Nov. 1, 2010
Items within a taxonomy share a defining characteristic. For items within genus “Yo-Yo,” this characteristic is destruction. Take the toy Yo-Yo. Maybe this example is specific to my childhood and my punk sister, but how is a hard knob that’s designed to be projected by way of long string not look like a tool to inflict pain? Next up: the Yo-Yo diet. The leaves are changing, which means that it’s time to launch the perennial preemptive assault on holiday weight gain: lose now what we expect to gain then. I’m from the South where food is the currency of love, and I defy anyone to say, “No, I’m full,” to my Grandma who offers just one more piece of the chocolate cake she made for your visit because she knows it’s your favorite. Moderation is not an available tactic. War is a messy business, and for many of us, the battle will look something like this:
Perhaps a lesser known, but far more consequential, member of this classification is YOYO public policy. On October 26th, the Asset Building Program and Economic Growth Program co-hosted an event called “Revising Policy Assumptions in the Wake of the Great Recession” and were fortunate to have Jared Bernstein, the Chief Economist and Economic Policy Adviser to Vice President Joe Biden, as the keynote speaker.
He spoke of the Great Recession as marking the shift from one social contract, defined by “YOYO (You’re On Your Own)” policies to another defined by “WITT (We’re In This Together)” policies.
“YOYO stood for ‘you’re on your own,’ and was intended to bring to mind the political economy of privatizing current non-market functions, defunding government, deregulating markets based on the principal that they would then self-regulate, opposing collective bargaining, public education, and public goods in general. YOYO’ism makes for a narrow social contract.”
He said that these “YOYO” policies that dominated the previous decade precipitated the Great Recession.
“For example, those at the highest levels of economic policy believed that markets would monitor themselves and then self-correct if any imbalances developed.
It should now be clear to all that this view fails to account for realities clearly absent from the models, dynamics having to do with political power, regulatory capture, corporate governance, and compensation structures. In other words, if your contract fails to account for political economics, for the role of adequate oversight, for the very simple Adam Smith principal that you need some skin in the game—there’s got to be some market discipline for this thing to work…well, otherwise, the center simply won’t hold.”
He argues that the alternative WITT policies of the last two years, such as increased investment in social insurance programs, education, and infrastructure in the American Recovery and Reinvestment Act, financial reform, and healthcare reform, have led to growth in job creation and GDP, and ultimately, represent an agenda of a broader social contract.
Asset building policies, ones that aim to increase the number of people within the financial mainstream and who have a stake in the success of the economy, fit cleanly into the WITT frame. The newly created Consumer Financial Protection Bureau, for instance, will hopefully replace what Elizabeth Warren calls the “tricks and traps” among financial products that expose consumers to excessive risk with the transparency and simplicity to make informed decisions that are in their best interest. And, more people with more information making better decisions isn’t just good for them, it’s good for everybody. As Bernstein said,
“Absent the contract, not only do average folks fail to get a fair shake, but society in the aggregate is worse off. It’s bad for micro AND macro.” The collapse of the housing marking that precipitated the Great Recession clearly demonstrated that risk isn’t contained at the household level and that, in fact, we’re in this together.
Some things are inherently destructive. A bomb, for instance, is designed to inflict damage. UPS doesn’t employ it as a delivery method. Puppies or flowers don’t emerge from the shell when it detonates. Other things become either destructive or constructive in the hands of their user and are subject to choice. When it comes to toys, eating behavior, or policies: just say “no” to YO-YO.