The Government War on Young Enterprise

The Government War on Young Enterprise

August 16, 2011
Originally published in Big Government

 Let’s start in Britain so we can see where we’re going. The first thing to know is that government has removed the incentive to work. The British unemployment rate is currently 7.7%, yet there are over 100,000 households bringing in more than $37,000 annually in government handouts (the average household income in the UK). There are 650,000 households taking home more than $25,000 in these benefits.

That, however, is only part of the story. As that essential chronicler of British national demoralization, Theodore Dalrymple, said in the Wall Street Journal yesterday, employers are no longer interested in British youth:

But while the rioters have been maintained in a condition of near-permanent unemployment by government subvention augmented by criminal activity, Britain was importing labor to man its service industries. You can travel up and down the country and you can be sure that all the decent hotels and restaurants will be manned overwhelmingly by young foreigners; not a young Briton in sight (thank God).
The reason for this is clear: The young unemployed Britons not only have the wrong attitude to work, for example regarding fixed hours as a form of oppression, but they are also dramatically badly educated. Within six months of arrival in the country, the average young Pole speaks better, more cultivated English than they do.
The icing on the cake, as it were, is that social charges on labor and the minimum wage are so high that no employer can possibly extract from the young unemployed Briton anything like the value of what it costs to employ him. And thus we have the paradox of high youth unemployment at the very same time that we suck in young workers from abroad.

The role of the minimum wage is crucial. It is around $10 per hour (slightly lower for 18-20 year olds), much higher than the US minimum of $7.25. The difference is all the more important when one considers that the US has a higher average income (around $42,000 annually), meaning that British employers are being asked to pay (roughly) over half of average wage as a minimum rather than a third in the US.

 

Minimum wage laws have therefore been the primary enemy of youth employment in Britain. Bluntly, why hire an untrained, unskilled youth with a sense of entitlement when you can hire an experienced, educated Pole hungry for work for the same price?

The situation is trending that way in the US as well. As Jeffrey Tucker of the Mises Institute says, the high teenage unemployment rate is alienating American youth from work.

These are the years in which young people learn valuable skills and ethics that they will carry with them until they die. At work, they meet a great variety of people and have to learn to deal cooperatively with different temperaments and personalities. They learn how to do things they do not really want to do and they also discover the relationship between work and reward. They gain their first experience with independent use of money — acquiring and spending — and how to calibrate the relationship between the two.

These are skills people draw on forever. They are far more important to their future than is the main activity taking up their time: sitting at school desks.

This portends terrible things for the future of the American workforce. People dumped on the labor market after college will be even more worthless than they are already.

As Tucker notes, the result is that more and more teens are choosing federally-subsidized college courses instead, ending up nevertheless in minimum-wage jobs but with massive debts (I discuss this phenomenon, and the resulting high salaries among public university educators and administrators in my book Stealing You Blind: How Government Fatcats Are Getting Rich Off of You). Indeed, one way for Obama to “solve” the youth unemployment problem could be by simply making college compulsory for people under 21. If you can force people to buy healthcare, why can’t you force them to attend college?

It is interesting that there were many students and graduates among the London rioters, surely a symptom of the same problem over there. Indeed, the recent riots followed riots by students (many of them female) not so long ago, incensed at the idea that they might have to pay for even some of their own education. British youth has been forced by state action to rely on the state for everything, and when the state starts to think again, they get angry.

That’s why the recent Lemonade stand  crackdown is so worrying. The Lemonade stand is a cherished institution precisely because it helps teach the old virtues of enterprise, self-reliance and neighborhood. Yet, as one dad found when he inquired about how a stand could operate legally, the lesson now is that you must pay obeisance to bureaucracy above all:

What the Lemonade Day organizers should teach the children, said the health official, is about the importance of learning and obeying the government regulations that prohibit lemonade stands.

Overweening government is destructive of all those virtues I just mentioned. It kills enterprise by insisting on box-checking and standards, destroys self-reliance by ensuring people look to bureaucracy first, and erodes neighborhood by its layers of ever-remoter officialdom. Of course, the cry in response is that government protects us and our children. We see how well that worked in Britain.

If we are not careful, we will sacrifice our children on the same altar to bureaucracy as our British cousins did. It is now time to take back government from the bureaucrats. A good start would be to help your kids set up a lemonade stand this Saturday, Lemonade Freedom Day. And if the authorities come to call, you can teach your children how government does not have their best interests at heart.