Free Market Unemployment

By Mike Tront – Support Mike on Patreon

There is a good side and bad side to everything.  Even the most positive advancements in humanity result in short terms losses for some.  These short term losses are inevitably used as foot holds for government to rear it’s ugly head and permanently establish itself in our lives.

Some libertarians are even drawn in by these losses and use them to justify government action!

Specifically, I’m talking about job losses from automation, immigration, and free trade.

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Historically, these three advancements have been the best predictors of wealth for a society.  We all know the societies throughout history that have been the freest, with the most trade, the most free movement of people, and the most industrialization have the most wealth and the highest standard of living for everybody.

However, the ugly side of automation, immigration, and free trade is short term job losses for some people.  It’s no secret that machines can do things better and cheaper than humans.  Immigrants can take over low skilled jobs and do it for less wages, and free trade can bring in more competition, thus forcing current companies out of business.

This is great for consumers of course!  We get better quality goods and services at lower prices.  This allows us to keep more of our money and spend or invest in other industries that we wouldn’t have otherwise been able to.  This leads to more jobs in those industries, a bigger economy, and more wealth and prosperity for everyone.

But what about the poor guy who lost his job in the meantime?  The guy who now has to find a whole new skill set or live on the street?  How can the amazing free market handle this “failure” Mr Libertarian Guy???

Right now, the government has massive bureaucracies that deal with unemployment insurance, disability insurance, job skills training, subsidized college for those laid off, and of course many forms of welfare.  These programs are forced on us whether we need them or want them, they cost billions, and they do little else but perpetuate and reward unemployment, rather than solve it.

So how would the free market solve this?  First of all, rather then be forced to pay into unemployment insurance through our employers, we would have a choice.  You could go through any number of private companies competing for your business.  This competition would keep costs down and quality up, and most importantly it would keep your options open.  Are you secure in your skills and job?  You may just want bare minimum or even no unemployment insurance.  Are you in a volatile industry?  You may want better insurance.  Depending on how much you want to pay, your insurance could kick in after 1 year of employment, 2 years, or right away.  You could choose if you want it to cover you for a month, 6 months, a year, or whatever.

The best part is that insurance companies don’t want to pay you this money forever, so it’s in their best interest to do everything they can to get you back to work! Just like car insurance companies incentivize teens to take driving classes, and health insurance companies incentivize people to live healthier and take better care of themselves (I’m wearing a fitness tracker right now so I can get lower rates), unemployment insurers would give you classes on how to find work, specific job training help, etc.  Simply, it would save them money to help you!  Greedy insurance companies trying to get me to be a better driver, live healthier, and find a good job just so they can save a buck!  The nerve!

For the government, bureaucracies have the opposite incentive.  The more people they have on their welfare rolls, the bigger the budget they get, the more secure THEIR jobs are.  Private insurance would lose money if their private welfare rolls swell up.  That puts their job at risk.

Who do you want in your corner if you lose your job?  The bureaucrat that stands to gain from you being out of work, or the private insurer that stands to gain from getting you back to work?

 

mike

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