The headline isn’t mine, but it comes from one of my old college professors:
Economics is a strange science. Our subject deals with some of the most important as well as mundane issues that impinge on the human condition. Our own study of how the labor market works and the role of unemployment in it provides the perfect example.
Studs Terkel, a fellow Chicagoan, was noted as an American oral historian as well as a famous character about town. In his book entitled Working: People Talk About What They Do All Day and How They Feel About What They Do, he sums up his interviews with the following observation: “For these people … work was a search, sometimes successful, sometimes not, ‘for daily meaning as well as daily bread’…” Although labor income is by far the largest component of gross national product, a job is not just a commodity. For many, work is an important reason for living. Even for those who are less fortunate in their allocation of work, being unemployed is a miserable state. These facts add to the reasons for supporting the income of the unemployed during this recession and restoring prosperity as soon as possible.
Dale Mortensen won the 2010 Nobel Prize in Economics, and I was fortunate enough to have studied under him for several years. Among other things, he instilled in me and my classmates a strong sense that behind all the statistics, all the equations, and all the models are real people. Models are approximations — valuable approximations, to be sure, but approximations nonetheless — that help us to understand the underlying forces that shape our lives, but they are not exact or infallible.
Dale died last week.
The remarks above came from his brief but powerful remarks at the Nobel banquet following the awarding of his prize. In his obituary at the Northwestern University website, they said “His [banquet] remarks spoke to the heart of unemployment and left many in tears.”
I’m assuming that none of the GOP members of the US Senate or House of Representatives were present that evening, given the fact that the GOP torpedoed the renewal of long-term unemployment benefits on Tuesday with no observable tears being shed at all. Cheers, yes; tears, no.
As this very ugly chart from Bill McBride at Calculated Risk shows (click on the chart to embiggen it), we have yet to replace all the jobs that we lost when the Lesser Depression began in 2007. This has been the longest, deepest, and most painful economic downturn since World War II.
And note, please, that we’re still not out of it yet.
That dip is not just an interesting picture. It’s an illustration of the realities of life for far too many folks.
No, we’re still not out of it — not by a long shot. (Did you hear that JCPenney is closing 33 stores and eliminating 2000 jobs?)
Right after Mortensen’s Nobel prize was announced, June Carbone hosted an FDL Book Salon Chat with Joan Williams of the University of California-Hastings College of Law, who had just published “Reshaping the Work-Family Debate: Why Men and Class Matter.” In the course of that chat, Joan made the following observation:
For 40 years, the Republicans have blamed every scraped knee on government — so that now, the automatic assumption is to do so, and to believe it when others do. Democrats need to reverse that, both by pointing out the good things government does, and the bad results the market can produce. How about a sign picturing bread line during the Depression with a legend: “Wonder why there were no bread lines this time around? Thanks unemployment insurance, brought to you by the American people, and your federal government.”
I’m not holding my breath waiting for that ad, but it’s been in my mind ever since I saw the FDR memorial in DC this past summer.
At the end of Dale’s banquet speech in 2011, he paid homage to his teachers — the folks on whose shoulders he and his two co-laureates stood:
I close by thanking our teachers who played an essential role in our intellectual development, our colleagues who collaborated with us along the way, and our families who supported our adventures.
Thank you, Dale, for being one of my teachers. I just wish that more folks in DC had had you as a professor, or would be willing to listen to the wisdom of your remarks in Sweden in 2011.
Requiescat in pace.
Photo h/t to Niccolò Caranti and used under Creative Commons Attribution-Share Alike 3.0 Unreported license.
Chart h/t to Bill McBride, proprietor of Calculated Risk, a genius at turning economic data into easily digestible and understandable images, and a housing market watcher extraordinaire. Many thanks for the permission to reprint your work here.