Don Peck’s comprehensive article, “How a New Jobless Era Will Transform America” (March Atlantic), omits some fundamental concepts. U.S. manufacturing jobs were transferred overseas by U.S. business executives. The U.S. economy was run into the ditch by U.S. banking and financial executives. Megastores in the U.S. are stocked predominantly with foreign goods due to the decisions of U.S. purchasing managers.
It is our own fault that our economy is a mess. Unless and until U.S. business executives realize that they have responsibilities beyond their bottom line to maintain the legal, social, and economic environment that gives them perhaps the greatest degree of entrepreneurial freedom in the world, the economic future of the U.S. indeed looks bleak.
Don Peck barely acknowledges the relevance of immigration to blue-collar unemployment, or the effect that continued high rates of immigration will have on unemployment in a recovering economy with slow job creation. The major reform of immigration policy in 1965, and later incremental changes, have drastically increased immigration rates, and increased the percentage of immigrants who are poorly educated and compete directly with blue-collar American workers for jobs.
In the early 1960s, and for many decades before, we received 300,000 or fewer immigrants a year, almost all legal. In 2008, the last year for which the government has released data, we received 1.1 million permanent legal immigrants, of whom three-quarters were at least 20 years of age. Until the recession, we were also receiving about 500,000 illegal immigrants a year. Our immigration policies have been a direct assault on the poorest American workers for decades. There is no reason to think that the number of legal immigrants will have been much less in 2009 than it was in 2008, and we continue to issue a large number of temporary work visas as well.
We are importing unemployment at a time of high unemployment.
Thomas M. Tharp
West Lafayette, Ind.
“How a New Jobless Era Will Transform America” affected me profoundly. But I see an unsurprising gap in this otherwise insightful analysis. Don Peck points out that industries dominated by women suffer less job loss, and he discusses extensively the negative psychological impact of extended unemployment on men, whose sense of masculinity is undermined by unemployment. But nowhere does he discuss the psychological consequences for women. It seems plausible to me that such consequences will be equally negative.
Because of women’s socialization, I think many women who, like me, are fortunate enough to have financial and professional stability experience a form of “survivor’s guilt” about our good fortune. This toxic sense of guilt informs women’s relationships, especially in marriages where women are the main or sole provider—creating an ancillary “provider’s guilt” that could have profound ramifications.
Simply, if extended unemployment creates an increase in domestic violence by men against women, as noted by the author, and also creates a phenomenon of “provider’s guilt” in abused women, is not a decrease in the reporting of domestic violence, and an increase in the number of women who remain in violent and abusive relationships, likely? If abused women feel partially responsible for their own abuse, due to a toxic sense of guilt, they are likely to take up the old adages of “It’s not his fault” and “He doesn’t really mean it.” The successes in recent decades in this area could be undermined, if the circumstances described by the author accurately reflect what is happening in today’s marriages because of joblessness.
Sabrina Bano Jamil
Assistant Professor of Philosophy
Miami Dade College
I’d like to add two points to Don Peck’s well-researched article. First, he refers to research by Till von Wachter of Columbia University that says the graduates of elite universities will escape much of the suffering, but then he turns to Princeton Career Services Director Beverly Hamilton-Chandler’s observation that while hiring by major investment banks was down, recruiting by hedge funds and boutique financial firms partly offset that trend. One wonders if the hiring of some of our young people with the best computational skills by the financial industry that contributed so much to our current malaise is something to celebrate. We might also ask ourselves if general liberal-arts graduates from the same universities will be so lucky.
Secondly, the author seems to favor doing too much rather than too little with regard to government response. Maybe, but a case can be made that the problems we are confronting now and which he so powerfully defines are due at least in part to flawed public policies of the last generation that are coming home to roost. The government certainly has a role in the solution, but since it contributed to the problems, designing this solution will require great caution and more than a little humility.
Palm Desert, Calif.
I live in southern Ontario, and we are experiencing the same type of economic turmoil described by Don Peck. I immigrated to Canada from Italy in 1963. I started working when I was 12 years old and I worked all my life, until July 2009. Since then, I have not been able to find employment in my area of expertise. I attribute this to the recession and to my age (I am 54 years old). My skills are up to date, as I have always maintained my skillset by taking relevant courses at the local universities and colleges. As a result of my unemployment, I have lost everything of monetary value, including my house.
However, I still have my health and my family, and eventually things will have to turn around.
Perhaps Megan McArdle’s claim that everyone knows health insurance reduces mortality is merely her setup for the counterargument (“Myth Diagnosis,” March Atlantic). More likely, it’s a sign that we’ve swallowed the insurance industry’s hook. I don’t buy car insurance to protect myself from accidents. I don’t buy home insurance to protect myself from fires. I don’t buy life insurance to protect myself from death, and I don’t buy health insurance to protect myself from illness. I insure my car, home, life, and health to protect myself and my family from the financial risks associated with their loss.
At some point, probably when the industry repackaged “medical insurance” as “health insurance,” we accepted the implicit equivalence of insurance and health, magnifying the product’s market value and helping the industry to become yet another institution too big to fail.
I must take issue with Megan McArdle on several counts. First, an insurance policy is not an entitlement. Participants pay in, and only the unlucky (the sick) get a return on their investment.
Second, while a controlled study of the benefits—or lack thereof—of universal health-care insurance cannot be done here for ethical and financial reasons, a comparison of some statistics around the world is informative. Nearly all developed nations enjoy a longer life expectancy and a lower infant-mortality rate than the U.S., and they offer their citizens universal medical insurance, either government-sponsored, run by private companies, or operated cooperatively by the public and private sectors. Does this suggest a correlation?
Third, number of deaths is not a good gauge of success or failure. Death is inevitable. Until then, a universal plan for health insurance will improve as well as prolong lives. It will prevent some diseases from developing and slow the progress of others. Further, it can ease the pain of the unwell, by reducing medical crises, providing timely interventions, and supplying medications, equipment, and other support. Are these not health benefits?
New York, N.Y.
Megan McArdle replies:
Mary Rotella is right that health insurance does not look like normal insurance markets—it combines a catastrophic-insurance component with a sort of bundled pre-payment system. We would probably be richer, and perhaps healthier, if people paid for normal treatment out of pocket, and used insurance only for unexpected large bills. But employer insurance gets a hefty tax subsidy, which means we tend to consume more of it than is optimal.
Katherine Jacobson is also right; many countries with national health-care systems have better mortality statistics than we do. But comparing statistics across nations is inherently difficult; differences in lifestyle, genetics, and even the way the statistics are collected, can skew the results. By one estimate, if you control for deaths from accidents and homicide—problems that are at best weakly related to the quality of our health care—the U.S. actually shoots to the top of the mortality rankings. Of course, mortality is not the only measure of a health system’s quality. But because it is one of the easiest things to measure—and one of the most visceral—it tends to be emphasized.
On September 26, 2006, my husband, Craig Ewert, attended the Dignitas clinic in Switzerland and peacefully ended his struggle with ALS. Craig was “the American man suffering from motor neuron disease” referred to in Bruce Falconer’s article, “Death Becomes Him” (March Atlantic). Craig’s experience is also the subject of a PBS Frontline documentary, The Suicide Tourist.
I bristled at Falconer’s description of Dignitas and its director, Ludwig Minelli, from the first paragraph. Language is a powerful tool of the status quo, and Falconer wields it with deftness, referring to Minelli’s properties as “makeshift death houses” where he “helps people kill themselves.”
Falconer plays upon all manner of negative images—Nazi death camps, survival-of-the-fittest eugenic theories, guerrilla tactics—to paint a negative image of Mr. Minelli. Atlantic editorial staff followed suit, with a pull quote on page 76 invoking memories of the Third Reich. Although the quote was not from Minelli, a casual reader could assume that it was. Falconer describes Arnold, the gentleman who was present when my husband died, as disheveled and dirty; in my observation, Arnold did not fit that description.
Reporters have asked me about my experience with Mr. Minelli, wondering if I found him somehow strange or different. The only difference I notice is the same one that I notice in Craig and in myself—we are willing to challenge the status quo, to remove the taboo around death. For many, that makes us frightening “others.” Mr. Minelli and Craig represent a matter-of-fact view of death—we all will die someday. They have been able to reflect on how people, including themselves, die.
In contrast, our society emphasizes the emotional aspect of dying. Patients are told to fight death, to be brave warriors. Acceptance of death is viewed as bizarre and frightening, something to be forbidden. Those who might prefer to pass quietly, to gracefully welcome a comfortable death, are viewed as oddities. One way of coping with death is not better than the other. However, both approaches must be respected.
In the film, Craig states: “If somebody wants to take their own life, obviously they feel a reason for that, at that point in time. You may not think it is a good reason. I may not think it is a good reason. But you know what? It is that person’s life.” Our society could benefit from an adult discussion about death, one based on serious reflection, rather than on politically generated fear and authoritarian religious commands.
Crystal Lake, Ill.
Bruce Falconer replies:
Assisted suicide is a deeply polarizing subject, as evidenced by Mary Ewert’s comments. But I disagree with her characterization of the article. Perhaps she was disappointed that it wasn’t a full-throated endorsement of Ludwig Minelli’s work, but neither was it a condemnation. After months of reporting, I feel as conflicted as ever about assisted suicide. Ewert also assails my use of language, but I fail to see where it does not accurately describe the reality of what Dignitas does. On the contrary, it is Dignitas that is guilty of obfuscation, using the term accompaniment for assisted suicide and calling its death house the “Blue Oasis.” If we are to have an honest conversation about death, euphemism simply won’t do.
In “Management Secrets of the Grateful Dead” (March Atlantic), Joshua Green does not mention the influence the Woodstock Festival had on the Dead’s approach to marketing and fans. Woodstock was the prototype of the marketing strategy described in the article. When the Dead and many others did a cross-Canada tour the summer after Woodstock, they discovered that in every city, fans now expected concerts to be free. Huge crowds vocally and sometimes violently rebelled. It was the harsh reaction that tour received across Canada as well as the unprecedented cultural and monetary success of Woodstock that influenced the Dead to give fans wide latitude in setting the terms of the relationship, such as recording the concerts on personal tapes, etc.
I found “Management Secrets of the Grateful Dead” to be an insightful and fascinating read. But as a copy editor and a longtime Dead fan, I have to give a gentle scolding for a rather subtle display of incorrect facts. Joshua Green says, “In 1983, the Dead’s drummer, Mickey Hart, asked Lieberman …” And later he says, “… the band’s lyricist, John Perry Barlow, who became an Internet guru.” But, in fact, the Dead had two drummers and two main lyricists. Bill Kreutzmann was the original drummer (Hart joined the band after it was established, and took a hiatus in the early ’70s), and Robert Hunter was Jerry Garcia’s primary lyricist (Barlow wrote the words for Bob Weir’s songs, for the most part).
Sorry to be a nitpicker—the Dead might say, “Hey, brother, just let it ride”—but I can’t help myself.
Again, it’s an excellent piece. All of us, businesspeople or not, can learn from the idea of strategic improvisation.
In “Cyber Warriors” (March Atlantic), James Fallows asserts that China’s capacity for conventional warfare is limited, and that the real threat to the United States is one of cyber-warfare. I would offer that China’s most potent threat to our national interests comes from its ability to shut down the U.S. economy by flooding the market with Treasury bonds.
I spent four years as an intelligence officer in the Pacific theater in the 1990s, and since that time, I have watched as China’s military spending has grown tenfold. I have been a fixed-income portfolio manager since then, and I have watched the growth in China’s holdings of U.S. Treasury debt to its current level of roughly $800 billion. By selling that debt in a wholesale fashion, China would abruptly shut down the economy. Treasury rates would likely have to rise at least three to four percentage points to absorb that much volume, which implies mortgage rates near 10 percent, and borrowing costs for U.S. corporations in the 8 to 10 percent range.
While those factors alone would be crippling, the secondary effects would also have major implications for U.S. households. Higher bond yields would cause investors to shift their allocations from stocks to bonds, implying billions of dollars in stock sales and a significant decline in stock prices. This would have massive implications for domestic household wealth. Asset-allocation decisions would also affect the borrowing costs of other developed economies, as investors shifted from Gilts and Bunds to higher-yielding U.S. bonds. This would reduce economic output in countries that provide much of the demand for goods produced in the United States.
Some would argue that a wholesale sell-off of U.S. debt would be economic suicide for China, since the U.S. market offers the greatest source of demand for Chinese products. But this assumes that China is a rational player, acting in the economic best interests of its people. While employment and economic growth are some of the most important considerations for the Chinese government, China’s leaders also consider other factors that are at odds with U.S. interests: the status of Taiwan and Tibet and the quest for oil and other commodities come to mind.
I am hopeful that China will emerge as a partner to the U.S. on such issues as terrorism, disaster relief, and nation-building, but we should be aware that as we have made economic choices to pursue these objectives in an almost single-handed fashion, we now find our economy exposed to a trading partner whose interests may differ from ours.
James Fallows replies:
I agree with Matthew Downing that the financial imbalance between the United States and China is a problem. I disagree about why.
As I have argued in several previous articles (including “The $1.4 Trillion Question,” January 2008 Atlantic, and “China’s Way Forward,” April 2009 Atlantic), the long, unbroken years of Chinese trade surpluses with America, which have led to the Chinese government’s accumulation of U.S. Treasury notes and other dollar-denominated assets, reveal a distortion in each country’s economic management. China, which still has hundreds of millions of peasants, has been living on much less than its people collectively produce. The United States, by comparison so rich, has been living beyond its natural means—and making up the difference by borrowing from China. In the long run this isn’t good for either country, and it makes the people in each feel vulnerable to the other. Many Americans have fears like Downing’s; many Chinese worry that too many of their national assets are sunk in one economically volatile, perhaps politically hostile, foreign site.
If China and America had a major strategic collision, for instance over Taiwan, the Chinese government might indeed sell its bonds—but that would be only one of many weapons each country might use against the other. In normal circumstances, the Chinese surpluses matter mainly as a sign that both countries need to correct the balance between savings and consumption in their own economies.
The January/February Atlantic contains two ungrammatical French expressions. “What Would Wilson Do?” uses the words grand guerre. The word guerre is feminine; since the modifying adjective should also be feminine, the correct version of this is grande guerre. In “Cultivating Failure,” the expression haute-bourgeois appears. This expression is also hermaphroditic: haute is feminine but bourgeois is masculine. It should have been haut-bourgeois.
“The Great Grocery Smackdown,” by Corby Kummer (March Atlantic), noted that a partnership called Agile Agriculture included the National Sustainable Agriculture Coalition and the University of New Hampshire. The coalition is not a member of Agile Agriculture; the university is about to enter a formal relationship with the program, but had not yet done so when the article was published. We regret the errors.
Dow Loses Points, but Reader Wins 10-Year-Old Bet
More than 10 years ago in these pages, James K. Glassman and Kevin A. Hassett argued a new theory of stock valuation, writing that the Dow Jones Industrial Average would rise “to the neighborhood of 36,000” (“Dow 36,000,” September 1999 Atlantic). In January 2000, J. Douglas Van Sant of Stockton, California, wrote in to say that their theory was “a giant fallacy.” He bet Glassman and Hassett that in 10 years, the Dow would be closer to 11,000. The writers agreed to the bet: “If the Dow is closer to 10,000 than to 36,000 ten years from now, we will each give $1,000 to the charity of your choice.”
On December 31, 2009, the Dow closed at 10,428, as Brad W. Bradley of Bel Air, Maryland, pointed out to Atlantic editors earlier this year. Glassman and Hassett conceded, donating $1,000 each to the Salvation Army, by Van Sant’s request.
“It’s been a bad run for optimists,” Hassett noted. “James and I included a chapter in our book [based on the article] outlining why the equity-premium decline that was at the core of our thesis might stop or reverse itself. Just about every equity-downside scenario we could envision, including terrorist attack, later became a reality. Going forward, investors have to decide whether the U.S. has had a run of bad luck or whether something fundamental has changed that cannot be reversed. Either is possible.”
“I’m surprised at the way it turned out. I thought their theory was pretty extreme, and that was the point of my letter,” Van Sant said. “I never imagined the Dow would have been less than in 1999 [when it closed the year at 11,453]. In a way,I was probably just as wrong as they were. If someone had bet me it would be lower, I would have taken the bet and lost it. Everybody lost on that one.”