Guest Post: A New Generation of Whiners?

Submitted by Leo Kolivakis, publisher of Pension Pulse.


Leah McLaren writes in the Globe and Mail that Generation debt is in for a rough ride:

A few years ago, I interviewed University of Toronto demographer David Foot, author of the bestseller Boom, Bust & Echo. Over tea at a campus pub, he assured me that my generation – which included the youngest of what he dubbed the “busters” and the eldest of the “echos” – was in for a sweet ride. We were destined to be prosperous and “in demand,” he said, as a result of being born in the mid-to-late 1970s, when the birth rate was at an all-time low.

What Foot didn’t know was that an economic meltdown would conspire to all but scupper my generation’s hopes and dreams, just as they seemed about to come to fruition. The lucky, plucky, anointed-for-greatness offspring of the first boomers, now in our late 20s and early 30s, have fared the worst in the current financial crisis, all things considered.

After finally managing to land decent jobs, we are the first ones being laid off, because of lack of seniority. Bad news, since we’re also mortgaged to the hilt, having bought our first houses on credit just as the market peaked (in the United States, it was the same generation of first-time home buyers who were swindled into subprime mortgages).

As for future generations? That’s our problem too. In recent months, many of us have found ourselves not only homeless and jobless but pregnant to boot – the recession having struck smack in our childbearing years.

In the midst of all this carnage, who’s crying the blues? Why it’s the baby boomers, of course! The generation in charge – the one that created and perpetuated the unsustainable financial model that led to the current collapse in the first place. Haven’t you heard the bad news? Their investment portfolios are down. They’re not sure they can afford to retire the way they had planned to. They might have to sell the cottage to pay for the divorce!

And as for their jobs – you know the high-paying, secure ones at the very top of the pay scale? Well, they’re going to have to hang onto those for a while longer than they had thought. At least until they get old and sick enough to max out the health-care system and the national pension fund.

It’s a wonder my generation isn’t demonstrating in the streets. Instead, we’re doing the opposite. We’ve formulated a strategy to get through this: We’re going to close our eyes and plug our ears and hum Mary Had a Little Lamb till it’s over.

In the cover story in the latest issue of Toronto Life, Katrina Onstad writes about the boundless enthusiasm the younger generation is showing in the face of an economic meltdown. Her over-educated, under-employed interview subjects are so relentlessly positive about the future that Onstad at one point blurts, “What if it’s not okay? What if it’s breadlines for everyone? What if it’s Grapes of Wrath?” To which her 25-year-old subject responds with a puzzled, “I just don’t go there. I just don’t think that way.”

As someone just a few years older, I do. The rest of my generation may not know it yet, but we have been robbed. Our famous self-esteem and sense of entitlement – instilled in us by over-indulgent boomer parents – can only shield us from the truth for so long: The demographers were wrong. We are in for a very rough ride. Much rougher than our parents.

My grandmother grew up during the Depression. As her family’s fortunes fell, she remembers hobos at the back door begging for table scraps. For my mother, growing up in the fifties, it was all pony club and tennis lessons. There were no ponies for me as a child, but things were comfortable. Just comfortable enough that I always assumed that, with a little hard work and perseverance, better things were coming my way.

Turns out this was a naive assumption.

One generation after another frittered away its wealth until the boomers came of age and – in a moment of supreme overconfidence – placed everything that was left on a bad bet.

This time round, my generation has more in common with the hobos than the pony clubbers.

Of course, the bleeding will eventually staunch, but the loss of the wealth and economic stability accumulated in the postwar boom will reverberate right through the prime of our lives. All the stuff our sense of entitlement entitled us to – home ownership, job security, holidays, savings, university funds for our kids – just disappeared. It’s not that these things are impossible. But we’d be wise not to count on them.

Perhaps positive thinking was our mistake in the first place. As Foot pointed out in a telephone interview this week, “Your generation has had the lowest interest rates in 20 years. You had jobs in your 20s. Some of you were overly optimistic on your future earnings and bought much bigger houses than you should have.”

You can say that again. And now it’s last hired, first fired. Foot concedes that the situation isn’t good. “You have all of the responsibility of adults and none of the protection,” he said. “I didn’t say there wouldn’t be ups and downs.”

As if things weren’t bad enough, we are also going to have to listen to our parents – the generation that steered us into the iceberg into the first place – fret themselves to death as the ship goes down.

Just the other day, my mother called me up to tell she was worried about her husband. The economy was stressing him out, she said. His blood pressure was up. It was so bad that they had stopped opening their monthly financial statements. When I reminded her – through gritted teeth – that both of them have good salaries and a manageable mortgage, she reluctantly agreed.

“I told him it could be worse,” she said. “We could be like you – no job security, heavily in debt, just starting out in the world. I told him we shouldn’t be worried about ourselves; we should be worried about you.”

Which was when it hit me: Not only was I unlikely to get through this recession unscathed, I probably wasn’t going to get an inheritance either. It had never occurred to me that I might need one, and just as I thought I might, the prospect was evaporating like a distant mirage.

And to think I had spent my 20s feeling optimistic. Thanks for nothing, David Foot.

My friend Tom Naylor calls this the “new generation of whiners”. Ms. McLaren has a point, but it’s time to stop whining and get to work to fix the “abuses of the system.”

Each one of us, poor or rich, can do our part to make this a better world. True change only comes when people take the time to properly inform themselves of what is going on around the world and that means always questioning what you read in mainstream media.

There is nothing that prevents you from volunteering your time to a local charity or doing your part to write on social and political issues that concern you, especially now that blogs are available to everyone who has access to a computer.

As far as pensions are concerned, stop believing that everything is fine and “over the long-run” your pensions are safe. If you really believe that, you are in for a rude awakening.

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44 comments

  1. JO

    Your post talks to a major trend we will over the next 5-10 years. A spectacular polarization in politics as the boomers and the younger generations fight it out over “entitlements”, taxes, etc. I am very angry at the bullshit entitlement mentality most people have – regardless of age. Thanks, as usual, to blatent government intervention, the end result will be lower standards of living. I am 31 and consider all collective entitlement programs as gigantic ponzi schemes. I am financially and mentally prepare for 30-50 % cuts in pensions, rising tax rates and shockingingly radical politics over the next 10 yrs. The boomers have already(not all boomers – those in power and their supporters)..started making changes to pensions and in fiscal policy (running huge, multi year deficits) that attempt to rob the younger generation in order to finance the boomer entitlements.

    Make no mistake, a debt based, fractional reserve, fiat money system combined with large governments who have high tax/complciated tax codes assures that most of these collective entitlement programs will never be honoured. Those who got in first, get the most out of it, while the young who have significant payroll deductions confiscated from the fruits of their labour to pay for this nonsense will be lucky to get back 50 cents on the dollar.

    If we want prosperity, we need to eliminate central banking and fiat money, reduce leverage in the banking system significantly (below 10 to 1), dramatically simplify the tax code with a focus on very low income taxes and a shift to consumption taxes, and finance healthy economic activities with savings and string investment in education and technology.

    I expect tax revolts in most developed countries before the end of 2010. At the end of the day, the boomers will lose out – the math always wins. The inevitable long term trend change in bond prices from bull market (bubble) to long bear over the next 5-10 yrs will, together with contracting credit and asset values with resulting pressure on tax revenues, assure that governments are forced to shrink and boomers to lose a notable portion of their “entitlement” programs.
    JO

  2. Michael

    People get the government they deserve. Making the economic crisis a generational issue is unfair and just a further division in our divided country. All of us are responsible for the economic crisis. All of us will have to work together to get out of this hole.

    When you assign blame look at yourself and then look at the financial sector for dragging us into a depression. Blaming your parents/grandparents is a childish response to a very complex set of problems.

  3. Anonymous Jones

    I think it’s a might bit unfair to say that equal blame lays on those who were not adults and not voting on the policies that led to economic devastation. I also don’t find it childish at all to worry that the boomers, with their huge block of voting power, aren’t going to use that power to maintain and possibly expand their entitlements (social security and medicare) at the expense of younger taxpayers.

    I’m over 40; I’ve already got mine, but I still have empathy for the generation of whiners. Not a lot, but still, they’re screwed.

  4. Charles Butler

    Leo,

    The Globe article has its merits, but the real truth of the matter is that the children of the boomers are the first generation in a century not to question the world into which they were born. You have to search far and wide to find an original notion sprouting from anyone born since 1975 – and clamours for a return to the ideologies of Adam Smith or Karl Marx quite simply don’t qualify in this regard.

    The boomers made the fatal error of believing that the magic of technology – an illusion created by their parents – had managed to leave a sordid past irrevocably behind. Their kids, on the other hand, couldn’t even find Iraq on a map let alone develop a coherent opinion on it.

    Absolutely right about pension funding, by the way. Everyone bought the ‘end of history’ line of bullshit, though.

    The intergenerational warfare take is priceless. Maybe a toning down of expectations and a little attention to defending the interests of one’s kin would be more appropriate.

  5. davecydell

    In response to: “….that means always questioning what you read in mainstream media.”

    I offer:

    I have this on the wall by my desk, my creation of years ago, and it says a lot, about the so called “economic crisis” of now.
    You, too, can have one. Here is how.
    Take a blank sheet of paper.
    Draw in it a box. Label inside the box: “Think inside the box. “
    Then label the area outside around the margin: “Think outside the box.”
    Now draw a small circle, encompassing some of the area inside and outside the box.
    Shade it and draw an arrow pointing at it.
    Write along this arrow: “Do not think here.”
    This circle was created in recent decades, and has been expanded since.
    This is why we are where we are today.

  6. Ian

    Some “Baby Boomer” parents went on the road for more than eight years, doing for their children (1977 and 1980) what should be: teaching about the human being and the truth of our American Dream — it is a nightmare on purpose.

    Read Robin de Ruiter and then, and only then, can the future be seen for what it was when created, not by the BABY BOOMERS, however.

    Karl Marx taught cooperation and THAT predatory capitalism would eventually destroy the LABORER class, in favor of the predatory.

    Take a look at the global financial melt down and then study ROBIN de RUITER, as well as the other scholars who teach about the economic reality:

    MICHAEL HUDSON, WILLIAM ENGDAHL, ELLEN BROWN, CATHERINE AUSTIN FITTS, GLOBAL RESEARCH, et al.

  7. Kristina

    I’m 32, so I’m going to chime in here, too.
    Each one of us, poor or rich, can do our part to make this a better world.We’re doing it, if only for the credit, the networking opportunities, returning to school and need the “community activism” credit.
    You have to search far and wide to find an original notion sprouting from anyone born since 1975 – and clamours for a return to the ideologies of Adam Smith or Karl Marx quite simply don’t qualify in this regard.This has not been my experience at all. If anything, my fellow “generation of whiners” colleagues have been card-carrying members of the “independent voter” crowd. We are fed up with both parties, see both parties as enormously corrupt sides of the same oligarchic coin. Apparently, we are finally starting to get the media to pay attention to us. See “The Quiet Coup” by Simon Johnson; “The Power Grab” by Matt Taibbi.

    If we want prosperity, we need to eliminate central banking and fiat money, reduce leverage in the banking system significantly (below 10 to 1), dramatically simplify the tax code with a focus on very low income taxes and a shift to consumption taxes, and finance healthy economic activities with savings and string investment in education and technology.Ok, say, just for the moment, that I totally agree with you. How do I go about doing that? Write a letter to Congress? See my articles listed above.
    Vote for a new President? Because the last four or five were such a smashing success?
    I should have been voting? I’ve been voting since I was 18. My choice never wins.
    Take to the streets? You realize there is an active military battalion, a standing army, in the northeast United States, right? If not, have a Google gander. I try to march on Washington, I am going to be facing my brothers and sisters, and they are going to have government-issued sandbag guns pointed at me.
    The ’70s was open protest, marching, etc. Our generation has to make change silently – get inside, and then tear the walls down. We don’t really have any other choice.

  8. Ian

    Yes, it is time that the future is taken into our own hands and the old way of “culling the human herd” is definitely a barbaric approach.

    The problem is and has been, the 13 families who have RULED the earth, for thousands of years.

    How to, is the question alright … how to change the power structure that is a tap root of pure evil: faux money that is used to neo-colonize the whole planet for the offspring of the inbred brain dead.

    CHANGE WE CAN BELIEVE IN?

    No, change we must create.

    First, the private global investors must be fully exposed for what it is they do, in actuality, for America.

    Study Catherine Austin Fitts.

    AND VOLUNTEER HERE:

    http://www.goldmansachs666.com

    Take down the vampires by driving stakes into the heart of the problem —

    TRANSPARENCY!

  9. Mary

    I am a baby boomer who has thought the very same ideas you express in your piece many times this past year. The debt is immoral but that hasn’t stopped anyone.
    I’m sorry you 30 year olds out there are left holding the bag for a bunch of self indulgent boomers who looked the other way while bankers took over and looted the entire world. It is a sad legacy to be sure.

  10. Harlem Dad

    Leo wrote:

    Ms. McLaren has a point, but it’s time to stop whining and get to work to fix the abuses of the system.Let’s get something straight right now. There are no “abuses in the system.” There are abusers. And the abusers are people.Where I come from we say that people like this need an attitude adjustment. That means put them in jail! You know what I call Lloyd Blankfein and Robert Rubin sharing a cell with Bernie Madoff? A good start!Shareholders, too, need an attitude adjustment in order to motivate them to do something about abusive Executive Pay. I know, let’s allow the free markets to freely destroy all of the wealth that they invested.

    My friend Tom Naylor calls this the “new generation of whiners”.It’s w-a-y too soon to call them whiners. The first step in fixing anything is realizing (1) that there’s a problem, and (2) what or who is causing it. I am relieved that the younger generation [disclosure: I’m 53, blue collar, no college degree] is waking up to the seriousness and depth of this crisis. Thanks to the blurring of Politics and Marketing, this is no mean feat.

    True change only comes when people take the time to properly inform themselves of what is going on around the world and that means always questioning what you read in mainstream media.Yeah. Like, duh. And a reasonable reaction to properly informing yourself is to exclaim “hey, we’ve been screwed! Like big time!”

    Tim in Sugar Hill

  11. Tortoise

    Interesting exchange. I am afraid, though, that Charles Butler hit the nail on the head when he stated: ” … the real truth of the matter is that the children of the boomers are the first generation in a century not to question the world into which they were born.”

    I have children of that age and I have interacted with a lot of people of that generation over the years. Though I am a baby boomer and perhaps at the top 2% in terms of income, I have not had an easy life (I strongly resent the BS that baby-boomers have a monopoly on a sense of entitlement) and I know the facts of life. It is the baby-boomers children who live (or used to live) in the clouds and who have thought that the world owes them a living no matter what they choose to do.

    Many of our children have made a rather silly mistake: They have been comparing their life in their twenties with our life in our fifties. When I became twenty nine years old, I still lived with my wife and our baby in a 540 square feet apartment — and were perfectly content with that. Our car was an ancient Pontiac that we bought for six hundred bucks. And I was a graduate of a top school with a solid job in a good industry and excellent prospects. By the way, I do not consider myself an exception, that was the norm for people of my generation in the mid and late 1970s.

  12. B. Mull

    I’m starting to come round to the idea that pensions are the root of all evil. I don’t think everyone can be completely responsible for their own retirement, but a system like Canada where the pension funds are reasonably solvent and immune to political shenanigans would be a great thing. It’s painful to admit that our parents’ and grandparents’ stole from us–but there is no denying now that that’s exactly what they did.

  13. Leo Kolivakis

    Harlem Dad wrote; “Like, duh. And a reasonable reaction to properly informing yourself is to exclaim “hey, we’ve been screwed! Like big time!” “

    So we have been screwed? What else is new? Democrats, Republicans, doesn’t make a real difference because Wall Street has the politicians by the balls?

    You got two choices in life: wallow in hopeless cynicism or keep hammering away at the corruption, exposing the lies and hoping that the sheer volume of people reading it on the internet will finally get the politicians to cave in.

    In my opinion, it is totally useless to whine and adopt a “victim” mentality like “they screwed us”.

    It is much more effective to hammer away at them day in, day out, exposing the blatant lies.

    As far sending them all to jail, this too is totally useless. It will appease the masses, catch some media attention, but if the system remains corrupted by the financial oligarchs, a new class of thieves will ascend to the top jobs to start anew again.

    Leo

  14. Tortoise

    B. Mull said…”It’s painful to admit that our parents’ and grandparents’ stole from us–but there is no denying now that that’s exactly what they did.”

    My God, what ingratitude! M. Mull, do you live in Zimbabwe? Congo? Liberia? Bolivia? I guess not. The youth of these countries have too much respect for their elders to accuse them for the abject poverty and mess they inherit. But the youth of America cry bitterly over their five-dollar lattes and accuse (for theft!) the previous generation for what? For the fact that they inherit a rich country with a relatively low debt to GDP ratio and abundant resources.

    Sense of entitlement anyone?

  15. Ian

    Yes, I admit it. I am the baby boomer who engineered the entire crisis for my own personal gain.

    Ahem.

    Look guy, most people my age (51) have as much to do with this crisis as the planet Jupiter. I’m not a financier, I’m a computer programmer. The first time I made over 30K a year was in 1996.

    When I did make my money, I never bought stock or cars or wide screen TVs. Ever. Didn’t trust the the market or the economy. Can’t imagine why. All my “retirement” is tied up in real estate and small businesses. No middlemen, and some very, very conservative 15-year bank loans.

    So before you paint the “boomers” with a broad brush, consider that most are simply people like you, trying to get by as best they could and frankly, nobody but suckers (a category which crosses generations) bought into prosperity forever as promoted by the most recent crop of oligarch owned media shills. My sympathy too is limited.

  16. Purple

    Look at the college graduate debt situation. 20 year-olds are debt slaves right out of the box. (Real college tuition is many times more expensive than 1970.) That’s another reason why one can forget about the economy reviving any time soon.

  17. Simoné Gibroné

    “they inherit a rich country with a relatively low debt to GDP ratio and abundant resources.”

    Except the country is less rich (whatever that means when you’re 10+ trillion in debt); has a higher debt to GDP ratio, and less abundant resources today than when boomers assumed positions of power. On the other hand, boomers earned much more than their parents by 1) not paying their own way and 2) not investing in the future. And its hard to suggest otherwise concerning two when the cost of education has outpaced inflation by about 10 percent a year since the 80s. Apples to apples it costs more to get ahead today than it did for my parents.

    Now, I don’t blame all boomers as individuals for the problems people of their generation caused, but if as a generation you leave the country worse off than when you found it, it’s not wrong to account for that. Debt = wealth national policies were popular, and voted back into office time and time again.

    And I don’t think it has to be about blame. The point is just acknowledging that going forward things are going to be worse than they were for the boomers, and in acknowledging that, we are acknowledging that a little shared sacrifice is called for. People in their 50s and currently at the top of the income scale can’t simply continuing cutting their own taxes and leave a bigger and bigger mess to clean up after them.

  18. Harlem Dad

    Leo wrote:
    

In my opinion, it is totally useless to whine and adopt a “victim” mentality like “they screwed us”.I agree. So after reading your comment I went back to the article you wrote from and I admit that Ms. McLaren does sound like a whiner. I still think it’s too early to say that all Generation Debt folk are whiners. “Holy cow, the house is on fire!” has to happen before people begin to flee or call 911.

    But I see now that I made too much of this point. In doing so, I made too little of your point, which, if I read it correctly goes something like this.

    Working within your own community to make life better for your family, your neighbors, your neighbors’ children, and so forth, is a much more productive use of your time than whining that you’re not even going to get an inheritance.

    I agree with you 100%.

  19. Nate

    Okay, to start off, I’m 26. I have warned my dad for nearly a year about my generations’ coming resentment of the Baby Boomers (our parents). A generation of whiners? Perhaps. But only until there are no more people up the tree to whine to…or maybe we just learned from the best…. ;)

    For the vast majority of prosperous times I was: unable to vote, did not own any stock or have a pension plan (that saw the greatest equity rise in history), was unable to buy a house at “normal” levels and had the privilege of attending a State college with tuition at its highest levels ever. Can you honestly say that my generation is even partly responsible for this mess? For better or worse, it is going to fall on the younger generations to get us out (unless of course you believe this will all be behind us come 2010).

    When older people say things like just “suck it up” they fail to understand the economic differences of my childhood vs theirs. During my time in college I saw tuition rise nearly 60% over 5 years. It took five years because now you have to apply for your major after completing two years of college (generally, this baffles anyone over 35). I came out with an average debt of ~$20K – my last year was on a full scholarship. Public colleges in my state turn DOWN the majority of applicants citing their “competitive” nature. It costs more and is more difficult to achieve the same things now than it did 30-40 years ago.

    Even if you only paid for things in cash and saw nothing of the rise in the stock market, did you not vote and guide our country to its present state? Or was your head in the sand and it is now your excuse?

    Forgive my continued whining, but are any of you going to be returning your social security or denying yourself medicare when the time comes? Funny that when it’s time to collect these benefits, it seems everyone believes they are getting out less than what they put in. Yet we have a system that is collectively losing money year after year. I guess one raindrop never caused a flood….

    We may not be looking for your to solve all of these problems, but some collective responsibility would be nice…or you could just hand the reigns over to us…doing neither is rather frustrating.

    Leo, I agree completely. I fear my generation is too cynical to actually attack the real problems or will just continue the divisive left vs. right crap until it is too late.

  20. GreeneTimes

    So many issues:

    1. Look at the increase in world population. Since 1950 it has almost tripled. Since we live on a finite planet, that’s a lot less resources for each person.

    2. Look at the speed of technology. Knowledge is expanding exponentially. Look at the scientific discoveries that come out EVERY DAY. Many of these are extremely distorting to our economies. Look at what the internet has done to business in a few short years (how many old companies gone).

    3. Look at globalization. If I phone a call center I am more likely to get an answer in the Philippines. Try and buy anything made wholly within 100 miles of where you live.

    The point is that we are in an era of extremely rapid change and resource limitations but with populations struggling to understand what is going on (expecting it to be like it was).

    This is not generational. We are all getting “hit”. It is a different world for all of us. The only constant seems to be change, and that means we have to do things differently and expect things to be different.

    Rapid change means that personally I can’t understand why anyone pays a P/E above 8 for any company (8 years is a lifetime now for any company). Neither can I understand an education system still designed to “pour in” knowledge, when it will be outdated within 5-10 years.

  21. John Merryman

    I would like to make a basic observation about the economy. Economic reality is supply and demand. With capital, supply is the lender and demand is the borrower.
    After thirty years of supply side economics, we have a huge bubble of illusionary wealth based on risky lending, inflated asset values and extraneous circulation, while real borrowers are maxed out. Capital doesn’t fuel the economy. It lubricates it and when precipitating benefits don’t match appreciating assets, eventually the cycle breaks down. That is why capitalism did function with a progressive taxation system because it drained excess wealth from the larger pools and lubricated the necessary parts of the system. How it was abused is another story.
    It is time to start treating monetary systems as the public utilities they have evolved into, not the accounting of private assets we still imagine them to be. The value of money is no longer based on underlaying assets. It has become a social compact, based on public support and funding. Money is a form of public commons, similar to a road system. You own your house, car, business, etc, but not the roads connecting them. It’s that same interchangeability which makes money a form of common exchange. The environmental and social advantage is that since people are selfish, if it became the common understanding that monetary wealth represented public property, then people would sequester value within their communal web and environmental situation, rather than trying to squeeze out every advantage from their community and environment to store as personal wealth in their bank account.

  22. Lexington

    Personally I find it hard working up a lot of sympathy for someone who reportedly earns six figures writing a self absorbed weekly column for the Globe and Mail loosely premised on providing insight into the mindset of her 30ish, urban professional peers. It’s good work, if you can get it (i.e. if your mother happens to be an editor at the paper).

    The oh so rich irony here is that McLaren is smart enough to recognize, at least at some rudimentary level, that her peers are ofen narcistic egotists with an outsized sense of entitlement who are completely unequipped to deal with any meaningful degree of adversity, but she lacks the self awareness to connect the dots and realize how perfectly her infantile tirade about how the Baby Boomers Have Ruined Everything reflects exactly the temperment of -I will not say her generation, which would be commiting a gross libel against the innocent many- but rather the priviledged minority who shared her charmed upbringing.

  23. sangellone

    Well, it could be worse. My father’s childhood home was lost in the Depression ( it’s now a bed and breakfast hotel) and instead of a mansion he got WW2 as his ‘inheritance’.

    Of course the ‘Greatest Generation’ won that war and then won the greatest economic victory in the history of mankind that left the US in possession of 50% of global GDP.

    I wouldn’t wish the fate of my father’s generation on anyone but it is something for the young to consider. Fate may deal a tough hand but tough people rise to the challenge.

  24. kackermann

    Change the system…

    I feel bad I forgot the name of the man who came within a few feet of plugging Tom Delay. There was a man commited to change.

    That’s terrible!Is it?

    Delay was entrusted to serve the people’s interest, but instead was part of a machine that excavates wealth from the people it slowly grinds up.

    Are corporate board members entitled to fully examine the companies they are entrusted to oversee? Shouldn’t they be held to account?

    I think during times when the wheels of justice are jammed, such as during the last decade, that a sort of martial law is reasonable.

    Someone has to oversee the overseers, and if it’s not justice, then some other form of punishment has to be implicit and credible.

    We have an army roaming the world looking for people who may, may do us harm. Parallels can be drawn.

    Someone managed to throw an egg at Norm Colman the other day, but a grenade would have been so much more effective.

    Elections don’t seem to matter anymore.
    We are too divided to take to the streets where the military would mow us down anyway.
    Blogging is carthitic and does affect change in a low-level way.

    The question is, are there more efficient ways toward real change?

    Can you relate to what I question, or am I just some nutcase?

  25. Tortoise

    Simoné, I do not know how old you are. The country did not look or feel very rich in the early 1970s. It was a country ridden with racial problems, war, the draft, male chauvinism. Even in terms of material goods, the average citizen was not doing that great. If we all could reduce our needs (size of houses, quality of our cars, dorm rooms, dorm food, even the coffee we drink, etc.) to those of 1970, most of us would feel rich by those lowered standards. So, you may not believe it, in a sense the country is richer than it was in 1970. It is also better in many ways that are hard for a young person to appreciate.

    The public debt of USA is about 40% of the GDP (at least it was last year), one of the lowest among advanced countries. I would rather it were zero but do you realize what it was in in 1948? It was 110%. If we could take care of that, we can take care of 40%. The ratio is now roughly the same as when the first baby-boomers were in college.

    Accounting for Social Security makes it more interesting. The Social Security run a huge surplus thanks to the overpayment by baby boomers, the first generation to contribute for the previous generation’s benefits AND for their own. Even with that, the total debt of the US is about 65% of GDP compared with 120% in 1948 and about the same as it was in 1995. If the trend started during Clinton had persisted, the public debt would be by now so low that the banks would not be able to find treasuries to use as collateral. Bottom line: The deficit is manageable if we are willing to ONLY MODESTLY raise taxes and reduce spending.

    The large Social Security surplus allowed the government to lower taxes for the wealthy. The benefits accrued to a class and NOT to a generation. (Just look ate the fact, for Christ’s sake!) Regarding inter-generational transfers, it was a transfer from the baby boomer to their parents generation, the greatest generation. I do not begrudge that but facts are facts … Our parents were great and their sacrifices made the world a better and more prosperous place.

    And by which apples-to-apples metrics do you figure that “… boomers earned much more than their parents by 1) not paying their own way and 2) not investing in the future?” Not paying their way? What on earth does this slogan mean? I think it means little, like most slogans.

  26. soulmatic09

    but the real truth of the matter is that the children of the boomers are the first generation in a century not to question the world into which they were born. You have to search far and wide to find an original notion sprouting from anyone born since 1975i find that comment both irrelevant and hypocritical. the younger generation is more worried about the question "are you leaving the world in a better place than you found it?"
    innovation is a tool to achieve that end, not the end itself. hence the focus on green technologies, environmentalism, among other things.

    by the same token, let's look at the innovations of the previous generation:

    free sex and drugs in the 60's (how original),

    "free market" economics (whatever that means), modern portfolio theory, supply-side economics, stagflation in the 70's & 80's,

    CDOs, CDSs, SPVs, black-scholes & LTCM in the 90's

    pre-emptive war, wars on terror, the bubble of all bubbles, and a depression in the current decade.

    i don't think the we can handle anymore "innovations," particularly when there is no substance behind them.

    now, I'm not one to say the whole generation was a waste; there are quite a few who have my endearing respect (yves, nassim taleb, internet developers, among many, many others) but it is pretty clear to everyone that history will not be kind to boomers. if nothing else, b/c the things they they railed against in the 60's is what took them down in the end.

  27. Tortoise

    OK, Soulmatic09, do you know what percentage of the voting population has the baby-boomer generation been while all these evils were happening? What it is now? I had not realized that the baby-boomers started governing as twenty-year olds and while they still commanded 10-15% of the votes. By the same token, your generation is in charge and should take responsibility for the mess we are in.

    (By the way, congratulations for the green technologies and environmentalism… I am glad your generation thought of them!)

  28. bob

    Part of the problem in the US is the continued marginalization of youth. When is a person an adult?

    At 18 you can vote, and go to war. At 19, in my county now, you can buy tobacco. Have to wait until 21 to buy alcohol. There are some civil statues that allow the parents to be sued for responsibility until the child is 25.

    I am 31. I wrote a letter to the paper when I was 16 about being taxed on my earnings at my after school job. My teachers were livid, and the question still has not been answered to my satisfaction. How can you tax someone when they can’t vote? No taxation without representation is the old saying. Sure, as long as they are over 40 and have more gaul than brains. Teabaggers.

  29. donna

    Lols. I used to turn off the radio in the 90s, calling it “whiner reactive music”. Yes, reactives always get the bad break in the generational cycle. Civics will suck it all up, do what they have to do and rarely complain — I call mine the “anticonsumers” right now since they rarely ask for a thing. Spoiled rotten idealist kids will get out there and fight for their values until they decide to just sell out and make a few bucks instead. Adaptives get off pretty easy, being kids through the worst of things and taken care of well, if without many toys until they are older.

    Poor reactives. Nobody pays attention to them as kids, nobody pays attention to them as adults, and they never get to be in charge generationally. Sigh. They do, however, make very good pragmatic managers, having to deal with so much shit. And they DID get spoiled rotten as kids, with stuff, to make up for their parents never being home since they were too busy making money…

    BTW, some of us boomers have done a good job with our finances, too, and are not irresponsibly in over our heads or underwater financially. I’ve been encouraging people over the last few years to get out of debt and stay out of debt, having seen this mess coming at us like a friggin freight train (thanks to all the wonderful econ bloggers I read!) Funny though I thought social security would go first as a twenty something, but I guess that was just a scheme to get us to put our money into the 401Ks.

    How about we all work together to start fixing things, hmmm?

  30. GH

    This mild-mannered, non-profit- employee 58-year-old mother of two has just about had enough of the whiny 20/30 somethings. (This is certainly not true of all of them by any means, but more prevalent during these challenging economic times than I ever imagined possible.) When I graduated from an Ivy League college in 1976, the economy was in bad shape and no one I knew was able to procure a full-time job. Contrast this with the world my two kids graduated into in 1998 and then 2000: they each received signing bonuses and within three years were matching the salary that I had worked decades to achieve. Back when I was entering the work force post-college, my contemporaries and I believed that we would never be able to own any real estate and none of us did until we were 32 years old at the earliest. When my kids graduated, each of them (and most of their friends) bought a condo within two years of starting their first jobs.

    When my husband and I were able to save up enough to put 20 percent down on a tiny house in 1984, our interest rate was 14 percent. We never thought we would ever see rates below 10 percent in our lifetimes. My kids’ interest rates were less than half of that of our first house.

    My husband and I have both worked full-time since we were 16. We have never had jobs that offered us a pension, and every penny that we have saved for our retirement (if that day ever arrives) we have earned by our own hands. Like many people, we have watched our investments evaporate both in 2001/02 and now again. I have never participated in the greed machine and am merely yet another exasperated victim of it.

    So when the whiny 20/30-somethings blame the current economic situation on my generation, I am inclined to think, “Yes, we have failed our children,” but it is because we spoiled them so thoroughly that they appear to lack an understanding of our history, and, most astonishingly (and to our ever-lasting shame,) seem to lack a capacity for empathy.

  31. bob

    “Like many people, we have watched our investments evaporate both in 2001/02 and now again. I have never participated in the greed machine and am merely yet another exasperated victim of it.”

    These points totally contradict each other. Savings and investments are two different things. Savings have not yet started to disappear by more than a percent or 5. Somewhere in that diatribe you made the change between the two. This is very important.

    This is a common argument, that we got screwed so you should too, and just laugh it off. I hear it a lot, especially when people are talking about family businesses.

    I am the first critic of my generation.

    Let me be blunt, you are a part of the problem. If you were not part of the greed machine, how did you watch your money go up in smoke?

    Just like you passivly “owned” your kids and fed them money, you passivly “managed” your money and fed it more money.

    Ownership does not consign knowledge of operation.

    Respectfully.

  32. Blissex

    «This mild-mannered, non-profit- employee 58-year-old mother of two has just about had enough of the whiny 20/30 somethings. (This is certainly not true of all of them by any means, but more prevalent during these challenging economic times than I ever imagined possible.) When I graduated from an Ivy League college in 1976, the economy was in bad shape and no one I knew was able to procure a full-time job. Contrast this with the world my two kids graduated into in 1998 and then 2000: they each received signing bonuses and within three years were matching the salary that I had worked decades to achieve.»

    What you are saying here is an illustration of a general principle that has emerged from some fairly recent studies: that people who start their careers during a recession or other bad times have a much worse career for the rest of their lives than people who start it during a boom.

    Those who have been starting their careers in the past 1-2 years will have the same problems you had, only a bit different.

    Path dependency is a bitch.

  33. kackermann

    When I graduated from an Ivy League college in 1976….

    My husband and I have both worked full-time since we were 16…

    Was it really nessesary to work full time while attending and Ivy League school?

    …my contemporaries and I believed that we would never be able to own any real estate…

    How did you ever come to believe that? Did you not notice all the houses around you? They are owned by people – some are even Ivy League’rs.

  34. Blissex

    «Simoné, I do not know how old you are. The country did not look or feel very rich in the early 1970s. It was a country ridden with racial problems, war, the draft, male chauvinism.»

    Here you are confusing social progress (about race and gender discrimination) with economic progress. And in case you hadn’t noticed the USA are involved in a couple of large wars in Asia again…

    I have read with amusement a summary of what had changed in the American way of life from the 40s/50s to the 70s here:

    http://mobjectivist.blogspot.com/2005/12/way-it-was.htmlAmusing read, 30-35 years later.

    «Even in terms of material goods, the average citizen was not doing that great. If we all could reduce our needs (size of houses, quality of our cars, dorm rooms, dorm food, even the coffee we drink, etc.) to those of 1970, most of us would feel rich by those lowered standards.»

    House sizes perhaps are the only bit that improves significantly, and only for those fortunate to borrow at low interest rates.

    But other than that oil and food supply were still growing (but shrinking currently), and at the time job prospects were good and rising (except, it turned out later, in the northeast/lakes area, where they were catastrophic).

    «So, you may not believe it, in a sense the country is richer than it was in 1970. It is also better in many ways that are hard for a young person to appreciate.»

    Forty years of technological progress have helped, but forty years later the economy has significantly worsened for most people: consider for example that median wages have been constant or declining for 30 years, that entire industrial sectors have vanished abroad, entire states have been devastated by a 30 year recession, that the USA is a large oil importer instead of exporter.

    The public debt of USA is about 40% of the GDP (at least it was last year), one of the lowest among advanced countries. I would rather it were zero but do you realize what it was in in 1948? It was 110%. If we could take care of that, we can take care of 40%. The ratio is now roughly the same as when the first baby-boomers were in college.

    «Accounting for Social Security makes it more interesting. The Social Security run a huge surplus thanks to the overpayment by baby boomers,»

    Only in cash flow terms, not in accrual terms.

    «the first generation to contribute for the previous generation’s benefits AND for their own. Even with that, the total debt of the US is about 65% of GDP compared with 120% in 1948 and about the same as it was in 1995.»

    So far, and that is only the public debt. The total debt is at 4 times GDP, and current economic policy is to transform as much as possible of the private debt in to public debt thanks to generous help from Treasury and Fed. Thus the doubling of the public debt in a year, and there is lots more to come.

    «If the trend started during Clinton had persisted, the public debt would be by now so low that the banks would not be able to find treasuries to use as collateral.»

    And a pony for everybody! :-) The trend that started during Clinton was a colossal growth of private debt, under the theory that private debtors would manage their finances much more efficiently and prudently than the government. Oh yes.

    «Bottom line: The deficit is manageable»

    But what matters is not the large USA federal deficit and debt, but the even larger state/local deficits and debts, and the truly colossal private debts.

    «if we are willing to ONLY MODESTLY raise taxes and reduce spending,»

    The Republican plan is to raise taxes on the unproductive many by “improving” sales/payroll taxes, while cutting income and capital taxes that punish the productive few, and to reduce spending on the parasitic minorities (who are said to enjoy free mortgages thanks to the CRA, free/guaranteed university degree thanks to affirmative action, free cadillacs thanks to welfare, free t-bone steaks thanks to foodstamps).

  35. Nate

    “«Accounting for Social Security makes it more interesting. The Social Security run a huge surplus thanks to the overpayment by baby boomers,»
    Only in cash flow terms, not in accrual terms.”

    Bingo. Just like it has a trust fund that will last us until 2016 or whatever. Look under the covers and you will discover this “trust fund” is just a bunch of IOU’s from the treasury. We spent the money on something else already.

    GH:
    “When I graduated from an Ivy League college…” Just stop right there. You do realize the hypocrisy of an alumni from one of the most elite colleges in the country/world telling others how bad they had it, right? Out of curiosity, did your kids attend an Ivy as well? Your kids were lucky in that they graduated at the start of a very large bubble. Two years later and those signing bonuses would be gone. Five years later and they would be underwater on their mortgage and possibly laid off. Nine years later…you get the picture. Things have changed in the last ten years.

    Tortoise:
    Obviously standard of living has increased tremendously since 1970. We weren’t stagnant for 40 years. But much of this “growth” – primarily from the last ten years – was fueled entirely by debt. Real wealth was not created. The mess we are in demands a decreased standard of living for quite a while. I am bitter because I see this coming, yet I am being told to stop bitching from the very people that were able to benefit from this and will probably only be dealing with these problems for the next 15-20 years instead of the next 60 years (perhaps this caring for the future is why GH perceives a lack of empathy?).

    I agree. If we make cuts we can get out of this. But this has been the case for the last 20 years and we have continually decided that debt fueled spending is fine and we will just worry about it later (this would be the “not paying your own way” slogan). You speak of the government debt being modest in historical terms but make no mention of the commercial debt or the public debt (both of which are at levels higher than that just before the Great Depression). We are in some very serious trouble.
    Will we make the decision to cut spending because we know it must be done or because it will be forced upon us? That will be the defining mark of the Baby Boom Generation.

    I am most frustrated by our leadership. Everything we have done to date merely delays the inevitable. I would love for my generation to take a larger role in leading this country, but I don’t see any of the older generation stepping down any time soon. Hell, both of my State’s Senators have been in office for 17 years! Take a guess what generation they fit into….I was nine years old the last time someone different was in office. I feel really bad for the Gen-Xers. They really got the shaft.

  36. Dan

    “My friend Tom Naylor calls this the ‘new generation of whiners'”

    Generational blame games are inane…whether it’s GenWhiner crying about BabyBoomer…

    OR

    People like your friend, Tom Naylor, whining about the whiners.

    A silly waste of time…about as fruitful as the old ship captain, taking the bull-whip to an angry sea.

  37. Leo Kolivakis

    Dan,

    Tom is a well known professor at McGill University because of his total disgust with contemporary economics which he calls eCONomics.

    He teaches popular courses in underground economics and ecological economics. He has seen many 20 something students over the years and long time ago, was a teaching assistant (TA) for one of his courses.

    I remember students coming to see me to complain that they wanted and A- or A instead of a B+. Whenever I told Tom, he would tell me “tell them to stop whining. I will reread their paper and the risk is that the B+ will go down to a C or F.”

    He never did that of course, but he did hate whining students, most of whom were from the faculty of Management looking to get into top investment banks.

    It is useless to blame generations, but his point is stop whining and deal with the cards that are dealt to you. Every generation has their own difficulties. My buddy graduated smack in the middle of the ’82 recession and he tells me those days there were huge line-ups to apply for one low level trading position at the Montreal Stock Exchange.

    My father grew up in Crete and was a child when the Nazis came storming in. He remembers people being murdered and being so hungry that his stomach was expanding from malnutrition. Till this day, if my dad sees me throwing out some stale bread, he tells me “never throw food away”. There is still one bullet hole at our ancestral home in Crete, lodged in a cabinet, to remind us of that era.

    My best friend’s father who grew up with my dad always calls us the “butter boy” generation. “You guys do not know what tough really is, to struggle with oppression and hunger”. Of course, he also tells us that he would never wish another war to his worst enemy.

    All this to say that every generation has its scars. But it is true that the new economy full of tech gizmos and internet chat rooms does not really capture the growing discontent. All this tech pacifies the population where as in the good old days there were a lot more protests.

    I thank all of you for commenting.

    Leo

  38. Tortoise

    Oh Blissex, if folks in 1970 could foresee how we live today, they would think that we live in a paradise. (They would be wrong, to be sure, and households have over-borrowed to sustain this fantasy. But the point is that we undoubtedly have adopted a much more expensive lifestyle.)

    I will give you a trivial example: Dorm food. Dorm food in 1971 meant a square meal with lots of calories. I remember there would be a choice of two entrees. The cost was also very little. Dorm food today means a choice of 4-6 main entrees, a first-class salad bar, brand-name drinks and deserts like Haagen-Dazs ice-cream. Needless to say, that’s an expensive proposition. I do not consider that “economic progress” but that is not the issue.

    As for total debt being four time GDP, where can I begin. It is an estimate that is based on a ton of assumptions and is propagated by mostly the same people who acted to increase it with the recent Medicare reform debacle. What is your source on the four times number? Have you really looked at how this estimate was computed?

    Personally, I would be happy if we all tightened our belt and had the public debt be reduced to a big ZERO. But this is the responsibility and burden of all Americans and not just one third of the population.

  39. Valentine Michael Smith

    I'm 56. I graduated from high school in 1970. That was a year when lots of people were having trouble finding jobs, including the most educated and experienced — they were told they were "overqualified." Then there was the stagflation.

    I couldn't figure out how to make a living, and could have made the same noises that young people are making now. Looking back, then, the 50's seemed like when the living was easy.

    In the 1980's I was trying to run a business during Volker's "strong dollar" squeeze, which made it pretty hard to make a buck. I noted that the people we employed were living at home longer and doubling up on rented apartments when they did move out.

    The 80's were an era of leveraged buyouts, where businesses were raped, looted, and their assets sold off. Factories in the US were shut down, and businesses like shoe manufacturing and electronics went to new factories in Mexico. There was the S&L "scandal" & bailout.

    By way of various kinds of looting, profits were sent upstream to the wealthy and piratical, and it became harder for everyone else to get by.

    When I was growing up, one person could work a 40 hour week and expect to be able to support a family in reasonable comfort. When women became "liberated" in the early 70's, it was to go to work. Now somehow it takes two people working at least 40 hours a week, probably more, to support a household. This is a direct result of the redistribution of wealth away from the middle class.

    The newest kind of looting is awesome in its magnitude and ferocity. This is not something "the boomers" did. This is something that very few people had any awareness of, and fewer still understood. The Derivatives bubble on top of Greenspan's low-interest-rate housing bubble is now followed up by the massive transfer of dollars into the hands of that same very small group of people who created the derivatives — they profited then, and now they're double dipping!

    I'm living off savings and have no health insurance. I got out of stocks in 2004 when I decided the whole market was still in a bubble and something smelled fishy. I own my house outright and have no debt. But I'm a sitting duck for inflation. I could kind of scrape by if not for inflation. I'll have to start borrowing against my house at some point. I'm not exactly employable — anybody want to give a job to a 56 year old high-school graduate who's career has been as an entrepreneur?

    I've paid into social Security all my life, but I'm not counting on that to be there.

    That's my whine.

  40. Michael

    You think it’s bad being in your late twenties and early thirties? You think you are on the lowest spot on the totem pole?

    At least you had a chance, and some work experience to boot. It’s only your fault if you went out and bought a house at the peak of the market. Try being 23/24/25 who graduated college in the summer of 2008, and then whine about being on the lowest spot on the totem pole.

    We never even got a chance. Many of my friends want to go even further into debt to finance a post-graduate degree. Not to further their education or anything, but just to avoid having to deal with the reality that jobs don’t exist for them anymore.

    It’s very sad.

  41. scriabinop23

    I am 29, right at the center of the debate, and perhaps I can offer some perspective.

    When I think about social security and medicare, programs that overprovide the boomer generation with support from younger generations, and then consider the most recent trend of indebtedness that much of my generation faces … I can relate with this whiny article.

    Then reality hits — most Americans don’t have perspective. Go travel to Indonesia, India, etc. where things are frankly a mess, and wealth divides are as great as can be.

    Yes, our system has flaws, and perhaps we will have rising unemployment continue as technology justifies reducing unnecessary labor inputs, but prosperity, debt included, is at perhaps the greatest point in history. There will be losers; there will be winners. But my generation will have to make new opportunities for itself, just as previous ones had done.

    To Ms. McLaren, I think she needs perspective — go to the third world, and see how people would be thrilled just to have a regular meal in a generally comfortable surrounding.

    That said, baby boomers are asking for the backlash when they don’t pass school bonds in local elections because they are too greedy to pay taxes. Education is the perhaps the most worthwhile investment in our future, and often this older generation even denies to pay that forward. With that ounce of perspective, they don’t have much room to say “Stop Whining!”

  42. margaret

    Turning the current financial crisis into an inter-generational battle seems like a complete waste of time. All the arguments are based on anecdotal evidence and sweeping generalities without regard for the whole picture.

    So I won’t talk about how I graduated college smack into the 1981 recession and had to move back in with my mom, how I was the one of the few people I knew who had a job at all, and that paid $12,000 a year, and how I am appalled at the amount of stuff my nieces and nephews have, and how clueless and entitled young people seem to me nowadays, and how for the last ten years they all seem to have graduated college with apartments paid for by their parents, because that is just my reality, and I don’t imagine it applies to everyone.

    And by the way, thanks for that piece of information about how people who graduate in a recession have their career paths permanently held back; I always wondered about that. Almost all of my friends went to very good colleges (ivy league and equivalent) and we all seem to have struggled throughout our careers.

  43. RPB

    Early 20s, graduated from the now lambasted school of economics, lost job in new york, lost glamorous apartment and lost the pomp of wall street. New job in Chicago with a significant pay cut and more hours, living in a basement apartment in a shady neighborhood and no more office open bars with free grey goose thrice a week.

    Whatever, I’ll cut back and live my 20s they way they are supposed to be lived: on the edge of poverty with plenty of indulgence in life’s simple pleasures.

    Microbrews, flag football leagues and recently graduated coeds. I’ll never complain because I know this is the prime of my life, now it will just be lived sans the affluence of old.

    “All I need are some tasty waves, a cool buzz, and I’m fine.”

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