Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21
CISCO 2020 Dot com Bubble Stock vs 2021 Bubble Tech Stocks Warning Analysis - 6th Oct 21
Precious Metals Complex Searching for a Bottom - 6th Oct 21
FB, AMZN, NFLX, GOOG, AAPL and FANG+ '5 Waves' Speaks Volumes - 6th Oct 21
Budgies Flying Ability 10 Weeks After wings Clipped, Flight Feathers Cut Grow Back - 6th Oct 21
Why Silver Price Could Crash by 20%! - 5th Oct 21
Will China's Crackdown Send Bitcoin's Price Tumbling? - 5th Oct 21
Natural Gas News: Europe Lacks Supply, So It Turns to Asia - 5th Oct 21
Stock Market Correction: One More Spark to Light the Fire? - 5th Oct 21
Fractal Design Meshify S2, Best PC Case Review, Build Quality, Airflow etc. - 5th Oct 21
Chasing Value with Five More Biotech Stocks for the Long-run - 4th Oct 21
Gold’s Century - While stocks dominated headlines, gold quietly performed - 4th Oct 21
NASDAQ Stock Market Head-n-Shoulders Warns Of Market Weakness – Critical Topping Pattern - 4th Oct 21
US Dollar on plan, attended by the Gold/Silver ratio - 4th Oct 21
Aptorum Group - APM - High RIsk Biotech Stocks Buy, Sell, Hold Investing Analysis for the Long-run - 3rd Oct 21
US Close to Hitting the Debt Ceiling: Gold Doesn’t Care - 3rd Oct 21
Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
Original Oculus VR HeadSet Rift Dev Kit v1 Before Facebook Bought Oculus - 3rd Oct 21
Microsoft Stock Valuation 2021 vs 2000 Bubble - Buy Sell or Hold Invest Analysis - 1st Oct 21
How to profit off the Acquisition spree in Fintech Stocks - 1st Oct 21
�� Halloween 2021 TESCO Shopping Before the Next Big Panic Buying! �� - 1st Oct 2
The Guide to Building a Design Portfolio Online - 1st Oct 21
BioDelivery Sciences International - BDSI - High RIsk Biotech Stocks Buy, Sell, Hold Investing Analysis for the Long-run - 30th Sep 21
America’s Revolving-Door Politics Behind the Fall of US-Sino Ties - 30th Sep 21
Dovish to Hawkish Fed: Sounds Bearish for Gold - 30th Sep 21
Stock Market Gauntlet to the Fed - 30th Sep 21
Should you include ESG investments in your portfolio? - 30th Sep 21
Takeda - TAK - High RIsk Biotech Stocks Buy, Sell, Hold Investing Analysis for the Long-run - 29th Sep 21
Stock Market Wishing Away Inflation - 29th Sep 21
Why Workers Are NOT Returning to Work as Lockdown's End - Wage Slaves Rebellion - 29th Sep 21
UK Fuel PANIC! Fighting at the Petrol Pumps! As Lemmings Create a New Crisis - 29th Sep 21
Gold Could See Tapering as Soon as November! - 29th Sep 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

The State is Killing the U.S. Jobs Market

Politics / US Politics Nov 24, 2010 - 05:09 AM GMT

By: LewRockwell

Politics

Best Financial Markets Analysis ArticleThe terrible job market has vexed an entire generation. It shows no hope of improving anytime soon. Young people are shut out. College students are taking refuge in matriculation without end. Thirty-somethings are zoning out in their parents' basements and attics. Despair for the future has become a theme of American public life.


The question we must ask is: why is unemployment stuck at 10% in the narrowest measure and as high as 30% for some demographics?

The usual answer is that the broad economy is not recovering. That’s true but superficial; it explains nothing. We have a problem of a specific kind with the jobs market. To see it as just a symptom of slow growth is an excuse for politicians and central banks to resort to reckless policies in the name of fixing the big problem without addressing the reality on the ground.

Some new data reported by the Wall Street Journal helps get to the core of the problem in greater detail. In the current environment, which the National Bureau of Economic Research (NBER) laughably calls a recovery, business start-ups of job-creating companies have not kept up with closings.

As compared with other recession aftermaths, new businesses are not hiring as they once did. The number of companies with at least one employee continues to fall at a rate we’ve not seen in 18 years. Everyone speaks of this as a recovery, but the numbers don’t add up. New jobs in new companies are appearing a rate 15% less than the last recovery.

Let’s try to understand what is going on here. In boom times, companies tend to bloat up in every area, especially in their staffing. Unemployment is always a feature of the bust because businesses shed jobs and expect more efficiency and productivity out of the remaining staff. Many businesses close and lose all employees.

Whereas workers once had no problem finding jobs and naming their price, there is now a surplus of workers and a job shortage, at least at the wages that the unemployed are demanding.

What usually fills the gap here are new businesses. In recovery times, entrepreneurs initiate new projects and hire the unemployed workers to staff them. The unemployed are usually willing to work for less and are willing to learn new skills in a new business environment. These new businesses become a major source for economic growth and rising living standards.

Without new businesses, there would be no net job growth at all. In post-bust economies, it is these new businesses that are responsible for soaking up the excess labor. That’s because the older and larger businesses are not willing to take on the risk of new employees and have already adjusted to doing business with fewer.

Until these businesses come along, unemployment will likely persist. And this is precisely what is happening right now. And so, now that we have a better idea of the mechanics of the high unemployment rate, we have a better idea of what question to ask and how to solve the problem.

Where are these new businesses and why are they not starting as we might expect?

Let us count the ways.

New businesses need to depend on a stable legal environment and a bright outlook for the future. These are both missing. The supposed recovery has been phonied up in every conceivable way: nationalizations, bad debt swept under the carpet, money creation by the Fed, make-work jobs paid for by the taxpayer. No one really believes all the hokum. The question is not whether the recovery is phony; it is: what is real and what is not real? No one knows for sure.

Despite every attempt by the Fed to provide oceans of free credit, banks are still extremely reluctant to lend when the payoff is not there and the risks of lending are extremely high. This means that prospective new businesses have to raise their own capital from a massively depleted capital stock.

Looking at the risks, it makes far more sense to hire no employees beyond temporary contract workers. Consider the payroll tax, the largest burden on both employees and employers. It does not benefit either party at all. It is sheer robbery that vastly increases the cost of hiring.

The problem of health-care mandates is very intense. Employees who expect these benefits are mostly going to choose between obtaining them and getting a job. But for certain firms and under some conditions, they are unavoidable and unpayable.

Business taxes are all too high and probably going higher. Regulations on all businesses in every sector of life have been intensifying for decades. No industry is free of them. Even formerly frontier sectors like software are becoming legal thickets of patents, protections, and scary mandates.

The minimum wage is way too high to encourage new job growth among new businesses. And given all the legal mandates and potential lawsuits, everyone knows that once you hire employees, you are pretty much stuck with them for some period of time. You can test the waters. But you have to be sure. And no one is sure.

Businesses thrive in an environment of freedom. But enterprise is no longer free in any area. In boom times, the consequences are less obvious. In the bust, the regulatory thicket, the taxes and mandates, and the legislative threats all become decisive in a way they were not before.

None of these problems are intrinsic to the business cycle. They are all imposed by government. The same problem afflicted the economy during the Great Depression, but back then the central planning was newly imposed. Now is different: the old central planning is killing us day by day, even without dramatic new legislation.

It could all be changed. Congress and the president and the courts could reverse it all tomorrow, restoring an environment of freedom and free enterprise. Jobs would recover quickly. Hope would be back in a matter of weeks and months. The economy would genuinely recover.

What is keeping that from happening? The lack of political will and the insatiable desire of the State to keep eating away at our liberty and property.

It isn’t complicated. The State is living parasitically off our living standards and hopes for the future. It must die, if we are to live well again.

Llewellyn H. Rockwell, Jr. [send him mail] is founder and chairman of the Ludwig von Mises Institute in Auburn, Alabama, editor of LewRockwell.com, and author, most recently, of The Left, The Right, and The State.

http://www.lewrockwell.com

    © 2010 Copyright LewRockwell.com - All Rights Reserved
    Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in