ReutersIn the Washington Post, Robert Samuelson describes our economic slump as the result of irrational but self-reinforcing consumer and corporate risk aversion:
Americans see themselves as go-getters and risk-takers. Our optimism will ultimately rescue us. So it's said. But the folklore increasingly collides with reality. The 2008-09 financial crisis traumatized millions. It swelled the ranks of risk-avoiders, worrywarts and victims. Of course, this was mainly a reaction to overborrowing, inflated home values and lost jobs. But now the fear factor is feeding on itself -- and it's smothering the recovery.
We are prisoners of our rotten mood. Everywhere, the bias is to spend less and wait to see how things turn out. Just as optimism sustained the boom, pessimism prolongs the bust. This is the reverse of "irrational exuberance," because as long as most people feel this way, the psychology is self-fulfilling. Unfortunately, that's how they feel.
His fellow columnist Kathleen Parker has a contrasting view. According to her, those professors are also to blame:
Fundamentally, students aren't learning what they need to compete for the jobs that do exist.
These facts have been well documented by a variety of sources, not to mention the common experience of employers who can't find applicants who can express themselves grammatically.
Does this mean that jobs are really unfilled because of a shortage of basic cultural knowledge and good writing? When companies are determined to hire, remediable written expression isn't necessarily a deal-breaker. There's no argument that teaching can and should be improved, but since so many corporations are depending on higher education for their basic research -- already in the 1980s quite a few of my science book publishing prospects had moved from the downsized labs -- if professors did divert more time, the same executives would probably be lamenting the stagnation of new ideas from academia, endangering American competitiveness.
And there is one more problem with Ms. Parker's argument. If the young are now so awful, why aren't employers hiring more of the prelapsarian middle aged? One electrical engineering blog estimates there are "tens of thousands" of unemployed engineers. And with drug prices continuing to soar, justified by the cost of developing future miracle drugs, Merck is laying off another 13,000 workers, many in the US. If the problem is really today's graduates, why aren't companies hiring more people educated before universities messed everything up?
The reality is less the absence of great teachers than of business visionaries. As the historian of technology Nathan Ensmenger has written in a review of Kevin Maney's biography of Thomas Watson, Sr.:
Paradoxically, it was the Great Depression that allowed the newly formed IBM to secure its leadership in the business-machines industry. In a characteristically bold and risky move, Watson actually increased by one-third IBM's manufacturing capability in the years between 1929 and 1932 and invested heavily in research and development throughout the worst years of the depression. His optimism was justified when, on August 14, 1935, President Roosevelt signed into law the Social Security Act, creating with a stroke of a pen a massive new demand for information-processing technologies. IBM, with its large inventories and expanded manufacturing capacity, was well prepared to capitalize on this demand: in 1935 IBM's annual revenues increased from $19 million to $21 million; in the next year, it grew to $25 million; and by 1937 it had grown to $31 million. For the next forty-five years this growth continued unabated.
And the IBM-Social Security connection also shows that the welfare state and private innovation need not be foes.
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