The Rosett Report

Remember the Free Market?

Hard to believe these days, but just a generation or so ago the 1991 collapse of the Soviet Union was hailed as a victory for capitalism. In the 20th century’s brutal war of ideas, central planning had lost, and the free market had won. Or so it seemed. But that’s not how it’s working out among the developed nations. Instead, government meddling in the economies has grown and grown, and with it — lo and behold — so has this persistent problem of unemployment, especially among the young.

This has produced endless discussion centered on the idea that yet more government meddling is needed to “create jobs.” Thus did the head of the United Nations International Labor Organization, Guy Ryder, lament to the world last week that unemployment among the G-20 industrialized nations remains at “unacceptably high levels.” Under the headline “Ambitious job creation policies needed to tackle unemployment in G20 countries,” the UN press office crammed a sampling of Ryder’s remarks into a press release, including such mattress filler as:

Experience suggests that high employment levels and inclusive growth can be achieved through a well-designed combination of supportive macroeconomic policies and employment, labour market and social protection policies that are designed to spread the benefits of growth.

Translation: he is urging lots more government, tuning, fiddling, regulating, redistributing (and, by implication, taxing). Which is a great way to choke the life out of individual incentives, creativity and opportunity to genuinely create those elusive jobs.

What’s gone missing entirely from this discussion is the idea that when government leaves people free to choose for themselves, in free markets, the process of voluntary exchange creates wealth — and, yes, jobs. Actually, not only does it generate jobs, but it gives a lot more people a lot more choice about what kind of jobs they prefer to take — since only in a perfectly gray and dormant economy is a “job” an utterly standard, interchangeable unit.

Apparently oblivious to the irony, the ILO chief delivered his remarks in Moscow — capital of a 20th century experiment in state-run job creation that went to such extremes that, having deprived generations of freedom and taken the lives of scores of millions, it finally collapsed — replete with such grim jokes as “we pretend to work, and they pretend to pay us.” No, I’m not saying that from Moscow the head of the ILO was advocating a return to communism. But he was talking about yet more steps in that general direction; the state as the grand arbiter of who needs what, and which tradeoffs constitute some uniform pursuit of happiness. It’s not a good direction to take.

There’s a time-tested better way. Remember the free market?