why do we have unemployment?
... just as the State
has no money of its own, so it has no power of its own - Albert Jay Nock
Why do we have employment?
Labor is like oil, land, and any other input. Entrepruneurs utilize these resources to generate a profit. So, if a worker can't generate a profit he will not be "utilized" or hired. Usually, wages are lowered to fit a workers productivity; for instance, if I can make 10 lemonades worth $.50 an hour that is $5 of revenue per hour. I would probably be hired for about $3-$4 an hour, but if say there is a minimum wage of $7 in place I would not. Other types of unemployment is frictional and structural unemployment. Frictional is temporary unemployment that comes from the process of workers searching for jobs. Structural unemployment is when the labor force does not have the skill set to fill those jobs. A common example of this is the shortage of engineers and computer scientists.
good video on the minimum wage ^
Basically everything EL said is gibberish. Edgar the Exploiter is an awesome instructional video, though, so do watch that. We have so-called involuntary unemployment because the economic regulations on the utilization of labor guarantee it. There is no - zero - involuntary unemployment in a free market.
Please explain how everything I said, excluding the video I posted, was gibberish. Do you know how to read? "We have so-called involuntary unemployment because the economic regulations on the utilization of labor guarantee it" was the first half of my post. If "everything" I said was gibberish, try to debunk the first half of my post. To say that in the free market there would be zero unemployment is ridiculous. Do you really believe that someone who gets fired will find a job by the end of the day? Nobody wakes up says "Hey I think I'm going to get a job today!" walks into a walmart, fills out an application, gets an interview with the manager, and starts working that day. Employers make sure they collect every application and select the worker best fit for the job, even in a libertarian utopia.
While it wasn't the best explanation, EL's post wasn't bad or wrong. Could you explain why involuntary employment is absolutely impossible on the free market?
Anyway my answer: because not everyone is employed.
In the real world it's always going to be because of intermediate periods in which people are searching for jobs, because wages are too high, or because of governmental barriers that prevent employment.
Shouldn'twe first define what do we mean _exactly_ by unemployment?
Is a farmer unemployed? Is a thief unemployed? Is a welfare queen unemployed?
I hold that there are only two categories of unemployment: the voluntary and unvoluntary ones. "Frictional" unemployment is a subset of voluntary unemployment. Now, the "term" voluntary" is slighty misleading, because you can be very unhappy to be "voluntary" unemployed. But the basic truth is that what people generally want is wages and not employment per se. So if, by exception, you're wanting employment per se, you're pretty sure to find a job in a free market. Indeed, if you are not hired à 100$/hour, you just have to decrease your claim to 90, 80..., 30, 20...0. And, if you don't find a job at 0, you may pay an employer in order to be employed. (See MES, p 583.)
Regarding the case of "frictional" unemployment, I believe it is clear it enters into the "voluntary unemployment" category. Indeed, if you're fired, instead of searching another job, you may underbid your own wage, and, if need be, pay to remain employed in your previous firm. Actually, the essence of the "frictional" unemployment is to be speculative: the job-searcher doesn't contract with the first potential employer he finds; he prefers to wait and seek the best job opportunity. Incidentally, the unemployment insurance leads to prolong the averaged period of "frictional" unemployment, because job-seekers can take their time. Unemployment insurance distorts the trade-off waiting time/best job opportunity.
Zero involuntary unemployment. The whole concept is pure Marxist drivel.
@EL: It's not worth my time to pick apart your each and every mistake. Go thou and study and find out. Start with the linked paper here. The very fact that in the same breath you want to defend your post and rebut my statement that there is no involuntary unemployment in a free market illustrates the problem. Your entire post assumes the validity of the concept of involuntary unemployment. Hence, it's all gibberish.
Actually everything embrace liberty said sounds right to me.
I'm reading the article on Involuntary unemployment right now. Currently reading the part about even somone who is fired isn't involuntarily unemployed because he could work for a nickel.
Hey, it is better to be unemployed than to be involuntarily employed
@Meistro Minimum wage, labor tax, child labor laws, health care liabilities, most laws in place by unions, etc. These are all laws that make hiring potential workers unprofitable thus leaving them unemployed.
@Raoul - " if you don't find a job at 0, you may pay an employer in order to be employed". So, would you say that if you are able to pay your employeer to be employed then you are in the "voluntary employment" camp? Everyone agrees that there is more opportunity in a free market job market, no argument there. But to say that you can simply "underbid your own wage" is not always the case for workers. For instance, your boss could hate you, be accident prone, be replaced by someone more productive, the list goes on. In these cases the worker has to search for a new job and not given the option to keep the job with a lower wage. Or what about the individuals just entering the labor force? Do they underbid their non-existent wages? "the job-searcher doesn't contract with the first potential employer he finds" people just entering the labor market or are desperate generally do. You also don't mention the side of the employeer who is doing most of the speculation. A worker who fills out 3 applications is doing less speculation than the employeer reviewing 50. I agree that unemployment insurance prolongs frictional unemployment, but do you believe that unemployment insurance will not exist in a free market?
@Clayton - It's pretty clear that you conceded to my argument. Next time don't make ridiculous claims that you can't follow through on.
"Zero involuntary unemployment. The whole concept is pure Marxist drivel."
Eh, I'd put it down to semantics.
@EL: I've conceded nothing - your post remains nonsense.
@Neo: No, it's not semantics... at least, it only becomes semantics once the Marxist/Keynesian claims that there is involuntary unemployment - due to "friction" in employment supply/demand and "sticky" labor prices - are refuted... then all of a sudden, the whole debate becomes one of semantics. It's not just semantics so long as we're talking about sticky wages... but the moment someone points out that, in an unhampered market for labor there is no such thing as a "labor shortage" or "labor surplus", why, then, it's all semantics.