This may wind some people up.
The spectre of mass unemployment is stalking the world. All sorts of solutions are being proposed, except the obvious one.
Human labour is subject to the law of supply and demand, just like oil or tomatoes.
There is no getting away from this basic truth.
Increase the price of labour beyond what the market will bear and demand will drop-hence unemployment.
What happens to tomatoes when demand fluctuates?
If there is a good growing season and tomatoes are plentiful, prices will drop and people buy more tomatoes relative to other foods. All tomatoes are still sold, none are wasted or left to rot, none are “unemployed”.
What happens if the government sets a minimum tomato price-to “protect” tomato producers. Simple-all tomatoes worth less than the arbitrary price are dumped-they become “unemployed”.
In a free economy there can be no involuntary unemployment because there is no state interference in the price of labour.
When demand for labour is high, employers bid up the price of labour-they pay more in cash or benefits to attract staff from their competitors.
When demand for labour is low, employers simply re-nogotiate their contracts down to find the right equilibrium. Some workers may get temporarily less, but everyone still has a job. Everyone is still utilised and continues to pay some tax.
Unfortunately, in the western world at least, it is very difficult to lower remuneration packages once established. Regardless of the demand for labour employers have no opportunity to negotiate pay rates downwards.
Therefore, in order to avoid bankruptcy employers have no alternative but to sack staff.
A few workers maintain their pay and perks-the rest are on the scrapheap.
This means companies lose some of their investment in training workers making any recovery slower. The government loses tax revenues and must either cut services, print money (inflation)or raise taxes on those still employing and working, further retarding recovery.
Worst of all thousands of people rot on welfare, just like so many sub-standard tomatoes.
The cure for unemployment is glaringly obvious.
Get the government out of the labour market.
Let people buy and sell their labour like we buy and sell any other commodity.
People are worth more than tomatoes, surely they deserve at least as much freedom?