Politicians in Wonderland

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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.

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.

  • http://www.itecode.com eerie Steve

    Obama stimulus shall focus on government jobs only, making it the worst case scenario. The next depression will be a perfect storm. Thank god for American agriculture. That is the only thing people want to buy anymore due to the inherent corruption inside the UIW.

    Barak, we have enough bureaucrats. What we need are more pioneers. In fact, we need the Sidney Crosby of pioneers to bring us out of a 1.8 trillion dollar debt. Unless Barak utilizes his executive powers to intentionally break the social welfare system, the 2000 generation better be friggin' smart.

    PR 10 !!! USA #1 !!!

  • http://intensedebate.com/people/johncarens johncarens

    What better proof does one need than the "Jobs Created or Saved" statistical nonsense that President Obama throws around that the man is, at heart, a Stalinist? It all rather reminds me of the crowing in the old Soviet Union during the Brezhnev era about the glorious wheat harvest every yeart… Until the old communist had to sneak in the back door to purchase wheat from the United States.

    None of this should surprise anyone. Liberalism is itself built on a tissue of lies. It lies about basic humanity, it lies about human nature, it lies about the relationship between soveriegn indivduals and the state. Why would we expect extreme far-left Radicals like President Obama to do anything other than lie, especially with things so amorphous as government statistics? The lies roll off his tongue like golden sundrops of honey, so they scarcely sound like lies. To him, they aren't lies– and, thus, in the liberal world-view, aren't lies at all. But they are lies, nonetheless.

    Thomas Sowell is a brilliant man, and it must gall him when he realizes that he's spent forty or fifty years battling these lying fools with reason and logic, which are completely useless against willful lies.

  • William

    " Government functionaries are by enlarge are not incompetent, they are lying to you."
    Milton Freidman

    One has to wonder with brilliant individuals as Sowell,and W.Williams teaching the fundamentals of free market economics that Adam Smith,Hayek,M. Freidman, our founding fathers espoused, with todays technology, we could venture so far off course from historicaly proven mechanics of free markets and small Govt. respecting property. Alexis de Tocquieville would now marvel at the foolish misguided direction America has taken versus the America he was astounded by just several decades after our Republic was founded.

    "We shall not grow wiser before we learn that much that we have done was very foolish."
    F. Hayek

  • Heather

    Thomas Sowell is the voice of reason and logic in these crazy times we are living in under Obama. He is a BRILLIANT man, and a great American!

  • 080

    In New York City the politicians are playing around with the lives of young people who would like to work but can't find jobs. A Living Wage and nothing less. It sounds good but the living wage has to be higher than the minimum wage that is already in effect. It stands to reason that if employers are not willing to pay the minimum wage why would they pay a "living wage". The answer is that they will not pay any wage under the current circumstances. And lo and behold: that's the way it is.

  • John C. Davidson

    People are waking up and reading the truth rather than sitting in front of televisions listening to paid propagandists who have more than anyone else, sold out democracy.

    Let us not make Mr. Sowell's efforts be in vain.

    • http://intensedebate.com/people/bubba4 bubba4

      Look on the bright side…there's still Fox News. Sure, it's paid propaganda, but at least you'll probably agree with it.

  • http://intensedebate.com/people/bubba4 bubba4

    But you guys don't want the government to do anything. How is Obama suppose to "create" jobs? He can't tell the banks what to do and yet they aren't lending unless there is zero risk and you have real estate collateral. They got through some tax cuts and are finally going to address self-employment tax which is a terrible anti-american travesty, especially when rich people are getting tax cuts and don't pay tax on capital gains.

    " But, because soaring political rhetoric leaves out such grubby things as costs, it sounds like a great deal."

    There is a lot of waste on "administration" and then of course there is the profit. So yeah, some of it may come out of the profit that insurance companies currently make. See, they don't produce anything….they are paper pushers and we already pay more per capita than any of our allies who have more strick insurance regulation or nationalized health insurance.

    The FPM thing to do these days is just give your political enemies whatever position you want them to have. Sowell here brings back all the old tired bullshit about what might happen if we try this mysterious experiment…but our civilized allies already have done this…so you can see the results…you don't have to theorize about it.

    As for the minimum wage….there are employers who would pay people for a days work with $1 and a sandwich if they would take it and if people got hungry enough and desperate enough…they would have to. This "fact" that someone is always willing to work "for less" doesn't make it right or fair or just…the minimum wage is quite simple…if you have so much work that you can't do it yourself…then you better charge enough so that you can pay a minimum amount of money for help.

  • bardefa

    so now, you don't have a job and IRS may walk into your home with a shotgun?
    NEWS:
    "The Internal Revenue Service (IRS) intends to purchase sixty Remington Model 870 Police RAMAC #24587 12 gauge pump-action shotguns for the Criminal Investigation Division. The Remington parkerized shotguns, with fourteen inch barrel, modified choke, Wilson Combat Ghost Ring rear sight and XS4 Contour Bead front sight, Knoxx Reduced Recoil Adjustable Stock, and Speedfeed ribbed black forend, are designated as the only shotguns authorized for IRS duty based on compatibility with IRS existing shotgun inventory, certified armorer and combat training and protocol, maintenance, and parts."

    • http://intensedebate.com/people/bubba4 bubba4

      Um…you did see that it was for the Criminal Investigation Division. If you get audited…your auditor won't be carrying a shotgun. Unless you are considering some massive criminal conspiracy to defraud the governent then you don't have much to worry about.

  • John C. Davidson

    How much they paying you to write this?

    • http://intensedebate.com/people/bubba4 bubba4

      Who would "they" be? LOL

      You actually think that posting on FPM is worth something to anyone? Please….

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