Thursday, February 6, 2014

Free market approach to Pope Francis' call to end unemployment

Pope Francis: "No-one should be without work!  It is a source of dignity."
The Rome-based Institute for Human Dignity offers a reflection




For Immediate Release 
Rome, 6 February 2014

Last week, at the conclusion of his Wednesday Audience, Pope Francis prophetically requested that: "...every effort be made possible by the competent bodies, so that employment - which is a source of dignity - is everyone's central concern.  No-one should be without work!  It is a source of dignity."

Speaking to the DHI, the US economics commentator Patrick Barron, said: "With these words, the Holy Father has shown that his fatherly interest and solicitude for the poor, in this case, specifically the unemployed, remains close to his heart.  I agree wholeheartedly with the Holy Father's desire.  This sentiment truly is reflective of the Institute for Human Dignity's primary purpose - to encourage the world's governments to recognize man's authentic nature as made by God with inalienable rights that arise out of this recognition, among which includes his right to offer himself for work."

Barron, who in addition to acting as the DHI's Senior Advisor on Human Dignity in the Economic Sphere, is a widely published journalist and lecturer on economics at two universities in the United States.  He continued: "What we need to do now, having correctly identified the correlation between being able to work and dignity (not to say self-respect) is to identify with courage and without fear the causes of the unemployment that causes so much despair - especially in the young. 

The most onerous restrictions to man's ability to offer himself for work are in fact caused by well-meaning but fundamentally misguided regulations to labour and capital enacted and enforced by governments everywhere.  Corporation taxes, employers' contributions, maximum working weeks, statutory annual leave, minimum wage restrictions, and other laws that artificially raise the cost of employment are together the greatest causes of unemployment in the world today.  This is not to say that these regulations do not bring things that we all like, but that they push the cost of employing a person higher than an employer can afford to pay.  The result is the unemployment we can sadly see - and a minimum wage, in fact, perversely hits the poorest unemployed the hardest."

"When God created the world, He intentionally created it in such a way that the goods we need to thrive are scarce - they are not infinitely abundant in their natural state.  God wanted us to work to create the goods we need - and more importantly, He wanted us to work towards that end together.  Ours is therefore a world of scarcity, which includes the scarcity of labour...all kinds of labour, both skilled and unskilled."

Barron concluded: "The US economist Scott Sumner recently published some fascinating research regarding the minimum wage, using data for Western Europe:
There are nine countries with a minimum wage (Belgium, Netherlands, Britain, Ireland, France, Spain, Portugal, Greece, Luxembourg).  Their unemployment rates range from 5.9% in Luxembourg to 27.6% in Greece. The median country is France with 11.1% unemployment.
There are nine countries with no minimum wage (Iceland, Norway, Sweden, Finland, Denmark, Austria, Germany, Italy, Switzerland).  Five of the nine have a lower unemployment rate than Luxembourg, the best of the other group.  The median country is Iceland, with a 5.5% unemployment rate. The biggest country in Europe is Germany.  No minimum wage and 5.2% unemployment.

Finally, with a view to widening greater access to employment for the poorest, I would recommend that the nations of the world strongly consider adopting free trade, so that the vagaries of birth are no longer a barrier to participating in the world economy - with all the opportunities which that access presents."

Luca Volontè, DHI Chairman, continued the point.  "I totally agree with Professor Barron: there is always more work to be done than men available to do it; therefore, there is no natural unemployment among men who are willing to cooperate with one another in order to achieve ends that they could not achieve when acting alone.  Unprecedented prosperity is therefore open to all - and governments must reflect at the shocking levels of unemployment around the world that they have in a major way created.  Such governments must have more faith in humanity's ability to resolve through free cooperation the problems that confront us.  The larger the number of cooperating men, the greater the opportunity to expand the specialization of labour, which is one of the main requirements to a more prosperous future."

Volontè concluded: "The DHI therefore joins its voice in solidarity with the Pope.  We must act now to liberate people from being permanently locked-out of entering the labour market by well-meaning but fundamentally harmful regulations.  The current crisis has now become urgent.  We must urgently deregulate labour before we irrevocably lose the next generation to a despair that leads them to reject forever the possibility of attaining their dreams and desires through means of peaceful participation in a free market."

1 comment:

  1. The posting is quite good except it needs emphasis on how wages are determined. While wages should be fair, the minimum wage should be related to skills needed for job and the skills offered in a free market for those skills.

    Wages must allow for training time to become productive.

    At the point that the workers skills add to productivity the employer will have to decide if he wants to keep the productive employee thru higher wages. The alternative is for the employee to seek higher wages because he has skills that add productivity.

    Government does not have ability nor right to make fair appraisal of wages for productively. Interference by government only adds costs and reduces productivity.