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Government Creates Human Suffering
Llewellyn H. Rockwell, Jr.
Lew Rockwell.com
Thursday, July 16, 2009
Just how bad is the current plague of economic fallacy?
Consider the front page of the New York Times today (July 15, 2009):
SEACHANGE IS SET IN A HEALTH PLAN – House Democratic leaders took a big step toward guaranteeing health insurance for most Americans on Tuesday as they unveiled a bill that detailed how they would expand coverage, slow the growth of Medicare, raise taxes on high-income people and penalize employers who do not provide health benefits to their workers.
A BLEAKER PATH FOR WORKERS TO SLOG – In California and a handful of other states, one out of every five people who would like to be working full time is not now doing so. It is a startling sign of the pain that the Great Recession is inflicting, and it is largely missed by the official, oft-repeated statistics on unemployment.
It’s sometimes said that economics is a difficult subject because it requires high-level, abstract thinking, and tracing of cause and effect through several logical steps. And yet, really, how hard can it be to see the contradiction in the above?
Here is the problem. Mandating benefits to employees imposes costs on employment. The would-be worker bears the cost. It makes the worker more expensive to hire. The employer has to pay not only a salary but also a benefit. If you make it more expensive to hire people, fewer people will be hired.
It is no different from eggs at the supermarket. If they are $2 each, you will purchase fewer of them – you will economize. This is nothing but the law of demand: consumers will demand less of a good at a higher price than a lower price. A salary plus benefits amounts to a price that the employer must pay to purchase the work of a laborer. At a higher price, less work will be purchased by the employer.
That means that requiring employers to provide health benefits to employees and potential employees will make the job situation today worse not better. It will intensify the current problem that people want to work more but are having a hard time getting employers to hire them.
(ARTICLE CONTINUES BELOW)
The answer is the same in every recessionary environment. The price of labor must fall in order for the surplus of workers to be absorbed into the market. Raising the cost of hiring only further entrenches the problem and creates new forms of unemployment.
There is no real reason to prove these assertions empirically since they flow from the logic of economics. Nonetheless, Richard Vedder and Lowell Gallaway spent years accumulating evidence of the link between full employment and lower labor costs, on the one hand, and higher labor costs and unemployment on the other. What they found in their book Out of Work was that the entire problem (or nearly the entire problem) of unemployment can be explained through the issue of the costs of hiring and employing. In other words, there is no mystery here. Unemployment can be created or solved by the application of policies and laws.
In a free market, however, there is no unemployment that persists that isn’t chosen by the workers themselves. That’s because the price of labor is continually fluctuating based on supply and demand. Everyone who wants to work can work, simply because we live in a world in which there is always work to do. Only artificial interventions can generate the unemployment problem we have today.
Even so, and for reasons that are unknown and can only mystify the learned person, the Congress and the Obama administration keep trying to pretend as if reality doesn’t exist. Here they are imagining that they can just order businesses to give everyone health care and then suddenly health care for all comes into being.
As with all programs, we have to ask: what is the cost? I don’t mean what the cost adds up to in terms of government spending. I mean: what is the social cost of overpricing labor relative to what the market would bear? In this case, there is no way to know in advance, but we can know that fewer people will be hired than otherwise.
And then what happens? Business goes to government hoping for a subsidy or for fully socialized medicine as a way of sloughing off the costs on the whole of society instead of bearing them directly.
Sadly, there is no way that free health care can be granted to all living things with the stroke of a pen. Broadening availability will require that the entire sector be turned over to the private sector, so that it can be controlled through the price system like everything else.
As it is, the imposition of new penalties on business will make them less, not more, likely to hire people, which will thereby intensify the labor problem. It is like trying to cure a drug overdose with the injection of poison. New mandates on business are exactly what we do not need.
In other words, the whole idea is just plain dumb, not to mention incredibly ill-timed. The worst possible time to be imposing new mandates on business of any sort is during a downturn. Make the mandates labor specific and you have a recipe for causing the unemployment rate to land in the double digits and go up from there, higher and higher until the entire economy shuts down.
Presumably, not even Congress and the President would benefit from this result.
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July 16th, 2009 at 5:23 am
all rich people are useless criminals !!!!! hope they learn how to put a camel through the eye of a needle soon because thats the only way they will get to heaven
July 16th, 2009 at 5:27 am
all our criminal useless government s pay and vacation time are intact! that is all they give a dam about! its time we the people take back what our forefathers died for and what our criminal government let the fed, banksters,and israehell steal
July 16th, 2009 at 6:52 am
A drug addict as Secretary of State. has anyone looked into the pain prescriptions that Hillary is taking for broken bones and pain management.
After all we have seen photos of her drinking whiskey on her campaign plane. We know she drinks hard liquor and has emotional issues. The crying in New Hampshire, the loose grasp of reality “Snipers fire and video” for example.
It not too much of a stretch to realise that she could be mixing pills and booze.
What if she reports back to president Obama or insults a world leader ,while smashed on drugs and alcohol ?
What disastrous results could that have on this nation ?
History Lesson, Pt. 2 Reply:
July 16th, 2009 at 6:06 pm
It worked just fine for Kennedy.
July 16th, 2009 at 7:38 am
All “they” want is to have the right to control, kill, and to bring us to our knees to WORSHIP”them” How sad people BELIEVE in “this beast system” WAKE UP PEOPLE, BEFORE “THEY” KILL, CONTROL, AND OWN YOU!!!!!!!!!!!
July 16th, 2009 at 9:15 am
There’s NO NEED for a health service. Everybody’s ill because of the poison’s and toxins the ptb pump out at every opportunity. Treat the cause and 90% of the patients wouldn’t be there in the first place and natural remedies and strong immune systems would take care of the rest. National Health Service’s are another scam, as is the economy. Needing money to live IS the scam and hardly anyone has yet realised it. You fools would win this and straight away set about starting new banking systems, new ownership schemes, new elections, new police forces, new slave job systems and new armies. Most have learnt nothing yet. And this s--- is EASY to see through. There’s NO HOPE yet.
pitofdoom Reply:
July 16th, 2009 at 9:42 am
Health defined by pharmacy boys swirling bucket of alchemy
might be our last science experiment !
If Technology has yet to provide Sovereign Free Liberty TODAY,
then all that’s left is Tryanny tomorrow!!
July 16th, 2009 at 9:36 am
Cradle to grave all the zombie man-sheep will require some herd thinning!
And them be some expensive bullets!!
July 16th, 2009 at 10:12 am
I have been documenting government and the economy in a more digestible format
http://cheapogroovo.vox.com/li.....overnment/
July 16th, 2009 at 4:08 pm
All because WE THE PEOPLE………f---ING LET THEM!!!!!!!!
July 16th, 2009 at 6:29 pm
ive been reading the information on this site for a while now, and it makes me cry almost everytime.
July 16th, 2009 at 9:03 pm
Of course their health plan is a scam and it isn’t free because taxes will skyrocket to pay for it. Seems all Obamas policies are scams for the bankers and drug companies and lobbiests and everything he was against as a Senator he is now for as President and that is the biggest con of all. It’s called wishy washy or when in Rome do as the Romans. He is not a real person for he stands for absolutely nothing in actuality. He is as virtual as his teleprompter. He is President now and all bets are off for he is king and you must be stupid if you don’t like it. After all universal health care is for your own good isn’t it?. And he would sell us the Brooklyn Bridge but Bill Clinton probably sold it already to China.
July 17th, 2009 at 5:48 am
…so if you don’t pay your monthly health care insurance bill, will you be carted off to jail or will you have your license to live revoked?
July 17th, 2009 at 7:04 am
Here’s an idea.
Stop all the foreign wars.
Close all foreign military bases.
Bring all the US troops home.
Cut funding for weapons development by 25% (We’re 20 years ahead of everyone else anyway).
Spend the savings on a national health-care system (Medicare 2.0) and research into natural and homeopathic remedies.
July 17th, 2009 at 7:36 am
Our Government is abusing us by frustrating us at every level. The Frustration-Aggression Hypothesis was presented 1939 in the book of J. Dollar, L. W. Doob, N. E. Miller, O. H. Mowrer and R. R. Sears: Frustration and Aggression. One of the statements reads, ‘that the occurrence of aggression always presupposes the existence of frustration and contrariwise, that the existence of frustration always leads to some form of aggression’.
The U.S. Department of Justice defines emotionally abusive traits as including causing fear by intimidation; threatening physical harm to self, partner, children, or partner’s family or friends; destruction of pets and property; forcing isolation from family, friends, or school or work.
In 1996, Health Canada argues that emotional abuse is motivated by urges for “power and control,” and defines emotional abuse as including rejecting, degrading, terrorizing, isolating, corrupting/exploiting and “denying emotional responsiveness” as characteristic of emotional abuse.
SOUND FAMILIAR?