We Must All Find Our Way
I love church. As a 25 year old American, that’s a weird statement to type. Many people in my generation either have a strongly negative to church. To those who do not subscribe to Christianity, church is a place of intolerance and judgment—and who can blame them, as churches throughout history have slipped into those evils. However, even those who do subscribe to Christianity still don’t like church—it seems like an antiquity to many in my generation, a relic of a former time whose importance has been transcended.
But I love church. Church has been part of my life since before I was born. I can’t think of a time when I missed church three Sundays in a row—church is something that I’ve always been expected to attend, and once I reached a certain age, it became something that I felt worthwhile to attend of my own volition. I love church because it’s a place to come together as similarly valued people and work through each of our struggles with the holy, and discern how God wants us to work in the world in which we live.
Up until about 6 months ago, I’ve attended conservative to moderate Baptist churches who were certainly less fundamentalist than what “Baptist” currently connotes, but who were (and continue to be) considerably less liberal than me. Six months ago I began attending Highland Baptist Church, and for the first time in my life, my faith has been challenged from the left. I’ve been left wondering more than once “is this stance too liberal for me?” That answer has not yet been ‘yes’; but I am glad to be in a place that necessitates the question. Prior to Highland, I attended two fantastic churches which I love dearly. They are the places where I found God and where I began my life-long struggle to comprehend my place in God’s world. In infinite ways, those churches have helped me along to become the person that I am. However, when I made the decision to go somewhere else six month ago, there was a specific reason
The issue of homosexuality, disappointingly, is one which continues to exist in American culture. Perhaps the main reason gay issues remain in the cultural and political zeitgeist of America is because of certain passages in the Bible which condemn homosexual behavior. Due to these passages, churches often condemn homosexual behavior and have wielded their considerable political power to both discriminate against homosexuals and to deny them the rights afforded to other people.
Before I started attending Highland, I’d never seen an openly gay person at church before. There are several who came out after leaving the church, or folks who were closeted at church but out when away from the church, but as far as openly gay people coming to church and partaking in worship—I’d never seen this before. Honestly, in most churches, neither the church nor the homosexual person really wants to be with the other. Churches make overages towards being accepting of homosexuals, and even the most conservative of churches claim to be accepting of gays—but only conditionally. Due to the passages of scripture opposing homosexuality, many churches say that we should “love the sinner and hate the sin,” implying that acting upon one’s innate feelings constitutes a separation from God—that due to no fault of a gay person, they are immediately at odds with God. This thought, that homosexuals are somehow more separate from God than any of the rest of us, is the biggest failing of the church in my lifetime.
I once attended a retreat for college aged ministry leaders, when one attendee stated that she had learned to have a “heart for the gays.” She talked about how God had given her the spirit to help them cope with their feelings and find Christ in the midst of their struggles with sin. She stated that the gays really NEEDED God. While I held my tongue at the time (thankfully), that is one of the stupidest things I have ever heard. The idea that Christians need to guide homosexuals away from their orientation in order to find Christ is anathema to the work of Christ. The grace of God is not given conditionally—it is ours for the taking whoever we are and whatever we do. God loves everybody—and God loves everybody now. We forget this often in our amiable quest to please God. The reality of the situation is that pleasing God is an impossible task, and that God’s grace is given to us without umbrage. Whether or not God wants ANY of us to change who we are is really immaterial. It’s not necessary, and never has been. Besides, asking gay people to change who they are is anathema. I don’t know what it is like to be gay, but I’ve seen self-resentment and a beginning to a healthy self-identity come from the identification of one’s self as gay. When Christians seek to change that identity, it is an affront to many who have struggled with who they are.
I do not mean here to disdain the importance of following God—I want only to emphasize that sometimes, that quest does not follow the same path for everyone. It is a central belief of mine that hewing too closely to the literal words of the Bible can actually separate us from God. Before the New Testament was compiled, there was the Pentecost and the Holy Spirit. Listening for the guidance of the Spirit will lead us further down the path of God than the Bible ever could. Though the Bible is the most important physical instrument for discerning God and its importance to Christian development cannot be overstated, it pales in comparison to the Holy Spirit—who is God among us.
If there has ever been a more obvious group of people who Jesus would spend time with if he had come to Earth now, instead of 2000 years ago, it is homosexuals. Like the tax collectors and prostitutes of the gospels, these are people who religious leaders wrongfully disdain. Building meaningful relationships with gays and lesbians would have served two of Christ’s main purposes if he were here now: it would give legitimacy to those folks as people whom God loves unconditionally, and it would show the church of today how to act.
Christ’s love is a beautiful thing. For me personally, I need the love of Christ when I am confused and hurt. I’ve read a lot about gay suicides lately, and from what I have gleaned, it is more than just bullying that is to blame—it is a deep, abiding discomfort with identity. I believe that the intervention of Christ works in this space the most effectively. Christians often speak of Christ “meeting us where we are.” While I believe this is true, I think it is more accurate to say “Christ already is where we are.” Extending this analogy, Christ is not further down the spiritual road, and Christ doesn’t need to leave the demarcated path to find us—wherever we find ourselves in this world, and no matter whom we are or what we do, Christ is there for us. Like the woman from my earlier anecdote, I too believe that homosexuals need God.
Because we all need God.
It’s a fact that homosexuals feel abandoned by God because of the treatment of Christians. While this is obvious in the case of the heinous folks who berate gays, women, and various others with hatred (go to any public campus in the South’s free speech area to see what I mean), the most insidious abandonment comes from the well-meaning Christians who want homosexuals to change who they are in order to find Christ. The issues that many homosexuals feel when they first come to grips with their identities are a direct effect of Christians in the culture—this is our generation’s greatest failure as people of faith. Not only is a group of people who faces serious problems en masse who could benefit from spirituality shut out of the Church due to our attitudes, the reason that they face serious problems is because of our actions.
I’m happy to attend Highland Baptist, because it’s a place where gay people can come and worship without being judged or asked to change who they are. Part of Highland’s identity is as a “healing church.” The most beautiful thing about that identity, to me, is that “healing” doesn’t signify that we help people reach a place where we “fix” their “broken” lifestyle—we seek to “heal” others by helping them get beyond all the clutter of our earthly existence and reach a place where they find God. I believe this healing to be among the most important callings of all Christians, firstly because it is what Christ calls us to do. But beyond that, this healing is of the utmost importance because we have created its need.
Top 20 Albums of 2011
To be perfectly honest, music kind of sucked this year. After a 2010 where I would put 3 albums on the shortlist for album of the decade (The Suburbs, Brothers, and My Beautiful Dark Twisted Fantasy--which may be the best album of all time), 2011 saw a step backwards. None of the top albums from 2011 would make the top 5 from 2010--but this years list saw a higher quantity of quality music. I had a hard time cutting this back to twenty, and I'm going to add an "honorable mention" category at the end of this thing. So, without further ado:
- Watch The Throne - Kanye West and Jay Z
This album saw the team up of the Greatest Rapper of All Time (Jay Z) with The Best Rapper Alive (Kanye West). It should have been amazing--and it was. People get a little weirded out about how adamant I am about the greatness of Kanye West, but he is the voice of our generation. Watch The Throne took a few listens for me to really get into, but after giving it some time it's easy to say its the best album of the year. This album has really high production value, and its subject matter is real. The album isn't even for me--it's the most pro-black mainstream album since Public Enemy fell off the map.
- Kiss Each Other Clean - Iron and Wine
Confession: Before this album, I didn't even really like Iron and Wine. I thought his sound was too soft spoken, and low-fi kind of bores me anyway. But this album is different--it takes all the good things about his low-fi sound and adds a funky sound to the mix. The result? A great album.
- El Camino - Black Keys
The Black Keys came out with one of the best albums of 2010 in Brothers. Their follow up, El Camino, is good--but not nearly as good as Brothers. Its telling that I think this album, which is solid and includes some great tracks, is one of the best of the year when its vastly inferior to their previous work. I worry a bit about the Keys. They've been pounding out the same song since about Rubber Factory. It's time to take the sound somewhere else.
- Wasting Light - The Foo Fighters
It was great to have another Foo Fighters album this year. While I really loved Dave Grohl's side project Them Crooked Vultures, it was great to have the Foo Fighters back in a time when rock music is dying a slow death. However, like the Black Keys, this album doesn't do anything with the Foo's sound--its essentially the same thing as Echos, Silence, Patience, and Grace.
- The Goat Rodeo Sessions - Various
If ever there was an album for Robert Kahne, this is it. Chris Thile and Yo Yo Ma teaming up to make a bluegrass album? With that lady from Crooked Still singing on some tracks? Yes, please. I love it.
- Hot Sauce Committee Part 2 - Beastie Boys
The Beastie Boys have made some pretty great music in the past 5-6 years--unlike the complaints I've made about some of the artists on this list, they do a good job of stretching their sound into something unique and different. While this album is a bit of a return to form, the lessons they learned from making an instrumental album really perk up in this disc at points. It's good.
- The King of Limbs
Radiohead has made several of the best albums of this century so far. This album might be their worst work since OK Computer, but it's still a Radiohead record and it is still awesome. While it clocks in at a mere 37 minutes, it still rocks.
- The Bright Lights EP - Gary Clark Jr.
Looking at the best rock music out right now, I am convinced that Blues is the future of Rock. Gary Clark does the Blues basics better than any other artist out right now, and this single-laden disc impresses. I am ready for lots more Gary.
- Shaolin versus Wu Tang - Raekwon
Fresh from a really impressive showing on My Beautiful Dark Twisted Fantasy last year, Raekwon came out with the best Wu Tang album since his own Only Built 4 Cuban Linx. This album is nutty and wonderful. Raekwon's flow is great and his rhymes are hilarious and the beats are slick.
- The King Is Dead - The Decemberists
I reviewed this album for Lexington radio station WRFL, and didn't give it the best review. The album is a little full of itself--probably because Decemberists fans believe the bang hung the moon. However, the band does roots music better than a lot of other bands out there and there are some very good tracks on this album.
- Rome - Danger Mouse and Daniele Luppi
I'd really hoped this album would be great. I am a fan of everything Danger Mouse has ever done, and expected this wouldn't be much different, especially since he had really wanted to make this album for a long time. This album is good--but it lacks greatness. It almost seems rushed. Vocalists Jack White and Norah Jones have a few great tracks, but on others, seem almost disinterested in the project. However, on the whole, its a good listen.
- Helplessness Blues - Fleet Foxes
If I were giving an award for "Most Pure Alt Rock Album Of The Year", this one would edge out the album at #15. This album is approachable--but not TOO approachable. The harmonies are beautiful and the songs are all great, but it kind of makes me yawn at points. That may be the point, but I'm not a fan of yawning.
- So Beautiful or So What - Paul Simon
It's a Paul Simon record. Of course it goes on the list.
- 21 - Adele
This is by far the most overrated album of the year. Don't mistake that for me saying this album isn't good--its very good. The songs are heartfelt and brutally honest and Adele's voice rings through them like a bell. But, it's overstated how great this album is, becuase its sold so well. This album appeals to everybody, including old people who actually purchase their music in physical form instead of streaming it through Spotify, Rdio, Rhapsody, or MOG (or downloading illegally). This inflates the sales numbers and makes this album look like a runaway hit. Its a good album, but its better suited for #14 than #1. And the fact that the Grammy's are giving this album the biggest prize over My Beautiful Dark Twisted Fantasy is an absolute travesty.
- Bon Iver - Bon Iver
- Inclusions - Ben Sollee
- Circuital - My Morning Jacket
- Thank You Happy Birthday - Cage The Elephant
Three albums by Kentucky artists, which are of very high quality and made national waves. As one of the proudest residents of Kentucky, this makes me extraordinarily happy. In addition, these guys are all in the genre I would qualify as "Rock" and doing different and interesting stuff.
- SuperHeavy - SuperHeavy
When I heard that Damien Marley, Joss Stone, and Mick Jagger were making a record together, my initial thought was that my mind just exploded. Then, I realized that super groups almost never work out, especially when they are one-offs with people of disparate tastes in music. But this actually works. Stone shows off why people were crazy for her 10 years ago. It works pretty well.
- Take Care - Drake
Drake is a simp, and there is no denying that. But he's a simp with some soul and some hot beats. While his subject matter is overly whiny and annoying, his delivery is top notch and his beats are worth listening to by themselves.
Like Raekwon, Bon Iver showed up in force for Ye's MBDTF and then followed up with a great album. It's very different from his last one, but I really like that he is stretching himself to do different things. Although this album may not measure up to 08's Emma, the lessons learned will serve him well in his career.
Honorable Mention: Wild Flag - Wild Flag, Nine Types of Light - TV On The Radio, How To Become Clairvoyant - Robbie Robertson, w h o k i l l - tUnEyArDs, World Wide Rebel Songs - Tom Morello and the Nightwatchmen, Elton John and Leon Russell - The Union, Beth Hart and Joe Bonamassa - Don't Explain, Camp - Childish Gambino.
The Politics of Unemployment
I was never a kid to dream big. I never wanted to be an astronaut, or the President, or a rock star or anything. When I was young, I thought it would be nice to be an engineer like my grandfather, because he always had enough money to provide for his family and always seemed happy. When I got to high school, I realized that math was hard, and that I was really much more interested in social studies. I went to college and got a couple of degrees (BA, Economics; BA, Political Science), and then went straight to graduate school and got a Masters degree in Public Policy. I thought that if I followed my passions and worked hard in school, some firm out there would find my credentials appealing and hire me. Even when the economy went south in 2009, I thought that getting an advanced degree would help me out, and that I had worked hard enough and done enough of the right things to find a job somewhere. That hasn't turned out so well for me.
There is this theme that runs through American mythology that goes something like this -- "If you are willing to work, you will find a job in America." There are several corollaries to this idea--sometimes "work" means "work yourself through college" or "get involved in extra curricular activities" or, in the most cynical iteration "Nothing is promised to you in this world, you have to go out and take it for yourself." I am not so sure if any of that is true. It might have been at one time, but I cannot look out into the world in which I live and say that anyone can do that. I only have myself as an example, but I am utterly willing to work. Job I have done for money include: making pizza (4 years), hauling recyclable refuse (which was gross-2 years), waiting tables (1 year), and working in a pharmacy clinic (one summer). In addition to that, I stated in school in 1990, at Middletown Methodist Preschool. I've been in school for 20 years straight, and throughout that whole time I've worked hard and gotten the grades I needed to advance. I got good grades in elementary school to get into a good middle school, did well enough at that middle school to get into the best high school in my city, and then got into my state's flagship public institution where I did well enough to get into a top-10 graduate school for my field. Furthermore, I have been active in good causes my whole life. I was the President of clubs in high school and undergraduate. I was selected to serve on a Presidential Advisory Committee in graduate school. I worked to get a student fee passed for sustainability throughout college, and served on the committee which spent that money while I was in school. I even teach Sunday School every other week. I did a lot of stuff--a lot of stuff which I thought would help me out when it came time to make my own living. I really believed in the idea that working hard would mean I could get a job. I even had some assurance that if need be, I had the skills to "take" my lot for myself. Nope.
I know that I am whining, and that whining doesn't help anything. I'm sorry about my tone, but there is a reason I am telling this story. I am very frustrated by this process, and I hope that all the employed people reading this have the chance to glimpse the life of someone without a job. One of the things I am always struck by when I speak to someone about my unemployment is how little they understand about what being unemployed is like. I've had lot of people tell me to "keep my head up" or that "things will turn around soon" or who have offered me advice about how to talk to employers or how to reformat my resume or how to find the best kind of jobs for which to apply. The thing about all that advice is--my generation grew up knowing all these things. Job seeking, resume writing, and networking are all skills I have learned in school from far back. I've been doing them to the best of my ability since the beginning of this process, but they haven't really helped. The worst is when people tell me that I shouldn't worry--I am very worried, and I have good reason to worry. I am 24 years old and I cannot provide for myself. I depend on my loved ones for my basic needs. Although I am extremely grateful and thankful for them, it is a very emasculating thing to be in the exact same position at the age of 24 as I was when I was a baby.
I am also worried about my long term health. I am the type of person that can weather any sort of storm, as long as I know what lays on the other side. Right now my life is full of uncertainty. I know that it is likely I will eventually find a job somewhere, but I have no idea where, or when, or what it will be. As I said in the beginning of this post, I was never someone with big dreams--but I had small dreams. I want a family. I want my own place to live. I even want to pay taxes! (or at least make enough money to have to pay taxes). Even smaller things: I want to be able to treat my parents to dinner on their birthdays. I want to own a piano. I want to be able to pay my own cell phone bill. Every single one of these dreams--and many more- are on hold right now. I have always considered myself an optimist--I get involved in causes in order to make a difference. But I see that facet of my personality slowly eroding. I found myself advising a college freshman the other day to not get involved in any clubs or activities, because they don't matter. After the conversation was over, I couldn't believe I had said that. That's not the person I have been--but I fear it is the person I am becoming. I find myself losing interest in activities I used to love--even though I have plenty of time to ride my bicycle or read or listen to new music, I find myself doing those things less and less. Even though I used to love meeting new people and making new friends, I spend most of my time alone. I am embarrassed to tell people I don't have a job. I don't ask girls out on dates anymore bother because I am ashamed to tell them I have no job, and because I can't afford it.
Its almost as if the culture has forgotten the unemployed, also. I recently saw this trailer for Sarah Jessica Parker's new film I Don't Know How She Does It and couldn't help thinking "Geez, I am so sorry that you are so busy balancing your high paying job with your family and stuff, but if you want to trade, feel free." How does this movie even get made in this environment? Do the producers not see how that whole concept is just insulting? The government has talked about making a "pivot to jobs", but seriously--unemployment has been above 9% for more than 2 years. Why did we ever pivot AWAY from jobs? I have been trying to use LinkedIn in order to find a job, and recently found this discussion. Essentially, it says "good help is hard to find anymore." It made me want to pull my hair out. One commenter even went so far as to say "Lots of people looking for employment, not many people looking for work." I didn't know whether to laugh or cry at that.
On some level, I hope that once I get a job, that I will have a greater appreciation for life and work. I really hope it is the case. I know I sound really depressed, but I try very hard to keep my head up and to be resolved to face every day as though it will be the day I get another interview, or the day I fill out the application which becomes the job I have in the future. I try not to despair, but there is a unique kind of torture in being trained about what causes and fixes unemployment, and being myself unemployed. If you have read this post, I want to ensure you come away from it with one fact--unemployment is a cancer on our society. The longer someone is unemployed, the less employable they become. Skills dull, demeanor's sour, and hearts become depressed. And unemployment is bad for all of us--when people don't work, our GDP stays low and our money gets weak. Also, unemployment is taking a significant psychological toll on people. So, start caring about this stuff. Please, I beg of you.
And also, if you are hiring, and have a place for a 24 year old guy with a Masters in Public Policy with skills in econometrics, statistics, computing, and/or interpersonal relations, please contact me. I'd love to talk to you.
Unemployment and How to Fix It
Being unemployed sucks--and I'm sure that whoever you are, you have a friend or at least know someone who can tell you exactly how much it sucks. However, there is a certain kind of torture in being completely aware of how and why this unemployment crisis exists and know how to fix it, and to be unemployed while watching the leaders of the country do the exact opposite. I took a lot of classes and read a lot of books about labor economics, and I continue to read articles and listen to experts in the field as they talk about this stuff. I feel like I have a really good handle on it. All this does is cause me to despair, because the course of action our governments have taken do not serve to fix our unemployment problems at all.
I really enjoy the discipline of economics for one reason--at the heart of all the extremely complex and difficult explanations for how and why exchanges of goods and services occurs lays one simple concept: supply and demand. If you ever find yourself in an economics class, and the explanation of something seems extremely convoluted and confusing, the best thing to do is always to take one step back and think: how do you take this concept being explained and turn it into this graph:
All of economics in one graph.
I guarantee that it is possible. Sometimes "Marginal Cost" or "Liquidity of Money" or some other thing is substituted for "supply," but the concept is the same: the stuff people want has a cost associated with it, and the amount of the stuff in question that gets consumed is a function of the amount people want and the amount people are willing to sell. Labor economics are no different. The demand for labor has declined precipitously, while the supply of labor has either remained steady or risen. Meanwhile, wages are sticky--meaning that firms are not really willing to adjust the amount they pay their employees on the fly (its unusual for employees to take a pay cut for doing the same job), which means that the quantity of labor declines very sharply, as shown in this graph:
CRASH!
The reasons for the downward shift in labor demand are myriad and have been pretty well studied and explained. To be very brief and crude: there was a buildup in over-rated mortgage backed securities which banks used to hedge investments and then over-insured, and when the bad investments started souring, the tenuous system collapsed in on itself, creating trillions of dollars in lost wealth. This post really isn't about why that happened, but if you are curious, I really recommend checking out the documentary Inside Job by filmmaker Charlies Ferguson. At any rate, this happened. While this crash was deeper and more precipitous than any crash before--it did not differ from them in any other significant way. Instead of being a crazy, completely unexplained crash that occurred without explanation, this crash was huge, deep, terrible, and incredibly normal. We know what happened, and we know how to fix it. Labor demand is part of the greater economy. Macroeconomics has this concept called "Aggregate Demand," which is a short way of saying "everything that everybody wants." When a crash like this happens, there is a drop in aggregate demand. In macroeconomics, the aggregate demand in an economy is defined by the function AD
C+Ir+G+NX, or, "The aggregate demand in the economy is defined by consumption, investment multiplied by the interest rate, government spending, and net exports."
The great part about this function has parts of it which the government can influence. The interest rate is something which the federal reserve can control, and government spending is something upon which the congress has direct control. Without going into a ton of detail [a ton of detail], a low interest rate and high government spending would help aggregate demand increase, and that, in turn, would boost labor demand and help people become employed. Or, if you would rather not focus upon the demand side of the equation, and would rather focus on "supply-side" economics, lowering tax rates would increase the amount of goods the economy would be willing to supply, which would have a positive impact on employment.
If you pay attention the news, you probably know that we have tried a lot of this stuff. The federal reserve currently is up against the "Zero Bound." What that means is that interest rates are so low that they can't get any lower. In order to affect the economy through monetary policy, the government has engaged in a series of "quantitative easings" which are unconventional ways to further engage in monetary policy. Furthermore, the congress enacted a stimulus package recently. This served to increase government spending, which increases aggregate demand directly. The problem with all this is that our problem is much bigger than anyone wants to admit. To the federal reserve's credit, it is doing all it can to keep the economy afloat. However, our elected leaders have really dropped the ball.
Facts: Right. Justifications: Wrong.
The stimulus package we passed was always doomed to fail. The chart to the left was produced by the Heritage Foundation, and expands on a graph that the Obama administration produced in the run-up to the stimulus. The administration was seriously in the dark about how bad the problem we were facing was--thinking that even absent stimulus, unemployment would only peak at 9%. In truth, the non-stimulated unemployment rate would have been closer to 11% or 12%. Economists in the know spoke out in 2009 that the stimulus was far too small to make a meaningful impact on the employment rate [incredibly prescient article by Paul Krugman from 2009]. This problem was huge, and required huge solutions--solutions which would have presented significant consequences down the road. Our national debt would have increased and we would have run much higher deficits--but the problems generated would have been able to be fixed because of the solutions presented in this plan. It would have required courage to present a stimulus which would have solved the problem. President Obama lacked the courage to do such a thing. In short, the solution which the President devised for us was always going to fail.
A lot of the blame for this problem lays at the feet of the President. It has become a kind of running joke among progressives that the President would rather get 1 GOP vote and sell out his entire constituency rather than present a progressive solution for anything. This has been a consistent problem during the Obama administration--there was $150 billion removed from the stimulus in order to earn 2 GOP votes. Democratic leaders have become far to focused on "civility" and the terms of our debate. We need solutions--we need leadership. We are not getting that from the President, or any one else in the Democrat party. Furthermore, the President never seemed to be willing to see the unemployment problem through anything besides rose-colored glasses. It was ridiculous to release a chart saying that employment would peak at 9%. It was known that unemployment would rise much higher. Furthermore, after passing a too-weak stimulus, the President then allowed the debate in DC to shift to healthcare and then to the debt ceiling. Fixing unemployment should have been the #1 focus of this administration from its beginning, and not having that focus gives him a lot of blame here.
But the greater portion of the blame lies at the feet of the Republican party. The stimulus included a large amount of "supply-side" solutions to unemployment, which is what the GOP favors. The GOP had every opportunity to add into the stimulus bill provisions which they favored--but the political gamesmanship and silliness of the Obama administrations graphs provided to be too tempting for the GOP, and they removed money from the bill, ensuring its failure and giving themselves the opportunity to speak out about the stimulus's "failure." Over the course of the Obama administration, the GOP has shown itself to be much more willing to allow the United States to fail, rather than allow President Obama to be successful. I suppose turnabout is fair play. During the immigration debate during the Bush administration, there was a real opportunity to fix a broken system in America. When the plan started imploded during intra-party squabbles by Republicans, the Democratic party (I among them) weren't really upset to see President Bush fail. It was wrong then, and is wrong now.
We are really in a crisis in the United States. Nearly a full tenth of the population is seeking work--me among them--and nobody is doing anything about that. The saddest part for me is my helplessness. I see this problem, and I know how the government could fix it. But I see nobody even presenting the right solutions. The GOP is telling us that if we just deregulated more (more pollution, less safety) that the problem would fix itself. The Democrats are saying that we need to cut some more taxes and give a few more incentives. Both of these solutions would increase employment, but neither solution presents the big, costly, hard solutions that we need to fix this problem--a second round of REAL stimulus. A $1.2 trillion dollar stimulus would reduce unemployment by 4 points, putting us at about 5%--which is where we need to be. As can be seen in the news, neither the Democrats or Republicans are willing to say that. And perhaps the saddest part is that there is literally NO ONE across the political spectrum willing to say that--on the far right, there are libertarians who say we need to do nothing--an equal crazy statement to my call for another trillion dollar stimulus.
So, I have no traditional party presenting the solutions I prefer, nor do I have another voice crying out in the wilderness taking up my call. Regardless, the political realities of the USA right now have no place for such solutions. Oh, and I also have no job. It's a pretty desperate place.
Lightbulbs, Negative Marginal Benefit, and Freedom
After a bit of discussion on twitter concerning the coming EU ban on incandescent light bulbs, I decided to take to this space in order to fully flesh out my thoughts on the argument that "because people are unable to buy incandescent light bulbs, capitalism is unable to work properly." I care deeply about ensuring that markets work efficiently and effectively, and think there are a lot of basic premises of capitalistic economics that point to the validity of banning a product such as the incandescent light bulb. Allow me to explain them to you.
Your Basic MB/MC Curve
The first thing we need to examine is the above graph. This graph showcases what may be the most important microeconomic concept in existence--an individual consumes until the marginal cost of consuming a good exceeds the marginal cost of consuming such a good. Marginal analysis is very important to economics, and certainly ranks in the top 10 most important academic developments in the 20th century. If Karl Marx had access to marginal analysis before he wrote The Communist Manifesto, the world would almost certainly be an entirely different place today. In plain English, what this concept says is that we take into account our very next purchase of a good before we buy it. I currently have no milk, so the marginal benefit of me buying one additional gallon of milk is very high. However, if I currently own 10 gallons of milk, the marginal benefit of me buying an 11th gallon of milk is very low. However, if milk were free, I would still "purchase" the 11th gallon, because within the microeconomic framework of nonsatiability, having more of something is always better. 1 However, due to the fact that the marginal cost of milk is indeed positive, I will consume milk until my marginal cost is equal to my marginal benefit from consuming milk.
Don't Buy This Crap
Somethings ought not to be consumed within this framework. The most basic case for this comes from the marginal cost side. Sometimes the marginal cost of purchasing even one of a good is too expensive to purchase. For instance, I ought not to consume even one yacht. In a macro sense, this also applies to some public goods--many have made the case that the marginal cost of a space program is too high for a government to spend. Costa Rica decided years ago that the marginal cost of operating a military was not worth the marginal cost. In this case, the free market will win out. People can easily make the decision not to buy yachts or whatever--and it seems strange that incandescent bulbs would be something people would choose not to buy--so why should the government ban the purchase of incandescent light bulbs?
This doesn't happy often.
Almost everything interacts in a certain way within the framework in the basic case shown in the first graph. Most of the time, we see something called "diminishing marginal benefit," which is the obvious idea that the benefit received due to the 1st instance of a good is more than all future instances. However, in the case of some goods, the above graph becomes the prevailing case. In this graph, the good in question yields no positive utility. In non-economic talking, this is "dissatisfaction." So, if a person has any number of these goods, they are worse off than before. No matter how low the marginal cost of the good, these items should not be purchased because they do not yield any utility. So, unlike yachts or maintaining an army, these goods can have very low prices and still not be purchased. It is into this realm that incandescent light bulbs fall.
Incandescent light bulbs have substitutes--compact florescent blubs (CFL) and light emitting diodes (LED). LED lights will eventually be the way in which we light everything--they are considerably more energy efficient than both CFL and incandescent light bulbs and have an incredibly long life span (something like 30,000 hours). However, until recently, the prices of such bulbs has been staggering. In 2009, it was not unusual for such a lightbulb to cost more than $100. However, nowadays LED bulbs are all the way down to around $40. CFLs are currently the most cost-effective way in which to light a home--although their life span is 8,000 hours, that is still much more than the lifespan of a simple incandescent bulb (<1000 hours). However, CFL bulbs contain a bit of mercury--which LEDs and incandescent bulbs do not. This, however, is not as big a deal as it appears at first blush. Mercury contamination has generally come from the consumption of coal, which contains a large amount of mercury, which is released when it is burned. Since CFLs are a great amount more efficient than incandescent light bulbs, they prevent a large amount of mercury from ever being emitted [related EnergyStar document]. So, in short, the replacements for incandescent bulbs are both more cost effective and energy efficient than incandescent, and there is no benefit to using incandescent light bulbs, giving them the above negative marginal benefit curve.
So, if the market for lightbulbs acts like the one above, why can we not trust the market to fix these inefficiencies? There are several reasons, but two of the reasons are major. Firstly, markets break down without perfect information. Participants in the market need to have all relevant information about the products that they buy in order to make efficient purchases. This is obviously not the case for light bulbs--people have been buying incandescent light bulbs their entire life, and breaking habits is hard. Therefore, perfect information does not exist. Secondly, participants in markets need to make rational decisions before the market works efficiently. This also falls apart in this case. Sometimes, people have a hard time seeing how a $40 or even a $9 light bulb could possibly be "cheaper" than an incandescent light bulb which has a much lower per-unit price. Although the rational decision is clearly to buy the LED or CFL lightbulb, people fail to do that. In the face of market failures such as this, it is the job of the government to step in and regulate. The most efficient and effective way to fix this problem is to ban the use of incandescent light bulbs. It is easy to do, since it is a very simple regulation and easy to enforce. Also, the impact on producers is relatively low. There are very few companies who are dependent on their incandescent light bulb division to stay afloat.
Banning incandescent lightbulbs is not the work of non-capitalist forces trying to undermine and destroy our republic and place a socialist, centrally planned economy in its place. Banning incandescent lightbulbs is good capitalistic policy and fits very nicely into the history of western government of correcting market failure.
1I recently read this very interesting article (by Matt Yglesias) about nonsatiability and the health care sector. For instance, if someone offered you all the MRIs and colonoscopies you ever wanted, would you even want one?
Debt, Deficits, China, and S&P
The news has been awash recently which public finance news. This is a strange thing to me--I typically think of my public finance passion as an oddity; something that makes me different than everyone else. Seeing normal everyday people discussing the implications of public debt and yield curves is not something I am used to, and its taken me aback quite a bit. It is interesting how the debate about public debt and deficits has occurred, for sure. There is a lot of misinformation swirling about, and while it's not necessarily my job to correct people's misconception, I want to utilize this space in order to talk about how I see things, and what I think is going on in the world. First, I'll show two graphs that lay the groundwork for my opinions. I'll use CBO charts, which, if you click them, will show you the reports from which they came. I'll spend three to four paragraphs giving the facts as I know them, and then after that, go into some opinions.
Deficits projected by the CBO
The above image shows the difference between the revenues of the United States and the Outlays of the United States, typically called 'the deficit' (except for a short period during the 1990s, when it was called 'the surplus'). As you can see, the downturn in the US economy in 2008 and the resulting stimulus package caused both a sharp increase in outlays, and a deep drop in revenues. This follows the pattern seen throughout the graph: the lines typically move together, but when they move away from each other, it is the result of recession (1974, 1981, 1990, 2000). The drawing together of the lines during the latter half of the 1990s was a result of the push by the whole government to get the fiscal house in order. The massive drop in revenues around 2001 was the result of the Bush tax cuts. At any rate, the difference between the dark blue line and the light blue line is the deficit, and the area between the two lines is the debt of the United States over time. Luckily for us, the CBO also calculates the debt over time:
Debt held by the public
This graph shows the cumulative debt owed to the public by the United States between 1940 and into the future. This graph is essentially a summation of past deficits, less what the government has done to pay for them. The US has used a few strategies in the past to ensure that the amount of debt outstanding doesn't get too out of control--including issuing shorter term bonds, which have a smaller interest rate. The projections from both of these graphs are likely outdated now--since the debt deal, the United States has committed to lower levels of spending, which will result in a lessening of the US debt and deficit. However, even with the cuts agreed to by the US government, that won't be enough for the US to eliminate it's debt.
The biggest news over the weekend was about the S&P downgrade of the United States' credit from 'AAA' to 'AA+'. This is news, because it is the first time a credit rating agency has ever downgraded the credit of the United States. Credit ratings are an important part of the bonding process: there are three major credit ratings agencies which rate debt issued by various groups, the ratings given by the three agencies have a lot to do with the interest rate at which issuers are able to sell bonds. For instance, a 'AAA' rating means that the bond is very unlikely to default, which a 'BBB' rating means the bond has a high likelihood of default. Bond rating agencies rate bonds throughout their lifetime, because often bonds are resold in a secondary market. If a bond is downgraded, the holder of a bond can sell it--but he or she will not be able to sell it at the same price at which the bond was bought. On the other hand, if a bond is upgraded, the buyer of a bond can sell the bond for a profit.
This is where the opinion part of this blog post begins.
There are many players in the bond market--in addition to the issuers of debt and the purchasers of bonds and the rating agencies, there are bond insurers, underwriters, bond and underwriter counsels, and accountants. However, ratings agencies are alone in the fact that they are selling nothing but their opinion. Their opinion about the credit-worthiness of a bond determines--as much as any other factor--the initial interest rate at which the bond can be floated. Therefore, credit agencies must have a sterling reputation, because if their opinions are wrong, then why would anyone trust their opinions? During the recent economic downturn, the most overlooked failure in the system of credit-default swaps and collateralized debt obligations were the bond rating agencies. These folks were the outsiders who had the ability to put their feet on the brakes of the system that caused the economic collapse, and yet did nothing. It is unclear why they didn't stop what was clearly about to happen, but what IS clear is that the ratings agencies failed at their job--outright failed (for more on the roles of credit ratings agencies, see this clip from the film Inside Job and this wikipedia entry). The consequences of this failure have been negligible. People still get their bonds rated by S&P, Moody's, and Fitch's every time they issue a bond. Why they have received a pass is beyond me. It seems to me that this MASSIVE failure on their part would do some damage to their credibility--and their credibility is the only reason that they exist.
Fast forward to last weekend, when S&P downgrades the US's credit rating. Plenty of ink and thousands of pixels have been illuminated about the agency's math error (I also read this interesting piece which might shed some light on why such an error was made). This downgrade was incredibly stupid--perhaps just as stupid as S&P's failure to predict the housing collapse. First, the downgrade was based upon faulty math, and once the faulty math was proven to be faulty, S&P changed its justification to a political one. I agree with all the links from above: ratings agencies are paid to crunch numbers, not to pontificate about politics like a cable TV host, and the anti-revenue tea-party is likely at the peak of its political power and will probably be much smaller in the next congress. However, in addition to all this talk, the recent extremely difficult political debate which the country just held should prove--not disprove--that the country will pay its debt. First, even though we went to the brink, the country managed to salvage a deal to meet its debt obligations. Secondly (and more importantly) if S&P is so concerned about the revenue and outlays of the United States not meeting up, they should be thrilled that the issue is now on the table. I seriously doubt that S&P would have made any move whatsoever had the debt ceiling been raised in the typically unceremonious fashion, but the optional argument which the GOP forced made the balance sheet into an issue--and this resulted in a downgrade? At least the country is now paying attention to the issue! This should be cause for strengthening the credit rating of the country, not downgrading it! In my opinion, this downgrade should not make the tea party look bad, nor the President. The only group receiving blame in this downgrade ought to be S&P--it was their own stupid decision, and if it destroys their company, I won't shed a tear.
The aftermath of this downgrade has been a bit comical. China--the US's biggest foreign creditor--has been scolding the United States harshly. China holds a huge amount of US treasuries, and the S&P downgrade makes their holdings less valuable (remember the secondary market). However, China needs the US to meet its obligations because of its huge trade surplus with the United States. China depends on the United States to buy the stuff that it makes, and it continues to buy US Treasuries in order to help keep the economy afloat. If it were to stop buying dollars, the US economy would tank again, and then no one would buy the things China makes, and the Chinese economy would then crash. So, China is stuck in a problem of its own making which it cannot escape.
Finally, the S&P downgrade is stupid and unnecessary because no one really needs a ratings agency to rate US Treasuries. Anyone who is in the market for them knows and understands the politics surrounding the treasury, and can make their own informed opinion without the help of S&P. However, investors (for whatever reason) still reacted negatively to the downgrade of US Treasuries, and decided to sell off their stock to find havens in safer investment--namely, US Treasuries. In perhaps the most hilarious turn in this sad story yet, the news about the downgrade in treasuries has resulted in investors fleeing for the downgraded items. Because they are still the safest thing in the economy, not matter what a foolish ratings agency says.
Movie Reviews
As I said last week when I wrote that Harry Potter post, one of my favorite things which I do is Surreelfilm, which is both a radio show on 88.1 FM WRFL Lexington at 10 AM on Mondays, and a podcast, which you can find here (its also on iTunes). We reviewed two films on this weeks show, but I want to take some space here to write more about my feelings about both Captain America and Beginniers.
I'm pretty good at Marvel superhero trivia. I was one of those nerds who was mad when the 2002 Sam Rami Spiderman film did not have mechanical web shooters, and was geekily excited to hear that the reboot would ditch the organic webbing. In the same vein, I was livid at what X-Men 3 did to the continuity of the comic book, and that Iron Man wasn't really an alcoholic. I'm THAT GUY. But, for whatever reason, I don't know that much about Captain America 1. I don't know why, since he is one of the original Marvel heroes, but his story never interested me very much. However, that was a mistake on my part. It's a pretty awesome story.
These guys are not stylish in the 21st century.
Making this film must have been tough. You have essentially a jingoistic, America is #1 in the world character who is campy and ridiculous--he has wings on his helmet and wears blue tights and has a shield. While during the 1940s, that stuff probably seemed really hip, it's relevancy has certainly waned as time has worn on. America's relationship with jingoism has really soured as the 20th century has worn on, and superheroes and tight quit being awesome after the original X-Men series went off the air. So, making a movie about Captain America that was both relevant and also respected the hero's story could not have been easy. However, Joe Johnson really got it done with this film. They gave us the real story--the one from the comic book--and managed to make it relevant to today by adding several modern sentimentalities to the plot.
Hugo Weaving: The Villain of our Time.
The acting was top-notch, especially by the older guys. Hugo Weaving stole the show, in my opinion. His portrayal of the villain Red Skull captured the evil madman pitch-perfectly2. Not to be outdone, Tommy Lee Jones did great as Col. Phillips. Chris Evan's portrayal of Cap was good--I think he fulfilled his duty of capturing the essence of Captain America--but it wasn't as outstanding as Weaving or Jones. Evans is given to overacting and melodrama. The supporting cast did well also, especially Neal McDonough as Dum Dum Dugger and Dominic Cooper as Howard Stark.
The film was not without its flaws, however. The love story felt shoehorned into the film. It was never very fulfilling or resolved, and the plot could have done without it. As I said earlier in reference to Chris Evans, the film is rife with melodrama--the script really didn't help Mr. Evans out in this regard. However, the action was still good, and this is a movie a 24 year old superhero aficionado can watch and enjoy.
If you enjoy comic books and superheroes as much as I do, you need to see this movie. Even if you only like superheroes half as much as I do, you should go see this movie. However, if superhero movies have started getting on your nerves and you are starting to wonder why so many of them are getting made, this film will do nothing but frustrate you. When I reviewed Green Lantern several weeks ago, I said that there is still a future for comic book movies--but only as fan service, not as big-blockbuster pictures that merit gigantic media blitzes and multi-million dollar advertising budgets. Captain America may have been pretty ubiquitous in commercials and branding, but it is the type of movie that the future of comic book films need to be--a film for fans of the character. This film did a great job of getting me super excited for The Avengers next year. Joss Wheadon, you are up.
This Movie Is Good.
The film Beginners is absolutely fantastic. At its core, its a film about people who have no idea what to make of relationships--a subset of people which absolutely includes me. The film gives a treatment of relationships between lovers and family which is sweet and genuine and which has heart, and I think you should go see the movie, already!
In this film, Ewan McGregor plays Oliver, a man whose elderly father comes out as gay to him after the death of his mother. The ploy is threefold--it includes scenes about his father's homosexuality and his eventual death from cancer, as well as scenes about his present relationship with a French actress with whom he begins a relationship, and scenes showing Oliver's youth and his relationship to his mother. The film is able to weave these three time periods together in a way which is focused and meaningful--reveals are made about the past which relate to scenes the audience has already seen which take place in the present which provide us with greater nuance with which to treat the various characters. The skipping between time periods really works for this film.
Ewan McGregor does a fantastic job of portraying Oliver, a man who is obviously damaged by his parents strange relationship, which fiercely loving both of his parents. He and Melanie Laurent (who plays his girlfriend Anna) are also dynamic. We often hear of chemistry between lovers on screen referred to with terms such as "sparks" or "sultry," but this relationship is very honest. It is hot and sensuous at times, and cold and distant at other times. All of the feelings seem honest and real, and that is a credit to these actors.
However, the heart of this film is in its treatment of LGBT issues. I have a lot of trouble empathizing with LGBT characters in film--probably because their experiences are very different from my own--and have always been frustrated by my lack of sympathy for their character's unique struggle and the impossibility of me understanding the complexities and motivations of LGBT characters. This film, however, presents a straight man, dealing with LGBT issues. In this movie, I found a person who is grappling with the role which homosexuality plays in the 21st century with whom I could relate, and with whom I could empathize. This is the greatest gay film for a straight audience, in my opinion, and there is a lot of credit due to this film for that.
This film is one of my favorites of the year. I cannot recommend it any more than that. If it is showing in your city, I strongly suggest you make a trip to see it. You won't regret it.
1However, I have been watching the cartoon The Avengers: Earth's Greatest Heroes, which has caught me up a lot on Cap's backstory. Like I said, I am a total nerd.
2The things I would do for a movie with Christoph Waltz and Hugo Weaving as European bad-guys are unspeakable.
I Am A Lot Like Ben Wyatt
Ben Wyatt, a man much like me.
The guy to the left is Ben Wyatt (played by Adam Scott), a character from my favorite show on television, Parks and Recreation. (Sorry, Community, I think you've been unseated). Ben Wyatt arrived on the show at the end of the second season as a hard hearted Indiana state financial auditor. He arrives in the mythical town of Pawnee in order to clean up the city's financial mess. During most of his second season appearances, he clashes with the lovely Amy Poehler, who plays my perfect mate--Leslie Knope. However, by the end of the show's third season, he has lightened up quite a bit, and is dating Leslie.
I am a lot like this guy. The character Ben was elected the mayor of a small town in Minnesota when he was 18 years old, and prompted ran the town's finances into the ground. After being impeached (two months after he took office), he spent the rest of his professional career trying to clean up his name. He became a financial auditor, and the character has helped turn around several towns financially. However, his past always seems to find a way to haunt him--in an episode in the show, he is consistently hounded by Pawnee's hilariously ridiculous media for his troubled past as a failed mayor.
In the show, Ben dates Leslie Knope. I wish I dated either Leslie Knope or Amy Poehler.
I am like Ben because when I was younger, I made a lot of silly mistakes also. I have always been pretty quick to absorb information, and I have always been very passionate about thing in which I believe. In high school and throughout much of college, I wielded my opinions like a big sword. I would argue until me and the other person were blue in the face, and I would never back down. I took to rhetoric pretty quick: while I fought a lot of arguments to a draw, I very rarely looked foolish or incorrect. I was thoroughly convinced that if I argued with people who thought differently than me that they would be converted to the way in which I think, or at least, that the people who saw us arguing would be swain to "my side." I fought with feeling--and if the other person had the facts which disproved my arguments, I would just continue to repeat my opinions, just louder, and with more feeling. Ideology trumped everything to me--and anything that was right to my ideological faith was gospel. That was a really crappy thing to do. More than several people have taken me aside to tell me that they were offended by how much I hounded someone in a rhetorical tussle, and others found me to be offensive and thought my tone was overly mocking. They were right.
For the past several years, I have tried to make this right. In my last few years of undergraduate, I worked really hard to learn about different political ideologies and economic schools. I have tried to learn and understand their decision making frameworks, and how they think. When deciding to go to graduate school, I decided to go to policy school. There, I worked really hard to learn how to discover facts and utilize information in order to solve problems and draw conclusions. Like Ben Wyatt, after realizing that the way in which I had lived was flawed, I have tried to make things a bit more right.
In real life, however, Amy Poehler is married to this guy. She has made a huge mistake.
That's not to say I don't have a lot of opinions, still. But when I do decided to be vocal about them, I am sure to provide evidence or support for the things which I say. That's super important. And whenever I am writing about something, I try to do my best to explain the other side of the coin. That's why in this space, I've tried to give Austrians arguments to the debt ceiling crisis, and why I have tried to explain every side of the sustainability/consumption chain as completely as possible. I still screw up--a lot. I let my opinions get in the way when I see something that makes me really angry, but usually I recover pretty quickly and before I say TOO many stupid things, I get back to using data and information to back up my thoughts. To the people who are reading this: feel free to call me out about this. If you think I don't do a good enough job of ensuring that facts and information are ingrained in what I say, write, and post--feel free to speak up! I want to be as good as I can about this, and help is always appreciate (well...help is usually appreciated 
)
Plus, Ben Wyatt and I both part our hair in ridiculous ways, and enjoy wearing plaid shirts entirely too much. And we are typically the only people to laugh at our own jokes.
Link Dump 7.22
I haven't really thought about stuff to write about today, but I have been watching the internet and have found some stuff that relates to the things I've written about recently.
- John Boehner, Speaker of the US House, has called off debt talks with the President. [Boehner Letter]
- Barack Obama, President of the United States, had a press conference about that. [Transcription]
- The New York Times hits the nail on the head in an editorial: it was impossible for Barack Obama to give away enough to appease the House Republicans. I'm probably going to write next week about Barack Obama's governing ideology. [Editorial]
- However, if you don't agree with the New York Times editorial, Ron Paul (Austrian Hero) has penned an editorial for Bloomberg. In his opinion, the US needs to default--and from his perspective that isn't anything new. Because nothing has worth unless it has intrinsic value in his economic ideology, every time the United States devalued it metal-backed currency or moved to fiat money, that constituted a default in his mind. Fits right in with his ideology. [Editorial]
- Matt Yglesias has an interesting post about how if Milton Friedman (Monetarist) hadn't died recently, that the Austrian rise in the GOP might never have happened. [Yglesias]
- I wrote about the change in the NL Central this year earlier in the week. The Pirates are good again, and had their 11th sellout of the year (a big accomplishment for the struggling franchise) in a series opener against the St. Louis Cardinals, and gave up 4 runs (including 2 home runs), 5 hits, and a walk in the first inning. The Pirates eventually lost, 6-4, proving that the more things change, the more they stay the same. [Recap]
- While writing about sustainability and consumption, I somehow overlooked linking the video which got me thinking about all this several years ago: The Story of Stuff. It's a twenty minute YouTube video made by a bunch of foundations who are concerned about consumption, starring Annie Leonard. It definitely comes from a very specific point of view, but its a good overview about how the consumption economy got started, and what it means. It just doesn't really take into account the economic consequences of stopping the system. [The Story of Stuff]
- The guy that wrote the article about the decline in consumer spending (the one with the big graph a few posts down) is now the new Washington Bureau Chief of the New York Times. That's good, I liked his article. [NYT]
More Sustainability And Consumerism
Yesterday, I wrote about sustainability and consumerism. At the end of the post, I said that we could build an economic system that was less reliant and dependent on our consumption of junk--like plastic that fills up the ocean or cheez-its (although they are yummy) or McDonald's toys. I then went on to say that this would inevitably lead to the demand of our labor being lessened. I want to unpack that statement a little more and explore the ramifications of our reduced consumption and increased sustainability. I drew some graphs, because I fashion myself to be at least somewhat of an economist. Here is the first one.
P=Price of Goods Q=Quantity of Goods S=Supply of Goods D=Demand for Goods.
In this graph, the economy is experiencing a shock to demand. A negative demand shock is usually thought of as a very bad thing in terms of economics: we recently experienced (and are indeed, still experiencing) a very major one in the wake of the 2008 financial crisis. In that case, the loss of household wealth meant that people couldn't spend as much money, lowering the quantity of things that we could buy. However, if there was massive "sharing" in the economy, or if we all just quit buying so much junk, this would ALSO cause a negative demand shock. As you can see, the thing that happens initially is that prices deflate, meaning that everything is cheaper. Here is what happens in the labor market when we experience a negative demand shock:
Hover over to see labels.
This is the effect of a negative demand shock on the labor market. With declining demand for stuff, firms no longer need to employ so much labor. This is a phenomenon I am all to familiar with, being an unemployed person. If you have ever heard a manager of a firm say "we will start hiring when business picks back up", this is that effect--reduced demand pushing the quantity of labor downwards (from Q*-->Q1). A second effect that is likely to happen is that, if the supply of labor doesn't fall (due to people falling out of the labor market due to becoming discouraged workers or early retirement), the wages for labor will also fall. This is also something with which I am intimately familiar. If you hear about people working "unpaid internships" or if you have heard stories of firms rehiring entry level people at lower salaries after firing seasoned employees, this is that effect--a demand shock causing a decline in the demand for labor.
There are no ifs, ands, or buts about this--a negative demand shock is bad news for wages and labor quantity. If there is a negative demand shock, due to massive sharing or consumption reduction or due to a recession, there will be fewer people employed and at lower wages. All of the people who say green is bad for jobs have this piece of logic in their back pocket at all times: reduced consumption leads directly to less employment. It's an economically sound argument. Let's look at the third graph in order to see the next effects that would take place.
P=Price of goods Q=Quantity of goods S=Supply of Goods D=Demand for goods
This graph is what happens after the correction in the labor market ("correction in the labor market" is what economists like to call massive layoffs and wage depreciation). The effect is a lower supply of goods. This makes sense: if there is less demand for labor, fewer things can be made. This pushes the prices back up to where they were before the demand shock, and further reduces the quantity of goods supplied, from Q1-->Q2. This is where REALLY bad stuff has a chance to take place. Typically, in situations like this, economies are at risk of "deflationary spirals". Think about this: what caused the labor supply mess in the first place? A negative demand shock causing a drop in the aggregate quantity of goods demand (a move from Q to Q1). What is the effect of the labor supply mess? Another drop in the quantity demanded (from Q1-->Q2). This would set off a horrific cycle, where drops in 'Q' would cause lower wages and employment, which would in turn cause less 'Q' etc. A horrific prospect indeed.1
So, would an increase in sustainable behavior through less consumption by people as a whole, or an increase in sharing societies really set off a deflationary spiral? Well, it's certainly possible, and definitely something to think about before proclaiming to the masses that consumption is killing us. However, while I lack the calculus chops and PhD in Economics required to take you though a theoretical model of how sharing would NOT set off a deflationary spiral in a Keynesian setting, I can at least walk you through the logic of such a happening.
If the cause of negative demand shock in the first graph were do to a permanent reduction in consumption by everybody in the economy, it would be called a "secular shock". This means it is a long term change, and in this case, the thing changing is people's behavior. Furthermore, the deflationary spirals which Keynesians fear are typically started by something that FORCES people to consume less--people physically are unable to buy things, and therefore stop. If people made a conscious attempt to use less stuff, the spiral might be stopped. There wouldn't be a massive reduction in household wealth which would necessitate a further spin of the cycle--once consumption lowered to the amount that people preferred, people would just consume at that point. There would be no driving issue or problem which would necessitate them continuing to consume less. The new aggregate supply and demand situation would be at lines S1 and D1, with points P and Q2 as baselines. There would be no reason to expect that labor would continue to decline, or for consumption to necessarily dive further. (I THINK this makes sense economically, but if anybody knows better, speak up!). In this framework, there would certainly be losers. People who preferred to work would be out of jobs, and other people who made high wages would make less. However, if people made a conscious decision to consume less, the fact that individuals made less money would be slightly mitigated.
So, like many across the political spectrum seem to be saying: our economy is out of whack, and it will take some pain to fix it. However, unlike many who make that statement due to their opinion of public balance sheets and the unemployment rate, I am making that argument about sustainability. The problem remains, however, that nobody is making these consumption choices in the midst of this downturn. The goal of our public policy on the right seems to be to increase the consumption of the private sector magically through "expansionary austerity" while the left-wing elites sit around and do nothing (or agree with the right), and left plebeians seem to be asking for more government spending to plug the consumption hole. Nobody seems to be thinking seriously about reducing consumption. I suppose that makes sense--it is the foundation of our economic system. Its just too bad we missed this opportunity to rethink that system.
1A note here about economic theory: Deflationary spirals are to Keynesian economics as debt is to Austrians. While Keynesianists think of debt as a necessary tool utilized to get the economy back in shape and Austrians absolutely despise debt; Keynesians think deflationary spirals are the scariest things in the world and Austrians don't even believe that it is possible for them to occur.