Bad Time to Graduate

Paul Krugman notes how it’s a very bad time to be under age 24, graduating with a Bachelor’s degree, and not continuing onto further education. In other words, looking for a college-education job.

I’ve been doing some data-grubbing for textbook revision, and found myself looking at employment data on young (<24) college graduates, which is provided by the BLS in Employment and Earnings. And I came up with a particular number that shows just how devastating the job slump has been and continues to be for the young.

Here’s the question: of college graduates with a bachelor’s degree who aren’t enrolled in further schooling, how many have full-time jobs?

In December 2007, on the eve of recession, the answer was 90 percent.

By December 2009, it was down to 72 percent.

As of December 2010, it had recovered only slightly, to 74 percent.

To me, that’s a tale of young lives blighted, not just in the short run but perhaps permanently: failing to get a job when you get out of school colors your whole career. And it’s still happening.

Yet unemployment has virtually dropped off the political agenda.

Since neither political party at this time is proposing policies to actively fight unemployment and accelerate the so-called recovery NOW, it appears both parties are basically telling young folks, especially the ones doing the right thing (getting educated) to f*** off.  So much for the youth movement that the election of 2008 was supposed represent.

Who’s Ignorant on Spending? Voters or “Experts”?

The new Republican-led Congress is trying to get started on it’s campaign promise cut spending. Apparently it’s not as easy as they thought.  Part of the problem is their ignorance about the federal budget and budget process (see GOP Cuts Budget with Axe).  But not understanding the difference between an appropriation bill and an authorization bill isn’t their big challenge. I’m confident that even the slow learners will pick that up eventually.

The bigger problem in cutting spending has the econ-blogosphere all atwitter.  It seems that Americans only really want cuts to some big, non-specific, generic “government spending”.  When it comes to actually cutting what the government spends in on particular programs, they sing a different tune. They don’t want cuts to Medicare, or to Social Security, or to the military (if it affects the base/contractor near them), or to education, or to WIC, or most anything else except maybe foreign aid. My guess is they will also oppose cuts to foreign aid once they figure out that much U.S. foreign aid actually subsidizes our sale tanks/planes/corn produced just down the street. Conservative columnists like Bruce Bartlett have described it as “Voter Ignorance Threatens Deficit Reduction”. Catherine Rampell of the NYTimes weighs in similarly with “Keep Your Government Hands Off My Government Programs!”, which documents how large numbers of government spending-beneficiaries don’t think they get any benefits from the government, including 40-44% of Medicare and Social Security beneficiaries. Even Krugman has weighed in on the topic.

Most of this commentary has adopted a tone of “it’s hard to cut spending and the deficit when voters are so ignorant”.  But I wonder if the the ignorant part isn’t the voters, but rather the self-styled pundits and politicians who are the ignorant ones.  Voters are going along with the generic “cut spending in concept” because they’ve been repeatedly sold and preached propaganda claiming that we have a “deficit crisis”.  (We don’t have a deficit or debt crisis in the U.S. –see here, here, and here.) Voters, when polled, go along with saying they want to cut spending because that’s what’s popular – it’s what we’re told over and over. It’s a popular thing to say that government is all waste. Our culture is built around the idea that only private-profit seeking is “productive” or “valuable”.  But when voters are asked about specific programs, they do see  the value. They know that Social Security is necessary. Medicare is necessary. Government spending on education, infrastructure, basic research, science, and the like are all necessary government services. The private sector will not provide those services in the proper quantity or at an efficient price.  Hence they oppose specific proposed cuts in polls. It may be the voters, who depend on the value of those government services, know the value better than the pundits, experts, and politicians who aren’t personally familiar with these programs because they’re in the elite, higher income group.

Technology, Growth and Printing Press

We know that new technology and information technology in particular can spark enormous long-run economic growth. Today we’re in the middle of an explosion of new info technologies based on computers, networks, and the Internet.  The last time the world experienced a similar phenomenon was probably the invention of printing via moveable type by Gutenberg in Mainz, Germany around 1450.

A new study of the diffusion, spread, and growth triggered by printing at the city level is summarized at voxeu.orgInformation technology and economic change: The impact of the printing press.

Part of what’s new here is the study of growth at the city-level.  A few interesting observations:

I find that cities in which printing presses were established 1450-1500 had no prior growth advantage, but subsequently grew far faster than similar cities without printing presses. …The estimates suggest early adoption of the printing press was associated with a population growth advantage of 21 percentage points 1500-1600,

…Printing presses were not set down at random across European cities. Cities that adopted the printing press 1450-1500 subsequently enjoyed unusual dynamism.

…Cities that adopted print media benefitted from positive spillovers in human capital accumulation and technological change broadly defined. These spillovers exerted an upward pressure on the returns to labour, made cities culturally dynamic, and attracted migrants.

The paper includes some nice maps showing the spread of printing through Europe 1450-1500.

Overall, I think one lesson we can take away is that it does make sense for cities/small states to invest in creating conditions and early adoption of new technology.  This is another role for government. Leaving adoption to the random effects of a totally private market risks letting the growth go to other cities/states.