I think it's important to have a balance and for people to have choice.
Self employment works brilliantly for some people who want flexibility and maybe don't "play well" with other people in a workplace. That was me! I was constantly frustrated by colleagues and bosses when I was a wage slave and hated the fake workplace friendships and office politics, etc.
Before I went s/e, in my last employed job, I was out of the office a lot, making regular visits to a group of clients, some weekly, some monthly, some quarterly, and I really enjoyed the variety and being able to pop into a different workplace for a day or two and then go back to the office for a day or two, etc. It gave me quite a gap/break so that I didn't get bogged down into the office politics anywhere.
It was that which really set me on the self employed route - the variety, different workplaces almost every day, lots of people interaction but never anything too deep - i.e. pleasantries with huge numbers of people, but not in anyone's pocket.
I think the government needs to provide a lot more help, support, grants, etc for people who actually want to be self employed. It would help if there was a "try out" period of maybe six to twelve months where unemployed and disabled didn't lose their benefits and were free to try self employment, with nothing to lose if it didn't work out. At the moment, they're unwilling to try if it means loss of benefits or having to re-apply to get back on the benefits they were previously on with no guarantee, not to mention having to fill in all the forms again.
There was a similar scheme back in the 80s where people going self employed were given a fixed weekly "wage" by the govt to subsidise the start up phase when they had expenses and probably no income. At the firm where I worked, we had loads of clients who were on the scheme and from memory it was pretty successful with lots of them staying self employed after the introductory period.