President Barack Obama will be hosting a White House forum on jobs in December 2009. Unemployment continued to rise during 2009, and the president seeks to stoke the economy to create more jobs, jobs, jobs.
The summit will gather together people from diverse fields: economist gurus, the small-business bourgeoisie, grand poobahs of big business, financial fat cats, and union bosses. Evidently, Obama forgot to also invite some actually unemployed workers. He also left out psychologists, priests, community organizers, political pundits, and plumbers.
Despite this lack of full diversity, the gathered will discuss how to accelerate job creation. The federal government has put the unemployment rate at 10.2 percent as of November 2009, but if one includes those who would like to work but have forsaken job search, and those who are underemployed, the jobless amount to about a fifth of the labor force. Thus there is political pressure for the president to appear to be doing something. A gathering to discuss the problem will be splashed in the media and create buzz.
But asking how to create jobs has it backwards. The fundamental question is not how to create more jobs, but how to stop government from destroying jobs. It is like hunters who go into a field and shoot every deer in sight, and then hold a meeting on why the deer have disappeared.
Henry George had a parable about the unbounded savannah. Suppose there is an infinite field of free land in which farmers could apply their labor to grow corn. Would there be any unemployment? Of course not, since anybody could get some land and employ himself to grow corn. When there is unrestricted access to natural resources, there is no unemployment.
In primal human society, villagers could go into the fields to hunt and gather. Sometimes they might not find enough food, but there was no lack of work, since one could keep on searching, digging, and foraging, and then do some crafting and trading.
Now, in the 21st century, employment should be much better, but instead, it is worse. It is illegal to pick the berries. Suppose a man goes down the street peddling goods to the public. A police officer arrests him, because this is illegal. The jobless man offers to pull weeds in the gardens of folks too busy to do it, and he would do it for a few dollars per hour, but it is illegal to hire workers at that low wage. He can’t go into the fields, he can’t freely offer his labor, and if he does work, he is poor because he can’t keep his full wage.
Primal man could get housing by going into the field to gather some sticks and fronds and build a house at the edge of the village on free land. The 21st-century homeless unemployed man gets some cardboard out of a garbage bin and builds himself a little house in a vacant lot, but is then fined for trespassing and for violating the building code.
Humanity has advanced from primal times when there was full employment and unlimited housing to the 21st century world of high technology where over a tenth of the population has been locked out of employment and can’t find a place to live. The modern world has more natural resources than the ancient world, because modern technology can make greater use of natural materials. Employers should be screaming for more labor. Instead, we have workers crying because they can’t get jobs, even while factories languish. Folks can’t find housing, while millions of homes sit empty.
There is in nature no reason for unemployment. Human desires are unlimited, so there is always a demand for something. The only reason an unemployed carpenter cannot trade with an unemployed tomato grower is that some force has imposed a barrier preventing them from trading tomatoes for chairs. The only agent that has the power to prevent trade is government.
Government imposes restrictions and costs on enterprise and labor, requiring expensive permits, licenses, badges, and taxes. Primal man had access to communal land, but modern man has lost free access. It goes back to conquest, as the land was taken by the war chiefs and then the peasants had to pay rent plus taxes.
The land titleholder exclaims that he bought the land with his own money, so why should he not have exclusive access? In olden days the slave owner too claimed that he bought the slaves with his own money, so he is entitled to the gains from their labor. Religious folks go to church clutching their Bibles, in which it is written in Ecclesiastes 5:9, “the profit of the earth is for all,” but when this is pointed out, they instantly become atheists.
The role of the economist gurus in the summit is to declare to the media, “The issue is complex. There are no easy answers.” That leaves the government blameless.
But the economic answer is clearly evident. We can restore full employment by going back to the rules of primal economies. Let anyone go into the field and apply his labor freely. We cannot now have unlimited access to natural resources, but we can have the possessors compensate the rest of society for exclusive access. The righteous market, with unchained labor and an equal sharing of nature’s bounty, will eliminate unemployment.
Subsidies to landowners, including cheap credit, generated the real estate bubble that burst and made workers lose their jobs. Instead of preventing the next boom and bust by shifting taxes from wages to land rent, the jobs summit will propose low-interest loans to business, and limited tax credits. But land rent will rise to absorb the gains, and there will still be imposed costs in hiring labor, so in the end, the proposals of the jobs summit will fail.
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FRED E. FOLDVARY, Ph.D., (May 11, 1946 — June 5, 2021) was an economist who wrote weekly editorials for Progress.org since 1997. Foldvary’s commentaries are well respected for their currency, sound logic, wit, and consistent devotion to human freedom. He received his B.A. in economics from the University of California at Berkeley, and his M.A. and Ph.D. in economics from George Mason University. He taught economics at Virginia Tech, John F. Kennedy University, Santa Clara University, and San Jose State University.
Foldvary is the author of The Soul of Liberty, Public Goods and Private Communities, and Dictionary of Free Market Economics. He edited and contributed to Beyond Neoclassical Economics and, with Dan Klein, The Half-Life of Policy Rationales. Foldvary’s areas of research included public finance, governance, ethical philosophy, and land economics.
Foldvary is notably known for going on record in the American Journal of Economics and Sociology in 1997 to predict the exact timing of the 2008 economic depression—eleven years before the event occurred. He was able to do so due to his extensive knowledge of the real-estate cycle.