The Upside of Down: Chapter 7 (Part 2)

GETTING UNSTUCK: Adopting the Way of the Shark (Redux)

A.K.A. The Rules For You Are Not The Rules For Me

So last time we gathered to discuss Megan McArdle's stunning similarity to a satirical character from a satirical cartoon and ultimately wound up trying to figure out why she's so keen to give people advice that was so ineffectual when she was following it. There are few plausible explanations. I suggested a lack of self-awareness in the last part. You could also argue that it's political - that a libertarian like McArdle would never even consider unemployment as a structural problem because that implies that the market is not so "self-correcting." But I think I have a better answer, and for that we're going to have to dig a little deeper into this mess, so strap in.

First, let's address the Megan McArdle plan to fight unemployment. We already know what she feels about those heretical Keynesians and their concept of unemployment:

Unemployment benefits may ease the pain of unemployment, but they also seem to ensure that we have more unemployment. The generosity of European systems in the 1980s and 1990s meant that people could - and did - linger on the unemployment rolls for years, even decades.

Now, the actual case isn't as clear as McArdle makes it out. Various experiments with the most extreme version of this - the basic income or minimum income, a form of support that doesn't go away if you have a job - never demonstrated the kind of mass departure from the working world that McArdle suggests. Those experiments did have a lot of problems, and I'd have to mark myself a skeptic of the basic income, but the most you can say is that generosity discourages people from working long hours.

McArdle also cites a study by Alan Krueger and Andreas Mueller that suggests people spend more time searching for jobs at the beginning and end of unemployment. This study is freely available, so you can see for yourself that McArdle isn't wrong though she is leaving out a few things that her hypothesis can't account for (such as how readily people take part-time jobs even if the pay is less than they wanted) as well as the author's own conclusions.

I bring this up because McArdle's opinions on Moral Hazard and unemployment might become relevant in...oh, five or six paragraphs.

Now, onto McArdle's own solution, which is as follows: People need to move more. That's pretty much it. This is actually a concept that's been floating around the right for a while now. Among doctrinaire conservatives, it's less about economics and more about the hope that if everyone moves to Fritters, Alabama, then everyone will be more conservative and cities will lose their clout and the GOP won't have to worry about that demographic death sentence that's been dangling over its head. Among libertarians, the choice is between this argument and the inverse from the techno-utopian types who insist that "disruption" means that location no longer matters and it's only a matter of time before everyone moves to Fritters and telecommutes.

McArdle has a lot to say about the economic might of mobility, ending with a few schemes the government might employ to encourage this. Okay, one scheme: Pay people to move to North Dakota. North Dakota was to be the major destination of this migration that conservatarians have been salivating over for several years now, owing to The Wonders of Fracking.

There are, of course, a few problems with this. Few people are entirely unmoored from their physical location; there are reasons other than laziness or sunk costs why people don't move. And McArdle mentions a few:

[O]wning a home makes it harder to move. A renter can give notice to the landlord and be out by the end of the month. A homeowner often has to wait until the house sells. And where is that likely to take the longest? In a depressed area where both the job market, and the housing market, are sluggish.

She also mentions other issues, like having a spouse with a job or familiar or social ties that are hard to give up. So what's the solution? Oh, she doesn't have one. Much like those poor kids in Chapter 1 who can't afford to treat a failure as a learning experience, McArdle doesn't feel the need to address the problems in her argument. As long as she mentions them, everything is copacetic.

So what would have happened if some unemployed person had followed McArdle's advice back when this book came out? Well, the upfront cost would have been a bear - the boom dramatically inflated housing prices and rent, to the point where this person might have been dreaming of the restrained sensibilities of the Manhattan landlord. And that's really unfortunate, because the lucrative work that would pay for that housing might not have manifested at all. In 2015, the year after The Upside of Down came out, the North Dakota economy slouched, with employment down and compensation on the wane. The sad part is that someone really could have predicted this. Energy production jobs are highly sensitive to boom and bust cycles, so building an entire economy around energy exploration is always going to be a crapshoot - just ask Venezuela. Anyone who actually did what conservatives recommended would be out a chunk of a money and a lot of time, without anyone to fall back on.

My problem here isn't just McArdle's short-sighted invocation of a blogosphere trend, it's the implications that the only reason people aren't heading out west in search of work is due to some personal flaw. Pulling up stakes and moving isn't as cheap and easy as pundits seem to think. Even by the cheapest means, traveling long distances can cost hundreds of dollars, especially if it's more than just you. If you have more belongings than will fit in a few bags, then you'll have to pay more to move those. And once you arrive, you'll either have to sign a lease on an apartment (not as easy to break as McArdle seems to think) or pay for a room, which even in a cost-effective extended stay facility will still run you two or three times what an apartment would cost. For a lot of people, that's a sizable amount of money that you're out of pocket no matter what. And that only accounts for cash. Unless you're lucky enough to have friends or family in the area, you're now starting over from square one. And then there are the opportunity costs, the time lost when moving, and the time it takes to conduct a job search which these days entails a lot of waiting.

There are a lot of pundits out there with some hazy recollection of On the Road who have a very poetic image in their head. They imagine the plucky youngster pushing his rattletrap old car to 200,000 miles as he treks into the horizon, or the streetwise scrapper meeting casts of colorful characters as he takes the Greyhound from town to town in search of fortune. Much like the image of the starving artist making masterpieces in a drafty shack, this is an fantasy with more appeal to people talking about it than to people living through it. The comfortable and well-heeled love reading stories about romantic poverty but they're never in a hurry to join the fun.

There are some other great bits in here, like one part where McArdle argues that the filthy European system forces people into low-paying benefit-free temporary contracts, which is just amazing coming from someone who defends Uber to the hilt. But unlike our subject, I'm trying to keep some sort of continuity here, and I've already promised to reveal the real mindset behind McArdle's meditations on moral hazard. The answer was right in front of me, but the thing that clinched it for me was a section on McArdle's husband. For those of you not familiar with Peter Suderman, picture a male version of McArdle - same sense of entitlement, same history of abject failure, same privilege-driven upward career trajectory, similar case of stunted maturity. Like McArdle, Suderman dealt with unemployment - in his case after running his publication into the ground.

If Suderman were just some guy, McArdle would have advised him to get off the couch and pound the pavement with vigor. So what advice did she give the manchild she would eventually marry?

"I think," I told him, "you should play more video games."

This sounds crazy, but it really was true. I knew he would by anxious about his job search even when he wasn't looking. Because they're almost diabolically good at capturing our attention, video games are an excellent way to deal with anxiety.

And suddenly I'm flashing back to something McArdle said earlier:

Common sense tells you that you are unlikely to land a job while lying on your couch watching TV.

When you take a break from looking for a job to entertain yourself, it's a sign of creeping moral hazard and proof that the system must be redesigned to give you a swift kick in the ass. When someone in McArdle's inner circle takes a break from looking for a job to entertain himself, it's an almost admirable effort to fight the anxiety that comes from doing the thing that he's not doing.

And there's the clincher - things are different for the elite. In tangible ways, of course, as Suderman eventually found another well-paying sinecure. But that's not what I'm talking about. I'm talking about perceptions and I'm talking about character. McArdle is indulging in a practice that the elite classes have been dabbling in for thousands of years - passing judgment on everyone else. She pretends that she isn't doing this, that she actually has empathy for the unemployed. It's very convenient to say that after prattling on about moral hazard for a dozen pages.

People have long had an obsession with explaining why the poor and downtrodden are so poor and downtrodden. It's something that goes beyond the obvious bigotries, beyond the racial and ethnic stereotypes that we still haven't shed. It's more subtle, more insidious than that. From the ancient Great Man theories of history to the modern "scientific" studies of demeanor, there has always been a presumption about the poor man, the peasant, the slave, the outcast. We have always assumed that people fall into these underclasses because they are, in some way, morally deficit. There's some character flaw that makes them like that. It's damn near universal and it's never gone away.

Believe it or not, we're having a serious discussion in the world of education policy right now. Look around "reformer" sites and you'll see the word "grit" come up a lot. This term refers to a set of attributes (paradoxically called "non-cognitive skills") that poor children allegedly lack. They slack off. They don't follow directions. They give up when things get tough. They don't even really try to begin with. The entire theory of "grit" is based on the idea that poor kids only do badly in life because they have rotten character, and that if we could get them to act more like those rich kids with their strong character then we wouldn't have to worry so much about poverty.

Those reformers are doing the same thing as McArdle and a hundred other pundits and a million managers. Here's how it works: You make a swift judgment call about a person's character, usually based on their conformance to the social mores and mannerisms of well-to-do white Anglo-Saxons. From that point on, you interpret everything that person does through the lens of that judgment call. This unemployed person playing video games eight hours a day has good character, so I'm sure he's just blowing off a little steam while preparing for his next valiant charge into the job market. That unemployed person playing video games eight hours a day has bad character, so I know he's just mooching off the government, dragging his feet because he's a lazy malingerer.

Maybe McArdle and all of those pundits and reformers and managers are right, and there is a fundamental difference between people ostensibly behaving the same way. But ask yourself this: When you're looking at a group of strangers who are all doing the same thing, what metric are you using to separate the sheep from the goats? Are you being objective, or are you just favoring the people who look and act like your friends? That's the invisible privilege, that subtle but powerful benefit that anyone born rich carries with him even if he ends up destitute.

Few people ask themselves what standards they use to judge others. I'm positive that McArdle never has.