Progressives Don't Really Want Higher Employment

Matthew Yglesias, in one of the stupider posts I've seen of his, which is saying something, disputes the broken-window fallacy. Matthew thinks the problem with the broken-window fallacy was that money was (supposedly) of limited supply because it was supposedly all linked to gold (and the supply of gold, of course, could never be expanded ever) and he thinks that Bastiat's explanation of this fallacy hinges crucially on said money supply being finite - all of which strike me as 100% wrong. But if you buy all that then, like Yglesias, you might think it's different to break windows nowadays, because we can just print all the money we want, no harm done.

The important thing, as many of the comments make clear, almost obsessively so, is to 'put idle resources to work'. Although I've written before about the persistent 'progressive' dream of putting peasant armies to work for them with other peoples' money, it hadn't quite sunk in to me just how one-dimensional is the lefty view of what is wrong with the economy. What is wrong, apparently, is just that a lot of people don't have 'jobs', and the important thing is to get or make or invent 'jobs' for the people who don't have them.

I think there's a lot more wrong with the economy than people not having jobs. Actually, I suspect that for some values of 'people', people not having jobs is the most economically efficient solution for what to do (or not do, to be precise) with them. If you disagree, please go walk around a housing project somewhere, like I have (oh what? you've never been?) and tell me just exactly what 'jobs' you think most of those people could or should be doing. However let me take the lefty claims at face value and assume that indeed the main problem that addresses us today, in the age of The Financial Crisis™, is to figure out how to make it so that a lot of the people who don't have jobs, have jobs.

One might begin, then, by asking oneself why doesn't a person have a job. Generally, there can be two (non mutually-exclusive) reasons:

1. No one will pay this person to show up and do a 'job'.
   
2. This person isn't willing to show up and do any of the 'jobs' on offer of which he's been made aware.
   

Are there other reasons? I think not. All of the reasons you can name, fall into 1 and/or 2 above. Don't they? And since 1 is a special case of 2, it really just boils down to 2. Which is just another way of saying:

The 'job' market isn't clearing as liquidly as we'd like it to.

Once you recognize this, you've reduced the problem to one of how to make the job market - the market for hiring people - clear more easily. Here are some obvious suggestions that come to mind when a market, any market, isn't clearing:

• Lower the offer price.
  
• Reduce barriers to entry/increase the buyer base.
  
• Reduce friction/overhead costs in transactions.
  
• Eliminate substitutable goods (or bring the price in line with them)
  
• Expand information/movement (i.e. make buyers able to access more sellers and vice versa)
  

The problem is that in the market for finding employees, these boil down to things like: eliminating the minimum wage, eliminating Obamacare and related health-'insurance' regulations linked to employment, reducing the payroll tax, reducing taxes of all kinds, reducing employment regulations and associated cost of compliance, encouraging entrepeneurship, enforcing illegal immigration laws, reducing welfare benefits and unemployment and all other socialist programs that make not-being-employed economically viable, increasing mobility in housing (by letting it become cheaper for one thing), etc. etc. Let the sellers (would-be employees) lower their offer price (for their labor); let the buyers' (employers) bids be hit; let them find each other more easily; remove cost-efficient substitutes (e.g. illegals) from the buyers' alternatives; similarly, remove substitutes for the sellers (i.e. just staying on socialist programs) and force them to mark themselves to market; let more buyers (entrepeneurs/startups) come to market. That's how one could find the inside market and let it clear.

Why doesn't any of this happen now? It's not because the government just hasn't printed enough money. It's because the government specifically doesn't allow any of it to happen. Why doesn't the government allow it to happen? At the behest and thanks to the agitation of, for the most part, 'progressives'. Almost every barrier to full(er) employment I have named above stems from a 'progressive' policy. Indeed, almost every 'progressive' policy you can name that touches on economics has the effect of making the marginal employee less likely to have a job. And then they walk around pulling their hair out about people being idle, and openly fantasize about printing money to solve this problem that they've created, which, if they really genuinely cared about solving, they could do simply by ceasing many or even just some of the policies they've put in place.

Yet this is never suggested or even examined by the 'progressive' who is supposedly so interested in increasing employment. No, it all comes back to printing money, i.e. diluting the value of money for those who have it. One could be forgiven, then, in inferring that this - and not fuller employment per se - is their primary goal. But I admit I can't prove that. After all, it could just be that they won't or lack the capability of thinking through their own policies logically.

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(Sonic Charmer is a friend of Pastorius and once-in-a-blue-moon IBlogA contributor. Originally posted at Rhymes With Cars And Girls, a real blog.)