Last night it rained again, reminding me of the two weeks of rain we had at the beginning of November. As I was walking home on my boulevard, under my umbrella, an image came back to my mind, from a couple of weeks ago. I was at that time pretty moved to see a beggar sit in the pouring rain against the wall, bare-feet, on the wet sidewalk.. hiding himself and all his possessions under a ragged umbrella, the only thing he could call "home". I can only remember how eager I was to get home and sip a hot tea that day... It is in times like these that you realize the importance of having a roof to hide under, and a place to call home.
I keep wondering since that moment what makes him stay on the streets and face such a rough existence. Is it a choice, or does he, in fact, have no alternative? Did he personally make the choice not to work or was he forced to become a beggar because the labor system could not integrate him?
As an economist, I stick to the libertarian principles and believe in the power of "the invisible hand". But in this case, I wonder... can, at least, an almost-efficient labor market exist? Or is it doomed to inefficiency, by its inherent nature? Could my friend there, the beggar, find a job if he really wanted one? Or, if not, what can he do when confronted with such structurally inefficient labor markets?...
Let's look at the situation more closely. I now live in France, a very developed country where people are usually nice and helpful to each other in public, regardless of circumstances, social differences, sex, handicap, etc. However, its labor system is highly discriminative: even smaller things, like not being French (even if you are European!) will play against you in the recruitment process (this, despite the fact thatUE is supposed to stand for free labor mobility and a unique labor market for the member countries). Therefore, it's no wonder that discrimination based on nationality, skin colour, name (yes you read that right.. recruiters look at your family name when they decide whether to invite you to an interview or not), the reputation on the schools you graduated, and what not, are common. Given this situation, I can't help but wonder: how can my friend there get a job when the market discriminates so heavily on criteria which have nothing to do with actual performance on the job? How many cases aren't there, especially in France, of families moving in and not being able to get a job because of this? Thus, not being able to get a job, not having enough money to go back home, they end up on the streets.. the French state, desiring to ensure a minimum level of life for everyone, will start subsidizing their existence, which will have a negative impact on the perception of the population regarding these "street people". This, in turn, will only increase discrimination... creating a vicious circle.
I'm not saying that there are no beggars by choice - sure there are... I am not saying that what the French state does by subsidizing everyone is good.. far from it. I am just wondering whether a free (or at least pretty much liberalized) market, not sustained by government through unemployment payments, can have the means to deal with such structural deficiency. This market failure has nothing to do with information asymmetry, nor with externalities, nor with problems of supply and demand.. it is founded on irrational behaviours embedded in the conscience of economic agents. Can the free market devise a mechanism to interfere with this irrational behaviour and bring it on the right track?
*** This view might also explain why some countries have more efficient labor markets than others. For example, the unemployment level in the US (pre-crisis) was rather low because the population is very diversified and therefore there is less discrimination, whereas in France where people are very nationalist and protectionist, the unemployment is one of the biggest in Europe.
Hello world!
Acum 3 săptămâni
Postări
2 comentarii:
Nice post Andi! The market inefficiency stemming from irrational behaviour makes indeed hiring very difficult for your soaked friend. But there are even stronger ones, this time regulatory: for instance, state discrimination between skilled and unskilled workers reflected in the minimum wage. The higher the minimum wage is, the harder it will be for unskilled people to get work. Although your beggar friend would be willing to work for less than the minimum wage, and although his skills are worth for the employer less than the minimum wage, the state will not allow this exchange to happen. And since employers are not philanthropists, they will not pay the beggar more than his skills are worth. So your beggar friend is unfortunately doomed to remain under the umbrella...
Another obstacle would be the difficulty to fire employees in France. As long as it is difficult to fire people who are not productive, companies will not take chances with unskilled workers, or immigrants, or graduates of non-reputed schools, or too young, or too old, or any other category they could deem 'risky'. Because if they hire somebody who will not be up for the job, it would be very hard to fire him and thus they have to keep them on the payroll. This is another "government failure" which can keep your friend further on in the street...
Great to hear from you every once in a while. Looking forward to reading your next posts!! :)
The points you bring up are very interesting, especially the one regarding the minimum wage. I haven't thought about it that way but you're right, this could well be another reason for the market's inefficiency. Same for the second point, but I tend to think that there is more to it that just the easyness to lay off unproductive employees... it feels like some sort of "embedded corporate culture" also exists in this respect. Thanks for the very insightful comments!
Trimiteți un comentariu