Earn or Learn: that's the message the government is now sending to the Australian Youth,

"Any Australian under 25 will need to be either working, studying or training under a new plan agreed to by the Federal Government and state and territory leaders."

The government, together with the unions[1], have progressively increased the cost of youth labour to the extent that the government feels obliged to pass yet another law to fix "youth unemployment". This is nothing more than a bandaid policy aimed at fixing a problem caused by government intervention. Rather than forcing youth to do what a group of bureaucrats think is "right", how about first they allow them to choose whether or not they want to work or study. As it stands right now, with the minimum wage at a staggering $14.31 per hour (set to increase further in 2009), it's no wonder fresh high school graduates can't find work. They're products of an education system that leaves them barely qualified to operate a dishwasher yet alone function in the workforce; they're being systematically dumbed down by compulsory state-run education and this move will do nothing but add yet another taxpayer-funded burden to our economy.

Businesses are already being subsidised by 'free' government education. They don't see the need to invest in their staff because they're (being forced into) paying for training already. As the direct beneficiaries of training and education, if the government gradually removed their involvement in the education industry and allowed the market to function, business should and would bear the costs, voluntarily. It would probably be a lot cheaper, practical and relevant to boot! Who can honestly say that what they learnt in high school is useful to them in the workforce; I had to 'unlearn' most of what I was taught as soon as I left!

If our leaders are serious about 'helping' "...young people avoid slipping into long-term unemployment", then they should repeal the minimum wage laws. They should let people work at the level where the cost of labour is equal to labour productivity. Every young man and woman willing and ready to work should be allowed the opportunity to do so. A free labour market would welcome young people, which would not only exhort and restore the spirit of work but also improve labour skill and know how. The labour productivity of Australian youth would likely rise and exceed the ominous minimum levels that presently condemn millions to idleness.

On a more cynical note (seem to be doing this a lot these days...), what's the bet that the next Australian Bureau of Statistics (ABS) unemployment data will show a remarkable decline in unemployment, considering that the government has literally made it illegal for under 25's to be unemployed. Kevin Rudd will be grinning with glee at the success of his latest scheme...but it's just a superficial, statistical, (at best) short-term 'gain', just like every other government initiative designed to "help us". The cost to production, to wealth, whether in lost labour or the cost to the taxpayer who has to foot the bill, will be untold.

[1] Just a quick note: I have no problem with voluntary unionism so long as they're not backed by the government, don't receive government handouts, 'favours' and so on and don't make any contributions to government or party officals. In other words, unionism is fine as long as the union doesn't engage in coercive or violent activity (sadly, that's the definition of the modern union!).

Nothing depresses me more than listening to Julia Gillard, I don't think anything she says makes sense. From the ABC,

"The political party in the Australian Parliament that is spitting in the face of the Australian people and refusing to recognise that mandate is the Liberal Party, with Mr Turnbull dithering on one side, looking over his shoulder to see what Mr Costello is going to say to him next."

What Julia doesn't understand is that their new IR laws will destroy jobs. Unfortunately she can't see beyond the few short-term jobs it will "save" and definitely can't see thousands of jobs that will never be created because of these "reforms". Of course the unions are in full support,

Ms Burrow says a national union poll shows workers want new laws to protect them during the global financial crisis.

"People know that the rights and protections that are in the government's IR bills are more important than ever in an economic downturn," she said.

"Unfair dismissal protection is absolutely central to people's security, they must be put in place."

Any policy that increases the cost of labour above the market rate (when I say market rate, I mean the fair rate) will increase unemployment and lower the standard of living of the nation as a whole. The government has made it nearly impossible to tell if someone is 'employed' or not, the ABS definition is a joke:

"Employed persons comprise all those civilians aged 15 years and over who worked for one hour or more in the reference week or who had a job from which they were absent. Work is taken to mean work for one hour or more during the reference week, undertaken for pay, profit, commission or payment in kind, in a job, business or farm, or without pay in a family business or farm."

Needless to say, even if you aren't 'employed' according to the above definition (one hour a week? are they kidding?), you have to fill several criteria before you're considered 'unemployed'. If you saved for a rainy day and never have to step foot in a Centrelink office, chances are you're not unemployed by their definition.

Some gold from Malcolm today, he really is running out of ideas. From the ABC:

Opposition Leader Malcolm Turnbull says Prime Minister Kevin Rudd is scaring people by describing global economic conditions as a cyclone.

"Using this type of extravagant language is very counter-productive," he told ABC Radio's AM program.

"Anyone that listens to that is hardly going to take their $900 and spend it - they're going to use it to pay off debt and put it into the bank."

According to Malcolm Turnbull, now that we're too scared to spend we might actually, gasp, start the road to recovery by increasing savings and paying off debt. Yet he chooses to use this as an opportunity to criticise the government?! This shows that both major parties have no idea what they're on about regarding economics. More spending on consumption will not create jobs; it will not pull us out of this crisis. It will only delay the recovery process. We need real savings and for people to pay off the debt they accumulated while living beyond their means. We need a reduction in the size of the state, not an increase. We need to remove the coercive cartel that the state has over banking and money, starting with the RBA. That is what Malcolm should be attacking the government over, not that we're "too scared to spend".

In reply to Malcolm, Wayne Swan chipped in with some usual idiocy,

"I simply reject the notion that there has been no significant impact flowing through from the Government's efforts to stimulate the economy," he told Radio National.

"The alternative is to sit and wait and do nothing and what that will produce is far higher unemployment, far higher lost output and enduring damage to our economy for the long term."

Mr Swan has refused to speculate on whether the country is already in recession but he admits that the nation faces a huge challenge.

"I don't think anybody can say what will occur as we go down the road with this global recession," he said.

Ah, the old "we didn't do enough" fallacy, the "it would have been much worse if we hadn't acted" Keynesian response to the repeated failures of their theory. Their "stimulus" will increase unemployment, it will distort the structure of the economy and will result in further pain in the future.

I have a pretty good idea of what will happen as we go down this slippery road to serfdom: a short-term "fix" through the continuation of a 'stop-go' inflationary policy (in other words, subsidise the banking sector -- Bernanke plans to inflate the money supply to the 'old' level that existed before the bank-created money began to unwind, in effect clearing the banks' debt by devaluaing the currency -- in other words, stealing from anyone who holds USD). Following the 'recovery', inflation will pick up and they'll start to 'tighten' their monetary policy, in the process causing all of the malinvestments that are only around because of the increasing rate of inflation to go broke. In the process, jobs 'created' there will be destroyed and we'll have unemployment in those sectors. We then have the next recession which will come around sooner and will be more severe. Unless these structural issues are resolved, we're destined to have booms and busts, becoming more frequent and severe each time.

Either we have a fundamental change in the way banking and money operate (i.e. free banking) and end this vicious cycle, or...and this is what I'm afraid of...we eventually fall into full-blown socialism.