To achieve maximum employment, the government must allow the market to take its course. The hunger, ambition and energy of individuals will lead them to employment and the education they need to obtain it. Anything government does to ‘help’ will only increase unemployment.

Healthy unemployment levels are around 3 to 4 percent. Under such circumstances, jobless people are either in transit between jobs or unemployable due to a poor attitude in the process of being rectified by hardship. Unemployment higher than 3 to 4 percent is caused by the government doing one or more of the following:

  • Printing money;
  • Tampering with interest rates;
  • Tampering with exchange rates;
  • Tampering with the labor market;
  • Lending money;
  • Borrowing money;
  • Paying money to the unemployed;
  • Failing to enforce contracts;
  • Preventing freedom of contract;
  • Failing to respect the rule of law;
  • Owning businesses;
  • Subsidizing businesses;
  • Bailing out businesses;
  • Over-regulating businesses;
  • Protecting businesses;
  • Overtaxing;
  • Overspending;
  • Distorting market forces.

Giving money to the unemployed simply encourages irresponsible behavior. If people know they can access a comfortable safety net, they will tend to spend all the money they earn instead of saving for contingencies, and get into debt by living beyond their means. People need to understand that if they become unemployed they will receive no money from the government, and if they become destitute they will be sent to a employment hostel. When this happens people:

  • Maintain their careers with more care, including cross-training and further education;
  • Do not go into debt to fund consumption (live beyond their means);
  • Stop spending every cent they earn on superfluities;
  • Save a portion of their income in a contingency fund;
  • Maintain close family bonds and/or a network of true friends so that in time of need they can stay with them;
  • Support charities in their community so that if they ever fall on hard times they can seek help from them without shame.

This article is an extract from the book ‘Principles of Good Government’ by Matthew Bransgrove