There was a recent flap because three different members of the Obama
administration, on three different Sunday television talk shows, gave
three widely differing estimates of how many jobs the president has
created.
That should not have been surprising, except as a sign of political
sloppiness in not getting their stories together beforehand. They were
simply doing what Barack Obama himself does — namely, just pulling
numbers out of thin air. However, being more skilled at creating
illusions, the president does it with more of an air of certainty, as if
he has gone around and counted the new jobs himself.
The big question that seldom— if ever— gets asked in the mainstream
media is whether these are a net increase in jobs. Since the only
resources that the government has are the resources it takes from the
private sector, using those resources to create jobs means reducing the
resources available to create jobs in the private sector.
So long as most people do not look beyond superficial appearances,
politicians can get away with playing Santa Claus on all sorts of
issues, while leaving havoc in their wake— such as growing
unemployment, despite all the jobs being "created."
Whatever position people take on health care reform, there seems to be a
bipartisan consensus— usually a sign of mushy thinking— that it is a
good idea for the government to force insurance companies to insure
people whom politicians want them to insure, and to insure them for
things that politicians think should be insured.
Contrary to what politicians expect us to do, let's stop and think.
Why aren't insurance companies already insuring the people and the
conditions that they are now going to be forced to cover? Because that
means additional costs— and because the insurance companies don't think
their customers are willing to pay those particular costs for those
particular coverages.
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It costs politicians nothing to mandate more insurance coverage for more
people. But that doesn't mean that the costs vanish into thin air. It
simply means that both buyers and sellers of insurance are forced to pay
costs that neither of them wants to pay. But, because soaring political
rhetoric leaves out such grubby things as costs, it sounds like a great
deal.
It is not just costs that are left out. It is consequences in general.
With all the laments in the media about skyrocketing unemployment among
young people, and especially minority young people, few media pundits
even try to connect the dots to explain why unemployment hits some
groups much harder than others.
Yet unusually high unemployment rates among young people is not
something new or even something peculiar to the United States. Even
before the current worldwide recession, unemployment rates were 20
percent or more among workers under 25 years of age in a number of
Western European countries.
The young have less experience to offer and are therefore less in
demand. Before politicians stepped in, that just meant that younger
workers were paid less. But this is not a permanent situation because
youth itself is not permanent, and pay rises with experience.
Enter politicians. By mandating a minimum wage that sounds reasonable
for most workers, they put a price on inexperienced and unskilled labor
that often exceeds what it is worth.
Mandated pay rates, like mandated insurance coverage, impose on buyers
and sellers alike things that they would not choose to do otherwise.
Workers of course prefer higher wage rates. But the very fact that the
government has to impose those wage rates means that workers were
unwilling to risk not having a job by refusing to work for less than the
wage rate that has been mandated. Now that choice has been taken out of
their hands, with the hidden cost in this case being higher unemployment
rates.
It is of course no secret that there is no free lunch. It is just an
inconvenient distraction that gets left out of political rhetoric.
