Sunday, November 20, 2011

Why The Young Have a "European" Future

Young people in America face much less opportunity than their parents. Why? Corporate greed?

Is greed something new that just burst on the scenes in the past ten years or so and has squashed the hopes of our young folks? Is greed the reason that young folks increasingly can't find jobs and are forced to take the European way -- live at home with your parents until you are in your late 30s? So, if no one is greedy, then jobs will magically appear and all will be well? Is that the thinking of the OWS crowd?

For starters, absent greed, there would be no jobs. Someone has to be greedy enough to want to make a profit and thus hire employees. The more profit they want to make, the more they have to expand their business and the more employees they will have to hire. Greed creates jobs. The absence of greed means there is no motive to hire anyone.

Those who push the "greed" thesis believe that an economy is a fixed pie that is available for everyone to take a slice and that politics is about who gets the biggest slice. If that view of the economy is correct, then the OWS people are right. That would simplify things a lot. That would mean that some of the poorest nations in the world have figured it out. Everyone is on the brink of starvation. The pie is fixed, not growing, and the only political issues are how to divide it in countries like that. OWS folks would like that, I suppose.

"Greed" has taken over in China and pushed it to nearly 10 percent economic growth year after year. The result is nearly 300 million people have moved from a standard of living of $ 200 per year to a standard of living of $ 20,000 per year in the newly prosperous cities of China. Where there is no apparent greed, in the Chinese countryside, the standard of living remains stuck at $ 200 per year. The OWS folks would like this because there is no 1 %. 100 % of folks in rural China live badly, but the pie is certainly sliced fairly....everyone gets virtually nothing.

What has happened to America that young people don't have the opportunities that were available to their parents? First and foremost, our parents were not saddled with modern employment laws that dramatically raise the cost of labor. Our parents got to keep most of what the employer paid in labor costs. Not anymore. What an employee gets is a fraction of what an employer must pay in modern America. This means that employers that want workers are becoming a vanishing breed. Minimum wage laws, family leave acts, OSHA, discrimination laws. growing legal liabilities for things both in the workplace and outside of the workplace, health care costs (why are health care costs an expense to be borne by employers?). All of these "good" things make labor too expensive in modern America and those who will suffer the most will be the least skilled amongst us -- minorities, youth, the unemployed. These are the victims of the big government agenda.

Second, social security and medicare have provided benefits to the older folks that are paid for by young workers and future young workers. That's a bad deal for young workers and future young workers to be saddled with a monstrous debt load that arose by providing benefits to people that never earned them (in any actuarial sense). But they have to paid for. The youth do that. What do they get for this? Nothing.

So young folks are prisoners of bad government policy. What the country needs is for those who want to get rich to have the opportunity to do so by hiring workers. If you don't like rich people, you probably don't mind high levels of unemployment (as long as it's not you) and young people increasingly forced to return home to their parents. That's been the European way for generations. It is now becoming the American way and for pretty much the same set of reasons.

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