Monday, January 11th, 2010

A Steady Diet of Nothing

MMM HMMNow that American finance capital has laid waste to much of the productive economy, Newsweek weighs in with the question that eventually occurs to all fretful magazine editors in the face of a crisis: What about the children? Or more precisely, what about the generation of striving Americans coming of an age when the lords of finance live in a state of plush federal retainership-and old-economy perks such as pensions, benefits and job security now seem like a sick joke?

For young people launching their tours in the workforce, explains Newsweek reporter Rana Foroohar, it's hard to summon much in the way of free-spending pluck.

While there's little data this early in our present calamity to track the formation of durable attitudes toward saving, spending and government intervention in the economy, the general rule of thumb is that "even one really tough year experienced in early adulthood is enough to fundamentally change people's core values and behaviors," according to the National Bureau of Economic Research. And as Foroohar goes on to explain, "there's an entire body of research to show that recession babies not only invest more conservatively, they tend to make less money, choose safer jobs, and believe in wealth redistribution and more government intervention."

Right-frugal brainwashed Obamabots, then? Not so, fast, our reporter cautions: "Paradoxically, they are also more cynical about public institutions and, arguably, about life, embracing the European notion that success is more about luck than effort." Good Lord-it's worse than we feared; the recession's bred a generation of Europeans on our own shores! If nothing else, that explains the disturbing weakness among today's youth for crappy club music.

But as you read on in Foroohar's dispatch, it soon becomes plain that such dangerously alien-sounding convictions about the randomness of life outcomes in our mode of capitalist enterprise aren't exactly an irrational continental superstition on the order of fauvism or the sublime auteurship of Jerry Lewis. The accumulation of wealth in America has long been decoupled from our stubborn social dogmas about individual merit and market reward.

Indeed, as Columbia economics Nobelist Edward Phelps tells Foroohar, we're now making money on a business model that's several arms' lengths removed from productive activity all together. "We are in a very unique period, in which we're seeing the biggest disconnection between financial capitalism and the real economy since modern economies began in the 19th century. That's not to say that banks don't fund some useful projects like wind farms or whatever, but increasingly they're existing in a virtual sphere in which they are more interested in funding each other, and developing complex securities, than in funding real businesses."

Meanwhile, intergenerational social mobility has been declining in the United States since the 1970s, Farhoohar notes, and is now lagging behind the upward churn you find in such alleged bastions of welfare-state lassitude as Britain, Denmark and Sweden.

You can certainly see how, in such conditions, young earners might not automatically bolt out of bed exclaiming, "It's morning in America!" But a lapse in can-do attitude can create its own baleful economic side effects, Newsweek worries; a luck-based vision of success breeds rampant slackerdom, it seems.

Farhoohar theorizes that the continental-Yank divide on the luck question "may go some way toward explaining the often mysterious growth edge that 'can-do' Americans have long enjoyed over 'yes, but' Europeans, who tend to mock such Type A behavior." It's far from clear, though, why young U.S. workers should cling to the faith of implacable upward mobility, when so much evidence now weighs in the balance against it-and indeed, when those initiative-mocking Euro layabouts are going further, comparatively speaking, up their career ladders than their can-do counterparts in the New World. Raising a generation of blindingly productive morons would pretty much be the textbook definition of a self-defeating initiative.

In terms of the actual state of our political economy, Farhoohar's analysis, which features plenty of suggestive reporting, nonetheless has things precisely backwards. What's hampering the kids today isn't an excess of cynicism-can there ever really be such a surfeit?-so much as a profound deficit of solidarity. Today's youth, after all, came of political age in a Reaganite political consensus, which has dogmatically insisted that no good can ever come of a greater role for government, anywhere-and that tax cuts and deregulation are readymade panaceas for every imaginable social ill. Likewise, younger workers toil in workplaces where union representation and collective bargaining are all but dead letters, so it's hardly a surprise, as Farhoohar announces, that research indicates that American job satisfaction is at a 20-year low.

Throughout Newsweek's breakdown of the Recessive Generation, the rhetorical foil is the archetypal, spooked survivor of the Great Depression-the cheapskate saver, who withholds his or her surplus labor value from the productive economy and gripes about the heedless, instant-gratification ethos of the younger set.

But that caricature leaves out the entire social background that forged the Depression generation's political maturity-ie, the New Deal social contract, which roughed out the shared interests and just claims of the private sector, the government and the laboring masses. The trouble with the Depression, after all, wasn't the flinty outlook of the average worker-a good quarter of whom could rely on unions to negotiate living wages even in hard times-so much as that of liquidationist public officials like Hoover's Treasury Secretary Andrew Mellon and unscrupulous titans of commerce such as utilities robber baron Samuel Insull.

Today's young workers, having never seen government act seriously in their interests, have had every reason to regard it with suspicion, even when it must serve as the only available countervailing institution to stave off a total economic meltdown. Certainly the US Senate's dismal handling of something as basic as universal health care-another elementary social protection that those allegedly shiftless Europeans worked out, oh, four generations ago-doesn't exactly set young civic hearts aflutter.

In other words, in order to realize significant economic gains, on an institutional scale, kids today need to combat an antigovernment ideology far more toxic than the cult of Hardingesque "normalcy" that pitched the 1920s GOP consensus into the dustbin of history it so richly deserved. But today's anodyne newsweeklies, of course, can never register such a glaringly obvious historical point.

Instead, Farhoohar alights on a singularly feeble supposition: Perhaps, she writes, "hard times might make us nicer to each other," since "we'll be more wary of falling down the ladder of life, and thus more empathetic, than our predecessors were."

Of course, one quite plain lesson of the present disaster is that the market will never give a shit about how individually "nicer to each other" its supplicants vow to be. Empathy's a poor substitute for solidarity-just as Newsweek's cautious pirouetting around the psyche of young American workers is a poor substitute for understanding why they might be justified in thinking their futures have already been cashed out in the derivatives market.

Chris Lehmann is the president and CEO of his very own union.

19 Comments / Post A Comment

brianvan (#149)

At least it wasn't as bad as TIME's coverage! They vaguely suggested we "deal with it" and quoted a bunch of economists who had no idea how to fix unemployment. It was the sort of listless coverage that would match well with Baby Boomers whose main inconvenience was that their home equity cash supply has dried up, preventing them from buying nicer appliances; it speaks not at all to the 20% of unemployed, underemployed, and de-motivated workers who are in crisis, mostly because they are not an appealing demographic for this sort of publication. (And I'm sure if they went there, they would have come up with the same conclusion as the NYT: we are all better off as Cavemen)

lawyergay (#220)

Hard times do make us nicer to each other! The other day, for instance, I tipped my bean-can top hat and stepped back from my plum spot right next to the oil drum fire so as to let an even more superannuated and filthy hobo get warm.

barnhouse (#1,326)

Certain Wall Street guys will (privately) tell you the same thing, viz., the financial sector takes a disproportionate amount out of the system compared to what it puts back in, in the way of value to the economy. Let us hope (with Frank Rich in his awesome piece yesterday) that Phil Angelides can shine the klieg lights on those cockroaches.

core (#2,956)

nice fugazi reference! it subtly points to an all purpose answer to corporate indifference regarding individual well-being: DIFY

Milquetoast (#2,961)

That's a nice way of suiting the facts to meet your existing beliefs.

The current generation is too full of dunderheads unable to see the benefits of state intervention(?) If only these morons would crack open a book, or look across the Atlantic to see the Utopia it has spawned(?)

Allow me to posit one other theory: This generation, like those before it, is learning.
And it's learned something you have not- that Crony Capitalism is not the same thing as Capitalism. Free markets do not favor big business, nor do they generate economic recession.

But hey- don't mind me. I'll get back in line with the other Individualist yahoos.

LondonLee (#922)

"Free markets do not favor big business, nor do they generate economic recession."

I find this remarkably similar to the old "Communism didn't fail because it was never really tried properly" line you used to get from Marxists after the USSR collapsed.

The market has never truly been free! If only it was unfettered there would unicorns for everyone!

DoctorDisaster (#1,970)

Took the words out of my mouth.

I think the issue is that people have an incredibly distorted view of capitalism. They think it's synonymous with economic anarchy: no rules, no controls, no safeguards. They think capitalism is the ground state of all trade and that, free from intervention, any market will default to capitalism.

This is of course straight-up bullshit. Like anything worth having, capitalism takes effort to maintain. You have to keep consumers educated about the products they are buying; you have to keep your markets flexible so newcomers can innovate and disrupt; you have to maintain a power balance between buyers and sellers where neither is under pressure to trade. Adam Smith himself spelled most of this shit out.

Economic anarchy, or "full deregulation" or "free market capitalism" or whatever Orwellian misnomer you prefer, defaults to crime, oligarchy, and power games. You have to strike a balance between simple, sensible safeguards and a free incentive structure that encourages growth and innovation. If you insist that regulation is BAD and only unfettered greed can lead to prosperity, I hear Somalia's markets are really, really free.

Milquetoast (#2,961)

Perhaps not unicorns, but certainly more horses.

the Loud Coast (#1,362)

"Paradoxically, they are also more cynical about public institutions and, arguably, about life, embracing the European notion that success is more about luck than effort."

Going to prep school with a lot of rich kids made me believe this at least as much as the recession did.

I encourage all free market capitalists to take a day off from the grind and take a little field trip to their local academy. They could get trashed with the lacrosse team, then race sportscars on dark residential streets for a few hours. It might help them loosen up a bit and take stock of all the aggrandizing horseshit they spew about our social betters.

NowMyButtHurts (#3,042)

"Going to prep school with a lot of rich kids made me believe this at least as much as the recession did."

were you the poor kid at prep school?

the Loud Coast (#1,362)

Nope, I was as grossly undeserving of my privilege as they come, I just have a sense of humor about it.

A.R. Chrisman (#2,964)

William Jennings Bryant in 2012!

A.R. Chrisman (#2,964)

Bryan*. Goddamn you "t" key.

The solution is clear: We need a monarch, stat.

Milquetoast (#2,961)

How quick you are to equate Capitalism with Anarchy.

Doctor Disaster has several good points, namely that Capitalism takes effort to maintain. This is true.
There needs to be rule of law which keeps your fellow citizens from bashing your head in, or stealing your dinner, and to act as an arbiter in disputes.
Without it, THEN you have anarchy. THEN you're talking "Somalian Capitalism".

You don't "have to keep markets flexible/smart/fair" just free to function. (distortions are rare, but should be treated as the exception to the rule)
The purpose of markets is to allow people to interact as they choose, and to learn from it.

And what's this talk of "social betters"? Why do you think freedom is just a cover for belief in some Nietzsche Supermen complex?

Most free marketers/libertarians like myself believe everyone has equal human worth. We just wanna be left the fuck alone to live out our lives. That's no sweat off your back, even if you perceive it to be.

Ribs (#2,690)

Good thoughts. Just this in particular-("younger workers toil in workplaces where union representation and collective bargaining are all but dead letters, so it's hardly a surprise, as Farhoohar announces, that research indicates that American job satisfaction is at a 20-year low")- caught my maw; the equating of low job satisfaction and unionizing doesn't come across as obvious as offered.

Milquetoast (#2,961)

Ribs- that statement is self evident to the author and some others here.

They've taken stock of the economy and the problems surrounding us (real and imagined), and worked backwards to reach the conclusion: Capitalism is to blame.

As I vehemently disagree, I also realize that this dispute won't be settled on a comments board. So let me just say this- free markets do not promise to deliver a perfect world, simply the best possible one. Socialism and related collectivist thinking opposes this, albeit for noble intentions.

While there is no laboratory to test our theories, there are shades of each system in practice. I will let the results speak for themselves.

Venezuela has enjoyed 11 years of Socialism and must now ration electricity, despite having the 7th largest oil reserves on earth.
Hong Kong has suffered Capitalism for 50 years in a country the size of Nashville, and now has the 10th highest GDPpp on earth.

But I guess I'm barking at the moon here…

Ribs (#2,690)

Free markets deliver positive gains though being open to unexpected hits; on this same hand the amount of burn it can bring belies the hope of a perfect world through it -or even, on its own, the best possible. (i feel, idealistically, that we have to look "beyond the horizon of capitalism" (Tocqueville's words) in the long term.)

Free markets on their own can't deliver a healthy society. Social 'nets' (and the 'ol Civil Society) are necessary components. These in a society that opens itself up to the potential positive gains of a 'free-market' (single quotes because i feel weird using it as loosey-goosey to try to stay in the vibe of the comment i'm replying to) seem to be a direction worth working towards…(whatever that means.)

Milquetoast (#2,961)

I believe there is a certain level of regulation that the free market can bear while still functioning as it's intended. Beyond that, it's just a matter of killing the golden goose. (so to speak)

While I would prefer no regulations, and complete freedom, I am open to compromise. Milton Friedman proposed a "living wage" to all citizens, which is enough to barely scrape by, but not enough to be complacent. What people choose to do with the money is totally up to them (food, housing, health care, etc.) But in exchange for this social safety floor, all other social programs would be ended.

Is that such an unpalatable idea to the liberal minded here?

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