Although it probably comes as no surprise, the degree of rentierism around the world has apparently hit the point that young people even in what most would see as good positions, by virtue of being educated and working in white-collar jobs, are downbeat about their futures.
Admittedly, this Financial Times survey is hugely flawed from an analytical standpoint. It’s an Internet poll, so there’s no control over sampling and no assurance that the respondents were truthful about their own demographics. But the flip side is the participants would have no particular reason to lie either, and if anything, survey participants tend to exaggerate how well they are doing. So for 1700 Financial Times readers, meaningly literate, presumably well to very well educated, and in a professional position, to report so much concern about their futures, is if nothing else awfully striking, large-scale anecdotal evidence. Consider its headline, ‘We are drowning in insecurity’: young people and life after the pandemic, and this table:
Notice how on the various measures, the US comes out poorly, with only the Netherlands, Singapore, and South Africa tallying a bit worse.
No one is saying that these individuals are facing hardship…at least now. It’s that the inability of even those who did everything they were supposed to do in our pretend meritocratic system to attain a comfortable lifestyle and support a family is eating away at its last veneer of legitimacy. From the pink paper:
Many describe feeling as if there is nothing solid under their feet. “Most people my age are paddling so hard just to stay still,” says Tom, an architect. “It’s exhausting — nobody is asking for an easy ride, but all my friends have worked so hard all their lives, and many are losing faith in the system.”
For Killian Mangan, who graduated during the pandemic last year and struggled to find a job, it feels as if “we are drowning in insecurity with no help in sight”. A twenty-something who works for a central bank says: “I sometimes have this feeling that we are edging towards a precipice, or falling in it already.”
And they also wonder how they can afford a dignified old age. As one participant said, “My retirement plan is to die in the climate wars.”
And as we’ll see, this isn’t the whinge of pampered New Yorkers (pre Covid) that you can’t get by on $500,000 a year, between taxes, housing, private school and extras, summer rentals and nanny costs. These young people are falling sort of more modest financial goals, like being able to raise children in something other than cramped quarters. They are all finding that not being able to get meaningful monetary support from their parents puts them on a vastly different track than their peers that do.
It’s no mystery in the US that social mobility has eroded. A Brookings paper in 2015 on the US found, consistent with the experience of the sources for the Financial Times story, that interegenerational mobility had fallen among the richest and middle class groups, more so among men than women. A Cleveland Fed study in 2016 found that mobility was lowest among the top and bottom quintiles, with 70% staying where they started out. The Financial Times confirms these trends:
Most young people are quick to acknowledge the ways in which their lives are better than those of previous generations…
But housing and education have grown more expensive, jobs feel more competitive and insecure, pensions less adequate and the environment imperilled….wealth is becoming a more important determinant of their prospects than their own efforts.
The statistics suggest they have a point. In the UK, for example, a paper to be published on Monday by the Institute for Fiscal Studies projects that as older generations amass more wealth, average inheritances compared to lifetime income for the 1980s-born will be almost double that of the 1960s-born.
This will damage social mobility. For those born in the 1980s to parents whose wealth levels are in the lowest fifth among their peers, inheritances will increase their lifetime incomes by 5 per cent according to IFS estimates, while those born to parents in the top fifth will enjoy a 29 per cent boost. For those born in the 1960s, the disparity was smaller (2 per cent and 17 per cent, respectively).
“At the moment, while the wealth is still held by older generations it shows up in the data as a difference between generations, but wealth doesn’t disappear, it’s going to flow down and [then] it moves on to being an issue about inequality within younger generations,” says David Sturrock, an IFS senior research economist. “It’s basically saying how much you stand to gain depends on who your parents are and the wealth they have.” Many developed countries share “a lot of the same dynamics”, he adds.
In the US, we do have the occasional leveler of a seemingly well-off older person depleting their assets due to living a very long time while needing costly hands-on care and/or dying expensively. But the general pattern will hold even with more exceptions.
But readers of the Financial Times around the world, who presumably are in finance or adjacent professions like banking, report that their prospects of securing what used to be considered basics, like buying a home suitable for bringing up a family, looks out of reach for those who aren’t getting parental support or are in line for an inheritance. In other words, even among the middle and upper middle class, the idea that they can, say, afford a house big enough for raising children in a district with a decent schools that isn’t a catastrophic commute from work looks unattainable. I know of one example in my immediate circle: an adult son who went to Yale and has a good but non-predatory job, with a working Ivy League graduate wife, again reputable employer, serious position. For them to be able to buy a house big enough for child-rearing would result in a >90 minute commute for both of them (they are both in fields where they can only intermittently work at home).
Those of you who are struggling or correctly hold the woes of the wannabe affluenza in contempt may consider this discussion to be of no interest. You have this dead wrong.
We’ve been writing since the very inception of this site about the rise of inequality and the various pathologies it produces, including a health cost even on the rich. Highly unequal societies are unhappy and insecure, with weak social ties. Even when you are high up on the food chain, any meaningful loss of income upends your personal life. You will no longer be able to socialize with your former supposed friends, or at least not as much. You’ll have to cut back on or even abandon your (say) country club/private club membership, charity funding, ski trips, Hamptons summer rental or second home, catered dinner parties….you get the picture. And that even assumes the fall in status doesn’t force the unlucky to sell his home and yank his kids out of private school or a fancy college.
The resulting desperation to hang on to their spot on the social ladder in turn makes it much easier to rationalize abusive business conduct. Steve Waldman explained in 2019:
It’s well and good to rail against health insurance companies and big pharma, and really, fuck ’em so hard they disappear into perpetual orgasm and we never have to encounter them again. But we know that healthcare in the US is exorbitantly expensive compared to anywhere else, and we also know, even if it is not shouted as loudly in political stump speeches, that a big part of this is that doctors are paid roughly twice as much in America as they are paid elsewhere in the developed world.
But what would it mean, really, to cut US doctors’ salaries in half? In theory, if you are the most imperceptive sort of economist, it means they could live as well as doctors do in Europe, which is not so bad. US doctors are paid twice as much in what is imaginatively described as “real terms”, so they should be able to purchase the same goods and services with their income as their European peers do. Where’s the problem?
But economists’ “real terms” do not measure the realest terms at all, the social relations in which the dance of our production and consumption is embedded. If you cut doctors’ salaries in half tomorrow, they would have to sell their mortgaged, absurdly expensive homes. At half their present salary, doctors would no longer be able to afford to live amongst “peer” professions like lawyers, management consultants, middling corporate executives, and the employees of surveillance monopolists. Doctors would fall precipitously from the social class, embedded in geography and consumption habits, to which many of them even now cling only precariously. More calamitously, they would lose the capacity to produce or reproduce membership in that social class for their children, often the most expensive amenity American professionals seek to purchase.
Doctors in France don’t have this problem because they live in a society less stratified than the one that we are unfortunate to inhabit. In societies in which the lives and prospects of the rich and less rich are not so divergent, people can afford to be a bit less rich. After all, even in the United States, the problem is not scarcity in a straightforward economic sense….
In a stratified, liberal capitalist society, the ability to command market power, to charge a margin sufficiently above the cost of inputs to cover the purchase of positional goods, becomes the definition of caste. When goods like health, comfort, safety, and ones children’s life prospects are effectively price-rationed, individuals will lever themselves to the hilt to purchase their place. The result is a strange precariot, objectively wealthy, educated and in a certain sense well-intended, who justify as a matter of defensive necessity participation in arrangements whose ugliness they cannot quite not see. In aggregate, they are predators, but individually they are also prey, and they feel embattled. So long as the intensity of stratification endures, they will feel like they have little choice but to participate in, even to collude to entrench, the institutions that secure their market power and their relatively decent place.
Reforming government contracting, controlling medical costs, breaking up big-tech, opening the professions to international competition, these sound technocratic, even “pro-market”. But under present levels of stratification, the consequences of these things would be a revolution, whole swathes of society accustomed to status and political enfranchisement would find themselves banished towards a “normal” they used to only read about, opiate crises and deaths of despair, towards loss of the “privilege” it has become some of their custom to magnanimously and ostentatiously “check”. Did I say they? I mean we, of course.
But of course, not doing these things means continuing to tolerate an increasingly predatory, dysfunctional, stagnant society. It means continuing deaths of despair, even as we hustle desperately to try to ensure that they are not our deaths, or our children’s. Even for its current beneficiaries, the present system is a game of musical chairs. As time goes on, with each round, yet more chairs are yanked from the game.
The only way out of this, the only escape, is to reduce the degree of stratification, the degree to which outcomes depend on our capacity to buy price-rationed positional goods. Only when the stakes are lower will be find ourselves able to tolerate, to risk, an economy that delivers increasing quantity and quality of goods and services at decreasing prices, rather than one that sustains markups upon which we, or some of us, with white knuckles must depend.
It’s only in a world like this, where the rich and near rich have insanely bid up the price of prime real estate in world cities, and leave their flats empty, turning London’s Sloane Square into an imitation of a neutron bomb blast site, the also-rans are squeezed even if they are by objective standards well off. They also further to fall if their status changes because the gradients at the high end have widened. It’s only in a world like this that this Financial Times example makes any sense:
A 30-something who works in private equity in the UK turns to collateralised debt obligations for a metaphor to describe the position of his generation. “The space I feel I occupy in the sociopolitical order is akin to being the first loss tranche in the debt stack,” he says. “Whenever anything bad happens I have no doubt that, because we lack political and economic clout, we will be left holding the bag.”
A young professional in private equity worries about his position….when anyone other than a total incompetent could expect to readily land another, albeit perhaps less lofty seat if their employer were to go poof. That’s an indicator that job and income security have gone out the window. And insecure people are much more willing to engage in desperate and crooked behavior than those who think they have less to lose. Our London-based banking and IT expert Clive explained how this worked in 2018:
I’ve spent almost 30 years working in the FIRE (Finance, Insurance, Real Estate) sector, my entire adult life. When I first started, it was viewed as a most suitable career choice for middle class not particularly aspirational sorts who wanted security, respectability and a recognisable position in the community. It was never supposed to be a passport to significant wealth or even much more than very modest wealth. It was certainly never supposed to be anything which oppressed or harmed anyone…
Increasingly, if you want to get and hang on to a middle class job, that job will involve dishonesty or exploitation of others in some way. Industries such as finance have seized and held onto larger and larger proportions of the economy.
The same disproportionate growth can be seen in financialised healthcare and finacialised education….
If we were to say that it is the “corporations” which are exploiting people, that would be wrong. “corporations” are not people. It is the people – you might be one of them too – who work in the corporations who are exploiting others.
From my experience, some who work in such exploitative enterprises do so willingly, with full knowledge of what they are doing. It is a regrettable human trait. Societies limit such harmful tendencies by placing justified restrictions on individuals and individual acts. It is relatively easy to identify an individual causing harm and deal with them appropriately. It is, unfortunately, much harder to identify and restrict the activities of groups of people when they can hide behind the veneer of innocence provided by a large, successful business.
For those of us who are increasingly appalled by the moral decay exhibited by some of our most powerful private sector operators which, naturally, lack any sort of democratic – public – accountability or oversight, we quickly learn that attempting to effect change from within is usually a futile gesture. Corporate Social Responsibility policies, regulatory compliance, consumer protection legislation and appeals to plain old fashioned decency are largely symbolic, quickly forgotten and ineffectual. They are minor impediments that the corporation has to work a little harder to step around and step over not significant hurdles to block unlawful, illegal or immoral actions. Whistle-blower protections are a quagmire in most jurisdictions and, at best, a gamble for the employee.
And of course, Big Finance and its related partners in crime Big Healthcare, Big Education, Big Energy, Big Agriculture and others do not sit idly by waiting to react to criticism and any attempt to reduce their influence and the cash benefits they obtains from such influence. They want to set societies’ agenda. They want to not only preserve the gains they have made at others’ expense. They want to increase them still further. To give a little context, one Too Big to Fail bank has a PR department employing over 200 people. The budget runs into millions. That is for just one bank. And that doesn’t count paid-for industry lobby groups, consultancies, advertising and think-tanks.
Yes, it is disheartening to face what has to change to claw our way back to a less brutal social order. But historically, big changes have taken place in relatively short time frames. The rich of the Gilded Era had their status cut back by trust busting and anti-monopoly measures. The conservative 1950s were followed by the social reforms of the 1960s. We’re now in the midst of a neoliberal counter-revolution that started in the 1970s and began to bear fruit for its backer in the 1980s and 1990s. Only if we understanding the nature and breadth of this challenge can we hope to turn things around.