Brooks and Krugman

Bobo is teaching (FSM help us) at Yale.  In “The Empirical Kids” he tells us about a Yale senior who takes a stab at defining her generation, one emerging into adulthood on the heels of the 2000s.  Prof. Krugman, in “Cheating Our Children,” says the deficit scolds who insist on reducing government borrowing have done far more damage to future generations than the federal debt ever did.  Here’s Bobo:

Twelve years ago, I wrote a piece for The Atlantic, called “The Organization Kid,” about the smart, hard-working, pleasant-but-cautious achievatrons who thrive in elite universities. Occasionally, somebody asks me how students have changed since then. I haven’t been perceptive enough to give a good answer.

But, this year, I’m teaching at the Jackson Institute for Global Affairs at Yale, and one terrifically observant senior, Victoria Buhler, wrote a paper trying to capture how it feels to be in at least a segment of her age cohort. She’s given me permission to quote from it.

Buhler points out that the college students of 12 years ago grew up with 1990s prosperity at home, and the democratic triumph in the cold war abroad. They naturally had a tendency to believe deeply “in the American model of democratic capitalism, which created all men equal but allowed some to rise above others through competition.”

Then came Sept. 11. That was followed by the highly moralistic language of George W. Bush’s war on terror: “Our responsibility to history is already clear: to answer these attacks and rid the world of evil.”

But Bush’s effort to replicate the Reagan war on an evil empire lead to humiliation, not triumph. Americans, Buhler writes, “emerged from the experience both dismissive of foreign intervention as a tool of statecraft as well as wary of the moral language used to justify it.”

Then came the financial crisis, the other formative event for today’s students. The root of the crisis was in the financial world. But the pain was felt outside that world. “The capitalist system, with its promise of positive-sum gains for all, appeared brutal and unpredictable.”

Moreover, today’s students harbor the anxiety that in the race for global accomplishment, they may no longer be the best competitors. Chinese students spend 12-hour days in school, while American scores are middle of the pack.

In sum, today’s graduates enter a harsher landscape. Immediate postgrad life, Buhler writes, will probably bear a depressing resemblance to Hannah Horvath’s world on “Girls.” The hit song “Thrift Shop” by Macklemore and Ryan Lewis “is less a fashion statement, more a looming financial reality.”

Buhler argues that the group she calls Cynic Kids “don’t like the system — however, they are wary of other alternatives as well as dismissive of their ability to actually achieve the desired modifications. As such, the generation is very conservative in its appetite for change. Broadly speaking, Cynic Kids distrust the link between action and result.”

A Brookings Institution survey found that only 10 percent of young people agree with the statement, “America should be more globally proactive.” The Occupy movement, Buhler notes, “launched more traffic jams than legislation.” The Arab Spring seemed like a popular awakening but has not fulfilled its promise.

In what I think is an especially trenchant observation, Buhler suggests that these disillusioning events have led to a different epistemological framework. “We are deeply resistant to idealism. Rather, the Cynic Kids have embraced the policy revolution; they require hypothesis to be tested, substantiated, and then results replicated before they commit to any course of action.”

Maybe this empirical mind-set is a sign of maturity, but Buhler acknowledges that the “yearning for definitive ‘evidence’ … can retard action. … The multiplicity of options invites relativism as a response to the insurmountable complexity. Ever the policy buffs, we know we are unable to scientifically appraise different options, and so, given the information constraints, we stick with the evil we know.”

She suggests calling this state of mind the Tinder Effect, referring to the app that lets you scroll through hundreds of potential romantic partners, but that rarely leads to a real-life encounter.

Buhler’s most comprehensive disquiet is with the meritocratic system itself. It rewards an obsessive focus on individual improvement: “Time not spent investing in yourself carries an opportunity cost, rendering you at a competitive disadvantage as compared to others who maintained the priority of self.”

She wonders if the educated class is beginning to look at the less-educated class — portrayed on TV in shows like “Teen Mom 2” and “Here Comes Honey Boo Boo” — as a distant, dysfunctional spectacle. She also wonders if the mathematization of public policy performs a gatekeeper function; only the elite can understand the formulas that govern most people’s lives.

I had many reactions to Buhler’s dazzling paper, but I’d like to highlight one: that the harsh events of the past decade may have produced not a youth revolt but a reversion to an empiricist mind-set, a tendency to think in demoralized economic phrases like “data analysis,” “opportunity costs” and “replicability,” and a tendency to dismiss other more ethical and idealistic vocabularies that seem fuzzy and, therefore, unreliable. After the hippie, the yuppie and the hipster, the cool people are now wonksters.

And, yes, I gave her an A.

Now here’s Prof. Krugman:

So, about that fiscal crisis — the one that would, any day now, turn us into Greece. Greece, I tell you: Never mind.

Over the past few weeks, there has been a remarkable change of position among the deficit scolds who have dominated economic policy debate for more than three years. It’s as if someone sent out a memo saying that the Chicken Little act, with its repeated warnings of a U.S. debt crisis that keeps not happening, has outlived its usefulness. Suddenly, the argument has changed: It’s not about the crisis next month; it’s about the long run, about not cheating our children. The deficit, we’re told, is really a moral issue.

There’s just one problem: The new argument is as bad as the old one. Yes, we are cheating our children, but the deficit has nothing to do with it.

Before I get there, a few words about the sudden switch in arguments.

There has, of course, been no explicit announcement of a change in position. But the signs are everywhere. Pundits who spent years trying to foster a sense of panic over the deficit have begun writing pieces lamenting the likelihood that there won’t be a crisis, after all. Maybe it wasn’t that significant when President Obama declared that we don’t face any “immediate” debt crisis, but it did represent a change in tone from his previous deficit-hawk rhetoric. And it was startling, indeed, when John Boehner, the speaker of the House, said exactly the same thing a few days later.

What happened? Basically, the numbers refuse to cooperate: Interest rates remain stubbornly low, deficits are declining and even 10-year budget projections basically show a stable fiscal outlook rather than exploding debt.

So talk of a fiscal crisis has subsided. Yet the deficit scolds haven’t given up on their determination to bully the nation into slashing Social Security and Medicare. So they have a new line: We must bring down the deficit right away because it’s “generational warfare,” imposing a crippling burden on the next generation.

What’s wrong with this argument? For one thing, it involves a fundamental misunderstanding of what debt does to the economy.

Contrary to almost everything you read in the papers or see on TV, debt doesn’t directly make our nation poorer; it’s essentially money we owe to ourselves. Deficits would indirectly be making us poorer if they were either leading to big trade deficits, increasing our overseas borrowing, or crowding out investment, reducing future productive capacity. But they aren’t: Trade deficits are down, not up, while business investment has actually recovered fairly strongly from the slump. And the main reason businesses aren’t investing more is inadequate demand. They’re sitting on lots of cash, despite soaring profits, because there’s no reason to expand capacity when you aren’t selling enough to use the capacity you have. In fact, you can think of deficits mainly as a way to put some of that idle cash to use.

Yet there is, as I said, a lot of truth to the charge that we’re cheating our children. How? By neglecting public investment and failing to provide jobs.

You don’t have to be a civil engineer to realize that America needs more and better infrastructure, but the latest “report card” from the American Society of Civil Engineers — with its tally of deficient dams, bridges, and more, and its overall grade of D+ — still makes startling and depressing reading. And right now — with vast numbers of unemployed construction workers and vast amounts of cash sitting idle — would be a great time to rebuild our infrastructure. Yet public investment has actually plunged since the slump began.

Or what about investing in our young? We’re cutting back there, too, having laid off hundreds of thousands of schoolteachers and slashed the aid that used to make college affordable for children of less-affluent families.

Last but not least, think of the waste of human potential caused by high unemployment among younger Americans — for example, among recent college graduates who can’t start their careers and will probably never make up the lost ground.

And why are we shortchanging the future so dramatically and inexcusably? Blame the deficit scolds, who weep crocodile tears over the supposed burden of debt on the next generation, but whose constant inveighing against the risks of government borrowing, by undercutting political support for public investment and job creation, has done far more to cheat our children than deficits ever did.

Fiscal policy is, indeed, a moral issue, and we should be ashamed of what we’re doing to the next generation’s economic prospects. But our sin involves investing too little, not borrowing too much — and the deficit scolds, for all their claims to have our children’s interests at heart, are actually the bad guys in this story.

Well, Paul, the scolds are primarily Republicans and all they seem to care about is keeping a child in the womb for 9 months.  After the baby is born all interest ceases, and they look at it and think FYIGM.

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