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On Creating Employment

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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