Isn’t is remarkable that vote-hungry politicians continue their never-ending extensions of unemployment benefits, even though these benefits, like minimum-wage laws, actually cause unemployment?
The fact is that when many people say they can’t find a job, what they really mean is they can’t find the job they want, at the wage they want, under the working conditions they want. Which means that high unemployment is, to a great extent, a result of workers simply refusing to accept low-paying jobs, preferring instead to have taxpayers support them.
Worse, when the government “creates a job,” it simply overpays someone to do work for which there is little or no demand in the marketplace. And since the government has no resources of its own, the money to pay the person who performs the job must come from newly printed dollars, borrowing, or taxing productive workers.
I thought about all this a great deal over the past week as snowstorms blasted the Middle Atlantic States and East Coast, because it gave me the opportunity to observe the free market at work on a micro scale. One of the things that many people don’t grasp is that the marketplace consists not only of goods and services, but labor as well. The free market is, in fact, a big hodgepodge of these three commodities mixed in with the unique wants, needs, desires, personalities, and financial situations of each consumer.
When the first big snowfall hit, my wife spotted a fellow with a snow blower removing the snow from our neighbor’s driveway. I was picturing being socked in for a week or more, so I represented a strong demand for someone willing to do the hard labor of removing snow from my driveway.
I asked the guy if he would shovel our driveway and, if so, how much he would charge. He quoted us $100, which seemed kind of high, but I wasn’t about to let him slip away. He had the supply, and the demand on my end was high. So, a hundred bucks it was.
No government involvement, no regulations, no price controls — a clean and simple free-market transaction. I made sure to get his telephone number, figuring I would call him the next time we had a major snowfall.
Sure enough, a week later, an even bigger snowstorm hit. I called the fellow who had shoveled our driveway for $100, but got no answer, so I left word to have him call me. He never returned my call, which I suspected was because the snowstorms had created a high demand for his services.
Then, lo and behold, a kid came to our door and said that his dad had a snow blower and would remove the snow from our driveway for $20. I couldn’t believe it. Without government regulation to thwart him, here was a man who was undercutting the first snow-removal guy by 80 percent. Can anything be more beautiful than watching the free market in action? Again, I got his telephone number after he finished shoveling our driveway.
Unfortunately, we got yet another blast of snow a few days later. I called my $20 guy again, figuring that because of the depth of the snow, he might decide to raise his price to $40 or $50. But I never found out, because his voice mail answered. I left word, but, again, no return call.
Staring at two feet of snow in my driveway, I was getting a bit concerned. Then, out of the blue, a lady came to my door and said that her husband had a snow plow and she wanted to know if I would like him to remove the snow from our driveway. Price: $65.
I quickly wondered to myself if I should I take a pass on this opportunity and try again to connect with my $20 guy. But then the thought occurred to me that he might be too busy with other customers to ever get back to me. Or what if he’s discovered that his price was way under the market and has since raised it to $75?
Like any consumer, I pieced all of these factors together in my mind, then added in the biggest factor of all — that the solution to my problem was right in front of me. No delay, no gamble, no stress — $65 it was.
The free-market aspect of my snow-shoveling experiences is obvious. But what I found even more interesting is that a handful of people chose to go out in the snow and cold, freeze their butts off, and work themselves to the point of exhaustion for a couple thousand dollars a day, while 99.99 percent of those who say they can’t find a job chose to sit home and do … whatever.
If compassionate politicians are really serious about lowering unemployment, good first and second steps would be to eliminate unemployment benefits and abolish minimum-wage laws. Follow that with slashing the corporate tax rate to 10 percent (for starters), and unemployment would very quickly become an anachronism.
The free market really does work. It’s just not the way politicians with a personal agenda would like it to work.