Time and Chance

Matthew Yglesias blogs about a paper which claims to find that graduating from college and entering the job market in a recession year has long term negative effects on your career. This seems plausible although the paper has the weakness that it only looks at a small number of years. So even if you show that people who graduated in high unemployment years did worse it is possible that these years were bad for other (or additional) reasons than high unemployment. However it is certainly true that chance events play a big part in life. This is not a new observation.

Ecclesiastes 9:11

I returned, and saw under the sun, that the race is not to the swift, nor the battle to the strong, neither yet bread to the wise, nor yet riches to men of understanding, nor yet favour to men of skill; but time and chance happeneth to them all.

Yglesias goes on:

... If you’re graduating from college this spring, you’ll be sitting around at the age of thirty-five still suffering from the fact that Susan Collins, Olympia Snowe, Ben Nelson, and Kent Conrad decided to make the stimulus bill stingier in order to better bolster their credentials as preening centrists. When thinking about short-term inflation-unemployment tradeoffs, this sort of thing is crucial to keep in mind. Inflicting a high unemployment rate on the population has incredibly punitive and deleterious long-run consequences for young people.

I think this is pretty wrongheaded. First if you are looking for villains the people who caused the recession would seem better candidates than a few moderate Senators. Second optimal economic policy is not as obvious as Yglesias would have us believe. Third any policy has winners and losers. One could equally say "inflicting a high inflation rate on the population has incredibly punitive and deleterious long-run consequences for old people on fixed incomes".