Unemployment is a choice made not by individual people, but by nations. We create our own economic systems — New Zealand’s, for example, was established in 1984 under the neoliberal Lange government of the time, spearheaded by Finance Minister and future ACT founder Roger Douglas.
Before this, New Zealand had what was called a “zero percent unemployment economy”, where the explicit government goal was to maintain full employment. This was done through our “controlled economy” that subsidised productive industries (such as wool, which then rapidly shifted to beef when controls were removed) as well as employing excess unutilised labour through state employment programmes that served to train our workforce (see also: government bonding programmes for students/graduates) as well as building and maintaining infrastructure, state housing, power generation, etc. Under this model, our current power companies started out as a nationalised industry, as did rail, banking, post, forestry, steel, air travel, and insurance (the reason why State Insurance is called that is because it used to quite literally be state insurance. We sold IAG to Australia in 1990).
Our neoliberal economy does 2 things: it trades controlling the flow of money via exchange rates for lending rates at which the government borrows money to private entities (what we call the OCR), and it uses unemployment to suppress the inflation that previously could be managed via the exchange rate. This is where we get our targeted inflation band from: when the exchange rate was floated in 1985, the Reserve Bank’s mandate went from controlling inflation and interest rates to controlling inflation and employment rates. To keep inflation and our currency stable, the central Reserve Bank aims to maintain a certain percentage of unemployment via the OCR rate they set. When they raise the OCR, lending costs rise, available jobs shrink, and the economy “contracts”. When this stability is, to their judgment, achieved, the Reserve Bank begins to drop the lending rate back down, which theoretically will make the unemployment rate drop back down too.
This is to say: there will never be no unemployment in New Zealand until New Zealand makes the policy changes to ALLOW no unemployment. Until then, our unemployment rate is being used as a deliberate mechanism to tamp down on inflation and protect our dollar for all of us, but especially for those with money invested somewhere who need to beat out the inflation rate in order to profit. By paying people less than they were getting under wages and salaries, unemployment suppresses economic activity through the hardship of citizens — for many, through the impoverishment of citizens. This is especially a problem for the more unemployable members of society, such as youth and the generationally uneducated, who are left at the bottom of the pile in the “free market” of open employment. In theory, we employ the best of the best, and the rest are subject to reduced incomes and provide the employment pool that tamps down wages and consumer spending, by reducing the amount of money available for consumers to spend.
So just keep that in mind when you consider the unemployed, especially the perpetually unemployed, and the ”problem” unemployment supposedly poses. It is not a choice made by the individual (though sometimes it is), it was a choice made by all of us (or rather, our politicians) in 1985 in order to benefit the rest of us collectively, and that decision has remained in place until this day.
