Jewish World Review April 9, 2004 / 19 Nissan, 5764

Thomas Sowell

Thomas Sowell
JWR's Pundits
World Editorial
Cartoon Showcase

Mallard Fillmore

Michael Barone
Mona Charen
Linda Chavez
Ann Coulter
Greg Crosby
Larry Elder
Don Feder
Suzanne Fields
Paul Greenberg
Bob Greene
Betsy Hart
Nat Hentoff
David Horowitz
Marianne Jennings
Michael Kelly
Mort Kondracke
Ch. Krauthammer
Lawrence Kudlow
Dr. Laura
John Leo
David Limbaugh
Michelle Malkin
Chris Matthews
Michael Medved
Kathleen Parker
Wes Pruden
Sam Schulman
Amity Shlaes
Tony Snow
Thomas Sowell
Cal Thomas
Jonathan S. Tobin
Ben Wattenberg
George Will
Bruce Williams
Walter Williams
Mort Zuckerman

Consumer Reports

Counting the costs, Part II | Signs that the "jobless recovery" is starting to generate jobs after all should not prevent our looking at some of the factors in the earlier slow growth of employment while the economy was growing vigorously otherwise.

Although the unemployment rate has been at near record lows, despite the slow growth of employment, this has been because of people who simply dropped out of the labor force, and were therefore not counted as unemployed. But think about it. Can you or I simply drop out of the labor force?

Of course not. We have bills to pay. Who can drop out then? Usually either those who are rich, those who are willing to live on handouts or young people still living with or off their parents.

According to the March 22nd issue of BusinessWeek magazine, "almost all" of the decline in the number of people seeking work "has occurred in the 16- to 24-year-old age group." Labor force participation among people older than that has continued to be what it usually is.

In other words, people who have to support themselves and their families were not the ones dropping out of the labor force. When things get tough for younger people, they can turn to mom and dad. Others turn to the taxpayers.

There is another aspect to this, however. Jobs have long been harder for young people to find. Some might say that this is due to their lesser skills and experience. But there is no inherent reason why low-skill people should be any less employable at low wages than high-skill people are at high wages.

The difference is that the government sets a lower limit to the movement of wages and also mandates working conditions and other benefits that are the same for everyone. All these things cost money and in effect make the minimum wage higher.

These things that cost employers money and cost workers jobs do not, however, cost anything to those who pass laws that enable the legislators to feel good about themselves and look good to the voters. These costs do not get counted.

Donate to JWR

California in general, and San Francisco in particular, think nothing of piling on goodies that employers are required to provide. Costs are no deterrent to the politicians, who can always call the goodies "rights" or part of business' "social responsibilities."

That kind of rhetoric is sufficient for those who have been through the dumbed-down education of our times. Costs, consequences, logic and evidence are concepts that are too old-fashioned for those who are in tune with our times.

The ability to ignore costs is at the heart of the attraction of government for some and of the expansion of government over time. Anything that might conceivably be of some benefit to someone, sometime, is worth doing, if someone else is paying.

In our own lives, we pass up all sorts of benefits when we decide that they are just not worth their cost. Maybe we would like to have a new car or add another room onto the house or take a vacation in the Caribbean but it may not be worth what it would cost.

So we keep driving the old jalopy, get used to not having a den and take in a few ball games during the summer instead of going on a cruise. Life is full of trade-offs when it is your own money.

Not so when it is the taxpayers' money or — better yet — money that business is forced to spend, which does not even show up on the government's budget.

One of the reasons costs do not get counted is that costs are often confused with prices. All the political noises being made about importing pharmaceutical drugs from Canada, or other schemes to reduce drug prices, do not face up to the 800-pound gorilla staring us in the face — the $800 million it costs to develop a new drug.

You can control the price of drugs all you want, whether by imports from Canada or in numerous other ways, but if that $800 million is not covered, you are not going to keep getting new drugs created at the same pace. That's when sick people will pay the real cost in needless pain and preventable deaths.

But the politicians do not have to count any such costs, especially if those costs materialize only after the next election.

Every weekday publishes what many in Washington and in the media consider "must reading." Sign up for the daily JWR update. It's free. Just click here.

JWR contributor Thomas Sowell, a fellow at the Hoover Institution, is author of several books, including his latest, "Applied Economics: Thinking Beyond Stage One." (Click HERE to purchase. Sales help fund JWR.)


Thomas Sowell Archives

© 2002, Creators Syndicate