"Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime."
This is a sentiment some people - republicans, objectivists, free-market economists, etc - use to defend their arguments for removing social government programs that provide benefits to the population, supposedly to encourage people to get jobs. But there's quite alot wrong with this line of thought.
First of all, you cannot just go get a job at your whim. That notion is ridiculous. To get a job you have to have a decent education and training. So, to ensure that everyone is able to get a job everyone must therefore have a decent education and training. But to get that education and training, you need to spend money, money that unemployed people surprisingly don't have. Their only options are to go into debt, or to go without. Encouraging method there boys!
The only way to comprehensively give everyone a chance at getting a job is to have everyone get a decent education and training, and the only way to do that is to provide that education and training. So, essentially this is advocating removing government programs when the only way to actually deal with the problem is to have government programs.
I certainly agree that having the government provide education and training at all levels would be a wonderful thing. This is not something the people who fling around the statement I posted at the top support though. Even if they were to support government provided education and training, they're still saying that you should remove programs like welfare and healthcare. Which shouldn't be done, because there it is near impossible to have everyone employed.
Which leads me to the second point. In a capitalist economy, full employment will never be achievable. Why? Because full potential output and the potential level GDP simply cannot match-up.
Let me elaborate -full potential output is the highest level of output able to be produced be an economy with all available resources. The potential level of GDP is the total level of value an economy is able to produce, which means full employment.
An economy can simply not produce as much as it has the ability to produce. First of all, there is a limit on supplies - there is not an infinite stock of resources available to us to use forever. Second of all, when something becomes unprofitable or less profitable in accordance to the laws of supply and demand, you scale production back. This is determined by the law of diminishing returns, where as the cost of labour goes past a certain point the level of output will decrease. The assumption that businesses would employ more people than they need is naive, and contradicts everything we observe about the majority of businesses in a capitalist economy.
For there to be sustainable economic conditions we use potential output, which is the highest level of real Gross Domestic Product output that can be maintained over a long period of time. Which means that Gross Domestic Product is unable to reach its full potential. Which means unemployment. Instead, the best possible result is for the economy to reach the lowest level of unemployment possible that sustains potential output. This can be called the 'natural' rate of unemployment, which some economists theorise lies between 2% and 4%. Not to mention the types of unemployment that occur naturally in an economy, such as frictional, structural, cyclical, etc.
The definitions of those aren't really relevant - you can look them up yourselves. Point is that it is impossible for there to be 100% employment in a capitalist economy.
Look at it like this - even during the world wars, where the majority of countries were using every available resource available to them, countries still had unemployment. The US had 1.2% unemployment at the height of WWII, the lowest in it's history. While it's quite a feat to have unemployment that low, it took a freaking World War to bring it that low and it didn't get under 1%. More than a million people unemployed at the height of WWII.
There are only two realistic ways for there to be zero unemployment that I can think of. One is another economic system, such as communism or a type of anarchy. The second option is a universal employment scheme, which requires very heavy government involvement in giving everyone a job inside a very complex new system.
Given that those two options are hardly something that'll get many people excited, we'll assume that they're going to go for the best possible option. Which means we simply need to keep social programs to support them. Removing social programs when people need them doesn't improve anything. Instead, it makes the problem much much worse. It creates poverty. This can be examined in the Miracle of Chile, where all government programs were removed and poverty became ripe until everything was reinstated. But that's hardly building a strong case. So, a second example would be the removal of the Aid to Families with Dependent Children (AFDC) program to make way for the Temporary Assistance to Needy Families (TANF) program in the US by Clinton. Long story short - removing welfare didn't work. For further reading on the subject, look up "The Ethics and Economics of the Basic Income Guarantee" by Widerquist, Lewis and Pressman, 2005.
Some may opt to ignore all available evidence available to them, and make the bold claim that unemployment is instead a result of laziness. Which would of course explain why the unemployment rate consists of people actively looking for work, and why when the unemployment rate rises it has absolutely nothing to do with economic conditions at all, nor the vast fluctuations in unemployment over an economic cycle.
In the words of Dugger and Peach (2009) - "No one we know of has ever presented an argument that laziness is a kind of viral social infection that cyclically swings through the population, occasionally breaking out into huge waves of contagious laziness like a flu epidemic."
It's sheer insanity to say laziness is the cause of unemployment.
So, what have we established here? First of all, that full unemployment is unachievable in a capitalist-oriented economy. Second of all, that removing social programs doesn't, and can't, solve the problem. And lastly, that simply getting a job isn't easy without the necessary support systems in place, and even then it's difficult to get and maintain work.
| My Profile
Teaching people to fish blog
