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Job seekers look for positions at computer stations at a Manpower Canada office in Toronto. (Michelle Siu For The Globe and Mail)
Job seekers look for positions at computer stations at a Manpower Canada office in Toronto. (Michelle Siu For The Globe and Mail)

economy

In tough economic times, personal drive goes only so far Add to ...

Have you been naughty or nice? Whether you are a child writing to Santa or an adult taking stock of 2012 and preparing for 2013, this is the time of year many of us reflect on our personal performance.

One yardstick is moral or religious (was I good?). But another way we assess ourselves is on our professional accomplishments: Did I work hard? Did I work smart? Did I get a raise? This culture of self-development is evident in the forest of self-help books and more literary best-sellers, such as The Power of Habit, which deploy more serious science to teach us how to improve and win.

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The baby boomers were enthusiastic followers of this individualistic approach. In North America and in Europe, they came of age at a time of robust economic growth. The social and economic trends that went along with that prosperity tended both to erode many institutions – the patriarchal family, the church – and to create more personal freedom.

The result was an era of unprecedented individual choice and unprecedented individual opportunity. You really could build it yourself, and today’s silver-haired generation did. Their children have doubled down on those values. Even in many European and Asian societies that retain traditional family structures and community ties, young people are leading lives driven and shaped by personal choice.

That’s why our new era of slow economic growth will come as a personal shock, as well as a political one. Today’s young people have been reared on optimism and the power of individual choice. But they are coming of age at a sour time.

In an influential study, Lisa Kahn, an economist at the Yale School of Management, in Connecticut, found that coming of age in a poor economy has a serious financial impact on the rising generation. Initially, their incomes fell between 6 per cent and 7 per cent for each percentage point increase in unemployment. Crucially, this penalty persisted over time: 15 years later, their incomes were still knocked back 2.5 per cent.

“Taken as a whole, the results suggest that the labour market consequences of graduating from college in a bad economy are large, negative and persistent,” Dr. Kahn writes. “This is suggestive that workers who graduate in bad economies are unable to fully shift into better jobs after the economy picks up.”

These economic headwinds are a personal tragedy – millions of them. They are also a million personal disenchantments and maybe the beginning of a tectonic cultural shift. Recent political contests in the United States and Europe have taught us to connect our beliefs about personal agency with partisan politics: The right thinks individuals are the masters of their own destiny; the left wants government to extend a helping hand.

That broad caricature overlooks the ways in which conservatives have often emphasized community needs (family, faith and country) over personal ones, while liberals have argued that personal happiness trumps everything else. Moreover, a preference for personal explanations over collective ones – the self-help book, rather than the political movement – can be a generational matter, rather than a political one.

Consider the finding by Paola Giuliano, of the University of California, Los Angeles, and Antonio Spilimbergo, of the International Monetary Fund, in a 2009 paper, that “recessions have a long-lasting effect on individuals’ beliefs.” They found that “individuals growing up during recessions tend to believe that success in life depends more on luck than on effort.” They also “support more government redistribution, but are less confident in public institutions.”

This research suggests we could be at the dawn of profound changes. Shamus Khan, a sociologist at Columbia University, in New York, told me that a widely shared conviction that individual effort determines individual reward – that we are the beneficiaries of hard work and talent, rather than luck and circumstance – is one of the central underpinnings of our social and political order.

The plutocrats think they built it themselves; ordinary Joes think if they get the right retraining and read the right self-help books, they can become winners, too.

But for young people trying to make their way in a time of fierce economic challenges, this idea is unlikely to square with personal experience. When unemployment is high and economic growth is sluggish, whether you are naughty or nice doesn’t matter much. What counts is how generous Santa is, and whether he exists at all.

 

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