Wasting Our Minds

In Spain, the unemployment rate among workers under 25 is more than 50%. In Ireland almost a third of the young are unemployed. Here in America, youth unemployment is “only” 16.5%, which is still terrible, but things could be worse. And sure enough, many politicians are doing all they can to guarantee that things will, in fact, get worse. We’ve been hearing a lot about the war on women, which is real enough. But there’s also a war on the young, which is just as real even if it’s better disguised. And it’s doing immense harm, not just to the young, but to nation’s future. Let’s start with some advice Romney gave to college students during an appearance last week. After denouncing Obama’s “divisiveness,” the candidate told his audience, “Take a shot, go for it, take a risk, get the education, borrow money if you have to from your parents, start a business.” (by Paul Krugman – NYTimes – 30/04/2012) 

The first thing you notice here is, of course, the Romney touch, the distinctive lack of empathy for those who weren’t born into affluent families, who can’t rely on the Bank of Mom and Dad to finance their ambitions. But the rest of the remark is just as bad in its own way. I mean, “get the education”? And pay for it how? Tuition at public colleges and universities has soared, in part thanks to sharp reductions in state aid. Mr. Romney isn’t proposing anything that would fix that; he is, however, a strong supporter of Ryan budget plan, which would drastically cut federal student aid, causing roughly a million students to lose their Pell grants. So how, exactly, are young people from cash-strapped families supposed to “get the education”? Back in March Mr. Romney had the answer: Find the college “that has a little lower price where you can get a good education.” Good luck with that. But I guess it’s divisive to point out that Romney’s prescriptions are useless for Americans who weren’t born with his advantages. There is, however, a larger issue: even if students do manage, to “get the education,” which they do all too often by incurring a lot of debt, they’ll be graduating into an economy that doesn’t seem to want them. You’ve probably heard lots about how workers with college degrees are faring better in this slump than those with only a high school education, which is true. But the story is far less encouraging if you focus not on middle-aged Americans with degrees but on recent graduates. Unemployment among recent graduates has soared; so has part-time work, presumably reflecting inability of graduates to find full-time jobs. Perhaps most telling, earnings have plunged even among those graduates working full time, a sign that many have been forced to take jobs that make no use of their education. College graduates, are taking it on the chin thanks to weak economy. And research tells us the price isn’t temporary: students who graduate into a bad economy never recover lost ground. Instead, their earnings are depressed for life.

What the young need most of all, then, is a better job market. People like Mr. Romney claim that they have the recipe for job creation: slash taxes on corporations and the rich, slash spending on public services and the poor. But we now have plenty of evidence on how these policies actually work in a depressed economy and they clearly destroy jobs rather than create them. For as you look at the economic devastation in Europe, you should bear in mind that some of the countries experiencing the worst devastation have been doing everything American conservatives say we should do here. Not long ago, conservatives gushed over Ireland’s economic policies, especially its low corporate tax rate; Heritage Foundation used to give it higher marks for “economic freedom” than any other Western nation. When things went bad, Ireland once again received lavish praise, this time for its harsh spending cuts, which were supposed to inspire confidence and lead to quick recovery. And now, as I said, almost a third of Ireland’s young can’t find jobs. What should we do to help America’s young? Basically, the opposite of what Mr. Romney and his friends want. We should be expanding student aid, not slashing it. And we should reverse the de facto austerity policies that are holding back US economy, the unprecedented cutbacks at the state and local level, which have been hitting education especially hard. Such a policy reversal would cost money. But refusing to spend that money is foolish and shortsighted even in purely fiscal terms. Remember, young aren’t just America’s future; they’re the future of the tax base, too. A mind is a terrible thing to waste; wasting the minds of a whole generation is even more terrible. Let’s stop doing it. 


Acerca de ignaciocovelo
Consultor Internacional

One Response to Wasting Our Minds

  1. Professor Uziel Nogueira says: Prof Krugman’s concern about youth unemployment is legitimate. However, his novel approach of more government spending to solve the problem is non-starter. Obama and Mitt Romney are aware of the danger presented by a macro scenario characterized by an unsustainable public debt, banks’s credit rating downgraded, consumers’s debt still too high and ineffective monetary policy with zero benchmark interest rates. Neither consumers –responsible for 80% of GDP — nor government spending can lift up the economy in the short term. Neither Obama nor Romney can present a serious, solid pro growth economic program during the presidential election. What can be done, ask the American electorate. The short answer is NOTHING. As an act of faith, economists argue that the so-called ‘animal spirits’ will eventually return and lift up production and consumption. The problem is that no one knows how and when the animal spirits come down and spark the American producers and consumers to behave as before the crisis. On average, a financial meltdown, similar to the one occurred in 2008, takes 10 years for production, consumption and employment to return to pre-crisis levels. Perhaps, a short term government sponsored program for the youth is a good idea to be considered by Mr. Obama. If Mitt Romney wins, kids should follow his advise and ask a loan from their daddies and start a new business.



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