Not Your Granddaddy’s Unemployment

Montana Unemployment Trend Heat Maps:
A map of Montana Unemployment in September 2009 (BLS data)
http://www.localetrends.com/st/mt_montana_unemp...

We are all entrepreneurs. Some of us make better forecasts of the future scarcity and value of different occupations and skillsets then others. We either profit, or lose, from our ability to gauge these.

She studied Marketing - one of the most common (and IMO, not terribly difficult to do without a marketing background) majors, and went to GWU - one of the most expensive schools in the nation.

If she studied, say, Engineering, at a cheaper school, I bet she would have been able to keep her place and would have some offers.

To me, it sounds like she made some poor entrepreneurial decisions. I don't pity her in the least.

"IMO, not terribly difficult to do without a marketing background"

I thinik it depends on where when studies marketing. My marketing classes at Wharton were demanding. Not as much as my economics and finance classes, but challenging nonetheless. As I also have a science degree - mathematics and computer science - I think I may be qualified to judge the relative difficulty of high-quality business courses and average science/engineering courses.

I have some sympathy for this young woman (and for others like Pingry who are in similar circumstances). Nobody puts the appropriate asterisks next to the "work hard, get a good education, and you'll succeed" advice, and it can be jarring and disconcerting when the arduous but sure route you've been on for 16 or more years suddenly dead ends in a place that isn't at all what you've been told to expect.

But let's face it - she's in a pretty good position economically. No school loans, obviously bright, with a valuable degree, and parents who are willing to lend her a room, and on and on. A forced year off for her is mostly an excuse to have some fun before jumping back into the rat race (whether that's a good job or more education).

Many people live much closer to destitution, and many of them really have been forced into food pantries and shelters. Not nearly as many as during the Great Depression, but not an insignificant number, either.

So I agree that this is not the Great Depression redux. But I disagree that this particular case demonstrates the fact. If anything, it shows that members of families with higher income and greater wealth are insulated from the worst effects of economic downturns. That was as true in 1934 as it is today.

"But let's face it - she's in a pretty good position economically. No school loans, obviously bright, with a valuable degree, and parents who are willing to lend her a room, and on and on."

Why do you assume she has no school loans? I would not be surprised if she has a significant amount of educational loan debt.

"Melissa's education cost the most -- about $100,000, even after scholarships and financial aid -- and Jack and Shelly paid every cent."

Financial aid for the middle class means student loans, not grants. Even if she received $50,000 in scholarships, she would still have about $50,000 in student loans.

"it can be jarring and disconcerting when the arduous but sure route you've been on for 16 or more years suddenly dead ends in a place that isn't at all what you've been told to expect."

Instead of making a celebrity out of one disappointed college graduate, the reporter could have done some real work and shown how college graduates faced the same job market in 1982 - and survived very well over the long run. I know a marketing graduate who found himself in 1982 "in a place that isn't at all what you've been told to expect." I know he didn't sit around moaning "What was the point?"

When life gives you lemons, go use your marketing skills to build a niche and sell them. From what I read, Melissa's job search didn't involve any marketing skills other than doing what everyone else was doing.

My point is that college graduates emerge disappointed all the time. So what? Nobody should have promised this woman that a good life was a sure thing. Nobody should be allowing her to feel like a victim.

So Don,

Where in that story does it mention anything about the Great Depression?

It's a story about a young person, exactly like me and so many people I know, who has a lot of talent and ambition, and yet we have been screwed over by laissez-faire finance.

Is it alright to tell a story about just one of millions of people, most of whom contributed nothing to this financial crisis and recession (like, say, incredibly talented people who have graduated in the past few years), who have been suffering because of this nasty recession? Is it fine by you to tell a simple story, without any comparison whatsoever to any previous downturn, including the Great Depression, about how large factors out of our control can ruin lives?

Or will this inflame Don Boudreaux because we need to downplay the fact that markets do fail and can lead to disastrous results for innocent people? Is this the extent of your day? Writing letters to the editor, even regarding an article about an innocent victim, to lie to yourself?

"It's okay that you're suffering huge spillovers Melissa, because you're vacationing with your boyfriend, and not on a breadline or living in a Hooverville"

No, it's not as bad as the Great Depression, and this article says nothing to the contrary, so why do you become a raving lunatic and write some drivel to the editor?

And while we're on the topic of this recession not being as severe as the Great Depression, let's not forget something: It was mainly the Federal Reserve (i.e. the government) which prevented this from becoming the next Great Depression. But had it happened again, with unemployment shooting to 25% again, how would you justify that?

Don, you're just as shrill as Paul Krugman, time to calm down......really

--Pingry

You actually drank the kool aid regarding the government "saving" us from the next Great Depression? Seriously? If so, it's a classic example of someone completely ignoring history. This was NOT a "market failure", this was a government failure going back over 30 years, beginning with the Community Reinvestment Act, followed by Glass-Steagle, and topped of by years of easy Fed money. And you think the entity that created this mess saved us from a bigger mess? Let me guess....Liberal Arts major?

So Pingry, where has this laissez-faire finance you mention been going on?

By his use of the term, he reveals that he doesn't know what he's talking about. He's angry, that's fair. I know a lot of idealistic youngsters who feel entitled because of a piece of expensive parchment paper and a handful of monolithic plans to save the world (while enriching themselves). Liberals who, as sandre says, want to do so many things they don't understand the concept of focus and decisiveness -- something at which even the most modest entrepreneurs excel.

He says: "large factors out of our control can ruin lives." Like a federal government with its hands in everything. In one breath, it's laissez-faire failure, in the next it's the unfathomable caprice of "large factors" like a recession. It's going to be all right, Pingry. We have to endure you, too.

Pingry is in that wishy-washy "middle" where Daniel Kuehn belongs. You know, full of people who stand for nothing and would fall for anything, the one where people have each and every one of their limbs in different boats. I want to get there. That's where I want to go. I want to get Al Gore on the board of directors of my company. I want to preach to the whole world about, "income inequality", "social justice", "climate change", "terrorism", "healthcare", "tax cut" for the middle class, etc. I want to become a billionaire. That's a lot better than being a principled, miserable libertarian.

The quote that struck me was near the end, where Melissa said she has a year to find a job...maybe more if she can stretch it. I don't think you have to read between the lines to get the sense of a lack of urgency on her part (or her boyfriend's part either).

I have seen this same attitude in 4 unemployed friends, who all had jobs at different levels, all are different ages, all are at different levels in their careers....but they all lacked a sense of urgency throughout their first 3 months of unemployment because they continued to receive unemployment checks.

At the end of the 12 weeks, one told me flat out, "Well, I guess I'll have to take something now." And this past weekend, another one told me (while on vacation) that she was nearing the 10th or 11th week of "benefits", but that she was confident that the government would provide an extension, so "It was no big deal."

There's clearly something bigger going on here, and I strongly believe it begins and ends with the incentives that are in place...that in turn bring about a lack of incentive. To be clear, I'm not blaming the four people in my example because they're responding to the incentives/system in place (similar to Sen. Moynihan's critique of the welfare system many years ago and how that would bring about the destruction of myriad low-income families); I'm blaming the designers of the unemployment system in the first place.