The Boomers had their recession from 1979-1982. I thought Gen X would have theirs during the DotcomMania days, but it was too weak. This up coming recession will not be and thus will be the “Gen X’ers” recession.
I have a theory about recessions and it basically goes like this. Every generation has to grow up. The more successful an economy is, the longer this takes as mommy and daddy can support their children for longer periods of time allowing their children to avoid the hard reality of economics; that you have to work in order to eat. This happened with the Baby Boomers in the late 1970’sand early 1980’s. One can contribute the recession of that time to the oil crises, but if you look at labor productivity, I’m more inclined to say it was the hippie commie attitude that everything should be free and why should we work (maaaan!) Well because if nobody works, then there is no food to eat. And if nobody works there aren’t any Jim Morrison 8 tracks to listen to.
Bar the horrible fashions of the late 1970’s (though my generation went through that earlier in the“grunge” phase – remember that? Where we’d pierce everything and make ourselves look revolting?) Gen X is repeating the same thing today. Everything should be free, why should we work, dude? I’ll just buy a house and take the equity out of it and avoid working to pay for my stuff. And then I can listen to my Kirk Cobain album, dude. This attitude caused debt to skyrocket during our coming of age and brought even more shame to my generation. Household debt as a percent of GDP is nearly 100%, up from a boomer average of about 60%.
And so now I think it’s time for another generational recession. Where unemployment and hard times befall us, and my generation is starkly reminded of why communist countries fail. Cause nobody works and our parents weren’t just saying it for S’s and G’s when we were kids in that there is no such thing as a free lunch. Just Fed induced inflation. Get ready to grow up, dude.
PS-Kirk Cobain sucked. No really, he did. And he was a loser on top of it too. Yeah, sorry, didn't mean to hit all the emo kids upside the head with that one. Yeah, apparently he did indeed suck. Some scientists over in Russia proved it, something to do with cosines and newtonian physics I believe.
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Your theory has a major fault. You cannot think of society in terms of generations. "Generation" is such a vague term. What about the millions of people who are neither Baby Boomers nor Gen X, but something inbetween? Do you really think that the Baby Boomers changed their way of live&work because of the Volcker Recession?
Let's just remember how bad the Volcker Recession really was (I'm only guessing the numbers now). GDP declined some 1% or 2% for one year? Unemployment was perhaps at 11%? That's not gonna change the lives of 200 million people. That can only be done by a Great Depression, with GDP declining 30%, Unemployment up to 30%.
I also have a theory about why productivity was booming between the 1930s and the 1960s. Before the Great Depression, around the world average working hours per week were over 60 hours. In most western countries since the 1970s, the average working week has been less than 40 hours. So both employers and employees had to drastically improve working efficiency in order to raise their living standards.
France is a modern example of this theory. They have reduced working week hours from 40 to 35 in the late 1990s, but they didn't have a recession after that. Instead, productivity increased.
I have been informed his name was not "Kirk" Cobain, but "Kurt" Cobain.
I am still finding it hard to muster the energy to change it.
French per-hour productivity is a statistical artifact. By enacting labor legislation that makes marginal workers unemployable, they raise their averages. If the US increased the minimum wage to $15 an hour and cut off the entire workforce below that line, we'd see a similar increase in per-hour productivity.
The problems that cause communist countries to fail are the same problems that are causing ours to fail now.
Communism: To each according to his ability, to each according to his needs. The means of production are and the capital resources are owned by the a central authority (the government) while pretending to be owned by "the people". A factory manager has no incentive to produce more because he gets paid the same as the guy who sweeps the floor.
Now contrast that with, say, your average broke american. His means of production are controlled by excessive regulation, he cant just build something in his garage and start building it...theres the epa, osha, liability concerns, taxes, lawyers, city ordinances, etc. etc. etc....
He doesn't have the capital anyway, that's owned too, even if he didn't destroy his credit or max out his debt to live, he is still obliged to pay back the capital plus interest on any loan he gets, so his capital is owned by another.
And even if he had capital and ability, he doesn't have incentive for needs, if he can't produce, he can alwayss go on welfare.
Are we really that far removed from communism?
Ryan,
You are right. The case of France is probably not quite comparable to the productivity boom of the 1950s/60s. But I am still convinced that shorter working hours (mandated per regulation) gave people an incentive to work more efficiently.
Concerning Captain's theory, I think that the present recession and the dot-com bust have to be seen as one major problem, and this is therefore even bigger than the Volcker recession. As a consequence of wrong monetary and regulatory policy since the 1990s, we're heading down the path of the 1970s: major inflation problem, major productivity problem.
Today, the question that bothers me most is: what monetary system is the best alternative to our present system? Since the Federal Reserves foundation in 1913, there have been only two decades of normal monetary policy: the 1940s and the 1950s. Otherwise, it was one economic catastrophy after another.
It would be interesting to read Captain's thoughts about that.
"Are we really that far removed from communism?"
Yes. We have a price system to allocate resources, and Communists didn't.
That's a hell of a big difference. That's not to say that government regulations aren't stupid and hurting productivity, but the role of a price system is way too important to just overlook.
The French economy is very lousy because the socialists running the country believe that businesses destroy jobs, and only government can create jobs, but overall that there is only a limited number of jobs, which must be rationed, so they have this 35 hour workweek to try and ration the jobs, or something like that (socialist thinking never makes sense).
Want to see a sexy business cycle? check out the Austrian school
"But I am still convinced that shorter working hours (mandated per regulation) gave people an incentive to work more efficiently."
People don't need incentives to be more efficient. Efficiency brings rewards automatically.
Shorter working hours will increase efficiency because people tend to do the most productive things first. If I worked 12 hour days, by the end of the day I'd be sitting on my thumbs trying to find something to do.
It's not that people work harder or are even more efficient while they're working. It's more that diminishing marginal productivity virtually guarantees a higher average output per hour for shorter workdays.
Incentives play a huge role in people's behavior, but they are neither necessary nor sufficient to explain French per-hour productivity.
Kurt Cobain was pretty sucky too...
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