I’m not the person to adjudicate whether our economic problems are “cyclical” or structural. But the reason I find Krugman’s anti-structural take persuasive (that is, aside from his arguments and facts) is that I think I understand why so many people want to see our problems as structural. It’s part of a broader notion I call Everyone Is Awful. Briefly, Everyone Is Awful is the belief that people today are worse than ever–stupider, lazier, less moral–and that this worsening of our culture and human stock underlies all of our largest problems. Basically, it’s the Kids These Days trope on steroids, elevated to a grand, world-historical narrative.
Applied to economics, Everyone Is Awful-thinking concludes that, ‘of course we have mass employment because a large chunk of us are less employable than ever’. Not only is this narrative factually wrong, the growing reach of the Everyone Is Awful narrative is itself partly to blame for the very ailments it purports to explain. If we have a real long-festering structural problem in our economy, it’s that elites have become allergic to risk; more than ever, the investor and management classes want a sure thing. This gives us financial markets that disastrously fool themselves into thinking that they’ve engineered away risk (or sloughed it off to others) and a hiring environment that expects job seekers to come fully formed as totally known quantities, predictable cogs that fit a precise purpose and which can be disposed at the first sign of deviation from specification. If an investment isn’t a perpetual money machine, it’s too uncertain; if this potential hire doesn’t have a prestigious degree and previous success with this precise area of practice, we can’t take the risk. Only star performers have real value, for whatever value non-star assets and people might have, that value is too hard to discern and so must be discounted. In short, everything has degraded to a lemon market.
How do we combat this? I have no idea. But notice that in the Everyone Is Awful narrative, elites are faultless, having been only failed by the common people. Should we be surprised that they like structural stories?
*To be clear, the ‘Everyone’ in Everyone Is Awful means ‘other people’.