Saturday, February 20, 2010

The Free Market's Role in Getting My Driveway Shoveled

by Robert Ringer

Even though Social Security and Medicare guarantee to bankrupt America, we should not lose sight of the fact that there are scores of other government programs that are both immoral and costly — and that need to be abolished.

Take unemployment benefits, for example. If Obama and progressives on both sides of the aisle continue with their never-ending extensions of unemployment benefits, we will look back on 2009 as the good old days, a time when we had only a 10-20 percent unemployment rate (depending on how one wants to calculate it). That’s right, unemployment benefits make the average worker worse off, not better, because, like minimum-wage laws, they cause unemployment.

The fact is that when many people say they can’t find a job, what they really mean is they can’t find the job they want, at the wage they want, under the working conditions they want. Which means that high unemployment is, to a great extent, a result of workers simply refusing to accept low-paying jobs, preferring instead to live off government largesse.

Worse, when the government “creates a job,” it simply overpays someone to do work for which there is little or no demand in the marketplace. And since the government has no resources of its own, the money to pay the person who performs the job must come from newly printed dollars, borrowing, or taxing productive workers.

Which is why it is impossible for government jobs programs to “stimulate the economy.” It doesn’t matter whether you call a new program a “stimulus package,” a “jobs bill,” or an Obama Scam, the result is the same — a negative impact on the economy.

I thought about the high unemployment rate a great deal over the past several weeks as snowstorms blasted the Middle Atlantic States and East Coast, because it gave me the opportunity to observe the free market at work on a micro scale. One of the things that many people don’t grasp is that the marketplace consists not only of goods and services, but labor as well. The free market is, in fact, a big hodgepodge of these three commodities mixed in with the unique wants, needs, desires, personalities, and financial situations of each consumer.

When the first big snowfall hit, my wife spotted a fellow with a snow blower removing the snow from our neighbor’s driveway. I was picturing being socked in for a week or more, so I represented a strong demand for someone willing to do the hard labor of removing snow from my driveway.

I asked the guy if he would shovel our driveway and, if so, how much he would charge. He quoted us $100, which seemed kind of high, but I wasn’t about to let him slip away. He had the supply, and the demand on my end was high. So, a hundred bucks it was. No government involvement, no regulations, no price controls, and, best of all, I think it’s safe to assume that no taxes will be paid on the money I paid him. I made sure to get his telephone number, figuring I would call him the next time we had a major snowfall.

Sure enough, a few days later, an even bigger snowstorm hit. I called the fellow who had shoveled our driveway for $100, but got no answer, so I left word to have him call me. He never returned my call, which I suspected was because the snowstorms had created a high demand for his services.

Then, lo and behold, a kid came to our door and said that his dad had a snow blower and would remove the snow from our driveway for $20. I couldn’t believe it. Without government regulation to thwart him, here was a man who was undercutting the first snow-removal guy by 80 percent. Can anything be more beautiful than watching the free market in action? Again, I got his telephone number after he finished shoveling our driveway

Read the rest here.

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