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How Dog Bones Explain the Economy

Robert Barro’s recent Wall Street Journal op-ed argues that a big cause of our persistent high unemployment is “the reckless expansion of unemployment-insurance coverage to 99 weeks.” Such arguments have become popular among conservatives lately, and this perspective has resonance beyond Republican commentators. A lot of Americans are ambivalent about social insurance, unemployment benefits in particular, because they believe such help distorts the personal choices made by people who rely on such benefits. In short, they believe, extended UI encourages people to live off their benefit checks when they should be hunting more doggedly for work.

Of course, we hear this argument in other contexts, too. Just as the unemployed should try harder and be more diligent, so the unschooled should read more and the unfit should start hitting the gym. Sometimes one must admit, these harsh judgments make some sense, although frequently they are based on stereotypes or simple ignorance. But even when these admonitions hold some truth, they can lead us astray—dulling our sense of urgency and distracting us from more important, bigger issues. We end up focusing on the real or imagined defects of a small group of people in difficulty, rather than the larger structural forces that affect them all.

I learned this lesson back in graduate school, when I encountered a great parable of labor market sorting: the dog bone economy. I encountered the parable in a brilliant article by Michael Sattinger. I suspect its many variants trace much further back. An example from my own community reveals the basic story:

There is a vacant lot on Ellis Street in Chicago, just south of my university office. Every morning at 7:00, wild dogs congregate there to fight over bones. This competition reaches equilibrium by 7:05, when every bone is taken, and no dog has a bone that a more powerful dog wants to take.

The dogs have received much study from our campus social scientists. An economist notes that the strongest dogs get the best bones. She suggests that we help the poodles through weight lifting and karate.

A sociologist explains that social networks are the real secret. Collies cooperate and accomplish through collective action more than even one Doberman can do alone. She suggests an intervention to bolster social capital.

A social psychologist identifies self-efficacy as the key variable. Poodles don’t think they have a chance, and so they simply give up. She suggests self-assertiveness training and maybe Paxil. She has promising data from a clinical trial.

Ethnographers, anthropologists, gerontologists, even someone from the dog genome project get into the act. Each researcher comes armed with data and testable theory regarding which dogs will get the nicest bones.

If we are trying to help a particular dog, these social science insights are greatly helpful. In countless ways, these insights can be important for the whole economy. We all benefit when our fellow citizens become more productive and self-sufficient. These insights are also helpful in dispensing public aid. If a dog is too small or too old to win his own bone, what's the point in making him fight?

But having discussed all of these possibilities, we’ve managed to ignore the most obvious problem of all: The garbage truck operator is dropping off 88 bones, and there are 100 dogs. No matter what we do, twelve dogs will be left out.

In times of deep recession, the same is sometimes true of unemployment. Maybe some of the jobless could be more virtuous, or smarter, or stronger. Sometimes public policies can help or can hassle people into acquiring these desirable traits, sometimes not. The fact remains that there just aren’t enough jobs to go around.

We live in an economy which is vulnerable to periodic declines in overall demand for goods and services that cause serious unemployment. Our workforce is no less skilled or diligent than it was ten or fifteen years ago. Yet millions of Americans cannot find work. Chronic joblessness directly damages millions of people's lives, while casting ominous shadows over millions of others from the Dunkin' Donuts cashier to the disabled woman requiring services from cash-strapped state and local governments.

And there is a palpable lack of urgency in the face of this crisis. Deficit worries play a role. Republicans are lock-step against further stimulus, and a handful of conservatives in sparsely-populated states aren't helping. But the problem here is one of priorities—or lack of priorities. The House and Senate act with surprising skill and speed when concentrated and powerful constituencies really need something done. If you doubt me, watch what happens if there is some realistic chance that Medicare will impose the draconian cuts implied by its notorious and misguided Sustainable Growth Rate policy. As I've written elsewhere, some awkward "doctor fix" will always be found, because, well, this just has to be fixed. Too many Representatives and Senators lack that same person urgency regarding millions of our fellow citizens who can't find work.

You might say that my parable is insulting. People seeking work aren't dogs fighting over bones. The real insult is that we act as though they are.

Harold Pollack is the Helen Ross Professor of Social Service Administration at the University of Chicago.

Editor's Note: This item reflects editing changes mistakenly left out of the original post.