Fetish of Full Employment   1 comment

The art of economics consists in looking not merely at the immediate, but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group, but for all groups.

This is an ongoing series of posts on Henry Hazlitt’s Economics in One Lesson. You can access the Table of Contents here. Although written in 1946, it still touches on many of the issues we face in 2017, particularly the fallacies government economic programs are built upon.

 

The economic goal of any nation or individual is to get the greatest result with the least effort. All economic progress of mankind consists of getting more production with the same labor. We domesticated animals, invented the wheel and the cart, the wagon, the railroad and the semi-truck to achieve this goal.

Image result for image of productivityThat seems pretty elementary, which is probably why people tend to forget about it and start shouting slogans about “full employment”.

We could define “full employment” as the absence of involuntary idleness. In economics, production is the end goal. Employment is merely the means. It is impossible to continuously have full production with full employment, but we can create the adverse conditions where we have full employment without full production.

Primitive tribes are naked, wretchedly fed and houses, but they do not suffer from unemployment.

Third world countries are comparably poorer than the United States, but the main trouble they suffer is primitive production methods, not unemployment. Divorce employment from the goal of full production and full employment is easily achievable. War provides full employment for every nation involved. Slave labor in Germany created full employment. Prisons and chain gangs can create full employment.

Coercion can always provide full employment.

Whenever we discuss full employment, wages and employment are discussed as if they had no relation to productivity and output. Hazlitt actually said it would be better to have full production with a portion of the population on welfare than to provide “full employment” by creating make-work that damages productivity.

In 1946, children and the elderly no longer worked and many women were stay-at-home mothers, because productivity improvements had increased wealth. In another words, there was a lot of unemployment in the country, but it was by choice, made possible by increases in productivity.

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One response to “Fetish of Full Employment

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  1. Pingback: Introduction to “Economics in One Lesson” | aurorawatcherak

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