Posted on 11/15/2005 2:49:09 AM PST by RWR8189
Many people are blaming the riots in France on the high unemployment rate among young Muslim men living in the ghettoes around Paris and elsewhere. Some are blaming both the unemployment and the ghettoization on discrimination by the French.
Plausible as these explanations may sound, they ignore economics, among other things.
Let us go back a few generations in the United States. We need not speculate about racial discrimination because it was openly spelled out in laws in the Southern states, where most blacks lived, and was not unknown in the North.
Yet in the late 1940s, the unemployment rate among young black men was not only far lower than it is today but was not very different from unemployment rates among young whites the same ages. Every census from 1890 through 1930 showed labor force participation rates for blacks to be as high as, or higher than, labor force participation rates among whites.
Why are things so different today in the United States -- and so different among Muslim young men in France? That is where economics comes in.
People who are less in demand -- whether because of inexperience, lower skills, or race -- are just as employable at lower pay rates as people who are in high demand are at higher pay rates. That is why blacks were just as able to find jobs as whites were, prior to the decade of the 1930s and why a serious gap in unemployment between black teenagers and white teenagers opened up only after 1950.
Prior to the decade of the 1930s, the wages of inexperienced and unskilled labor were determined by supply and demand. There was no federal minimum wage law and labor unions did not usually organize inexperienced and unskilled workers. That is why such workers were able to find jobs, just like everyone else, even when these were black workers in an era of open discrimination.
The first federal minimum wage law, the Davis-Bacon Act of 1931, was passed in part explicitly to prevent black construction workers from "taking jobs" from white construction workers by working for lower wages. It was not meant to protect black workers from "exploitation" but to protect white workers from competition.
Even aside from a racial context, minimum wage laws in countries around the world protect higher-paid workers from the competition of lower paid workers.
Often the higher-paid workers are older, more experienced, more skilled or more unionized. But many goods and services can be produced with either many lower skilled workers or fewer higher skilled workers, as well as with more capital and less labor or vice-versa. Employers' choices depend on the relative costs.
The net economic effect of minimum wage laws is to make less skilled, less experienced, or otherwise less desired workers more expensive -- thereby pricing many of them out of jobs. Large disparities in unemployment rates between the young and the mature, the skilled and the unskilled, and between different racial groups have been common consequences of minimum wage laws.
That is their effect whether the particular minimum wage law applies to one sector of the economy like the Davis-Bacon Act, to the whole economy like the Fair Labor Standards Act of 1938 or to particular local communities like so-called "living wage" laws and policies today.
The full effect of the Fair Labor Standards Act of 1938 was postponed by the wartime inflation of the 1940s, which raised wages above the level specified in the Act. Amendments to raise the minimum wage began in 1950 -- and so did the widening racial differential in unemployment, especially for young black men.
Where minimum wage rates are higher and accompanied by other worker benefits mandated by government to be paid by employers, as in France, unemployment rates are higher and differences in unemployment rates between the young and the mature, or between different racial or ethnic groups, are greater.
France's unemployment rate is roughly double that of the United States and people who are unemployed stay unemployed much longer in France. Unemployment rates among young Frenchmen are about 20 percent and among young Muslim men about 40 percent.
There is no free lunch, least of all for the disadvantaged.
Copyright 2005 Creators Syndicate
We could almost think of France as a huge laboratory, in which Sowell's clear-headed ideas have been tested and validated.
bumped for later
ML/NJ
Does France offer unemployment benefits to these who can't find work?
The real problem could be that the gap between working and welfare is so slight that it discourages the unemployed from finding work. Why work 40 hours for just a little more?
If socialist France does offer generous unemployment benefits it'd mean that Sowell's idea of solving the problem by eliminating the entry wage structure/package wouldn't work at all.
Maybe he'll get to that in Part II :-).
Excellent point, though. Systematic unemployment has at least those two parts: wage rates fixed by government above the market level, AND government support of those who aren't supporting themselves.
I admire your succinct wording...and your tagline too!
I just found the tagline in a book last night :-).
I think Dr. Sowell will cover all the relevant points, eventually - he's so close to perfect that it's scary sometimes!
Yet another great article by Sowell.
I wonder if politicians will ever start to listen to the great economic thinkers about these problems?
I doubt it. It's not like these are new concepts. The politicians are supported by the unions, who understand perfectly what artificially high wages do to the economy, and don't care.
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The clearest difference between regular pets and human ones is that our cats and dogs won't go nuts and burn the neighborhood down...
Well-put. "Caring" government does reduce unproductive citizens to the status of pets.
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Good article, but it made it appear that the rioting was a result of unemployment.
It ignores that wahabbist Muslims are indiscriminately killing all over the world.
And all we need to do is increase job growth?
Seems to me that someone should be questioning whether there's a problem in their religion.
reference bump
BUMP!
Some of both ... economics and religion. An over-emphasis on Islam, in this situation, ignores the fact that we've had similar riots among our own underclass, the majority of whom are not Moslem.
These same regions seem to have their share of anti-Jewish desecrations, intimidation of uncovered females, and pro-terrorist sympathies.
I'm assuming that those are not correlated to unemployment. Would you agree?
In Europe, those manifestations are correlated with unemployment. I assume what you meant is that they are not caused by unemployment?
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