generation limbo: 20-somethings today, debt, unemployment, the questionable value of a college education

re. moving a lot, we're moving this spring & having to sell a house & I wouldn't want to do this super often b/c we've acquired bullshit that has to be moved & the house has to be maintained & it's all very complicated, & if we were just renters & didn't have much stuff it would be sooooooooo much easier (I'm not talking about the psychological burdens, which obviously vary a lot)---but if we're gonna rely heavily on consumption & housing then a nation of renters without much stuff is tricky---guess American corporations are relying on Asian consumption rising enough to make up for our losses but still

renting is still consumption and people in NYC find ways to consume despite small apartments, for example, brunch. there are ways to build a consumer economy that don't depend on building mini-castles and filling them w/ stuff.

how, exactly? where is the money to buy brunch going to come from if not, ultimately, from manufacturing? surely we can't build an economy on you reading the ads on my blog & me reading the ads on your blog, & then tipping 20% at brunch whilst sexxxting on our iphones

(gen limbo slash)

Best. Economy. Evaaaar.

how many people do you know who work in manufacturing euler? manufacturing made up 11% of our gdp in 2009, why would it be more important than anything else? why is 'creating the supply of nikes' more important than 'creating the supply of iphone apps' or 'creating the supply of brunch' or 'creating the supply of legal services?'. when somebody pays somebody else for legal services they are 'creating economic activity' that's no more or less real than paying somebody for a physical object.

so the money to buy brunch comes from bloggers who sell ads to people who sell legal services to people who make brunch...I just don't see how this works. to provide services the people who buy the services need to get their money from somewhere & it can't just come from service providers. I'm just dense on economic things but I can't puzzle through this one.

Sent from my iPhone

END FIAT CURRENCY

so the money to buy brunch comes from bloggers who sell ads to people who sell legal services to people who make brunch...I just don't see how this works.

it works...more or less like this? the production of physical objects is cheap and simple and highly efficient and mechanized - this is why poor people can have huge tvs - production of legal services and brunch is not, and if you are going through a divorce 'legal services' are worth a lot more to you than a cool pair of shoes, despite being 'an abstract thing'.

like, you yourself are a service provider, you provide educational services, people find value in your educational services and pay money for it and receive something in return. that is, effectively, 'creating money'. if you made shoes, they would receive shoes in return, instead they receive an education. shoes might be more tangible than 'an education', but that doesn't make them inherently 'worth more', an MBA from Harvard is certainly 'worth more' than a pair of shoes despite being a completely abstract form of value.

and the economic gains from turning leather into a shoe is just a small part of the process of getting that shoe here. somebody in china can make the shoe but it's still worthless until someone transports it here. and it's worthless before a company convinces you that you need to buy it. and it's worthless until some dude at a counter can hand it to you for cash. you can consider everything manufacturing if you frame it 'manufacturing a piece of leather in china all the way to your house in the form of a brand-name shoe'.

let's be real. the collapse of american manufacturing does have a fair amount to do with why things are pretty screwed up. the "service economy" people talked about turned out to be based on people selling houses to one another, and there's no indication that one is necessarily coming back. you do have "service economies" to a degree in countries with dual economies where for those with expat money, labor is so cheap that they can basically pay people to do everything for them -- but that's sort of the opposite of a modern phenomenon.

well it's part of the same big picture, and yes there were a lot of service jobs that were created directly or indirectly by the housing bubble but that doesn't mean that service jobs wouldn't have also been created by a better allocation of resources. and in the longer-term the amount of people we need to be 'manufacturing' was going to decline even if we were the only country in the world:

http://2.bp.blogspot.com/_otfwl2zc6Qc/S3wzGvaJcBI/AAAAAAAAMy4/Ont4pK4djUE/s400/mfg.jpg

When people look out on the closed dockyards like Frank Sobatka and mutter that "we used to build shit in this country", I think the physical manufacturing is actually only a small part of it. People point to Germany and say look at how much they're physically producing, but the real difference it makes there - and what it used to make here - was the decent wages for trained or semi-skilled workers. Unfortunately, with the decline of manufacturing, that pay grade has pretty much evaporated for a certain class of Americans. Whereas earlier generations could live decent lives working at a car plant in Detroit, and then afford to send their kids to college/give them the freedom to create techno, now its basically "Wal-mart/Taco bell/Fuck you".

As i'm a believer that it was that particular reading of the 70s economic slowdown as "workers get paid too much/unions are strangling us and as a result profit margins are smaller and nobody will invest for such a low return" - and the subsequent deregulation and bust-up of unions - that led to wage stagnation while allowing more money to flow/be created by the financial services sector (in addition to the flooding of the market of easy credit to mask the wage stagnation for the workers), I don't think resurrecting the manufacturing industry will do nearly as much as people hope because there's still no reason for companies to pay the kind of wages that gave us that level of PPP in the 50s and 60s. They'd probably get health insurance, though...

"to provide services the people who buy the services need to get their money from somewhere & it can't just come from service providers."

once you have necessities taken care of, you could conceivably create a purely service-based economy.

i mean all online games with currencies are essentially pure service economies.

the real reasons why 'manufacturing is different':

a. it's almost always 'tradable' (w/ other countries)

b. manufacturing jobs were traditionally better-paid

as far as a. goes, if we want to buy more things from other countries, in the longer-term we also need to be able to sell things to other countries. but when you're buying a nice TV most of that money is going to american firms - the only thing you are 'buying' from china is the labor for 50 cents/h or whatever. which is why manufactured imports make up a relatively small part of gdp. and stuff like nice tvs take up a small % of our budgets anyway - far more goes to service or service-related industries - housing, education, health, food - which is all 'actual stuff' that people want and need despite not being made in a factory.

and fwiw some services are tradable - american architectural firms can design for a chinese city, chinese people can watch our movies, they can buy our ipad apps etc. as far as long-term planning goes it's a lot better to focus industrial policy on tradable services than on having an enormous and competitive manufacturing labor force.

as far as b. goes, it's hard to imagine us being long-term competitive by paying unskilled labor $40/h forever. not that there weren't good things that came from this, it just isn't a viable model forever. deregulation and union-busting haven't helped, but a lot of this is just the reality of 'low-skilled americans have to compete in a global marketplace / there is no inherent reason why someone born in america will always be paid more money by virtue of birth'.

and again, productivity gains in factories allow us to make the same stuff w/ a fourth the workforce anyway. we still have plenty of factories, we just don't have that many factory jobs.

I promise I'm an idiot about this (& lots of other things) but I mean, is The_Economy just pushing FIAT CURRENCY around & around? I mean surely the money has to "come" from somewhere? I mean I'm sure this is just

RON PAUL 2012

but I just don't get it, I don't mean "haha I'm playing the fool to show absurd it is" but rather I don't understand where Economy "comes from", like it really can't just be pushing money around, can it?

I mean I guess I sell my labor (as does your mom btw) so I mean is the story just "you only need 1800 calories a day & land is plentiful so shelter is too & what's scarce is you (& my mom's) labor"?

The economy comes from 'belief' more than anything. Has done in some way or another since the end of bartering.

well don't think too much about the money part, the dollar is just a medium of exchange and store of value. ~economic growth' comes from two parties trading with each other. each time that happens they both are (strictly as far as 'economic value' goes) better off. you use money to facilitate the process.

when a student pays you to teach them you are better off because you have teaching and they have dollars and both of you prefer the situation where you have the dollars and they get the teaching. then when you go to the grocery store with those dollars, both you and the grocery store become better off because you have dollars and they have groceries and both of you prefer the situation where they have your dollars and you have some groceries. this happens constantly and everywhere, and people end up, (only economically speaking) 'better off'.

things like food and manufactured products are a part of this but their 'costs of production' are very low due to massive manufacturing/farming productivity gains, whereas the labor added 'cost of production' for getting surgery done is very high. and if you need surgery done than it's as 'real' as getting a tv.

essentially most of 'the economy' is paying other people to do stuff for you or doing stuff for other people. that's abstract and harder to understand than trading a goat for a tv, but the reason why you can buy a tv is because people find as much real value in 'education' as they do in a tv. most of this is abstract because most of the things we need and want in life are abstract.

I think the idea that trade leaves both parties "better off" is really problematic, in terms of understanding what's actually happened over the past period. It's exactly the sort of story that blinds you to asset bubbles, in fact.

yeah. money is great because it doesn't rely on the double coincidence of "I've got this TV but I need a goat" and someone else "I've got this goat but I need a TV".

The thing about those abstract wants and needs is how you determine the value. Determining 'worth' is itself a pretty abstract process, and certainly in the case of speculation on the markets, which leads to those asset bubbles.

My mother is a pretty hardcore Republican, and she lost a lot of her retirement fund in the recession, and her argument that Obama hasn't done well with the economy is that she hasn't gotten that money back. She can't seem to accept that it just flat-out doesn't exist anymore.

I think the idea that trade leaves both parties "better off" is really problematic, in terms of understanding what's actually happened over the past period. It's exactly the sort of story that blinds you to asset bubbles, in fact.

yeah I mean I'm just trying to explain the basic concept of how a dude who makes and sells no physical object can ends up with a house filled with stuff. 'better off' certainly shouldn't be taken to mean happier or even better off in the strict 'economic' sense in the longer-term - even two seconds after the trade one can be 'worse off' in every sense.

like hey, if I go to vegas and put my life savings on red I'm 'better off' at that one second because I wanted and got an opportunity to have a 50% chance to double my life savings. but it's pretty easy to think of a way that I will soon be worse off. people don't generally do that and the economy 'working' depends on most of us being mostly rational most of the time or at least having many of our forms of irrationality tied to wanting to buy lots of stuff.

The economy comes from 'belief' more than anything. Has done in some way or another since the end of bartering.

― stay in school if you want to kiw (Gukbe), Thursday, 12 April 2012 19:45 (1 hour ago) Permalink

FWIW, the idea that "bartering" was ever the primary means of exchange in any society has pretty much been debunked.

nitpick -- even graeber's stuff acknowledges that there are barter societies. he just argues that all documented barter societies we know of came through the collapse of more complex economies.

yeah that's true

ok but doesn't this idea that we're all "better off" when we trade suppose that we all have something worth trading? I guess that's why I settle on manufacturing, or if you prefer, natural resource extraction, as "basic" practices with value.

RON PAUL 2012

xp to something, sorry

BTW tons of services are internationally tradable, it seems silly to say otherwise.

In fact one of our problems is that a lot of those service jobs themselves have also become portable.

FWIW, the idea that "bartering" was ever the primary means of exchange in any society has pretty much been debunked.

so this is why that doctor treated me so rudely when I tried to pay for my check-up with three chickens.

Also in theory there is no reason why each country has to have manufacturing. You could hypotheize a (very simplified) world where one company did all the manufacturing and another did all of the, i don't know, web design, creative media production, financial services, legal services, etc. Both countries would have "something worth trading."

I mean the idea that making a physical plastic doohickey is somehow more fundamental than making a web doohickey seems like object fetishization.

we should also note that amount/cost of immediate labor is a bad measure of value. or even "value added".

i'm surprised that ppl are still acting as though the entire "new-economy" hasn't had the curtain lifted on it like two or three times now.

If you manufacture a physical product, and it costs $25 to make through materials, process, and labour, but nobody is willing to pay money for it when its finished, it isn't worth $25.

i'm surprised that ppl are still acting as though the entire "new-economy" hasn't had the curtain lifted on it like two or three times now.

― s.clover, Thursday, April 12, 2012 9:11 PM (41 seconds ago) Bookmark

We live in a world where a healthy number of people place all of this blame squarely at the government's doorstep. You shouldn't be surprised.

As I said above, the problem with the "New Economy" isn't really that you can't build an economy on service, it's that service can also be transferred elsewhere much more easily than the Prophets of the New Economy predicted.

i thought the outsourcing thing was thought of as good by boosters?
is friedman not in this camp?

50% chance to double my life savings

Iadmit I am being pedantic here, but the reason '0' and '00' are on a roulette wheel are specifically so that your chances are NOT 50%.

the 'old economy' doesn't really have any solutions either. unskilled factory labor only exists where and when it's cheaper than high-tech machines doing the same work. this is going to continue to be fewer and fewer places - how much unskilled labor will necessary to build a car in 2050? like who cares who is a 'booster of the new economy', the goal is a functional society, and pretending like well-paid unskilled factory labor can exist in 2050 is just pointless.

xp yeahhhh I know "47.37%" was just gonna be pointlessly confusing tho

'will be necessary to built a car'*

guys i'm reading all this and i'm starting to wonder...is there some sort of intrinsic problem with capitalism's sustainability???

well environmentally yes, but another problem is the fact that we assume people always have to have jobs and work 40 hour weeks

like maybe we should work 20 hour weeks

factory labor wasn't and isn't that unskilled. certainly not compared to the vast bulk of "service economy" employment these days. also i'm not just discussing industrial jobs but the actual value created by industrial production versus most service jobs, including many fairly skilled ones.

xpost

For most people, even 40 hour weeks would be a good start.

factory labor 'isn't that unskilled' because all the unskilled factory labor is now done by machines.