It is an issue that is all over the news, Increasing Income Inequality or I3. (I just made that I3 up). Normally, it is expressed in terms of the top 1% own 136% of everything or some other statistic like one CEO makes more than the rest of the world combined. It is obviously an issue that so many feel hard done to, but the prescription normally involves a “living wage” or caps on what some can earn or taxing income above certain amounts at confiscatory levels. That’s just pie-fighting. I wish we had more pie makers, especially those who really love to make and eat pie.
Political viewpoints normally determine where one stands on these issues. The Right want free enterprise, but the Left want social justice. However, I would like to frame this issue more in the New Yeoman point of view. What if you got social justice through free enterprise? Who from the Right would want to discourage self-employment? Who on the Left would want to discourage the individual to stand for themselves?
Unfortunately, some would. The corporatists (modern day mercantilists) and the government-firsters are in agreement here. Keep ’em under the thumb, so they are easier to manage. “You don’t have a W-2 slip? What are you a weirdo? Are you evading taxes? No, you cannot get a loan.” (There’s a great book on this topic entitled “The Future and Its Enemies” by Virginia Postrel)
What we have is far too many people who have listened to the decades of “good” advice to “get a good job.” In simple economics, the supply exceeds the demand. What happens when the employee demand exceeds the supply? All other things being the same, wages will go up and I3 will reverse. I can hear the howls of indignation already! “Koch stooge! Hippie! Unfettered Capitalist!” But hear me out.
Yes, I know everyone is not cut out to be self-employed, but that is not what I am talking about. All that is needed is for the most capable to become self-employed. The number needed to hit the exit from employed life would need to be relatively few. The meme of “The War for Talent” should be an indicator that it is a pretty fine balance already and wouldn’t take much to upset it. Remove a few of the best qualified and voila you have a labor shortage. Both in number and productivity. This can be seen in the hi tech fields already. Many coders have taken the leap to self-employment. That shortage means that the ones who are still happy to be employed reap higher wages and benefits too.
Roughly speaking, all other things being the same, each 1 million employees that became self-employed would drop the current unemployment rate by approximately ⅔ of a percentage point. [Source: USA’s BLS statistics for December 2015.] And that is from a employed work force of nearly 150 million. Surely, we have 1 or 2 million people who would prefer to run their own shop rather than work for Mr. Blatherhard?
The problem is that we as a society have reduced the respect we give to the self-employed. To own one’s business of any type should be held in high regard by everyone. It means that, compared to employees, one has taken more risk and shown more willingness to make it on their own. Yes, I know “no one makes it on their own,” but that is true of everyone, so for those that do become self-employed, still, they are different. And it is not only good for them; it is good for those that do remain employees.
So, how do we get a few million of the employees to remove themselves from the “employed” force? First, we need to set it as a goal for people by holding those who do so in high regard. Parents, teachers, counselors, I’m looking at you. The employed world you knew is not the one your children are entering. They need more than, “get into the best school you can” and then, “get a job at a blue-chip company.” Second, the thing that stops many is the idea of the bureaucratic hassle of setting up a business, so we should make creating a business so easy that anyone could do it in under an hour. Surely, that should be a goal of government, no?
That’s it. Something that is socially respected and easy to set-up. It is New Kind of Science in its simplicity, but I believe those are the ideas that work best over large populations and time, because they are clear and repeatable. All that is left is excitement and hard work.
Let the New Yeomen take over from there!