As Russ (and some of the commentors on Russ’s post) pointed out, this claim by Harold Meyerson isn’t supported by the facts:
Over the past 35 years, the massive changes in the U.S. economy have largely condemned American workers to lives of economic insecurity. No longer can the worker count on a steady job for a single employer who provides a paycheck and health and retirement benefits, too. Over the past three decades, workers’ individual annual income fluctuations have consistently increased, while their aggregate income has stagnated. In the brave new economy of outsourced jobs and short-term gigs and on-again, off-again health coverage, American workers cannot rationally plan their economic futures.
Robert Samuelson, a couple of days earlier in the same newspaper (Washington Post), addressed the same issue, but with much more wisdom than Meyerson displayed. Here are the key paragraphs from Samuelson’s column:
For Americans, what’s curious is that people seem to feel more economically insecure even though the economy has become more stable. Since 1982, there have been only two recessions, lasting 16 months. In the past 10 years, unemployment has averaged 4.9 percent; in the 1970s, the average was 6.2 percent. Yet in 2006, only about half of workers were satisfied with their job security, reports a poll from the Conference Board. In 1987, when unemployment was higher, about 60 percent were satisfied.
One explanation of the paradox is that the uncertainties and insecurities that assault workers, investors and firms actually foster overall economic stability. There are constant upsets — business expansions and closures; greater competition from emerging technologies and foreign economies; shifting prices for stocks and bonds. These put people on edge. But many small adjustments may smooth out the business cycle. They may minimize deep recessions, stock crashes and panics [emphasis added].
One lesson here is that, rather paradoxically, allowing some expectations to be upset is a means of ensuring that a greater number of other expectations — and, arguably, expectations over more important matters — are more likely to be regularly fulfilled.
Another, related lesson is that a society that aims to prevent any and all expectations from being upset can, in the end, succeed in this quest only by impoverishing itself — but reducing itself to such a level of simplicity that expectations finally can be nearly universally guaranteed to be fulfilled, but only because that society’s division of labor has been dramatically reduced, and because all entrepreneurial dynamism and consumer sovereignty have been snuffed out. The risk of “job loss” will replaced by a far greater risk of “life loss.”
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In my opinion, expectations have changed dramatically since the 1970s. People were satisfied with their blurry televisions that gave them 3 channels. Now, 80 channels on a HDTV isn't enough. A very small percentage of people flew in airplanes back in 1970, but now one of the most common conversations is to complain about air travel. I believe this mentality is true in many different arenas of life.
If you asked the people who are now dissatsifed with their jobs if they would take a steady job that paid 30% less, I'm not sure how many would take it.
People have always wanted stability AND the rewards from risk. But the notions of risk in terms of employment were much more simplistic 35 years ago.
The stock market might be a better example. Back in the 1970s, bonds and dividends (and even savings accounts) were the way to go. Now it's stocks. We still want the stability of bonds, but with the growth potential of stocks.
Pandora's box has been opened, and it has changed our expectations.
"For reasons of stability and continuing security, the Republic shall be reorganised into the first…galactic…empire!"
So…if investors and firms produce stability…what need then exists for the process of 'creative destruction'?
"allowing some expectations to be upset is a means of ensuring that a greater number of other expectations — and, arguably, expectations over more important matters — are more likely to be regularly fulfilled."
Mybe yes, maybe no – that argument's ultimate value is predicated by who decides what is and isn't important.
And that's not a matter of economics, but politics.
"Another, related lesson is that a society that aims to prevent any and all expectations from being upset can, in the end, succeed in this quest only by impoverishing itself"
Don, unless you can cite me a rock-solid example I don't think such a society has ever existed.
"Don, unless you can cite me a rock-solid example I don't think such a society has ever existed."
I think that is his point.
Another point: Don't put all your eggs in one basket.
So, this is the economic equivalent of the controlled-burn method of preventing runaway forest fires? Sounds plausible.
"Another, related lesson is that a society that aims to prevent any and all expectations from being upset can, in the end, succeed in this quest only by impoverishing itself" – DB
"Don, unless you can cite me a rock-solid example I don't think such a society has ever existed." -Martin
It depends on what you want by means of defining "rock-solid" Martin. Most planned and mixed-control economies are such examples. Pivotal is what DB means by "impoverishing". I understand it to mean that given the insight in the original article in regards to natural "fear" (for lack of a better word) in the marketplace, societies that seek to address every fear do so at the expense of economic progress.
Or to put it another way, planning and control discounts the idea that these fears are already well accounted for in the actions of individuals. Politicization of the issue is only a subsequent reaction to perceived need to control such fears.
Yet in 2006, only about half of workers were satisfied with their job security, reports a poll from the Conference Board. In 1987, when unemployment was higher, about 60 percent were satisfied.
Well, yeah, if the survey of "workes" means that they only asked the ones who had jobs. It is often possible to improve job security for people who already have jobs, by making it much more difficult to fire them, by bailing out failing companies, etc. The price gets paid, though, especially by those who don't yet have jobs.
I am in my 50s. When I was growing up, it was not uncommon for people to start a job out of high school and work it till they retired. They didn't need a college education. They could count on their job skills to last through their entire work life. They had affordable housing and could actually pay off their mortgage. A man could earn enough from his job so that his wife could stay home and raise the kids. (And lest you think I'm a crank, I was raised by a single mom during this period who did not make out quite that well.)Better yet, they had things like pensions. My father in law collected a pension from his military service and also a pension from the company he worked for when he retired from the military.
Compare and contrast with today. I doubt that you'll be able to find anyone who can start with a company and stay with it till they retire. 20 years ago, I used to find jobs that I could stick with for seven years. Now I'm lucky if I can work them for two years straight. My retraining 13 years ago landed me in the computer field. After the tech crunch, I'm now making $11 an hour. That's a dollar an hour more than my husband makes as a janitor. I've never worked a job with a pension. Houses are so expensive that it's unlikely you can ever pay off the mortgage even if you want to. It's almost impossible for a married man to earn enough for his wife to stay home with the kids.
There is good reason why people are insecure about their jobs. All it takes is a few layoffs and you'd be pretty insecure too. I went 13 months without work after the tech crunch and wound up taking an $8 an hour job just to get back to work. I don't know anyone who truly feels that their job is secure even for a period of five years.
Maybe this is a generational thing, but I can't imagine anything less appealing than working the same job at the same company for the rest of my life.
I find the romanticism of the 50s to be absurd. Yeah, maybe dear old dad had a pension from his mindless job at the town factory, but did his wife have her own new car? Did the kids have more than 2 pairs of shoes? Did the family even have a TV on which to watch insipid shows like My Three Sons?
By the way, I suspect that a family today could very easily pay off their mortgage if they adjusted their standard of living to match that of the average family in the fifties. If they give up the restaurant meals, the cell phones for each family member, the big house, the recent model cars for each licensed driver, the plethora of electronics equipment, the fancy vacations, the name-brand clothes, the chic home furnishings, and the high-speed internet connection then they could easily knock it out. Now, if average Americans would rather spend their money (or increase their debt) on what I've listed above, then that's on them.
How well have those pensions from the 50s held up? Last I checked, companies were dumping old pensions as fast as they could, and the companies that were still holding on to the pensions were worried about the pensions' affect on the companies' earnings and flexibility. I would argue that, if the the idealized world of the 50s ever existed, it suffered from serious myopia. Companies made short-term promises that don't work in the long-term. They made promises that they cannot keep, if they ever intended to. The only promise of security is that predicated upon individual sufficiency. Thus we must make sure that we live in a society that is free and open enough to allow individual adaptation. Strangling economic creativity in the name of security will fail just as the promise of a pension, or of assured social security, will fail. And if these promises will fail in the end, then what purpose is there in making them? The only one I can see is to fool some of the people some of the time for cheap political gain…