Once upon a time there was a village where everybody worked… Well, almost everybody. Women would get married and then they’d stay at home and do housework which as any economist will tell you isn’t really work at all because it has no value. Of course, while economists may tell you this, they never say this to their wives because it could lead to them going to work with a crumpled shirt because the little woman has refused to do the ironing as it isn’t work…
Ok, I know that it isn’t politically correct to presume that all economists are men who are married to housewives but I thought that a little bit of sexism may encourage any neo-con reading this remember the good old days when men were men and women were a special type of being who only occasionally appeared and certainly never became Prime Minister or Deputy Leader and it may encourage them to read further in the hope that I’m going to justify all that stuff about the invisible hand of the market. And, of course I will. I just love the concept that an imaginary hand is guiding our decisions… Well, not so much imaginary as non-existent, but as any economic rationalist will tell you it’s far more competent to make decisions than a government even if they themselves are the elected party.
And, of course, it wasn’t just women who didn’t work. Occasionally, somebody would be between jobs. But generally there was plenty of work to go around.
The main store was owned by a man named Mr King, as was the hotel and the widget factory and many of the houses that people lived in. He was a very wealthy man and he was responsible for the employment of many, many people in the village. In fact, the only other person who owned anything was Mr Gold who owned the bank. In fact, apart from Mr King and Mr Gold, the only way you could be earn money was to make and sell things. Many of these things were sold in Mr King’s store.
All this worked well enough, but one day Mr Gold’s son, Rollo, came back from the big school in the city and he needed a job, so Mr Gold saw Mr King, and arranged for him to work as a manager for Mr King. Mr Gold convinced Mr King that Rollo would have a lot of good ideas about how they could improve things and make them more efficient.
And sure enough, young Rollo did. One of his first acts was to point out that the could replace Sol, the man at the drink counter of the store with a self-service machine which saved them most of Sol’s wages. Unfortunately for Sol, this meant that he could no longer afford the rent on his home, and so he had to move out. Luckily for Sol, the town council ran a shed for people who had no income where they could go, and in return for a few hours’ work each day, they’d be fed and could spend the night out of the cold.
Rollo, flushed with his success, had an even better idea. By installing the latest machines in the widget factory, they could reduce their workforce by a third. Mr King was most impressed. When he and Mr Gold had their weekly dinner at his hotel, he expressed the belief that things were better than they’d ever been. Mr Gold agreed. Everything was just fine, apart from the town council charging so much in taxes and rates.
“Once we needed them to build roads and the like,” said Mr Gold, “but now all the roads are built, they only waste money on those layabouts who hang around that homeless shed!”
Mr King agreed and they decided that they would set about trying to have their charges reduced. “After all,” said Mr King, “we provide all the jobs in this village and if it wasn’t for us everybody would be poor!”
So imagine their outrage when they discovered that the town council was intending to increase charges. One of the town council tried to justify it by arguing that they needed to increase the size of the homeless shed now that so many more people were homeless, but Mr King was having none of it.
“These people no longer pay rent and I have all these empty houses which nobody will buy because they’re all too lazy to work hard and earn money, and you expect me to help provide them with shelter and food!” he screamed. He needed to find ways to save money.
Many of the people who made things in their own home sold these to Mr King’s store. So when Rollo was asked if he had a way to save more money, he suggested that the people in the across the lake sold what they made much more cheaply, so if they stopped buying locally then it would be much cheaper and they could make bigger profits.
And they needed to make much bigger profits because the hotel was serving fewer customers. Nobody was eating meals there, and fewer people were having a drink. Rollo responded and sacked half the staff, but still he was making a loss.
After a year, nobody was working. Nobody had a home. The widget factory had moved to another town. The hotel was closed. The makers had no buyers for their goods.
But thankfully the town council knew what to do. They closed the homeless shed and used the money saved to give Mr King and Mr Gold a reduction in their taxes because they knew that’s what would stimulate the economy…