Dear Friends,
It seems to me that the best thing government can do for the working man is to make the demand for labor greater than the ability of the market to deliver. To do so resets the value of labor and allows the working man the ability to raise his lot.
The swamp of humanity that Malthus supposed has not come to fruition and can be tossed out. Population growth is slowed to the point in industrialized countries that the average age is going up fast. Problems of how the few youth will pay for the services of the many old are manifesting.
Market forces can never be ignored. When ever demand exceeds supply the aggregate price will rise. Labor is no exception. So whenever demand for labor exceeds the supply of labor the price goes up. But market forces are powerful. As the price of any commodity goes up more of the commodity is produced. So as the price of labor increases the supply will increase. By bringing in people who had little reason to work. (People who formerly had taken advantage of government largess). Most of the time the value of their labor is less than the value of government services they receive. Only when the value of their labor gets to the point where it makes economic sense to move into the labor force will people that receive government services do so.
As more people move into the workforce the ranks of the poor will necessarily go down. Poverty will necessarily become a thing of the past. But, more importantly, as almost everyone of working age in a society work, (add their productive labor to the aggregate), the wealth of all of that society grows… inevitably. The more people that work in a society, the more wealth there is in that society, the stronger the “foundation” of that society. The less people that work in a society the less wealth there is in that society.
How can government help drive up demand for labor in it’s territorial jurisdiction? By lowering friction to business… Regulation, taxes, licenses, and graft are friction to business. Another more pernicious source of friction are parasitic lawyers and legal system that creates chaos to enrich itself. Export and import tariffs and regulations continue to drive down the demand for labor in a country. Government largess is another insidious incentive that keeps the demand for labor low by creating a permanent underclass that has only the buying power, government, (societies roof), suffers it to have.
The roof cannot long support the foundation.
But by far the biggest drag on the demand for labor in a country is a lack of justice. Nothing else is as corrosive of the wealth of a nation. In a country that has no real justice, only the appearance of justice, poverty is always rampant. Starving people litter the streets and countryside.
Look at modern Kenya. There is a drought there. Starvation is gearing up to take the lives of thousands of people, and reset the epigenetics of the next two or three generations. Now what is the effective cause of the starvation in Kenya? Is it the drought or is there some root cause that is only made apparent by the drought?
The last elections in Kenya were marred by violence. Many were killed and the turmoil is only just under the surface. Justice is not to be found. People cannot be safe in their possessions. I submit, the lack of justice is the root cause, of the imminent starvation in Kenya and the drought is an aggravating factor.
Can you think of one country that has, or had, no justice and is/was wealthy? Not one exists in the history of man. Many were wealthy and lost their wealth when they became corrupt but not one has risen in corruption to wealth. The two are like matter and anti matter. They cannot exist together. Where there is injustice there cannot be general wealth. But where there is wealth, injustice will eat from the inside, that wealth, as surely as a nematode in a caterpillar.
Injustice lowers the demand for labor because of many factors one of which is the incentives that are set up. No one gets ahead by his or her own labor, they get ahead by stealing the possessions and labor (slavery), of others. Therefore, as possessions are used up and not replaced by the labor of the many, necessarily, the aggregate wealth of the county goes down. And, inevitably, as the wealth of a country goes down the demand for labor goes down as well… a nice feedback loop.
