Friday, May 08, 2009

The Roots of Job Market Success and Failure

In the coming week, we will turn our focus to understanding the distribution and causes of success and failure in the US labor market. Matthew Yglesias points out some interesting differences between the US and Germany that are particularly relevant in today's economy:

Nice WSJ piece on the transatlantic divide in treatment of the unemployed:

In Germany, losing his factory job didn’t stop Alfred Butt from taking a Mediterranean vacation this winter. Thanks to generous jobless benefits, being out of work “hasn’t changed my life that much,” Mr. Butt says.

In the U.S., Dylan DeRoberts lost similar work — but there’s no seaside getaway for him. Instead, he’s giving up life’s little pleasures, like riding his snowmobile, because he lost his insurance, too. “I’ve learned to live at a new level,” Mr. DeRoberts says.

The great absurdity of the American system is that we tend to treat unemployment as a symptom of laziness as if someone who gets laid off could always just go move west and start up a Homestead Act farm. We know, however, that the nature of the modern business cycle is that events set in motion in 2008 have essentially guaranteed that a much larger proportion of the population will be jobless in 2009 than was jobless in 2007. For any given unemployed person, there will be a story you can tell about why he’s unemployed rather than someone else, but the existence of the unemployment as such has nothing to do with individuals’ failings.

This article is spot on. Americans in general have a very negative view of those who get laid off, as it was entirely their fault. However, even a cursory analysis of the markets show that the broad sweeping trends of boom and bust effect industry to a much greater extent that any worker. Workers just get caught up in trends that are well beyond their control. It is almost like a giant wave swallowing up a poor defenseless surer. The mass and momentum of the wave is much greater than any one man can control.
The underlying philosophy that supports and proliferates our negative view of the unemployed stems way back to the pioneer days (as alluded to in the article) when an unsuccessful factory worker could head west and get his forty acres and a mule. This view was then brought even more to the forefront during the Regan era with his negative views of the unemployed and his theory of "boot-strap republicanism"- the idea that any man could fix his life by "pulling himself up y his bootstraps. hopefully, Americans can learn from the Europeans and become more tolerant of the unemployed. Oh wait, but that might be socialist.....
Post a Comment

Subscribe to Post Comments [Atom]

<< Home

This page is powered by Blogger. Isn't yours?

Subscribe to Posts [Atom]