STUCK IN FIRST GEAR
About five years ago, an engineer working for an electric utility company in Florida asked for my advice on what her living-at-home twentysomething college grad son should do. He could not find work in Cocoa Beach, along the so-called Space Coast, and the state’s overall jobless rate hit 10 percent.
“Does he have a mortgage?” I asked.
“No.”
“A spouse?”
“No.”
“Kids?”
“No, Joshy just graduated a few years ago.”
“Then tell Joshy to grab a cheap flight on Southwest to Fargo, North Dakota. He’ll have to change planes and hop the overnight Greyhound in Omaha, but the unemployment rate is just 2.9 percent. Joshy will nab a job as soon as the captain turns off the fasten seat belt light.” I also asked if Joshy liked skiing or maple syrup, since Vermont’s jobless rate was just 4.5 percent.
My conversation with Joshy’s mother encapsulates the challenges of a rich, indebted, over-bureaucratized country. When a rich nation begins to shatter, people do not go hungry. They simply stop waking up as early to fix breakfast. When rich nations begin to shatter, everyone has a comfy bed—but fewer people have a reason to get out of it. As confidence ebbs and debt piles up, the work ethic suffers. Each month the Department of Labor publishes a nerdy number called the Labor Participation Rate. That’s the proportion of adults who want to work. It has been falling for the last seventeen years to about 63 percent and is now beneath the level of the late 1970s. Why is that shocking? Because in the 1970s millions of women had not yet figured out how to enter the workforce; many called themselves “homemakers” or faced insurmountable discrimination. Since women now have more opportunities to work, the overall adult participation rate should trounce the ’70s level. It does not. And in West Virginia, fewer than half the adults now work, about the same as forty years ago.1
I should point out that many of the statistics I cite in this chapter pertain only to men. During the twentieth century, the employment trends for women were contorted by discrimination and cultural norms, which dramatically dampened the ability of willing females to get jobs. Beginning in the 1950s female labor participation began to soar, doubling from 35 percent to 75 percent in the 1990s. Since 2000, though, even the likelihood of a female working began to slip.
So why has the proportion of adults working slid so sharply during the past fifteen years? Retiring baby boomers explain only a part (and their impact began to hit only since 2010), according to the Federal Reserve Boards of Chicago and of Philadelphia.2 Many Generation Xers and Yers, who are nowhere near retirement age, have shed their ambition to take full-time jobs. About 11 million Americans have quit and have successfully filed for disability payments. That’s double the 1995 number and odd since, as I will discuss later in this chapter, jobs are safer and less physically strenuous than ever before. We cannot just blame the feeble recovery from the Great Recession for the dropping Labor Participation Rate. In the spring of 2015 the Department of Labor reported 5.4 million job openings, the highest since it began compiling the series in 2000.3 Granted, not every job opening is well-matched for a job seeker. We need more software engineers and more respiratory therapists aiding medical patients rather than more mortgage brokers baying for borrowers. A report by Deloitte found that 600,000 jobs in manufacturing went unfilled in 2011, even though the overall unemployment rate averaged over 8 percent.4 Now, perhaps the wages for these jobs were not attractive enough. More likely, though, we are seeing a structural swing, almost like a shift in tastes. Just as people have decided they prefer low-fat milk to full-fat milk, tens of millions have decided that they do not care much for the idea of showing up for work in the morning and staying on the job till the end of the day. While news reports tout the amazing success of Mark Zuckerberg, Sergey Brin, Elon Musk, and other entrepreneurial wizards, the sad truth is that even the level of entrepreneurship in America has reached a thirty-year low.5
ONCE UPON A TIME EVERYONE WORKED
If we scroll back the calendars to a poorer time, from 1850 to 1900, an overwhelming majority had no choice but to work or to starve. It was a bleak choice. About 90 percent of males over the age of sixteen worked.6 For how many years did people work? The average retirement age was “death,” since life expectancy was so much lower than today. In poorer southern states, even children were often expected to hold jobs. In Alabama and North Carolina over 50 percent of the children aged ten to fifteen worked full-time.
Immigrants toiled even harder and were more likely to be working than the native-born. This makes sense, since foreigners (unless they were rich) often had to prove they had strong backs and calloused hands in order to qualify for a rocky boat trip to the United States. Only the wiliest slacker could sneak aboard a ship crossing the Atlantic or Pacific.7 The Titanic was a real ship in 1912 and the steerage decks were jam-packed with hundreds of immigrants seeking jobs, but the scamp played by Leonardo DiCaprio in the blockbuster film was fiction.
Before the twentieth century societies had to grapple with what to do with old people who were too feeble to earn their keep but too hungry to skip lunch. We hear ancient tales of Inuits sending old people out to sea on ice floes or grizzled Hindus in the former Madras region in the south (now known as Tamil Nadu) deliberately forced into renal failure by drinking too much coconut water. In his dystopic novel The Fixed Period (1882), Anthony Trollope imagined a breakaway colony of Britain called Britannula. It is 1980 and the parliament passes a law that any citizen reaching the age of sixty-seven must be sent to Necropolis and cremated at age sixty-eight. The protagonist, a farmer named Crassweller, is still robust and hearty in his sixties. So he does the heroic thing: he lies about his age. In a more recent satire, the 2015 television series called Younger depicts an over-the-hill forty-year-old woman lying about her age and claiming to be twenty-six in order to land a job in publishing and to avoid psychological death. The lead character is played by Sutton Foster, who earned Broadway’s Tony award for playing heroines who break social rules in two different Roaring 1920s–era shows, Thoroughly Modern Millie and Anything Goes.
Trollope’s Fixed Period found a fan in the turn-of-the-century “founder of modern medicine,” Sir William Osler. In his farewell retirement address at Johns Hopkins Hospital in 1905, Osler suggested mandatory chloroform at age sixty, stating that the “effective, moving, vitalizing work of the world is done between the ages of twenty-five and forty.” His textbook on medicine called pneumonia “the old man’s friend,” a disease that Osler himself succumbed to at age seventy.8 Was Osler serious about forcible chloroform? Probably not. He was known as a practical joker and once tricked the editors of the Philadelphia Medical News into publishing a fake paper on penis captivus, a very rare disease in which intercourse resembles a Chinese finger trap prank. Osler’s backing of Trollope’s Fixed Period was likely just for laughs. But until the last hundred years, few others found the plight of old people comic or the source of any relief.
If you tally up the most remarkable feats of rich nations in the twentieth century, this one stands out—they generated enough wealth so that old people could stay alive even if they did not work. Scary ideas like the Hindu coconut cocktail and Osler’s chloroform were shoved off the table. In the twentieth century from 1900 to World War II, as standards of living began to rise sharply, labor participation began to trail off a bit for men. Men who reached age sixty-five began to utter the word retirement, a term unknown to their fathers and grandfathers. After Franklin Roosevelt’s administration set up the Social Security system in the 1930s (inspired in part by Otto von Bismarck’s 1889 social insurance program in Germany), about half the sixty-five-year-olds stopped working. Eleanor Roosevelt imagined they would sit around in rocking chairs. She could not foresee shuffleboard on cruise ships or today’s inexhaustible senior citizens engaging in extreme hang gliding and white-water rafting. Her wish was merely that old people could comfortably loll about and avoid poorhouses. In a speech to the Monday Evening Club, a Washington group dedicated to social causes and going out on Monday evenings (Monday Night Football did not begin until 1970 and one strains to picture Eleanor Roosevelt on a sofa next to Howard Cosell), she observed, “Old people love their own things even more than young people do. It means so much to sit in the same chair you sat in for a great many years, to see the same picture that you always looked at!”9 With the help of Social Security most elderly people stopped working, but many of them had ambitions greater than simply plopping themselves down on a plastic-covered couch and staring at the wall.
Swelling incomes allowed individuals to purchase for themselves not just meals but leisure time. Ask yourself, why did the game of baseball take off in the 1920s? Because tens of thousands of people in major cities had the economic freedom to take off two hours in the daytime to cheer Lou Gehrig and Babe Ruth (this was before ball games stretched to over three hours and before night games). Picture in your mind those black-and-white photos of American presidents throwing out the first ball at baseball games, starting in 1910 with William H. Taft, who somehow managed to get his arm around his well-fed, barrel-chested 340-pound body. Rising incomes made all that possible—Taft’s gut and the thousands of fans watching the Washington Nationals play the Philadelphia Athletics. During the 1920s and 1930s the game of golf spread beyond the wealthiest meadows of Long Island and Chicago’s North Shore. The number of golf courses tripled, inspired by Bobby Jones, who in 1930 won the US Open, the British Open, the US Amateur Championship, and the British Amateur Championship. Tennis reached a heyday as champions like Bill Tilden and Helen Wills became household names. My grandpa Bobby was the New York City tennis champion of 1927 (I have the trophy to prove it), becoming a household name, at least in the Buchholz household.
THE GO-NOWHERE GENERATION
In recent decades, amid the shattering of nations, we are seeing a new phenomenon: young and middle-aged people acting more like retirees and avoiding work. A test: do you know any recent high school graduates who do not have a driver’s license? In the most startling behavioral change among young people since James Dean and Marlon Brando started mumbling, an increasing number of Gen Yers are not bothering to get drivers’ licenses. A few years ago in a widely shared essay in the Sunday New York Times entitled “The Go Nowhere Generation,” my daughter and I showed that young people today are 25 percent less likely to get a driver’s license than their parents or grandparents were at the same age. Don’t blame the drop on more expensive cars: households own more cars than ever before and it takes fewer workweeks to buy a car today than in the early 1980s. Don’t blame Uber, because the trend predates it.
Another test: do you know any young people who have moved to another state to take a job? The likelihood of an eighteen- to twenty-four-year-old moving to another state has dropped 40 percent since the 1980s. The stuck-at-home mentality hits not only college-educated Americans but also those without a high school diploma. This is another paradox of our era: as native-born people find themselves surrounded by foreign-born people, they become less likely to explore our own country or the world. They become homebodies. The proportion of young adults living at home nearly doubled between 1980 and 2008, before the Great Recession hit, and the trend continues to creep upward. This is the Occupy movement we should really be worried about.
What does not getting a driver’s license or not moving to a new state have to do with entropy and national spirit? Each suggests a tendency to sit and wait, rather than get up and go and seek new opportunities when times are tough. In The Grapes of Wrath, young Tom Joad loads up his jalopy with pork snacks and relatives, as the family flees the Okie dust bowl for sun-kissed California. Along the way, Granma dies, yet the Joads keep going. But sometime in the past thirty years someone has hit the brakes and Americans refuse to climb out of their La-Z-Boy recliners. The timing is terrible. Even with a 10 percent jobless rate in the depths of the Great Recession and a foreclosure rate that would grab the attention of the Joads, Americans were less inclined to pack up the station wagon for sunnier economic climes, even if the station wagon came equipped with a Blu-ray DVD player on the back of each seat.10
Mobility can be crucial for poor people. A fascinating study by Raj Chetty, Nathaniel Hendren, and Lawrence Katz looked at a program that offers housing vouchers to randomly chosen parents so they can move out of very poor housing projects and into less impoverished neighborhoods. Ten years later the children of parents who moved were earning 31 percent more income than those who stayed behind.11
Generation Y is turning into Generation “Y Bother?” The proportion of teens with summer jobs or part-time after-school jobs has plummeted since 1980. In 1994 two-thirds of teenagers worked during the summer. By 2007 (before the Great Recession) less than half participated. This radical shift is not just focused on white teens, rich teens, black teens, young teens, old teens, high-school-dropout teens, or college-attending teens. All teenage groups have basically gone on strike.
Now, I must admit that cooking hot dogs on the boardwalk and stacking pints of cottage cheese and yogurt at the supermarket hardly count as academic exploits. As teenagers growing up on the Jersey Shore, my brother and I performed both these tasks. What did we learn toiling in the dairy department? I am not sure, other than to wear a sweater (and that the freshest milk sits on the back of the shelf). Yet work teaches young people to show up on time and it also teaches them that they’d better develop new skills, lest they spend their careers grilling hot dogs in the hot sun or stacking cottage cheese in the chilly dairy department aisle. An after-school or summer job helps to build discipline and helps teens bridge the path to adulthood. If a kid has not done any work before age eighteen, he finds it much harder to understand how and why to put in a hard day’s work at nineteen, twenty, or twenty-five years of age. A recent Northeastern University study found that poor high schoolers who worked (especially blacks and Hispanics) were more likely to graduate and that female teens who worked were less likely to get pregnant than their peers.12
Many teens cannot be bothered to stand in line at the DMV and even bicycle sales are much lower than they were in 1973. The millennial generation is literally going nowhere. All this turns American history on its head. The United States was a nation of movers and shakers. Pilgrims leaped onto leaky boats to get here. After World War I the so-called Lost Generation followed Ernest Hemingway and Gertrude Stein to Paris. In the 1940s the Greatest Generation signed up to ship out to fight Nazis in Germany or, like my father, the Japanese imperial forces in China. The ’60s kids joined the Peace Corps. Even Jack Kerouac put down his reefer to hit the road. We’ve gone from What Makes Sammy Run? to “Joshy, get off the couch!” But Joshy and his friends won’t put down the Mindcraft magic wand.
A shattering of work ethic and of ambition shows up even in high school course selections, as native-born students display less ambition and avoid more difficult classes. Even though employers are handing out bonuses for graduates in science, technology, and engineering, white and black students have been throwing up their hands and essentially saying, “Let the Chinese and Indian kids do the math.” It shows up in the numbers, of course. Among Asian American students, 43 percent take advanced algebra or calculus, twice the rate of white students and four times the rate of black students.13 But laxity is contagious. By the third generation, Asian American students taper off in their enthusiasm for hard classes, essentially saying, “Let the guy who just got off the boat do the math.” In a bad sense, they become more like the white and black kids next door.
HURTS SO GOOD?
A sagging work ethic is contagious. People who do not work do not pay income taxes. Those who do pay income taxes feel resentful. A splintering of the population drives people to cheat and focus on the get-rich-quick or quick-getaway. Earlier in this book I cited a 2008 report that virtually every career employee of the Long Island Railroad applied for and received disability payments upon retirement! The US attorney in Manhattan stated that “Employees, in many cases, after claiming to be too disabled to stand, sit, walk or climb steps, retired to lives of regular golf, tennis, biking and aerobics.” The scandal goes beyond Long Island, of course. A recent NPR report stated that one in four adults in Hale County, Alabama, collects disability. On days when government checks come in, the Hale County banks stay open late. In New Mexico disability payments jumped 59 percent between 2003 and 2011. Since the late 1980s total applications have tripled. Between 2000 and 2013 disability awards in the United States rose 43 percent.14 Even after the Great Recession ended, the number of Americans collecting disability kept climbing, by about 10 percent. The chance of a judge’s approving one’s application has jumped 50 percent since 1980. For every American working in a factory, another former worker is collecting disability. The United States is not alone. The Netherlands, Sweden, Great Britain, and Australia have also seen leaps in disability claims.
Are jobs really more dangerous than ever before? Is that really possible when rusty factories have shut down, replaced by employees merely sitting in front of telephones and laptops, and many working from home and avoiding the hazards of commuting? Since the 1990s workplace fatalities have dropped by one-third. Businesses and workers have incentives not to cut off hands or break bones. Working with the United Food and Commercial Workers Union, Tyson Fresh Meats reduced workplace injuries, including sprains and strains, by about 70 percent in the past twenty years through better ergonomics and replacing dangerous whirling blades with shielded, automatic loin trimmers.15 But these improvements—jointly hailed by unions and employers—do not seem to show up in the soaring number of disability awards. Moreover, in recent years the claims seem based on less palpable, less provable injuries. In 1961 just over 8 percent of workers received disability payments because they suffered from back pain or musculoskeletal problems. In 2011 over one-third of the recipients did.16 The number of people who are disabled for mental illness doubled over the same period to 19 percent. Soaring disability claims come not only from blue-collar employees. White-collar workers, too, are claiming disability at a higher rate, even if they are more likely to be injured while swiveling in a Herman Miller Aeron chair than while controlling a band saw. The NPR report on Hale County described a hearing in which a judge named Sonny Ryan asks from the bench, “Just out of curiosity, what is your disability?”
“I have high blood pressure,” the man said.
“So do I,” the judge said. “What else?”
“I have diabetes.”
“So do I.”
Many of our great-grandparents worked in construction and they jammed shovels into the dirt to dig tunnels; today carpal tunnel syndrome keeps a million Americans from performing any kind of work, whether they developed the syndrome from filleting trout in a seafood factory or writing a blog in their pajamas. And there lies the systemic problem: in the current environment, when a person is diagnosed with a disability and begins receiving Social Security payments to compensate for lost work, he or she will likely never return to the workforce in any capacity. Someone who injured his ankle as a crossing guard might still have the physical agility to get a job sitting at a desk but the chances of his even applying are slim. Of the roughly 10 million Americans collecting disability payments, only 2 percent tried working in the past year. Only 0.3 to 0.5 percent try to find work each month.17 The overwhelming number of people who ever exit the disability program do so because they reach retirement age and switch to other benefits or because they die. The US federal government has from time to time tinkered with the rules in order to nudge those on disability to rejoin the labor market. Nonetheless, the nudge has mostly been shrugged off, even by those who purport to be too injured to even move their shoulders in a shrugging gesture. A program called Ticket to Work has apparently helped one-tenth of 1 percent of disabled workers get back into the workforce, a pretty puny ticket, it seems.18
Getting anyone back to work is a challenge. Even for those who have not filed for disability, the economy’s ups and downs can deplete their willingness to be flexible. Once laid off, many workers stay on the sidelines for a long time. Our state unemployment compensation system does little to spur an ethic of returning to work. When people are laid off, they typically receive twenty-six weeks of payments. When do they typically accept a new job? At the end of the twenty-six weeks. In a front-page proposal in the Washington Post, I suggested turning unemployment benefits into signing bonuses, to lure laid-off workers back into the workforce earlier.19 Under the proposal, the sooner a worker accepts a new job, the more money he gets. A signing bonus, like the ones pro athletes and Wall Street guys get—albeit with fewer zeroes—could be a nice push forward at a time when the tendency is to slouch back.
NOT WORKING KILLS BRAIN CELLS
Human beings did not evolve as sloths. A sloth has a curved claw that can lock onto a pumpwood tree even when Caribbean winds blow at near-hurricane speed. But a sloth does not get more stupid if it spends its life simply hanging around and eating twigs and fruit. People do. A fascinating multicountry study showed that when people retire early, they lose cognitive abilities, even after controlling for age and other health issues. For example, researchers asked sixtysomethings in the United States and twelve European countries to look at a list of common words (lake, car, army, for example) and to recall those nouns five minutes later. In countries where people retire early, individuals could not recall the words as readily and were less competent at adding and subtracting numbers.20 Americans and Danes tend to retire later than do French and Austrians. In the United States and Denmark, most men in their early sixties are still working. In Austria and France, over three-quarters have retired. The cognitive ability of a French or Austrian sixtysomething drops twice as much as an American’s or a Dane’s. If you ever appear on a trivia game show where you have the chance to “phone a friend,” do not dial Paris or Vienna.
Not working shrinks the brain’s capacity to think quickly and clearly. When people work, they are forced to handle new challenges, even if these are frustrating challenges like a broken photocopier machine or an annoying receptionist. When life becomes more rote, the brain slips into a more slothlike state. That is why retirees should challenge themselves physically and mentally. Whether taking a Road Scholar trip to Brussels or taking up the bassoon, they should keep moving and thinking. Retirement does not condemn retirees to stupidity. Of course, they can keep up their mental health, but they’d better exert energy to do it.
Perhaps more important, when able-bodied people do not work and do not stay active, they lose ambition and it dampens their ability to catch a few glimpses of happiness. Neuroscientists have shown that when we take action, dopamine and serotonin begin to flow, lifting spirits. Gray cells, which process information, become revitalized and the brain renews itself. Feeling ambition and action is like allowing your brain to sip from the fountain of youth. Arthur C. Brooks has reported data showing that if you take two people with the same age, education, and employment characteristics, but if one is collecting welfare, there is a 16 percent chance that person will have felt “inconsolably sad” at some point in the past month.21 I suggest that people who feign disability will actually become disabled as they sap themselves of vital neurotransmitters.
Work builds and preserves nations. In chapter 9 I will discuss Golda Meir and the early Zionists, who were convinced that Israel could not be created and would not have the spirit to survive unless its people worked the land and tried to conquer drought, parched parcels, and scarce resources.
In the early 1930s in a small Austrian town called Marienthal just south of Vienna, a terrible thing happened. Faced with a worldwide collapse in trade, the town’s textile factory, which started as a flax-spinning mill in 1820, slammed its doors shut. Men wielding axes and sledgehammers demolished the place. You can see the sad black-and-white photos of the destruction.22 It was not only the building that was demolished. Twelve hundred laborers were thrown out of work and the town spun into a depressed state. Out of 478 households about four hundred were without a breadwinner. Only a few local shopkeepers kept going. Incomes plummeted and the most desperate and poor apparently swiped the pets of others for food. Yes, the depression was economic but it was also spiritual. Before the shutdown, the town boasted of libraries and social clubs. Without work, the spirit of living seeped away. Few borrowed from the library even though the fee for borrowing was zero. The theater club went dark along with the football and wrestling clubs. Three-quarters of the families received government relief aid but the state government actively discouraged Marienthal citizens from taking on any work projects. If bureaucrats spied anyone chopping wood or delivering milk, they would snatch the relief check from the offender’s hands. According to a landmark study conducted at the time by Marie Jahoda and her husband Paul Lazarsfeld, one man lost his government aid simply because he pocketed some coins in exchange for blowing his harmonica.23 The researchers quote one woman who recalled, “During the summer we used to go . . . [to] all those dances! Now I don’t feel like going out anymore.” This was truly the day that music died.
The Marienthalers lost a sense of themselves and they also lost a sense of time. Literally. Most of the families lived along Main Street and most people walked wherever they needed to go. The researchers began to observe and time the pace of walking among men and women. They discovered that the men seldom strode directly as they crossed the street. Two-thirds interrupted their ambling but without apparent reason. The women walked one and one-half times faster than the men. Remember, wives still had to organize the children and figure out how to put food on the table. They managed to do so but the men began to show up late for the meager meals. People chose to go to bed earlier, 9 p.m. instead of 11 p.m., but they reported feeling more tired even with more sleep. The children absorbed the dread and it stunted their ambition and their natural fantasies. The researchers arranged for a teacher to ask children, “What do I want to be when I grow up?” The once typical, optimistic boy themes were gone. None wanted to be ship captains or airplane pilots. One still wished to be an Indian chief but was not sure whether he could find an opening in the field. A large number longed for a factory job, the kind their fathers reminisced about.24
Not working impacts trust and honesty, too. As the situation turned darker, more Marienthalers accused others of cheating on their relief aid.25 The incidence of actual cheating rose. But so did the incidence of false, unfounded accusations of cheating hurled by others. In 1928–29, when the factory was still operating (but with half its employees laid off), nine residents were denounced for unreported work. Three of these accusations turned out to be justified. Now we compare that with 1931–32, when the factory was demolished. During this more dire period, twenty-eight individuals were accused of cheating. Twenty-one were exonerated and seven were convicted.26 Without work, the social fabric ripped. Of course the rip would soon become louder and joined by the jackbooted march of the fascists. In Germany and Austria support for the Nazi Party closely tracked the unemployment rate.27 Dependent on government relief, Marienthal became fertile ground for mental disease and a deadly social disease called Nazism.
VENICE RECLINING AND DECLINING
Marienthal shows how economic collapse can extinguish spirits and a work ethic. But history also shows that during relatively healthy economic times, government bureaucracies can discourage employment, entrepreneurship, and innovation. Consider the Serene Republic of Venice in the 1600s. After the economic fireworks of the mid-1500s, marked by spectacular success in coloring glass, dying textiles, and tanning leather, the Venetian government began crushing merchants with tariffs, which doubled the cost of textiles and allowed the British to poach market share. Employers and workers grew discouraged and became less productive and less innovative. The guilds more tightly controlled who was permitted to work, and the labor force grew older, closing off opportunities and demoralizing young people. Typically, guilds and unions work hardest to protect senior members and those who already pay dues, rather than the up-and-coming. (That is why, for example, today most teachers’ unions insist on negotiating contracts that pay a ten-year veteran gym teacher more than a calculus teacher with just five years’ experience.) Over the course of the 1600s young Venetians increasingly felt blocked from the workplace, whether the potential employment involved hammering against anvils, casting iron, or fitting shoes on horse hooves. In 1600 only 15 percent of the workforce had been over the age of forty-five. By 1690 nearly half were over the age of forty-five. Remember, this was at a time when a fifty-year-old was far less productive than today and typically hobbled by rickets, syphilis, or worms.
In rushed a period that historians call Venice’s “era of decadence.” Aristocrats and merchants became focused on renting land and exploiting peasants rather than on expanding and inventing new products. Businessmen preferred luxurious villas to grubby countinghouses. Peasants buckled under heavy rents, even as guilds blocked the young and ambitious from joining the workforce. Ambition ebbed and along with it the proportion of workers eager and able to put in an honest day’s labor. The Republic transformed into a kind of theme park of gambling and debauchery, better symbolized by frivolous carnival masks and lecherous Casanovas than by hard work and rising incomes. Eventually, the economy crumpled, but not because of some environmental mishap like a rising tide in the canals or even because of a shortage of silica sand to melt for Murano glass. When a rich nation loses a desire to work, and when those who happen to have jobs block others from competing with them, an unraveling begins.
BUREAUCRATS CAN DAMPEN WORK AND DRIVE UP DEBT
You might think that as a nation grows richer, its citizens might be in a better position to take care of themselves. In this case, bureaucracies would shrink. That seldom happens. It has been easy to decry bureaucracies ever since Hammurabi placed wage-and-price controls on Babylonian cowboys 3,700 years ago (“If a man hires a herdsman for cattle and sheep, he shall pay him six gur of corn per annum,” Code of Hammurabi 261; this wage would equal about twenty-six bushels). Today comedians can win laughs merely by pronouncing to audiences the acronym DMV. I do not believe that bureaucracies are intrinsically evil or unnecessary. But as nations grow more prosperous, they tend to become more encrusted with bureaucracies. These bureaucrats tap the brakes on the economy, which then short-circuits optimism. Large bureaucracies are symptoms of the entropy of rich nations. Large bureaucracies subvert nations because they create a wedge between citizens and leaders. The larger the wedge, the larger the risk that the nation will unravel.
CHINA: AFTER THE EUNUCH FALLS
This is not simply an American story from the twentieth century or a Venetian tale from the seventeenth. During the Ming dynasty (AD 1368–1644) the Confucians scorned Chinese merchants as parasites. No surprise, then, that they expanded the bureaucracy to oversee and ultimately stomp on the merchants, which strangled the economy and helped implode the dynasty. But how could Ming mandarins afford to expand their ranks, hiring and training more bureaucrats? Quite simply, the economic growth came first. Manning the massive bureaucracy came second.
In the early Ming period a visitor from Europe would marvel at China’s riches and its technology, from gunpowder to movable type for printing to seed drills to four-hundred-foot-long ships that could carry a thousand soldiers. Chinese mariners used a magnetic compass hundreds of years before the Italians, and in the 1400s they figured out how to sail as far as the Red Sea and Zanzibar. One mission came back from East Africa with a tower of giraffes to delight the emperor. In contrast to a sophisticated citizen of Peking, a Londoner in 1400 might as well have been swinging from vines. When China referred to Westerners as barbarians, they weren’t kidding!
But then in the mid-fifteenth century science and sailing skidded to a stop. In 1433, after the death of Zheng He, a leading palace eunuch who promoted trade, the bureaucrats banned shipbuilders from constructing seafaring vessels. The scholarly Confucians sneered at moneygrubbing merchants and periodically confiscated private property. They slammed shut the printing presses except for scholarly works and then banned those they deemed “illiterate” from holding public office. With each edict, each stoppage, and each embargo, the Chinese bureaucrats ended up building their own great wall separating the government from the people, which ultimately crippled public support for the emperors. Although the Ming dynasty lumbered along for another two hundred years, it stopped moving forward and became more vulnerable to invaders, rebellions, and economic crises made worse by government deficits and high taxes. Ming troops grew dispirited and angry. Overcome by treachery, in 1644 the last Ming emperor hanged himself from a tree as the Manchus crashed through the gates of the Great Wall of China. The stones of the Great Wall might have done a better job protecting the dynasty from collapse had the Ming bureaucrats not erected their own great walls severing themselves from the people.
WHO DO REGULATORS PROTECT?
In a brilliant book called The Rise and Decline of Nations (1982) Mancur Olson described how regulations and bureaucracies almost inevitably increase their power over time.28 Groups from cotton farmers to dockworkers have an incentive to organize and lobby congresses, kings, and prime ministers to protect them from competition. This protection requires more government ministers and minions. In Washington you will find the American Dehydrated Onion and Garlic Association, which protects against imported flavorings, and the Balloon Council, which fights for a government helium reserve. Sometimes bureaucracies created to protect the public end up protecting the companies they oversee, as Nobel laureate George Stigler described in his “capture theory.” An example: even though Frank Sinatra’s “Come Fly with Me” album was a bestseller in 1958, by 1965 only one in five Americans had ever stepped onto an airplane. During the 1960s and 1970s few Americans could afford to fly because the Civil Aeronautics Board ruled over a cartel that kept prices sky-high and routinely turned away applications for new airlines to challenge incumbents. The board, founded in 1938, would specify which routes airlines were permitted to fly, often consulting old railroad maps, so that United would get the east-west routes from Chicago and TWA would dominate routes from Saint Louis.29 Even upstart cargo carriers were discouraged from liftoff. Federal Express could not fly big jets until the airline deregulation acts of 1977 and 1978. Nowadays half of Americans take a round-trip flight every year.
Olson pointed out that countries grow faster after wars and revolutions precisely because such stormy events sweep aside the old regimes that restrained free commerce. He noted, for example, that Germany and Japan grew faster after World War II than before. Olson (who died in 1998) demonstrated that countries accumulate more bureaucrats over time. But my research shows that it is not just the passing time that attracts bureaucrats; prosperity itself does so.
America’s bureaucracy grew rapidly during the Johnson and Nixon/Ford years from 1964 to 1975, when the number of nondefense US government employees climbed by 46 percent. This period was preceded by one of the most prosperous periods in US history, the post-WWII boom from 1945 to the 1960s. The postwar boom supplied the funds to pay for new cabinet departments including Health, Education, and Welfare (1953; it became Health and Human Services in 1979), Housing and Urban Development (1965), and Transportation (1966). (By some accounts US real weekly wages have still not regained the peak they reached in 1973, suggesting that new government bureaucracies might drag down economic growth.) After the recessions of the 1970s and early 1980s, the federal bureaucracy actually shrank by eleven thousand workers. After the meltdown of 2008, total government employment dropped by over half a million (though federal employment ticked up slightly). Here’s the key point: bureaucracies often grow fastest after periods of prosperity. They do not grow as quickly during periods of stagnation or poverty.
When bureaucracies grow, they may do so in ways that specifically discourage more jobs in the private sector. My father urged his children to be “professionals,” rather than corporate employees. He had worked for railroad companies from the Wabash to the Norfolk & Southern. His office was in the Pan Am Building on Park Avenue, which we would call “Daddy’s building.” But he did not own it and he did not own much of the railroad. When the ringing landline phone would interrupt us at home during the dinner hour, he would flare his nostrils and blurt, “Tell them I’m not here.” That worked until one day my little sister answered the phone, turned to my dad, and said in a loud six-year-old voice, “Daddy, are you home?” The steam emerging from Dad’s ears resembled the photos of steam locomotives he framed on the wall. My father thought that if his children grew up to become lawyers and doctors, they would escape dinnertime interruptions and a boss’s call to arms. He could not, of course, foresee the cell phone, telemarketers, or HMOs turning physicians into mere wage slaves. Still, I can recall my father’s frequent refrain, “If you’re a professional, you can always hang out a shingle of your own.” Sure enough, my brother’s name is on the letterhead of a California law firm. I doubt that the offices in downtown San Diego and Los Angeles have wooden shingles but I can find his name on the directory in the lobby.
Before one hangs up a lawyer’s shingle, of course, one needs to pass a bar exam and receive a license to practice. We expect that of attorneys and we demand it of cardiac surgeons and airline pilots. Incumbent lawyers and surgeons are pleased to put up obstacles that keep out competitors and help maintain high fees. But what other jobs should require government approval and the expenses that come with preparing for exams and filing for those licenses? How about people who cut hair? Or sell wrestling tickets? Or set DVR machines? In fact, we have a licensing epidemic in the United States, a result of government bureaucracies conspiring with incumbent practitioners. This epidemic robs people of the ability to get work, especially the younger and less experienced. For every “profession,” there is a trade association and a state agency working to develop and shape the shackles that block others from competing. Venice’s guilds are back, but instead of flying under the flag of the Serene Republic, they fly under the flag of protecting the public. In 1900 just over 4 percent of the labor force worked in professional occupations, but by midcentury states had passed more than twelve hundred state occupational licensing statutes for over seventy-five occupations from physicians to embalmers. About one-third of occupations now require a government license or certificate, including 15 percent of the jobs held by high school dropouts.30 Arizona demands that hair stylists take sixteen hundred hours of classroom instruction, at an approved cosmetology school. The schools are not cheap, and it can cost $10,000 to $15,000 to fulfill the sixteen-hundred-hour requirement. But here is the shocker. In Phoenix an aspiring policeman attends training school for just six hundred hours! Apparently it is almost three times more dangerous to wield a Revlon blow-dryer than a .40 caliber Glock. Do not try to arrange flowers in Louisiana without a license. And if you do apply for a flower arranging permit, study hard. A higher proportion of applicants pass the Louisiana bar exam than pass the picky flower-arranging exam, which includes a hands-on design test.31 How ironic: in New Orleans, you can stumble down Bourbon Street flanked by lewd signs for dirty dancing and X-rated T-shirt shops, but put down those petunias unless you have a license to beautify!
Who is damaged by all these seemingly silly, but shrewd regulations? First of all, young job seekers, who must scrounge around and save up substantial sums of money just to start studying to take a job. The licensing epidemic especially hurts women, who are less likely to be represented among the incumbent class. One study showed that excessive licensing burdens for funeral directors reduce the number of female funeral directors by 18 to 24 percent.32 Second, consumers who pay more for services because of dampened competition. Third, consumers who cannot afford higher prices and therefore take it upon themselves to recklessly cut their own hair or arrange their own tulips. But there are far more serious examples, including “do-it-yourself root canal.”33 A careful study showed that in states with the most burdensome licensing requirements for electricians, more homeowners try to do the job themselves, mismatching wires and, in some cases, killing themselves.34 The absurdist comedian Steven Wright had a more droll take on such episodes: “I installed a skylight in my apartment. The people who live above me are furious.”
LOOKING BACKWARD IS NOT AN ECONOMIC POLICY
Progress can be wonderful, but it can be painful. If you visit Williamsburg, Virginia, you can spend time with the farrier and the candlemaker. They have much free time, because they were replaced by automakers and lightbulb factories, respectively. But trying to stand in the way of innovation in order to protect incumbent job holders does not work out very well. Innovations sometimes literally push aside the old order. Cows did not care much for railroads in the 1880s. Those steel grills on the front of locomotives are called “cowcatchers” and would turn a live steer into instant dinner. That’s pretty much the story of economic progress, which Joseph Schumpeter called “creative destruction.” There is often a lot of blood left on the ground. But it has largely been worth the price. Back in the 1880s when Edward Bellamy put forth his socialist utopian Looking Backward, life expectancy was about forty-five years of age. Today it’s about eighty.
Would you want to go back to the good old days when your great-great-grandfather with a toothache would have his teeth yanked out by a barber who had no better anesthesia than the stuff he might have rinsed his combs in? I vote for modern dentistry. We should be very worried about government policies that protect those with an interest in the status quo, whether barbers waving combs or wild cattle. Consider two recent headline stories. In 2014 the state of New Jersey banned Tesla Motors from selling the world’s highest-rated automobile (as ranked by Consumer Reports that year) because Tesla had not signed contracts with local, independent dealerships. The original prohibition was clearly a way to fatten wallets of esteemed local campaign contributors (New Jersey’s governor Chris Christie reversed the ban in 2015). But how esteemed are those local car dealers? According to a December 2013 Gallup poll, surveying the honesty and ethics of twenty-two different professions, car dealers do not rank last. They narrowly beat out congressmen and lobbyists, but lose to everyone else including auto mechanics and lawyers. So why should New Jersey consumers be forced to sit in the waiting room of a middleman dealer and be fenced off from dealing directly with Tesla? Since Tesla’s buyers earn much more than the median income, don’t they have less need for government “protection”?
Second, taxicab drivers and some taxi commissioners have declared war on Uber and Lyft, companies that allow customers to deploy swift and nifty software to call for cars and pay with previously approved credit cards. Unlike city cabbies, Uber drivers are instantly rated by their customers and if the driver fails to average a 4.7 score on a scale of 1 to 5, Uber tears up his contract. No surprise, then, that Uber drivers often provide bottles of water, courteous service, and pleasant conversation. Would city cabdrivers be willing to subject their licenses to such a rigorous review process? Is the customer better off in a clean, technologically equipped vehicle? To help protect Uber drivers, they get to rank the passengers, weeding out bad patrons. In San Francisco, a city supervisor complained that cabdrivers were “losing about $15 per shift or even more” because more Uber cars were on the roads. Here’s another way to look at it: San Francisco residents and tourists are finding the city a more convenient place to live, work, and visit.
INCUMBENTS AND AT-RISK CHILDREN
Too often incumbents want to “look backward” and protect the status quo even against waves of change. A few years ago seven thousand teachers marched in Chicago to protest school closings because the school-age population had shrunk by 145,000 during a decade’s time. In Chicago, the black population alone—adults and children—dropped from 1 million in 2000 to 887,608 in 2010. Yes, a shuttered school is a sad thing, but when a population falls because people choose to move into the suburbs, a school district cannot fill those empty classroom chairs with test-crash dummies. The prudent path is clear: send the remaining students to the best nearby schools and pack them with extra resources from the financial savings.
Obstinate school bureaucrats can block children from better ways of learning. I am sorry to report that, in my own professional experience, charter school and private school officials are much more willing to entertain new ideas than the conventional public school bureaucrats who govern almost 90 percent of elementary and secondary education. I have become deeply involved in math education, as the inventor of a patented matrix called the Math Arrow, which hangs in many school classrooms as a poster and is the basis for iPad apps like Kyle Counts.35 Both the Math Arrow and the apps have won applause from leading education and technology reviewers and from teachers in the classroom. Martin Cooper, the inventor of the cell phone, calls the matrix “ingenious,” and a study at Brigham Young University showed that it raises test scores. But when my colleagues and I have tried to make appointments with curriculum supervisors, we noticed that the charter and private school bureaucrats were far more willing to test a new idea than their public school counterparts. In one glaring example, a Success Academy charter school on Lenox Avenue in Harlem (twenty-eight hundred miles from my home) almost immediately introduced the Math Arrow into its kindergarten classroom. In contrast, my local public school officials, who work in an office four blocks from my home, ignored numerous requests just to hold an introductory meeting! Often public bureaucrats do not have sufficient incentives to upgrade their behavior or performance.
Of course, it is wrong to claim that all new ideas are worthy or that all progress is good. Nor is it true that new ideas and new industries create only good and never inflict pain. A free market is not a pain-free market. Good economic policies create losers; but the winners either are more plentiful in numbers or create large enough overall gains to compensate the losers.36
Looking backward to prop up old jobs and old buildings is not a strategy for success. It is the desperate flinch of entrenched interests. Jerry Seinfeld recently performed a funny routine teasing the US Post Office, noting that we should not be surprised when a business cannot compete when it is based on a 1630s model of licking, walking, and random pennies. Seinfeld advises, “If you really want to be helpful to us, just open the letters, read them, and e-mail us what it says.”
What is worse for a polity? When millions of individuals who are able to work decide not to? Or when those who would like to work are told by bureaucrats to stay home and wait for a check that’s in the mail?