"Why millennials are facing the scariest financial future of any generation since the Great Depression"
A friend of mine sent me this huffington post article to read and I thought it'd be interesting to see what some of you think. It's kind of long just so you know.
That's because millennials insatiable demand for AVOCADO TOAST has completely ruined the economy!
Admittedly, it is nearly impossible to start the day without my organic avocado toast and soy latte. I scoff at any inferior substitute. My mind, body, and skin need the avocado. I am special. Yay me. Yay. (Mocking sarcasm of millenials...)
Simple solution. When poor people are struggling, give a huge tax cut to rich people
This statement is actually case in point how the American left can correctly identify problems (gotta give 'em credit for that) and then offer the most economically asinine solutions. As if "taxing the rich" is somehow going to bring down the cost of housing, education, and healthcare.
They don't have to give either tax cuts but are you suggesting "tax the poor" is the solution?
Out of genuine curiosity (please forgive me if I'm making any asinine/nonsensical economic assumptions or assertions) - why would cutting taxes on the wealthy be economically preferable to increasing wealth transfers to the poor?
The poor have a higher propensity to spend each dollar, so that would theoretically boost economic growth more. Each incremental dollar given to the poor will be injected into the system, while the rich may save 80 cents out of every dollar.
I understand that the rich would theoretically invest and therefore drive longer-term economic growth, but I'd imagine the vast majority of incremental wealth would accumulate just to the rich, and the result would be increased income inequality rather than any real economic benefit to the middle class or the poor (rich invest > companies grow > better returns to shareholders which accumulate at the top). I'm not saying there will be zero benefit, but small enough where income inequality would be the central issue (potentially leading to discontent from the masses and political instability, and the election of somebody like Bernie Sanders whose socialist ideals seem appealing).
There's truth in some of what the author is saying, that many of the fundamental things that are a prerequisite to security--housing, education, and healthcare (HEH)--have skyrocketed in cost well beyond the rate of inflation, with the consequences falling right into the laps of Millenials. Of course, I think if the article were longer, and given that it was written for the Huffington Puffington Post, I'd imagine that the author's solutions would be wrong and counterproductive.
What do housing, education, and healthcare have in common? They are all heavily subsidized and highly regulated markets, either regulated and/or subsidized by the local, state, and/or federal government. Over the last 40 years, in a bid to make HEH more accessible, the government has subsidized and regulated these markets to the point where they are non-functioning (in the sense that their costs have increased far beyond the rate of inflation without underlying justification, apart from government interference). Markets in a capitalist society, unencumbered by excessively meddling governments, in almost (ALMOST) every case, create products and services that are better and more affordable. For whatever reason, both political parties have been persuaded that subsidizing and regulating HEH will lead to greater quality and affordability when the reality couldn't be further from the truth (at least with regard to affordability).
I hold out little to no hope that there will be any kind of structural changes with HEH in the near-to-middle term. It seems that few politicians have the brain power to process the fact that more subsidies = higher costs.
Spot on mate. Never heard that point before but its so true. Especially with housing, the amount of regulations in Australia you have to get past to build a house is something that Kim Jun would be impressed with. I'm sure the local governments in the US are no different.
In the U.S. you've got a twofold problem--local regulation and federal subsidies through Fannie Mae, Freddie Mac, FHA, VA and USDA. I read a study, like, 3 weeks ago--and for the life of me I can't re-locate it(!)--that indicated that the cost of the median home in the San Francisco Bay Area would be in the $300,000s if not for the local government's burdensome land-use regulations (instead of in the, I believe, $800,000s presently).
This is an interesting article about why Tokyo has such affordable housing (relative to other major world cities). Two-ish word summary: land-use regulation.
https://www.ft.com/content/023562e2-54a6-11e6-befd-2fc0c26b3c60
So you add together tight rules for new housing starts and issue breathtakingly cheap and easy credit for purchasing a home and you've got massively un-affordable housing (at least in some areas). The knee-jerk reaction of many of our American friends on the left is to look at the housing affordability problem and to wave a magic wand and "require" it, or subsidize it with taxpayer money--the two places in America where those perverse policies are most prevalent are in NYC and SF, perhaps not-so-paradoxically two of the most insanely un-affordable places on Earth, and it's mostly artificial.
So back to the original point, the Huff Post article correctly diagnoses the problem but the Huff Post's READERSHIP's solutions are, to put it mildly, wrong.
Firstly, that article is far too long. That said, it makes a pretty depressing case with which I don't wholly disagree.
The working environment has changed a great deal in a single generation. And it's going to keep changing. And the pace of change is going to accelerate. This is likely to exacerbate the problems highlighted in the article for Millennials (low rates of home ownership, decreased expectations of investment returns within pension funds, low access to jobs that offer pension funds, a smaller population of people paying into Social Security than our parents, more student debt than any generation in history, little savings, wage stagnation, job competition from abroad, job competition from AI, rising housing costs, and a medical system that needs us in it just to be solvent).
The policy response from the left is always to expand the social safety net. The policy response from the right is that they don't want the safety net, no matter its size, turning into a hammock, so it's always too large. The problem, of course, is that the safety net is the mechanism through which you pacify what would otherwise be an unruly mob. You don't want to live in a society where too many people have nothing because that means they have nothing to lose. And I don't know what you call a large group of people with nothing to lose, but 'mob' seems to fit the bill.
If one person has nothing and they get desperate, they may choose to break the law as a rational response to their situation. If they steal food, clothes or money and get away with it, their circumstances have improved. If they steal and don't get away with it, they get put in jail, and at least they have food and shelter. The only real downside to the perpetrator in this scenario is the chance of immediate vigilante justice by the person getting robbed (say, they have a gun and shoot the assailant).
If you have a sufficient mass of people operating under that same decision framework (say, a mass larger than the current size of the US prison system), and they have an easy means of communicating and therefore organizing (say, the internet), then you have the makings of an uprising. At the very least you start operating at the precipice of anarchy.
I'm hoping technological progress helps solve some of these problems before they reach a tipping point. Technology has generally been a catalyst for positive change, but not always without social unrest. I think AI with change the supply chain and make goods cheaper, but we don't spend enough on roads or bridges, so costs of goods and services to end consumers might not drop. I think AI will identify medical maladies earlier than currently possible. Prevention is always cheaper than emergency medicine, so that should lower health costs, but the system will still absorb the emergency costs of the uninsured, and the US health system is just generally an inefficient mess, so unless we completely revamp the system, we won't participate fully in that technological advance. I think 3D printing will continue to disrupt the manufacturing sector, and will hopefully combine with automated vehicles and heavy equipment to allow for a fully automated 3D-printed house (with automated excavators mining the raw materials, automated trucks transporting those materials to refineries and eventually to job sites, and then printing the house in a matter of hours). But regulations are likely to get in the way here, and every worker displaced along that supply chain is likely to resist such efforts, so we might not participate fully in that revolution either.
A lot of this, though, kills jobs. And I don't think my grandmother wants her roofer wiping her ass at the nursing home, so all of the displaced won't be moving into caring for the elderly.
I've been talking about these demographics for years. It scares the shit out of pension fund managers. I wish we had smarter people making policy at the moment, but I think this is one of those times you just cross your fingers and hope for the best. The problems are so large and so convoluted, I'm almost tempted to give up thinking about it. After all, it only really impacts me if the rabble grows too large or rouses itself into a mob that tries to take my stuff. Let's hope we don't get there.
2017 is the best year to ever live in in the history of the planet. 2018 will be the best year to ever live in, then 2019 and so on. We as a society are so ridiculously wealthy that we have time to compare our stuff to other people’s.
There will be no “uprising.”
Typical comment made by those who are comfortable. So because we have wealth, tech, medicine etc, this makes 2017 the best time to live.
As a collective yes we do have those and life sounds good overall, like economists who look at GDP and say everything's ok. But let's not forget that some people don't have access to some of that tech, wealth and medicine.
I agree with your saying that there has never been a better time to be alive than today (and this will likely be true every year into the future), but this assertion is relative to past human prosperity. It is not human nature to judge our current individual conditions relative to what they were for past individual humans; rather, it is human nature to judge our current individual conditions relative to those in our "group/tribe" (city/state/country). Indeed, I think this is a fact of evolutionary psychology (and it's not difficult to think of reasons why such a trait would be evolutionarily advantageous). So although I agree with your first assertion, I disagree with your dismissiveness at the potential for an "uprising" from the malcontent masses.
Great post, +1
brotherbear well said and the sad thing is society in the US is just now becoming "aware" of problems mainly because of the instant information age we live in as well as the 24/7/365 "news" cycle.
For me the BIGGEST catalyst to any societal downfall IMO is the erosion of the family unit. It seems to me that the greater wealth a society experiences and or greater inequality this leads to negative affects on the family structure.
I firmly believe a large part of society's ills could be solved if the family and societal fabric were kept in tact.
Being an Asian I come from a community where it is common to live with you parents past 22 years of age, its common to have multiple generations in one home, and greater influence of community (good and the bad) on your life.
HuffPo is absolute garbage, I would take a literal dump on it but then I'd have to buy it, and I sure as hell don't want to shit on my laptop screen. If you can cite any reasonable source, happy to talk, but I can't even take HuffPo seriously
The only things I'm afraid of that can stop my exponential success are loss of control of mind or body, malevolent AI/GI, nuclear disaster, pandemic, and massive natural disaster/asteroidal impact.
Real wages have not risen fast enough relative to the cost of living...housing costs, education costs, transportation costs and healthcare costs adjusted for inflation.
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