”
If those are really urgent needs,market would have met it.
“Are the “laws” of economics to be compulsorily followed, even, at the cost of human welfare? ”
Laws of economics are like the law of gravity.You can’t refute it/
deadmanoncampus Says:
December 23rd, 2008 at 7:36 amIf some one wants to jump of a sky scraper,and says-“Why should I respect the law of gravity? Why shouldn’t it take a backseat when It is my urgent need to get to the ground as fast as possible?” What could be said to that person?
sd Says:
December 23rd, 2008 at 5:46 pmFor me there are two main themes working here:
1) The right of the corporation or employer to create jobs and to hire only those most capable to perform that job efficiently
2) The social responsibility a society has towards protecting the least fortunate and most vulnerable in society.
These two often work at odds to each other, hence we have the eternal fight between capitalist forces and socialist forces; one wanting more efficiency, and the right to discard anyone or anything that reduces the profit margin and the other, wanting to protect the ‘peoples’ ’ rights over everything else, seeing anybody making personal profit as the enemy…
Unfortunately real life is not like that. As much as the corp has a right to discard anybody that does not meet it’s standards of skill or performance, it is also unacceptable for the corp to exploit it’s workers and not pay them correctly for the work done, or to keep them in working conditions that are detrimental to health.
This is common in many countries where the profiteering company is creating jobs, but exploiting the workers to maximize profits for themselves. Workers are expendable items to them, to be replaced as they die.
That is where laws and labour unions should come in: to ensure that there is a clear and fair means of regulating the corporation and their treatment of workers. Somebody needs to stand up for the worker and make sure they also get their fair share of what they have worked hard for.
However, in reality, this protective body has become swollen and corrupt and is now just a big hinderance to the corporations, in that the unions now seem to be more interested in gaining wealth and political power for themselves.
This is sad because they seem to have lost sight of the real issue: to protect the vulnerable. They are now as bad as the corporations in that they will block otherwise good initiatives to create jobs, because the minimum wage is not high enough for their liking, or organise strikes because some inefficient or even corrupt employees were (rightfully) sacked!
How can any business expect to operate in the face of such barriers to operation? The easy solution for them is to uproot and move to a region with fewer barriers to entry (less corruption, fewer constraints to employ, lower tax rates payable to the state etc).
A good example is TATA Nano production uprooting from West Bengal to I think Gujarat because of what I understood to be the same reasons above! What a shame that was for Bengal and all the jobs that were lost! But that is no longer the problems of the corrupt WB government and the unions. They became too greedy and ensured that business and jobs were lost in the process.
Prashanth Perumal Says:
December 26th, 2008 at 8:21 pm“If those are really urgent needs,market would have met it.”
To put it in short, goods (supply) flows towards people who offer high prices. That’s an economic “law”. If a person A (who wants the good as a luxury) could offer higher prices than person B (who wants the good as a life sustaining need), then if you leave the market to follow your “laws”, then market will win, welfare will lose .i.e. the good will allocate itself to satisfy luxury needs, NOT life sustaining needs. On the other hand, the government can do a better job.
“Laws of economics are like the law of gravity.You can’t refute it”
I didn’t take a shot to refute economics. I asked you, should the market be allowed to work by its’ own laws even if it goes mad (market failure)?
Prashanth Perumal Says:
December 26th, 2008 at 8:25 pm“The objection here is simple. The welfare of PEOPLE should not be at the cost of right of a PERSON.”
My point is, there needs to be the right balance with — people’s rights and welfare. Both are important, not recognizing it would mean having a view of the population as “a herd”.