It’s Not Really Okay to Fail
Megan McArdle says that young Americans have become more risk-averse, avoiding challenging experiences if it might even slightly tarnish their records. Increasingly, high school and college students today are conservative and grade-grubbing, shying away from more challenging classes that might give them a bad grade that will dog them for years. Or more challenging careers where they might fall through the cracks. I am sympathetic to this idea, but I was annoyed to see Noah Smith wrote the same post I was going to: even if risk aversion has remained flat, the cost of failure has increased greatly:
1. No social safety net. America has less of a social safety net than most rich European and Anglophone countries. Especially since welfare reform in 1996, economic failure has dire consequences. If your business or risky career path falls through, you’ll have no health insurance (well, at least til Obamacare kicks in), and you could even find yourself on the street. Jacob Hacker calls this the Great Risk Shift.
2. Income inequality + income stagnation + social preferences. The big runup in inequality since 2000 has mostly been about the top 0.1%. But in the 1980s – when the rate of new business formation started to fall – there was a much broader increase in inequality. The middle class spread out, and that raises the penalty of failure. If you don’t break into that $100k-and-up income bracket, you’ll be stuck in $30k service-sector-land. Add to that the fact that incomes for the lower part of the distribution have flatlined since 1980, while incomes for the top brackets have soared; a career failure means, more than ever, that you’ll be much poorer than your peers.
3. Labor market segmentation. In America, if you’re unemployed for longer than six months, you have a much worse chance of getting a job Also, the college wage premium has increased – if you don’t go to a decent school, good luck getting a decent job. This is a weaker version of what has happened in Japan. It seems like both college and the duration of unemployment have become important signaling devices. Fall off the “success” wagon, and good luck getting back on.
Whether or not actual utility functions (or “cultural preferences”, whatever makes you happy) have changed, these reasons are indubitably true. Increasing inequality has made the costs of failure higher, and increasingly ruthless meritocracy has made non-traditional professional career paths increasingly difficult. And if things really go south and young workers fall off the professional path entirely then they face a long and grinding existence working poverty-level service jobs with little social safety net. In these circumstances it would be pretty nuts to jeopardize your chances at professional success by “challenging yourself” and “not being afraid to fail”.
A nice chaser is a piece from Crooked Timber, mocking a survey where Millennials don’t believe that Social Security will be there when they retire. The tone is snarky and dismissive and completely neglects why Millennials believe this. I don’t believe that Social Security will be there when I retire, and neither does anyone I’ve ever asked. All are intelligent people, most of them are at least vaguely aware that the math is perfectly sustainable. But this belief is fundamentally one of political economy. First and foremost, of course we expect the Boomers to pull the ladder up after them as one last gesture of selfishness. Secondly, we’ve all seen over the last 5 years what has happened to people who believed the government would look out for them. The political world has gone to war on the safety net. The article also fails to mention the probably-relevant fact that the government tried to end Social Security a mere nine years ago, and draconian Social Security cuts remain a key policy goal of the GOP. The Democrats have been more than willing to entertain the possibility as well.
To people of our generation, the idea that “you should be okay with failure” is incredibly, unspeakably naïve. We’ve grown up in an era where the safety net has been shredded, and the penalties for failure have grown ever steeper. Furthermore, the rat race for professional careers is continually creeping closer and closer to birth, and right now I’d peg it as starting right around 6th grade. We all know people who have fallen off the track, and the future is very clearly quite bleak. McArdle bemoaning our personal conservatism reads a lot like this masterpiece from the Onion. Maybe our friends who have failed will end up beating us all in the end – but we have to work from what we see, and it sure seems that those friends have been consigned to a life working for shit wages at shit jobs for shit respect. Better hit the books or get back to your Excel models because there are plenty of people who would kill to take your spot.
I suspect that the Millennials will remain a generation of very deeply seated personal conservatism. If you’ve paid even the slightest attention to the last decade, as we came into political consciousness, the lessons have been pretty clear. If you work hard and succeed, you will get money, you will get respect, and you will get autonomy. If you fuck up, you are pretty much fucked. A spouse won’t even help you much, because the elite don’t marry losers. And the idea that Social Security & Medicare will at least keep us comfortable in retirement is laughably absurd. The economy is basically the state of nature, no one is coming to help you, and the consequences of failure are for life.