PRESIDENTIAL ADDRESS. 677 



2. The percentage of unemployment found during the seven best years of the 

 cycles has averaged 24, and only in two out of these seven years has it diverged 

 by more than unity from this average. 



3. The variation between the worst and the best years of the various cycles 

 has averaged 8'5 per cent. — i.e., more than three times the average percentage of 

 unemployment in good years. 



Now, broadly speaking, if we neglect any progressive changes in the total 

 demand for labour, which are evidently slight as compared with the intensity of 

 the periodic fluctuations in that demand, we may say that the percentage who 

 are unemployed in years of good employment gives a maximum limit which the 

 voluntary or non-insurable risk cannot exceed, since it also includes a number of 

 minor accidental risks which are properly insurable — e.g., the risk of unemploy- 

 ment through a fire or other accidental stoppage of work, or through defects in the 

 local distribution of work and labour. Moreover, through the method of averag- 

 ing employment over the year, and risk of seasonal want of employment is 

 included, and this is mainly an insurable risk. 



We may further regard the difference between unemployment in a good and 

 bad year as giving a minimum measure of the insurable element in unemploy- 

 ment, since this difference is wholly the result of changes in the demand for 

 labour, and is independent alike of the choice of the individual and of the 

 gradual progressive changes, if any, that affect the total field of employment. 

 Hence, as this difference is much greater than the minimum percentage in a good 

 year, we may regard our proposition as being proved. 



But at this point it is necessary to forestall and reply to an objection that will 

 certainly be taken to the proposition just laid down. It will be pointed out 

 that the experience of all relief works and of all schemes for the relief of distress 

 due to unemployment establishes clearly that the great majority of the unem- 

 ployed, or at least those who seek relief from distress, are very markedly 

 inferior both as regards their industrial capacity and their physical and moral 

 qualifications to the average employed workmen in the same trades. It is 

 possible in a large number — probably in the majority — of these cases to trace 

 clearly the operation of the personal defects which have contributed to 

 unemployment— bad time-keeping, drink, slovenly work, and so forth — and 

 those who are most familiar with the personal side of the problem are, I think, 

 likely to put the personal or non-insurable element in the risk of unemployment 

 very much higher than I have done in relation to the involuntary insurable 

 element. 



But in this criticism there is, I think, confusion of thought. Of course, if 

 fifty men out of every thousand are out of work, those fifty individuals are likely 

 to be less eligible than any other fifty taken at random. We might, if so 

 disposed, construct a geometrical curve like those used in expounding the doc- 

 trines of utility and rent, in which the number of workmen employed is ex- 

 pressed by abscissae and the degrees of efficiency by ordinates. Then it will 

 appear at a glance that in a time of good trade the efficiency of the ' marginal ' 

 labourer — that is, of the worst man who just manages to retain his employment — 

 is necessarily less than when the total demand for labour has shrunk from any 

 cause. In the latter case the workmen discharged will for the most part be the 

 less eligible section; and this state of things is quite independent of the true 

 cause of the shrinkage in the demand for labour, so that while the personal 

 defects of A may be the decisive reason why he is selected for unemployment 

 instead of B, it does not follow that these defects are a principal or even a 

 contributory cause of his unemployment. 



It is a very complex and difficult question, only to be determined in any given 

 case with full regard to all the circumstances, to what degree the increase or 

 decrease of the personal efficiency of the labourer conduces to an increase or 

 decrease in the total demand for labour, or to what degree it merely enables him to 

 shift the burden of unemployment on to someone else. Broadly speaking, there is 

 no doubt that the total demand for labour is to a material extent dependent on its 

 average efficiency. For example, a quite new demand for labour would be created 

 if it were possible to level up all the feeble-minded and the physically and morally 

 defective members of the community to the normal level. The abnormal defects of 

 these persons (the true unemployables) are the vera causa of their unemployment, 



