Posts tagged with: unemployment

Blog author: jballor
posted by on Friday, January 6, 2012

In last week’s Acton Commentary, “Food Fights and Free Enterprise,” I take a look at the food truck phenomenon in US cities, sometimes called a “craze.”

In the companion blog post, “Food Trucks and First Steps,” I refer to Milton Friedman’s observation that there is a difference between being pro-market and pro-business. Art Carden has more on this over at Forbes.

As I note in the piece, the fight over food trucks is not just the stuff of big cities. The Carolina Journal has been following for some time the various dimensions of the political fights over food trucks in North Carolina, in both Raleigh and around the state.

One of the pieces of particular interest shows how political lobbyists for established businesses, in this case restaurants, can use legislation and regulations to squeeze out competition. But as Sara Burrows writes in “Regulations Hinder Food Truck Ministries,” these actions have negative impacts on faith ministries that would otherwise be helping to put people to work and getting them off the government aid rolls.

As Pastor Michael King says,

“But it’s obvious there is not a will in government to help the folks that don’t have jobs to create their own jobs,” he said. “They talk about wanting to create jobs. But it appears the folks they’re concerned about are only those who can go to the bank and borrow a bunch of money and put money in the ground.

“We don’t want them to be on government assistance,” he continued. “But the government is putting these rules in place and forcing the people to go on government assistance. How are you going to bring down government spending if you are putting rules in place so even if people want to create a job for themselves, they can’t?”

Congress insults our intelligence when it tells us that Chinese currency games are to blame for our trade deficit with that country and unemployment in our own. Legislators might as well propose a fleet of men-o’-war to navigate the globe and collect all its gold: economics is not a zero-sum game.

An exchange on yesterday’s Laura Ingraham Show frames the debate nicely. The host asked Ted Cruz, the conservative Texan running for U.S. Senate, what he thought about the Chinese trade question. Said Cruz, “I think we need to be vigorous in dealing with China, but I think it’s a mistake to try to start a trade war with them.”

“The trade war is on, and we’re losing it,” Ingraham responded. “[China is] subverting the principles of free trade.”

We blockaded the ports of the Barbary pirates when they subverted the principles of free trade — is Ingraham looking for a similar response now? No, she wants weenier measures: just some punitive sanctions here and there to whip China back into shape (because those always work).

Conservatives who are looking through the Mercantilist spyglass have got to put it down, because it distorts economics in the same way Marxism does. Economic growth and expansion of the labor market don’t come by the redistribution of wealth; they come by allowing man to exercise his creative talents, to innovate, to produce.

Protectionists also tend to ignore the inverse relationship between the trade deficit and the inflow of capital to a country. We are a nation of entrepreneurs, and entrepreneurs require investment. All business requires investment. If it’s Chinese investment, then Chinese investors see long term value in the U.S. economy. Sorry I’m not sorry about that.

Our leaders do the country a disservice by proclaiming that unemployment is caused by a trade deficit, and that a build-up of retaliatory tariffs is the way to fix the trade deficit. And they do other countries a disservice also, because U.S. protectionism hurts our trade partners (or potential trade partners). Holding back U.S. economic progress by artificially retaining manufacturing jobs, for example, means that workers in China or Vietnam are denied employment opportunities. It’s mindless selfishness.

Acton’s director of research Samuel Gregg has a piece over at The American Spectator that may surprise big government liberals. (We know you read this blog.) In “Free Market Sweden, Social Democratic America,” he lays out the history of Sweden’s social democracy — its nature and its effects on the country’s economy — and then draws lessons for the United States. The Scandinavian country isn’t quite the pinko nanny state Americans like to look down upon, and we’ve missed their reforms of the last two decades.

Gregg explains that Sweden’s dramatic mid-century expansions of government were portrayed as rooted in the traditional values of the homeland, so Social Democrat governments escaped the soft-Marxism tag, and were able to do pretty much as they pleased. Social programs were also characterized as coverage of universal rights, to be imposed by general taxation. Then came

the decision of governments in the 1970s to hasten Sweden’s long march towards the Social Democratic nirvana. This included expanding welfare programs, nationalizing many industries, expanding and deepening regulation, and — of course — increasing taxation to punitive levels to pay for it all.

Over the next twenty years, the Swedish dream turned decidedly nightmarish. The Swedish parliamentarian Johnny Munkhammar points out that “In 1970, Sweden had the world’s fourth-highest GDP per capita. By 1990, it had fallen 13 positions. In those 20 years, real wages inSweden increased by only one percentage point.” So much for helping “the workers.”

Economic reality was painful, but Sweden responded, and began to unravel some of its “progress,” reducing the public sector and even allowing private retirement savings. Unemployment was still high though — about 20 percent — in large part because the country’s tax structure encouraged joblessness.

But with a non-Social Democrat coalition government’s election in 2006, Sweden’s reform agenda resumed. On the revenue side, property taxes were scaled back. Income-tax credits allowing larger numbers of middle and lower-income people to keep more of their incomes were introduced.

To be fair, the path to tax reform was paved here by the Social Democrats. In 2005, they simply abolished — yes, that’s right, abolished — inheritance taxes.

But liberalization wasn’t limited to taxation. Sweden’s new government accelerated privatizations of once-state owned businesses. It also permitted private providers to enter the healthcare market, thereby introducing competition into what had been one of the world’s most socialized medical systems. Industries such as taxis and trains were deregulated. State education and electricity monopolies were ended by the introduction of private competition. Even Swedish agricultural prices are now determined by the market. Finally, unemployment benefits were reformed so that the longer most people stayed on benefits, the less they received.

By 2010, Sweden’s public debt had fallen dramatically and its rate of economic growth was 5.5 percent. Compare that with America’s 2.7 percent growth in 2010, and just try to restrain your jealous impulses.

Gregg cautions that Sweden’s economy is still hampered the Social Democrats’ legacy. High minimum wages keep a full quarter of the country’s youth unemployed, and a carbon tithe to the religion of environmentalism retards growth, but

It’s surely paradoxical — and tragic — that a small Nordic country which remains a byword for its (at times obsessive) commitment to egalitarianism has proved far more willing than America to give economic liberty a chance.

Full article here.

Writing in today’s Pittsburgh Tribune-Review, Rev. Robert A. Sirico, president and co-founder of the Acton Institute:

Jobs & deficits — the moral equation

By Rev. Robert A. Sirico

Thursday, September 15, 2011

The Genesis account of creation tells us that from the beginning, humanity was created to work. God puts Adam in the garden to “work and watch over it.” The Scripture provides an insight into our nature: We are all, man and woman, called into this life to find our vocation, the work that is uniquely ours and contributes to the flourishing of the wider community.

This explains why we are naturally so troubled about what appear to be merely economic problems: intractable unemployment and the various schemes put forth by policy makers to spur job creation. But behind the question is the reality that we naturally prefer people to be productive contributors to our economic life.

How we accomplish that is the subject of the debate over our unsustainable budget and debt trajectory. Do we choose those policies that make room for more freedom in the market, unleashing the creative potential of the American worker, business owner and entrepreneur? Or do we default, once more, to political and bureaucratic measures that require heavier burdens of taxation and regulation?

A government that actively sustains poverty by removing natural incentives to work is gravely in the wrong. Such government is without its essential anchor, which is that understanding of humanity as creative and productive.

The super committee created by Congress’ debt-ceiling compromise has begun its work to find $1.5 trillion in federal spending cuts ($2 trillion if the committee accepts the cuts corresponding to President Obama’s proposed stimulus). Even after this reduction, though, the nation’s debt will be unacceptably burdensome.

In 2011, for the first time since World War II, the amount of our total federal debt will surpass annual GDP. This is perilous, because economic capacity begins to be seriously affected when a country’s debt reaches 80 percent of GDP.

The super committee should begin by cutting social programs that perpetuate cycles of poverty. The only way to rise from poverty is to contribute to economic activity — a job is the best poverty program ever devised.

The federal government has spent hundreds of billions of dollars in the “War on Poverty” since Lyndon B. Johnson declared it, but we have next to nothing to show for the expense. And the agenda put forward by the religious left devalues the human person, treating the poor as objects of charity rather than as economic contributors.

The federal government does have real obligations to current generations that must be met. But without substantive reform of our largest entitlement programs, the country’s long-term fiscal health cannot be secured.

We cannot leave future generations with the full burden of our debt, which becomes a heavier weight the longer it is left unaddressed.

Congress must remember that economic growth is driven by innovations — by improvements in how the population produces goods and delivers them. The incentives caused by an expanding government run counter to economic growth because they run counter to human nature.

As reform of federal spending is undertaken, all cuts must be made with an eye to freeing citizens of every class to pursue their economic potential — to engage in the kind of dignified work that is essential to our nature, properly understood.

Blog author: abradley
posted by on Wednesday, February 9, 2011

My latest for Acton Commentary. I’m also adding a couple of videos from Hotep and the Institute for Justice.

Let the Hustlers Hustle

By Anthony Bradley

If necessity is the mother of invention, then there is nothing worse than quenching the entrepreneurial spirit of people seeking to improve their situation by imposing arbitrary third-party constraints. America’s unemployment problems linger because hustlers cannot hustle.

For many, “hustling” connotes business activity that is shady, or even illegal. But in the black community it is common to use the term to describe the entrepreneurial spirit that drives people to take risks to meet one’s needs and to provide legitimate services through creative enterprise in the marketplace. The latter view is the one taken by indie Hip-Hop mogul Hotep, who has created Hustler University as an effort to redeem hustling as a way to create space for economic empowerment. Clients include the NAACP, the Urban League, Clemson University, the National Education Association, Illinois Public Schools, and Morehouse College.

Hotep defines a “hustler” as “an enterprising person determined to succeed, [a] go-getter.” Participants in Hustler University are exposed to the idea that human beings were made to be innovative and creative and “to manifest our dreams into creation,” says Hotep. Among the Hustler’s 10 Commandments that Hotep aims to teach today’s entrepreneur are the aphorisms “your network is your networth,” “the early bird gets the worm,” and success is “where opportunity meets preparation.”

Hotep offers helpful direction, but for independent-minded hustlers to succeed and thereby benefit both themselves and their communities, they need an environment that provides them opportunities to work freely. While there are many factors that keep entrepreneurial spirit dormant such as laziness, the absence of mentors, and skill deficiencies, one of the greatest obstacles is the mass of regulations generated by federal, state, and local governments.

The Institute for Justice recently released a report describing how government regulations prevent entrepreneurs from taking off. In Houston, for example, hustling a mobile food truck business is nearly impossible. For starters, a would-be mobile food entrepreneur must obtain a license from the City of Houston Department of Health and Human Services. Potential hustlers must submit, in-person, two sets of plans that satisfy a 28-point checklist. During the government truck inspection, the vendor must provide extensive documentation including an itinerary and route list. He is required to pay $560 in fees, which includes $200 for the installation of an electronic tracking device. Operators must also disclose their menu, including every ingredient used as well as its origin, and how each dish is prepared. Even worse, a form must be filled out for each ingredient. This is just a sampling of the regulations in one city. Similarly daunting tangles of red tape exist in every jurisdiction in America, preventing entrepreneurs from starting and maintaining small businesses.

It’s clear that this regulatory regime especially hurts small businesses, the primary source of new jobs. Mark Crain, William E. Simon Professor of Political Economy at Lafayette College, conducted a study several years ago describing the disproportional burden imposed by federal regulations on small business. Crain found that firms with fewer than 20 employees spend 45 percent more per employee complying with federal regulations than do larger firms. Small firms spend 67 percent more per employee on tax compliance than larger firms do, and, compared to the largest companies, more than 4 times as much ($3200 vs. $700) per employee to comply with environmental regulations.

The black unemployment rate currently (January 2011) stands at 15.7 percent. Hispanics are a little better at 11.9, but both lag whites at 8 percent. The last thing we need are burdensome government regulations preventing hustlers from hustling. Whether intentionally job-killing or not, these types of government regulations dampen the entrepreneurial spirit of people who are trying to improve their situation and make contributions to the civic good by providing services that people need. Based on employment figures, these regulations arguably affect blacks and Hispanics disproportionately.

If America is really serious about addressing abysmal unemployment rates, federal, state, and local governments would do well to take the handcuffs off of hustlers and free them from the regulations that keep them from creating wealth. In other words, get government out of the way and let the hustlers hustle!

This week’s Acton Commentary. Sign up for our free, weekly email newsletter here. While you’re at it, pick up a copy of Victor Claar’s new monograph, Fair Trade: It’s Prospects as a Poverty Solution, in the Acton Bookshoppe.

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Searching for Meaningful Work: Reflections on the 2010 Economics Nobel

By Victor V. Claar

This year’s Nobel economics prize was awarded to two Americans and a British-Cypriot for developing a theory that helps to explain why unemployment can persist even when job openings are available.

The economics prize is not one of the original awards established by Alfred Nobel’s 1895 will, but is instead a relatively new prize. Established in 1969, the Bank of Sweden Prize in Economic Sciences in Memory of Nobel — its official name — is funded through proceeds from a 1968 donation by Sweden’s central bank.

This year’s winners — Americans Peter Diamond and Dale Mortensen, and British-Cypriot Christopher Pissarides — were honored with the $1.5 million prize for their illumination of the obstacles that may keep buyers and sellers from finding each other in some markets as efficiently as economic theory traditionally predicts.

In some markets — where information is low-cost and individual buyers and sellers are not particularly unique — parties can quickly find each other and engage in mutually-beneficial exchanges. Any buyer is happy to trade with any seller as long as the price seems reasonable to each.

But in other markets the fit matters more. And, as Diamond’s early work in the 1970s suggested, sometimes fit matters a lot. An extreme example is the “market” for spouses. Because marriage is a lifelong joint endeavor, men and women search extensively for partners with whom their eventual marital union may fully flourish as God intends.

And because searching for just the right person takes time, effort, and perhaps many first dates, plenty of eligible men and women remain single at any given moment. Web sites like match.com and eHarmony are popular with singles because those sites help reduce search costs by improving the amount of information available to singles about potential mates.

Diamond, Mortensen, and Pissarides have studied extensively markets with such search costs. When both buyers and sellers are unique, it requires considerable searching for each to find just the right fit. Even in a well-functioning housing market with plenty of available homes, buyers may struggle to find homes they like. So the buyers keep looking.

All three recipients of this year’s prize have carefully extended Diamond’s work to better understand why we may observe persistent unemployment in the labor market even when there are plenty of job openings available, and with interesting policy implications — especially for unemployment insurance programs. Their work shows that more generous unemployment insurance programs will unambiguously lead to longer average unemployment spells: a result with very strong empirical support.

There are two ways to interpret this policy conclusion, and neither is incorrect. On one hand, quite generous welfare benefits may — at the margin — backfire in the sense that they make finding employment less urgent than it would be otherwise, resulting in less search effort by job seekers. This interpretation provided part of the motivation behind the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (the “welfare reform” bill), which shortened the amount of time individuals may receive welfare payments without working. The bill made unemployment look less attractive.

But on the other hand, meaningful work is a gift. God desires that men and women — the only creatures that He made in his image — imitate him through their creative work. Work is our collaboration with God’s creative purposes. Reformers such as John Calvin and Martin Luther stressed the idea, gleaned from Scripture, that every believer is called by God to certain work — a vocation — and has a duty to respond to that call. And John Paul II, in his letter on human labor, observed that work is “one of the fundamental dimensions of [a person’s] earthly existence and of his vocation.” Thus while low unemployment is an important goal, we should not be too quick to put policies in place that force unemployed persons to settle too quickly for jobs that are not a good match. Doing so would deny people the opportunity to pursue their unique callings — ones in which each person can exercise stewardship to the glory of the Creator.

The enduring contribution of this year’s economics Nobel winners will be their suggestion that unemployment insurance alone cannot guarantee meaningful work, and that future policy efforts to reduce unemployment would do better to focus on improving information and reducing search costs, leading to enhanced opportunities for meaning and human flourishing in labor markets. In a recent interview with the Associated Press, Pissarides pointed to the UK’s New Deal for Young People, which directly attaches government assistance to job seeking and training (rather than unemployment per se), as one example “very much based on our work,” he said.

Dr. Victor V. Claar is associate professor of economics at Henderson, the public liberal arts university of Arkansas. He is a coauthor of Economics in Christian Perspective: Theory, Policy, and Life Choices, and author of the Acton Institute’s Fair Trade? Its Prospects as a Poverty Solution.

Acton’s Research Director in the American Spectator:

Europe’s Broken Economies

By Samuel Gregg

During September this year, much of Europe descended into mild chaos. Millions of Spaniards and French went on strike (following, of course, their return from six weeks vacation) against austerity measures introduced by their governments. Across the continent, there are deepening concerns about possible sovereign-debt defaults, stubbornly-high unemployment, Ireland’s renewed banking woes, and the resurgence of right-wing populist parties (often peddling left-wing economic ideas). Indeed, the palpable sense of crisis left many wondering if some European economies have entered a period of chronic decline — one which might eventually reduce Europe to being a bit-player on the world stage.

Obviously we should avoid over-simplification. In Germany and Sweden, for instance, unemployment is declining while economic growth and exports are rising. Not coincidentally, both countries have implemented significant economic reforms over the past ten years. To the audible disappointment of the world’s left-wingers, Sweden is no longer Social Democracy’s poster-child.

Nor can Europe’s present woes be explained in mono-causal terms. Like America, property-bubbles and over-leveraged financial industries played a role in some countries’ meltdowns. But not every European nation presently enduring economic hardship experienced banking crises on the scale experienced by Ireland and Britain.

It will be decades before economists and historians completely diagnose what’s happened to Europe’s economies since 2008. Many, however, will likely conclude that many European countries’ economic culture helped them lurch into seemingly unending crisis.

“Culture” is one of those heavily over-used words. But in sociological and historical terms, “culture” is a way of describing, among other things, the approach to life, the values emphasized, attitudes toward work, the understanding of law, and ultimately the view of science, the arts and religion prevailing in a given society. Over time, these form a type of inheritance that can remain relatively stable in particular historical settings over several generations. (more…)

The front page of a recent issue of the Vatican daily L’Osservatore Romano read like an Italian “Help Wanted” listing: “Lavori per Giovani Cercasi” (cf. Aug. 13 2010).

Unfortunately, this eye-catching headline was not a classified ad targeting young professionals for job openings at the Holy See’s many curial and administrative offices – the prized “stable” positions that would have Roman youth queuing in lines much longer those to enter Sunday Mass at St. Peter’s Basilica!

Rather, the Vatican newspaper summarized alarming statistics on worldwide youth unemployment released by the United Nations International Labor Office (ILO) in its detailed 87-page Global Employment Trends for Youth. In its special report the ILO confirmed global unemployment rates for young men and women (ages 15-24) are caught in a dangerous tailspin.

In only a two-year span between 2007 and 2009, an estimated 81 million out of 620 million youth have lost jobs –the unfortunate fall out from the massive lay-offs, non-renewed contracts, and start up bankruptcies during the Great Recession. That’s an average 13% unemployment rate for a young generation whose lives are on pause at critical stages of their vocational and financial development.

Some naysayers claim we are witnessing a veritable free fall into what may be a very long and bitter winter for job seekers, further extended by inevitable “double dip” periods of recession. So pessimistic are they, that we hear them quip: the currently frozen jobs market has activated a financial Ice Age. They argue that world’s unemployed youth are stuck in a very long-term socio-economic downturn in which many of them may never fulfill their basic dreams without stable jobs. Hence they can forget about plans for marriage, having children, purchasing homes, and saving for proper retirement.

Well short of claiming that the sky is falling, in the very least we can agree wit the ILO report: rising unemployment among youth will surely “lead to socio-economic instability and political unrest.”

NEETs and Nullafacenti

A 13% youth unemployment rate would be a “dream figure” for some industrialized countries, like Italy where I live and work. Here average unemployment for the same age bracket hovers regularly above 20% and drastically worsens when counting those young adults older than 25 who are not counted in most official unemployment figures.

Those young Italians who procrastinate entry into the workforce by not graduating university on time or who are still stuck in the starting blocks of their career by taking on un-paid company apprenticeships are typically not counted as unemployed. When we include them in the unemployment statistics, some estimates rise to well over 30%.

Finally, there is the most worrying segment of the young jobless population: the so-called NEETs (Not in Employment or Education or Training). In Italy, NEETs have now reached two million and account for over 21% of the country’s unemployed youth. NEETs are often tarred and feathered as the nation’s nullafacenti (“do nothings”), who help Italy maintain the number one EU position for this ever-growing detriment to society. They invest absolutely nothing in themselves to find traditional jobs or create entrepreneurial business opportunities – a financial and social welfare time bomb just waiting to explode.

To prove my point, just watch this TV5 clip (see minutes 12.20-13:50). Last week on Italian national television, reporters covered the shocking story of a 25 year-old NEET male (living at home in a city near Rome) who violently threatened his parents, extorted them, and even locked them out of their own house as he demanded more “allowance” money to satisfy his various material caprices. Eventually local police had to intervene to subdue the nullafacente and “restore” the official property rights of his parents own home.

Adverse vs. Difficult Conditions

All this is going on while the 2010-11 forecast for economic growth in Europe appears dim, as the Old Continent sputters along a very trepid economic recovery.

In Euro-zone countries official reports for the first quarter of 2010 were modest at best and downright dismal in economies of its weakest Mediterranean partners, like Italy, Spain and Greece. Second quarter reports released on August 13 by Euro Stat were not inspiring either, with average Euro-zone GDP growth rates up by a mere 1%.

When studying conditions in impoverished and developing countries, our heartstrings are tugged by the increasing impossibility for young people to succeed while paralyzed by a most vicious circle of economic, political and social turmoil (no fault of their own!). These include massive obstacles such as absolute tyranny, decades of civil war and genocide, widespread corruption, little or now rule of law, no direct foreign investment, no regular lines of credit, devastating droughts and famines, deathly outbreaks of easily treatable diseases, faulty telecommunications, et al.

Now these are what I call adverse conditions. These are conditions which all but crush any chances youth have to find and create new work, despite their high ambitions, inventive strategies, and sincere vocations in their line of business. Their odds will improve only if radical changes and revolutions occur in their societies.

Yet, we cannot say the same about the chances of youth finding and creating work while living in the world’s largest but struggling industrialized economies, like Italy. Comparatively speaking, this is still a land in which youth can make it in life. Here some of the world’s most creative and unrelenting businessmen achieve success, even despite suffocating regional and national tax structures, turf wars with mafioso thugs, and a near bankrupt social welfare state in times of austerity. Believe it or not, it is still possible for enterprising youth to make it in Italy. It may be very difficult to succeed here, but not impossible as in, say, Cuba or North Korea. Far from it.

Too Much Dolce Vita?

Some stats claim an amazing 70 percent of Italian single men and women (both employed and unemployed) live at home until their mid-to-late 30s. Some critics from hardworking cultures typically say this population group lives the “sweet life”, a.k.a. the dolce vita. Others defend the socio-economic phenomenon, claiming this is the only way youth can save for a future home and a car down payment or to help keep their parents’ household afloat. In either case, they enjoy the benefits of a secure and relatively struggle-free home environment. In Italy no 15-24 year-olds starve or sleep on the street.

However they view themselves, Italian youth usually fail to appreciate that living at home provides a tremendous financial opportunity for them. Unlike others living own their own and barely making ends meet, they can save up small amounts capital over time to try their luck in entrepreneurial ventures on their own or in partnership with others who share their same business concept. This is what I think the Vatican newspaper meant to inspire, when it said youth should live up to their potential as the “forza motrice” (driving force) of the world’s teetering economy.

After all, in addition to being able to save a little venture capital, they have assets and resources that impoverished and developing nations would fight tooth over nail for. They are private owners of smart phones and wireless lap taps, have 24/7 internet access, enjoy affordable higher education (and cheap advanced education), have efficient and very inexpensive transport around the European Union (God Bless Ryan Air!), and can easily request small start up business loans – typically up to €5000 (with their parents as guarantors) to secure a little more investment capital.

And yet so many bitter young Italians sit idle in their beautiful piazzas with nothing better to do.

Ironically these historic squares were not built for modern day-dreamers, but to host and encourage vibrant hubs of entrepreneurial trading during Renaissance times –the very period that gave inspiration to the free market as we know it.

Notwithstanding, Italian youth know not their past nor perceive well their futures. They blame everyone from Berlusconi to the Madonna (not the pop-star!) for having no opportunities.

Parents Should Be Furious

The Vatican news piece of two weeks ago (written on Friday the 13th, another reason to blame the bad stats!) should have been dedicated to a story on inspiring young business leadership in the recession market. They should have interviewed a young Italian entrepreneur, a friend of mine, whose marketing agency was built on less than €1000 start up capital. It now approaches six figures in annual revenue and the business owner is now attempting to purchase his own home, get married and is considering hiring other young collaborators to help take his venture to the next level (yes he is about to create new jobs!).

Italian parents should furious, just like the master in Christ’s Parable of the Talents, whose timid servant had simply buried the meager capital he had received. The risk aversion is the same for Italian upper and middle class youth who do nothing worthwhile, even with a generous €200 paghetto (monthly allowance) that some of them receive. Worse still, they blow it at bars, movie theaters and cell phone shops. Did they know that some successful internet businesses humbly start with that very same amount?

Perhaps it boils down to a question of values – values instilled in youth by an overly cautious post-war generation of parents who insist their offspring find the golden fleece of work (i.e. un posto fisso or permanent union-protected job). Their encouragement has done little but create false hopes in youth.

Sadly, this values system is broken. In Italy, we can no longer use the same macroeconomic and political “excuses” to define the youth’s scapegoats, like we still can in developing and impoverished countries or in 1940s post-World War II Europe. In modern industrialized, but often struggling countries like Italy, the forza motrice must be the the current generation of enterprising youth, whether they like it or not. To do so, they need to finally switch gears and overcome their aversion to risk, discover their special callings in life, invest their talents in worthwhile projects, and once again prove they are one of the most creative and resilient cultures on earth.

Blog author: ken.larson
posted by on Friday, October 30, 2009

Recently I got a phone call from an engineering manager I’ve known for over ten years. He informed me that he’d been laid off last spring, but before I could offer condolences he added that he’d been hired by another company in the same industry for a consulting assignment.

That temporary work had lasted over six months but was winding down. He hadn’t been a contract “consultant” before and after some additional small talk told me, “… and I’ve discovered something I never knew.” Anticipating a revelation about a new found inner strength, I listened carefully.

“You know,” he began, “when you work as a consultant, you have to pay twice the withholding for Social Security and Medicare that you do when you work for a company.” I told him that wasn’t exactly true and we discussed briefly the labor burden — those costs the employer pays in the U.S. when they hire someone.

The big story these days is employer provided health benefits, but unfortunately that subject overshadows the longer term liability an employer or company faces when they hire employees; and is certainly one of the reasons why many firms increasingly like “contract” agreements. My friend’s take on having to pay a greater amount to Social Security and Medicare was not “exactly true” because the money “contributed” by the employer was always part of his gross wages, but was obscured by the mechanism of the deceit explicit in the government’s term “employer’s contribution.” I have some experience here. I’ve been a business owner and self employed most of my adult life.

You see, the employer by law must add to and pay the government an amount equal to what he withholds for Social Security and Medicare on a full-time employee’s behalf. If you regularly earn $400 a week, you are responsible for sending $30.60 of that amount to the federal government. (And that’s separate from what you may owe for income tax.)

The employee’s Social Security portion is 6.2% of gross wages up to $106,800 a year; and Medicare another 1.45% of gross wages but without a cut off point. For most of us, the combined 7.65% is our “contribution” to the federal retirement and healthcare systems already in place. But it’s not the total “contribution.”

As stated above, an employer or company that hires you is responsible for an equal “contribution” in your name of an additional 7.65% of your gross wage. Many who work for company’s lose sight of the fact that employers must add that cost of having them on the payroll to their cost of hiring us. Put bluntly, our employee has to account for a profit of at least $430.60 a week in order to justify being on a payroll. And because of the federal government’s demand that his and the employer’s “contributions” must be paid weekly, or monthly according to the government’s demands; the system has a tendency to put its own demands on a company’s cash flow. A company has to have enough profitable receipts to be able to “contribute” their one-half of what is demanded for their employee’s government retirement and healthcare system. And believe me, the government wants “their” money first and doesn’t care what other bills an employer has to pay.

My engineer friend was facing the reality of having to be his own employer so to speak and ante up the total 15.3% all on his own. Like most consultants he’d arranged a fee that paid him an amount from which no deductions were taken. At times like these, we’re all small business owners. It’s sobering. Imagine if there was no withholding and all taxpayers had to write a check at the end of the year. How might they choose to act? These government systems managed by Caesar are soon to be bankrupt. I heard someone report recently that Medicare is in arrears by $38 Trillion.

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Fall is typically the season during which the sermons delivered by pastors from church pulpits concern stewardship. In making the case for Christian Stewardship many pastors will visit Genesis and the story of Abel and Cain. Compare and contrast are my favorite means of offering clarity on many subjects so I like the Genesis story of obedience versus selfishness. Many use the Bible to promote the concept of the tithe and if you Google Tithe you’ll come up with a plethora of explanations, indictments and opinions. Generally the percentage of income or produce that we are persuaded God asks of us is ten — 10%.

I can tell you that the tithe is a request that staggers most Christians. Those with work earning $400 a week are not likely to volunteer $40 when the plate is passed on Sunday — yet seemingly ignore the fact that $61.20 was sent to the IRS on their behalf that week.

It’s instructive to remember that the concept of the religious tithe contains a lesson which is not of taxation. It’s argued that all is God’s and all we have comes to us through His Grace. I believe that’s true.

Yet as I sat in the pew recently listening to one of those sermons about “giving” I took a break to recall and pray for my engineer friend’s employment perdicament, I also compared my own hesitation at pledging myself toward a 10% tithe in light of the reality that I was already on the hook to give Caesar 15.3% off the top. Glancing around the sanctuary, the question arose as to whether the bureaucrats at a government office could match our congregation in our common devotion to each other, our Lord; and the missions we support in service to Him.

And it got me realizing that when you compare the two: Caesar and God — 10% is one heck of a deal.

Today’s Wall Street Journal Europe carries an editorial titled “Jamais on Sunday” approving of the French government’s attempt to allow some businesses to open on Sunday:

Parliament is likely today to pass a bill that would scrap the 1906 law restricting Sunday work. The law’s original purpose was to keep Sundays sacred — France’s empty churches show how well that’s worked — and the Catholic Church remains a strong supporter. But it has become emblematic of the regulatory red tape strangling the economy. Some 180 exceptions have been made to the law. For instance, a store that sells sunglasses can open on Sunday because sunglasses are considered entertainment, while a store that sells eyeglasses must be closed.

This got me thinking about Pope Benedict’s call in n. 32 of Caritas in Veritate to “prioritize the goal of access to steady employment for everyone” and also about this Foreign Policy piece on Europe’s new “lost generation”:

Unemployment among job seekers under 25 in France has risen more than 40 percent in the past year, while total unemployment rose by about 26 percent. A third of Britain’s unemployed are under 25. Youth unemployment is nudging 40 percent in Spain.

The Baltic states, whose bubble burst so dramatically last fall, have seen the greatest increases. In June 2008, between 8.9 and 11.9 percent of young people in Latvia, Lithuania, and Estonia were out of work. As of the last round of reported data, from March and April, those rates stand between 25 and 35.1 percent — about a threefold increase in less than a year.

[...]

The effects aren’t simply financial. One prominent British think-tanker recently warned, “If this situation persists, the risk may be of a new generation lacking the experience, qualifications, and self-belief to provide for themselves and their families.”

Moreover, youth unemployment, much more so than for older workers, carries dangerous social effects: social exclusion, depression, poorer health, social disruption, and higher incidences of crime, incarceration, and suicide. With every month a teenager is unemployed, for instance, his or her likelihood of being convicted of a crime increases.

[...]

“It’s hard to say whether a whole generation is ‘doomed,’” says Yale University political scientist David Cameron. “The cyclical component will probably start receding a bit in late 2010 or 2011. But we’ll have higher unemployment for a long time to come. Europe needs a growth rate of 2 to 3 percent a year, year after year, to bring the rate down substantially. I don’t think anyone sees that happening anytime soon, if ever.”

“The great benefit is that in a few years, when the Earth turns, there will be thousands fewer [young job-seekers],” says Blanchflower, the former British central banker. “But now, we’re just trying to get these economies moving. And unemployment, especially among young people, is a ticking time bomb.”

(HT: Real Clear World)

The Church’s position against Sunday work makes sense if people actually went to Church, just as it would be absurd for the Church to de-emphasize the great importance due to the Lord’s Day. But with rising unemployment among the youth and the degree of secularization that has already taken place, does it still make any sense?

I remember my graduate school days in Toronto when I first saw bumper stickers that read “Keep Sundays Free for Family and Friends.” I noted the noble sentiments but also the significant absence of God from the Sabbath.

So how has the introduction of Sunday business affected our understanding of Sunday worship? Should the Church argue against market deregulation that would help young people find work and begin their adulthood? Is it impossible to combine Sunday work with Sunday worship? Is it the case that once Sunday is treated like any other day of the week, the Church has already admitted defeat?