The current issue of National Review has an interesting short article (not on-line – there is still a world outside the Internet!) by Kevin A. Hassett, in which he discusses the disconnect between public perceptions of the economy and its actual state:
We are in the midst of a lengthy economic boom, unemployment is low, and GDP growth in the first quarter of this year was likely more than 5 percent. The latest Federal Reserve data suggest that factories are the busiest they have been in over five years.
But the polls tell us that Americans are anxious. Overall, people think things in the U.S. are going in the wrong direction. According to a recent poll, more people think the economy is doing very badly than very well, and a majority of respondents disapprove of President Bush’s handling of the economy.
One of the conventional explanations is that workers feel insecure, because “In the past, the story goes, employers cared about their workers and gave them jobs for life. Today, job security is lower, and workers are nervous.” Yet at least one statistical measure indicates that job security has been increasing rather than declining:
Back in 1976, when Jimmy Carter was president, about 3 percent of the workforce entered unemployment in a typical month, and about the same percentage exited unemployment. After surging in the early 1980s, these numbers have declined steadily. Today, the flows into and out of unemployment in a typical month are less than half their rates of the early 1980s.
So job security has not dropped off the face of the earth. Indeed, it probably has improved, at least according to a thorough analysis of the data done recently by Steven J. Davis, R. Jason Faberman, and John Haltiwanger. Their paper shows that many indicators of volatility in the labor markets have trended down over time. While the level of turnover is still high relative to other countries, the amount of job churn is a sign of the dynamism and health of our economy. Outside of recessions, more jobs are usually created than destroyed. The labor market is a game of musical chairs where more chairs are put into the game when the music stops.
Maybe, then, we should look outside the four corners of the labor market for the source of anxiety and economic pessimism.
I believe that our collective angst has less to do with economics and more to do with our national character. Back when the odds of being unemployed were much higher, we dealt better with the world’s challenges because we were better equipped psychologically to do so. We were, as Harvard’s Harvey Mansfield might put it, more “manly.” “Manliness,” he writes in his new book with that title, “seeks and welcomes drama and prefers times of war, conflict, and risk.” A manly society would be ashamed to admit anxiety in the face of turnover. The culture we have today wallows in negative statistics that are still better than our predecessors could have imagined.
One can almost hear Dana Carvey’s grumpy old man character on Saturday Night Live responding to today’s media: “You call that job-market insecurity? In my day we had real insecurity. And we liked it!” It’s not the times that are changing, it’s the people.
If Mr. Hassett is right – and his argument has intuitive appeal – it’s not just the Bush Administration that faces a problem. No government, whatever its political complexion, will be able to calm the nerves of people who are constitutionally unable to face challenges and risk. Of course, there’s plenty of evidence that the rest of civilized world is no better in this respect – which leaves the Islamofascists, I fear, as our planet’s last manly risk takers. Not a prospect to fire one’s optimism!
Comments