Although he described himself as "like Tigger" the "Winnie the Pooh" character known for his optimism Associate Dean of the Tuck School of Business' MBA program Matthew Slaughter shared somewhat pessimistic projections for the American and global economies in the first installment of the five-part Fall 2011 Faculty Chalk Talk Series, "Election Issues 2012: Hot Topics in National Politics."
Slaughter divided his presentation into five segments, each centering on a number either a date, a percentage or a financial figure to showcase different aspects of the state of the economy. The lecture addressed various public policy challenges that governments will face in the coming years and was titled "In the Wake of the Financial Crisis: What Next?"
The first number Slaughter discussed was January 2020, the date when he projected the United States will return to its total number of pre-recession payroll jobs.
January 2020 is a "summary" for how damaged the U.S. economy and many other economies across the world still are, Slaughter said.
Slaughter performed his calculation without including the possibility of an increasing number of work-seeking Americans in future years, he said. After analyzing a number of different elements relating to the current state of the economy, he came up with the January 2020 date, he said.
High rates of unemployment and underemployment will heavily impact political discourse and election results for at least the next 10 years, according to Slaughter.
"A lot of political commentators have correctly pointed out that the 2010 elections had a lot to do with jobs," Slaughter said. "Whether or not you liked that, 2012, 2014, 2016, 2018 the dynamic of the political economy is going to be present in America for a long time, and I worry how that's going to play out."
In Europe, the impact of high joblessness rates has already been seen, Slaughter said. In Spain, for instance, where the rate of youth unemployment hovers around 40 percent, riots broke out several times during the summer, according to Slaughter.
One factor contributing to the unbalanced state of the American economy was the fact that consumption accounted for 70.5 percent of American GDP, an unsustainable and "unusually high" number, Slaughter said. Americans should do away with the attitude that they can "have everything yesterday," and must increase their saving rates in order to make consumption more sustainable, he said.
Although global monetary policy institutions have pursued aggressive tactics that deferred depression such as cutting target policy interest rates to near zero percent, the third number identified by Slaughter these policies also placed governments in a somewhat difficult situation, according to Slaughter. Officials now must work to stimulate the economy while also avoiding excessive inflation, he said.
"There's no historical precedent for where the [Federal Reserve] and many other central banks are," Slaughter said. "There's no playbook."
The interventions that saved the global economy from further calamity also left several governments with large deficits, Slaughter said. In the case of the U.S. economy, the total for fiscal years 2009, 2010 and 2011 will likely equal $4 trillion, another number cited by Slaughter.
Underlying problems including a high school graduation rate that remains stagnant at approximately 75 percent, the final figure of the lecture further magnify the challenges that the United States faces, Slaughter said.
"We've got crisis issues, but all these pressures are building and present on top of lower frequency pre-crisis pressures," Slaughter said.
Although the numbers are dire, they also provide opportunity, he said. With the right leadership, the United States could take advantage of new opportunities, particularly overseas.
The Faculty Chalk Talk Series has been held annually since Fall 2003 after the Office of Alumni Relations noticed that many alumni chose to visit campus independently from College-sponsored reunions, according to Roberta Moore, director of alumni continuing education and travel. Because most of these "mini-reunions" took place during fall football weekends and alumni had responded "enthusiastically" to other continuing education programs sponsored by the Office of Alumni Relations, administrators decided to add more robust programming, Moore said.
After noticing how many Dartmouth faculty members had been interviewed and quoted by national media organizations, Moore began to develop a lecture series that addressed the topics "in the forefront of the minds of Americans," as determined by Gallup polls taken in March and April, she said. Future lectures will address topics including the environment, health care reform and foreign and domestic policy.
Although the Chalk Talk series is primarily geared toward alumni, students and other members of the Dartmouth community are encouraged to attend, Moore said. The remaining four lectures will be spaced throughout Fall term.
