Friday, September 13, 2013

Don't Blame Generation Y For The Horrible Economy

Some of my friends in academia like this blog post explaining the unhappiness of Generation Y kids in terms of how they think they're special and they're so entitled and they use social media. Who knows? That might be part of the story. But kids with an excessive sense of entitlement have been around since the Joffrey Lannisters of our world were claiming the divine right of kings. And I'm suspicious of explanations in terms of the special properties of social media -- mostly it gives you a new way to do kinds of social interaction that have been around forever. I'm sure explanations involving overly entitled kids resonate with my fellow teachers who are frustrated with students who complain about the bad grades they earned through their own laziness. But I'd like to see some real evidence that this generation is different.

The provable difference between this generation's situation and previous ones is that today's kids are looking for jobs in a terrible economy. Here's the US unemployment rate:
Unemployment got higher in the early 1980s when the Federal Reserve basically created a recession to crush inflation, but it turned around much more sharply when the Fed declared victory and relented. So which recession is worse is sort of a judgment call. The upshot of the chart is that right now we're in one of the two worst recessions since the Great Depression.

If this is bad for people with jobs, who risk being laid off, it's horrible for people trying to enter the job market. Even when unemployment is at 9%, people with jobs mostly get to keep their jobs. But new jobs are really hard to come by, because employers aren't looking to hire. New hiring is much more volatile than retention of old employees. If you're dependent on new hiring (as people coming into the job market are), unemployment over 7% puts you in a dire situation. People of most age groups didn't have to deal with anything like that when they came out.

If you want to make Generation Y cheer up, there's something you can do about it. Well, you can if you're Ben Bernanke or the next chair of the Federal Reserve. Enact monetary policy that creates jobs. Inflation is currently unusually low, at 2%. Getting the Fed to stop worrying about inflation and worry more about the unemployment crisis for new job seekers would be exactly what they need. If this involves printing some new money and giving it to people until they start spending it and creating jobs, I'm for that. Bernanke once said that "The U.S. government has a technology, called a printing press (or today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at no cost." He should turn it on, and keep it on, until unemployment falls back to typical levels.

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