Freedom-Fighters Forum

By Paul L. Poirot

There is abundant evidence that unemployment occurs in the most prosperous industrialized economies in the world. There also is ample evidence of unemployment in poverty-stricken nations such as Red China where industrialization is attempted through coercion and men are forced from traditional subsistence farming into the tax-supported heavy industries planned and promoted by the rulers. When shortages of raw materials or tools disrupt “The Plan” in Red China, the coolies who have been drawn into factories find themselves unemployed and starving.

Evidently, it is not the stage or the degree of industrialization that accounts for the severity or persistence of unemployment. Serious unemployment can occur in a United States of chronic surpluses as well as in a Red China or Russia of chronic shortages. Perhaps the surpluses and shortages afford a clue. These are signs of a malfunction of the market, of supply in excess of demand, or vice versa. There is a surplus of wheat in the United States because someone has been using the force of the government to regulate the price of wheat, holding it up by law instead of leaving it free to rise or fall to that point which would tend to balance supply and demand and clear the wheat market. And the shortage of food grains in Red China likewise is the result of government tampering with the price signal, holding the prices down by law to a point too low to stimulate the production consumers want and otherwise would pay for.

It should be clear that a surplus or a shortage of any commodity is not an inevitable consequence of industrialization or of trade in an unrigged market. The surplus or shortage arises because of price control — because the market is not allowed to perform its natural function of bringing supply and demand toward equilibrium — because people are not permitted to buy and sell what they please at prices acceptable to everyone concerned. When a surplus or a shortage of any commodity occurs, you may rest assured that the force of government has displaced individual choice.

The effect of price control for services — that is, control of the level of wages — is the same as the effect of government price control of commodities. In other words, unemployment in reality is a surplus of labor. And a surplus of labor can occur in any society only if someone is using the force of government to hold wage rates above the level that would clear the labor market. If willing workers are unable to find willing employers at a given wage rate, this means that the wage rate is being held at too high a level.

Unemployment is not a necessary condition of industrialization or free market exchange; it is caused by control of wage rates — by the government directly, or by some person or group having usurped and exercised governmental powers of coercion.

The government-assembled statistics of the United States show that unemployment has ranged in recent years between 4 and 5 per cent of all experienced wage and salary workers, and that about 80 per cent of those classed as unemployed were eligible for government “unemployment compensation.”

It may be argued, of course, that the government bases its count on faulty information, that many of those presumed to be unemployed are simply waiting out the normal interval between jobs, or that some of them have never really looked for job opportunities and wouldn’t work if offered the chance. And of the four out of five actually being paid not to work, a high proportion must consider that arrangement the most satisfactory of all ways to “earn” a living.

There is another side of the picture, however. Does the government’s count include the thousands of farmers who are being paid not to produce wheat, cotton, tobacco, and other “basic commodities”? Are not these farmers as effectively unemployed as the laborers collecting “unemployment compensation” for not producing coal or cars or steel or whatever? And can it be said that they were fully and effectively employed who grew the wheat and cotton and other “surplus” commodities now deteriorating in government storage?

Are shipyard workers fully and effectively employed while building subsidized vessels for a subsidized merchant marine? What of those workers in “depressed areas” who are engaged in subsidized highway construction, or subsidized urban renewal; are they fully and effectively employed? Above all, what of the jobs “saved” in shady and questionable private enterprises by the government’s deliberate policy of deficit-financed inflation designed to conceal business bankruptcies and thus keep working those union members who otherwise would have priced themselves out of the market into the ranks of the unemployed?

Without further extending the list of government projects and policies designed primarily to make work for the otherwise unemployed, it seems reasonably clear that the government’s unemployment count has grossly understated rather than overstated the seriousness of the problem. When governments at various levels in the United States are spending more than two-fifths of the total earnings of all individuals, there can be little doubt that far more of us are effectively unemployed than government statistics reveal.

The harsh fact is that government intervention — in the form of special powers and privileges to labor unions plus a vast tax-and-deficit-financed matrix of “depressed area” work projects designed to shelter and hide those who have arbitrarily priced their services out of the market — has resulted in a surplus of labor, a rate of unemployment and malemployment that not even the wealthiest nation in the world can long endure. The government statistics do not even begin to show the extent of the unemployment problem. The corrective is to repeal those grants of power and privilege, stop the foolish government spending, and let prices and wages find their own level in a free market.