The Freeman: Is anyone shocked by high youth unemployment?

In the magazine The Freeman Professor William Anderson of Frostburg State University wonders who is to blame for the high youth unemployment (around 26% in the US), whether the state can do anything about it, and whether Franklin D. Roosevelt was right when he said that economic laws can be formed and bent as needed. We for you this reflection we have in the Czech translation.

Do not enter! Source: thefreemanonline.org

Franklin D. Roosevelt said in a nomination speech at the National Democratic Party of the United States in 1932: "We must adhere to the fact that economic laws are not made by nature. They are made up of human beings. ”Indeed, much, if not all, of the New Deal contained tried to circumvent economic laws - with a predictable result.

George Santayana he wrote, "Those who do not remember the past are doomed to repeat it" and this is true. We are probably seeing the clearest example of how politicians and bureaucrats are trying to label themselves as able to rewrite the laws of economics. Nowhere is this as clear as in the example youth unemployment and minimum wage legislation.

Barack Obama in his presidential campaign, he stated that he wanted the minimum wage in 2011 to be §9.5 per hour, which would continue last year's growth to the level of §7.25. He said it would "strengthen" employees and make the US economy stronger. But if he wanted to tell the truth, he would have to say that in fact, it promises people a mass of unemployed young people.

In fact, youth unemployment today is around 26%. The situation is so bad that some young people are also taking unpaid internships, which state governments (of course with support from trade unions) were declared illegal. Others lament that young people do not have valuable work experience.

Despite all the anxiety of those who believe that a government decree can override economic laws (or create new ones), we are dealing with a situation that it cannot surprise anyone who truly understands economics. The combination of a recession and a significant increase in the minimum wage is hurting inexperienced workers (a group that young people fit in precisely), as they are an economic burden on their employers if they cannot create enough to pay for their work.

In March, the massacre was similarly interpreted in an editorial Wall Street Journal:

"Higher minimum wages have the biggest impact on those with the least experience and the lowest education. This means especially those who are looking for their first job, especially young people. Furthermore, of course, as all economic models assume, a higher minimum wage will cause even more confusion for the young unemployed. Bigger than you'd expect in a recession. "

Unemployment figures are simple depressive. It's all around for all young people 26 %, for black men it is over 50%. Not only because of the rise in the minimum wage, many African-Americans live in those parts of the city where trade is not very successful.

Do not enter!

However, minimum wagewhich exceeds the extreme productivity of many young people becomes a barrier to entry into employment. Unfortunately, many people not only do not see the role of government in creating this catastrophe, but even think that the government can solve it. Journalist David Schepp wrote:

"Programs such as the Civilian Conservation Corps, which helped around 30 million young people to work in the 3s, could be the beginning of a long journey today. We can, for example, involve young people in public works. The CCC has given young people work experience and income to a generation of young people who might otherwise be lost, said Professor Michael W. Brandl.

I agree that if we keep the young out working reality, it can be bad, but we must also understand that government programs are to blame. Expecting the government to solve the problem it created by even greater interventions is a belief in the exact quadrature of the circle. Contrary to Roosevelt's contention, economic laws cannot be broken with impunity by state regulations any more than King Knut could control the tide.

Source: The Freeman, authored by William L. Anderson, Professor of Economics, who also writes for the blog “Krugman-in-Wonderland".

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  1. minor note on translation: "human beings" means "human beings", not "human beings"

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