This post is a follow-up for my introductory macroeconomics class, on the heels of our discussion this morning. I had them read this account of one woman's experience with long-term unemployment. I also sent them to this collection of case studies from the 1920's, documenting families coping with prolonged or repeated spells of unemployment, and asked them to write a couple pages comparing two of the earlier cases with the modern one. In the conversation, I also referenced Larry Summers' recent remarks about secular stagnation (covered here by Kevin Drum), looking back on 5 years of a week labor market and seeing more of the same for several years ahead. By the afternoon, I felt the need to try and provide a different perspective, maybe a more optimistic one.
Today’s conversation in both classes was more of a downer than I expected or meant it to be. It’s got to be tricky (or hard, or depressing, or discouraging—different responses for different people) to be 18 or 20 years old, and some middle-aged dude is having you read and talk about stuff that doesn’t have a clear way out.
And as I said—maybe a couple of times in each class—I don’t know what the answer is (and it’s a little early to expect you to have that one figured out for yourselves). But I wanted to share some perspective that became clearer for me after a little time away from the conversation (and after some food).
The first thing is to see that there are two distinct types of problems: a physical one and a social one. And there are two time scales: relatively soon (the next 10 years), and long (more than that).
The physical picture is mixed. On the positive side, our technological capabilities keep advancing. Every year, we understand more about how nature works, and find new ways of applying that knowledge to something that matters to us (or that matters to some of us).
On the negative side of the ledger, we face resource constraints that are far more challenging than what earlier generations had to deal with. If we want more lumber, we can’t just go find some new piece of forest and cut it down. Well, we can, but there are reasons to think it’s not a good idea to do much more of that. If we want more oil or gas, there is more, but it comes at much higher cash cost than was true 30 years ago, and often involves more environmental impact than comes from “conventional” extraction techniques. And even if we solve that problem and find lots more fossil fuels available cheaply, it looks like the combustion of it will bring potentially horrific impacts through climate change.
So a mixed picture with a lot of negatives (I could have extended that part of the list, but I figured I’d made my point), and the only positive being the ephemeral thread of, “But we’re getting smarter at stuff!” Nonetheless, when I look at that ledger from a strictly physical side, I’m actually an optimist. Perhaps I’m ill-informed, but when I put together what I know, I can picture a way of providing a respectable life for 9 billion people, in the long run.
And in the short run, we have unprecedented wealth. We’ve built an infrastructure that allows us (at least for now) to pull vast amounts of fuel from the earth and apply it to our tasks. We have the capital and technology to do incredible amounts of work, simply unprecedented in human history.
That’s the physical side: impressive capabilities in the short run, and real possibilities in the long run.
So what about the dispiriting employment situation we’ve discussed in class? That’s where the social side comes in. Because the problem isn’t a physical inability to create wealth, at least not yet.
The problem is that the path we’re on doesn’t seem to be working. Despite the ability to do amazing things, and the need to do great things, we’re leaving large portions of our population unemployed, or underemployed.
That should be a solvable problem.
And then the question becomes, Are you going to look around for a solution?
Are you going to talk with your friends and relatives, to see what insights they have and where they think we can go?
Are you going to work hard at understanding how the world works? Not just the physical world, but also the social structures by which we coordinate our activities in our thousands, and millions, and billions.
How will you use that knowledge? Can you use it both to help you find your own place in this unfamiliar world we’re creating? Can you also use it to help others find their places as well?
Those aren’t easy questions. People my age and older could usually get away with not facing them and still end up with our feet on the ground as adults.
I imagine that’s still possible for some of you, but not for as many. And the more of you who actually work at the larger social problem, the more solvable it will become for everyone.
That’s not an answer, but it is an idea about where to start looking. And sometimes having even that much is enough to enable you to get up and do what needs to be done.