I fancy myself as an economist. After more or less of six years of economic traning and several more years working as an economist, I think I can call myself as such without too much pretension. While I do like to claim that I know more economics than a typical layperson, I have to admit that sometimes, I do wonder about basic stuff that economists supposedly know like the back of your hand. When I see an unemployed begging on the streets or scouring the trash for something to sell, I really do wonder, why is he or she not working.
One can be absolutely optimistic and assert that begging or scouring the trash is a kind of employment. It is not a pretty thing to say and much less do but the person is doing something. Employment can be defined as something that one does to earn a living. One can earn a living by doing just so. There are even professional beggars too these days although the profession is not something one would put down in his or her tax return forms.
It all comes down to definitional matters and it is a matter of how tightly one wants to define the term unemployment. Truly, it is hard to imagine why unemployment exists in a very efficient economy. There is no bill on the sidewalk so-to-speak where everybody can be an entrepreneur. Begging and scouring the trash are a type of entrepreneurship if one thinks of it, however ridiculous it sounds. Those who beg on their own (discounting the professional beggars) are doing something for a living and it brings them income.
But let us make an exception. Let us just take begging, scouring the trash and the likes minus the professional kind as not employment but only something one does when one is desperately and involuntarily out of work instead. I am sure, if I was to lose my job and forced to beg on the streets, I would call myself involuntarily unemployed. I would consider it as an insult to be called employed if I was reduced to a beggar.
It is with the exception that I find it odd that somebody can be unemployed especially in an economy that Malaysia has, which enjoys pretty strong long-term growth and (very) low unemployment rate. Are the unemployed who exist really that lucky that they are one of those few involuntarily unemployed in the country?
Perhaps it is unrealistic to expect anybody can be an entrepreneur. Entrepreneurship requires ideas and not everybody can come up with an idea, regardless whether it is brilliant, unoriginal or just plain stupid. So the unimaginative mind discounts the case of no unemployment based on the idea that everybody can be an entrepreneur. Never mind that not everything imaginable in this world is profitable. So instead of continuously making a loss, the state of unemployment can be the right situation to be in as it limits those losses.
That may create an opportunity for unemployment to exist especially within the mainstream economics way of understanding it: that unemployment exists because of insufficient aggregate demand in the economy. That particular understanding of the phenomenon explains the issue of involuntary unemployment. In a recession, the cause of unemployment can be painfully clear. But that is at the macroeconomic level. I am more interested in the microeconomic explanation. Maybe the macro-micro differentiation is unclean here but I hope I get to send across what I mean.
Notwithstanding the point on macro-micro dichotomy, we are far from being in a recession. That makes it hard for me to comprehend why some involuntary unemployment exists, especially those who beg on the streets and is suffering while begging. The Malaysian reality for these unemployed is such a way that begging is not the best option available, or at least if I were put in shoes of the unemployed with all of my savings and the necessary support structure that I currently enjoy were unavailable to me, I would find my hypothetical state of unemployment as insufferable. If having a paying job is always superior to being unemployed, then there are low-skilled jobs everywhere that I look and I would take it.
I see everywhere eateries dotting the streets and these eateries are always busy. Surely, they do need some extra hands. Some small effort of enquiring the operators of those eateries can be a great start to getting out of employment. And when one goes to fast-food restaurants, these restaurants are perpetually hiring. Every time I pass by McDonald’s, KFC, Pizza, whatever, the fact of vacancy is hard to be ignored. I am unsure about other industries but looking at recent manufacturing production, at the very least, it is hard to think that they are retrenching people (although in the fourth quarter of 2013, retrenchment spiked and there are reports that manufacturing plants are closing down and moving away due to minimum wage policy).
There are job search costs obviously in temporal, pecuniary and effort terms. But low-skilled, low-paying jobs do not require too much of that cost and certainly, not insider information that is typically needed for high-skilled, high-paying jobs. Maybe, the desperate cannot travel to search for job and that creates unemployment in the specific kind that I am referring to. Indeed, one needs to travel wide in Kuala Lumpur to see these vacancies and witnesses also some beggars on the streets. Still, I have seen a business advertising vacancy and there was a homeless man across the street. The cost of crossing the street cannot be so great that that street cannot be crossed. If it was in the affirmative, it would be the height of ridiculousness.
The state of homelessness may complicate the scenario because many employers need to an applicant’s contact details if the employers need to get back to the applicants. A begging homeless person has not contact details in the traditional sense. That may be the barrier to employment and it may be the inflexibility of businesses that cause unemployment in this sense. I think I can support some state action to help any homeless persons to get a job. Effort is important and if a homeless person is applying to a job, then someone and unfortunately the state, should find a way to help the homeless apply for the job while employers should be more flexible in their requirement so that the unemployed homeless do not find themselves in a conundrum: I can only get a job if I have contact details but I can afford contact details only if I have a job. Somebody needs to be break the cycle.
Being an illegal alien may also contribute to employment because the law does discriminate against illegal immigrants.
But really, even counting homelessness into account, there are many business establishment, those eateries by the streets in KL, even those restaurants by the streets under the trees, are not really much into bureaucracy. I even doubt those establishments even fully disclose their tax information. So contact information and illegal status are hardly a consideration for very small businesses.
But beyond homelessness (I have a feeling that homelessness is a small factor in the state of unemployment) and illegal aliens, within the context of Kuala Lumpur, that of a relatively strong economy and low unemployment rate, I struggle to understand why a person can be unemployed when clearly, being unemployed is undesirable to a person. Unless the person fakes his condition, some beggars that I spotted looked miserable it appeared to me that the beggars needed jobs.
I have been thinking about this for a long time now, ever since that man came up to me at a gas station and asked me for money. I refused him and I felt bad as I thought myself, maybe it was in a tough spot. I began to felt less bad when I saw him again some weeks later, and again after that multiple of times.
Why does he not just get a job?
He has no disability, physically and mentally. Clearly he is capable of work.
Is there some kind of psychological explanation?