The War on the Young
mises.org
mises.org
I sat in on a talk that Frank Luntz was giving last night. Everyone else in the audience was 40+, well educated, all at the top of their fields. When Frank asked them how many thought their kids would have a better standard of living than they did, only 6 of the 120ish people in the room raised their hands. Frank's comment was, "If you're all in the top 1%, imagine how the rest of America feels right now."
We take these things for granted and don't consider them "making us richer" because they are widely accessible, and people have a tendency to consider themselves rich only when they are richer then their neighbors.
In that same vein, how can you calculate the cost of healthcare for technologies that did not exist 20 years ago? How do you compare the cost of a McMansion to the kinds of houses (tiny) that were being built 20 years ago? You can't. So instead people look at numbers they can calculate, and draw limited conclusions. It's a sort of selection bias based on what kinds of data we know how to work with.
The improvements in health care seem to be offset more and more by our poor food, sedentary lifestyles, and fractured relationships.
Maybe technology has made it cheaper to build a house, but that seems a wash as the dominant cost of housing is the property on which it is built.
In general, yes, technology improves our lives. But can not solve every problem in and of itself, and can exacerbate underlying problems if misused.
Disclaimer: Being a child of a parent in the top 1% certainly makes it more likely that one will also be in the top 1%. But even in good times, such a child falling out of the top 2 or 3% will experience a fall in living standards relative to their parents.
To the extent that having a good life comes from one's personal income, if the purchasing power of the dollar were increasing then they could easily buy more even if they were only in, say, the top 10%.
But most of what comprises standard of living isn't even determined by one's personal income, but rather by the resources, laws, customs, etc. of the community at large. And as it stands the wealth and health of society as a whole is dropping so fast that an individual can pretty much never keep up, no matter how much money they make or where they choose to live.
Perhaps he simply had a reserved audience.
Living in a world without fossil fuel reserves, endless supply of fresh water, plastic, minerals, rare earths, etc. will be nothing like the 20th century. And that world is guaranteed. Those who anticipate what that world will look like have an opportunity to be ready for it. My hunch is that the steady-state of the world could at best look like, say, the Song Dynasty era.
This may not always be true. In rich countries, the problem seems to be avoiding population decline, not over population. As more people become wealthy, we might achieve some steady state of population.
There is still the problem, of course, of even a stable population exhausting non-renewable resources (fossil fuels, for example).
Which is mostly what you'd expect from a site like mises.org or anything else that is highly political in nature.
I'm sure we can look at the numbers and come up with a conclusion. Furthermore, there are many city and state institutions that have tuition caps. In this situation I would expect more students to result in better use of existing resources or the creation of more city and state institutions.
A long, long time ago I read an article comparing the increase in the cost of college education vs. the published inflation rate. They were roughly the same. Really. But this was a long, long time ago...Camelot.
After student loans came into existence this rough equality disappeared and the cost of an education rose faster than inflation. Economically, that makes sense. Subsidize something (education) and you get more demand. With a somewhat inelastic supply of colleges, the price goes up.
Of course correlation is not causation. Many other reasons can be cited as well. But once upon a time college, while still expensive, only kept pace with inflation.
529's can be structured as a portfolio/mutual fund and be as aggressive as you want it...
If the price of education was set entirely by the market, the price of education would be equal to the expected reward - which would imply student payments so high they leave a graduate making little over the minimum wage for their entire lifetime. Even more, the student is more likely to overestimate their expected reward from education (everyone thinks their above average) than the bank is likely to underestimate it so some students today can wind-up with truly absurd debt loads (think of the people who drop out of medical school with no degree but owing $150K).
This situation provide such perverse incentives that it's in the interest of society to prevent it through lower-priced state education as well as private education subsidized by scholarships. During the 1950's, when America happen to be growing and productive, this was the paradigm. In the present era, the movement towards the marketization of education has only accelerated the country's decline. Why providing even more marketization now is "good thing" is beyond me.
Education and basic health care should be provided free to each citizen (to extent, forced on each individual) because they are a good, benefit for society as a whole rather than being merely a good for each individual. You benefit when everyone is healthy and smart (unless you're a con-man looking to outsmart your fellow citizen). The willingness of this society to go in the opposite direction has been a powerful force moving downwards.
I'm pretty sure that was Generation X. Myself at 35 being on the tail end of that group; we're hardly "the young".
House prices and a competitive job market are the main forces keeping my standard of living lower.
Not: cash speculative stocks bubble inflated real estate suitable for a shrinking demographic managed investments consumer junk
I'm living in a building that was built in the 1920's. It is definitely still useful.
True, consumer goods generally don't last that long, but capital goods can last for a half-century or more.
Even then only if population continues to rise - if population drops as it does in almost all developed countries your land will be worth a lot less. Imagine a world where there are 1000 old people who can't work but own land, and then there are 100 young who can work and need a place to live. The first 100 buildings will sell/rent for some amount of food, the remaining 900 old people will die of starvation because there is nothing they can offer to the young in exchange for food.
Of course, that mechanism is in trouble the minute the market starts to contract or collapse.
Note that DenisM uses food as his example and try to find his meaning instead of the few exceptions.
yes, that's the starting point of my argument, thank you for phrasing it clearly. The next step is that future demand for durable goods is not a good savings mechanism for a number of reasons:
1. The demand isn't large enough for a whole generation of people
2. Those goods have to be stored and maintained, which is
costly and eats into the savings
3. It may unpredictably lose value due to technological
innovation, and if you made a poor bet you will starve
when that happens
Absent that there are only so many way to defuse the demographic bomb:
1. Saddle the young with debt by enticing them to spend beyond their means. Later they are compelled to pay via social norms and coercion of the state.
2. Collude on ownership of a crucial scarce resource such as land or oxygen. Collusion is likely to kill the economy very quickly though.
3. Make more babies. Costly in the short term, especially given that anyone who is making babies is also under the opression of debt, and the more babies the more crushing that debt is.
Although I should also mention "The Last Fool" concept. Those long-term savings won't be fictitious if you aren't the last fool left with them, i.e. you find another "fool" to sell them too.
But as you note that's a very iffy thing, certainly not something you should bank on, so to speak.
(Hmmm, you left out the Soilent Green option ... it's already being discussed by "serious thinkers". And there are less unpleasant ways to abrogate explicit and implicit promises to older generations.)
Alternative to debt burden would be oppressive taxes, but this has bad side-effects as well:
1. Taxes are not as discriminating against the young as situation dictates (debt is very discriminative)
2. People actually feel angry when money is taken from them via taxes. They are a lot less angry when they willfully spend themselves into debt. They even feel guilty when they can't pay. Bottom line is that it's easier to enforce because voluntary compliance is so much higher and political resistance to "pay your debt" is harder to imagine than to "pay high taxes".
3. Taxes depress economic development, while debt increases it (at the expense of the boom-bust volatility).
So I don't really see any realistic alternatives to the debt burden.
There is a very remote hope that technology brings us basic necessities too cheap to meter so that we don't have save for retirement. But that's really out there.
I wouldn't assume our current political order survives this looming mess (heck, many including me argue it didn't survive the Civil War or FDR).
This is what the Australian government decided to do. $4000 per child, no questions asked. (subsequent governments have fiddled with this and pandered to their support base, but the concept still remains)
The treasurer came out with a phrase 'one for mum, one for dad, one for the country'.
It worked. Birth rates are now higher than they have ever been.
I'm normally against this type of government wastage. But it's not hard to see that the $4000 will be earnt back within a ~25 year period once the child becomes an adult and starts paying taxes, even when you take inflation and future value of the $4000 into account. The $4000 was being paid out of revenue at the time as the government had no debt. (subsequent governments have started to borrow again, being unable to be fiscally responsible more than a couple of years)
It's actually the smartest strategy of your three, because the old people need to have as many young taxpayers working as possible.
In the 50's, the marginal top income US tax rate was 90%, but the exemptions for dependents were very substantial.
However they weren't indexed for inflation so they became relatively trivial over time before Reagan got the Congress to index them. Perhaps a return to that tax policy is worth a try?
I've seen this phrase, in various versions, in lots of places over the past few months. Is this a new proposition, or was the idea floated (incorrectly) during the Great Depression or the 1970s oil crisis/stagflation downturn?
It look like the government is doing everything it can to make the obstacle even higher and thicker though.
During all of the economic problems of the past, polls consistently shown that people, as bad as things were, expected their kids to have a better financial life than their own. This is no longer true.
Note that the data is different depending on whether you ask "will children do as well as their parents?" or "will your children do as well as their parents?"
I am in my 50s, and one of my common little rants is how selfish my generation and the next older generation is. My children and my young grandchildren will indeed have to pay for our collective excesses. Really unfair.
I believe that it is human nature to care for younger generations, so the current wave of selfishness is really sick and unnatural behavior. Two generations of gluttons.
This selfishness is on personal, corporate, and government levels. The worst is starting unnecessary wars on credit, but the general blame trickles on down.
Only the "next older generation" has made out on these ponzi schemes.
I have to admit to a bit of a morbid fascination about the economy: I expect that in the USA that local governments will go bankrupt, the federal government will devalue the dollar to get by, etc. Thing that I have no idea about: will this happen in 1 year, 10 years? ...
Seriously - in the real world, a perfectly valid way to solve a problem is to stop doing the thing that causes it. Why the defensiveness because a libertarian pointed this out?
As for transition processes, to be blunt, many random libertarians online don't bother discussing them because they know it will probably never come to that. If you want good discussion of such things, places like the Mises Institute and Cato.org (full of policy wonks) would be good starting points.
"people who are going to complain about something should offer some practical alternative"
Meh. When the overwhelming majority of the public does not believe that things like the war on drugs are destructive programs that should be stopped, why waste time on trying to satisfy the rare person who says he already agrees, but demands we all have a presentation on a detailed decriminalization/legalization scheme decades before it's even worth talking about?
But of all those examples, the War on Drugs is probably the easiest to "just stop," so to speak. Putting an end to Social Security overnight means that grandparents around the country won't have any source of income. That's a good example of where just ending a program overnight seems impractical to me.
To address your previous point, I have spent some time on Mises before, not as much Cato. But not enough time on either to really comment about specifics on their proposals or lack thereof. I suspect the reasoning you presented is probably accurate, at least in some part.
Not sure where anyone made any "pure ideological arguments", especially since this is a thread off a very consequentialist blog post...but no, having a plan doesn't convince people that action is necessary or desirable.
Plans are what you discuss after people generally agree that change must happen; the public at large doesn't want most changes libertarians are interested in, so trying to sell them on how to carry out those changes is hugely premature.
Mind, nobody said it was.
I think the default libertarian solution is "don't do anything, the problem will take care of itself", which in point of fact often is a better idea than the hodge-podge, incoherent "solutions" that actually get adopted.
On the other hand, perhaps you're asserting that "do nothing" isn't a realistic solution in the sense of being politically impossible to implement; in which case you'd be completely correct, which is why libertarianism remains a fringe political position for naive idealists (along with many other philosophies that could plausibly work better than the status quo).
Most of the issues he cites exist because the free market failed people in the past and there was public outrage over a government that allowed it to happen.
...to be fair, most problems caused by the market arise because of perverse incentives and government meddling that allow profiteering looters to exploit the system at everyone else's expense. The counterintuitive part is that reducing regulation is roughly as likely to "create" these problems as solve them, because in a semi-stable equilibrium removing one distortion may open a new opportunity to abuse an existing one.
The energy crisis in California is an excellent example of such, where making a (stable, inefficient, heavily regulated) market more free created exploitable distortions that allowed a bunch of (unprintable) people to screw everything up.
I'd add one more bit, though: it's not between youth and old; it's between risk takers and risk avoiders.
The last thing the majority dreams about is risk. So the gov takes care and tries to minimize the risk. The minimum wage, enormous benefits for not very innovative public workers, interest rates' manipulation etc.
Of course, if you minimize the risk you also minimize the social mobility. It's hard to get a reward, without risk.
I mean, declining education levels, deteriorating infrastructure, and many other causes might be pointed to for the decline of America. Considering that, as you say, only a minority is ever going to risk-inclined, the decline of America can't be chalked up to risk-aversion.
And also, when the health care system declines, the risk of catastrophic becomes something that an individual isn't very capable of managing.
For example so very many things came out of RADAR R&D ... *including microwave ovens :-), but also stuff that fed into the Whirlwind computer project (the first practical computer), etc. etc.
If in 10 or 20 years, we don't clean up our act and a huge part of my taxes are just servicing debt, I'll just move somewhere else. I don't even care if the taxes are higher in another country; so long as I get good value for my taxes paid.
we complain about the newly introduced Bachelor/Masters system here. We complain, students will now have less time to study and think about the problems. Also having to pay more money than before, we say that less people will go to universities, thus lowering education standards.
Price controls always produce shortages; in this case, there's a whole bunch of jobs companies just can't afford to hire people to do any more because the total cost of labor is higher than the return. Is this so hard to understand?
Is it a moral position to tell an unemployed youth that if they can't get a job at $X wage there's better off without one? Have you looked a youth unemployment rates, especially recently?
Second, I'm not even necessarily in favor of a minimum wage. I just think it's bogus to blame our current economic woes on the existence of minimum wage. It's a bogeyman that the right attacks at every opportunity, whether it makes sense or not.
Edit: Also, you haven't provided any evidence supporting the claim that we don't have movie ushers because of minimum wage or labor laws. You've just provided ideological conjecture and arbitrarily placed the burden of proof on me.
Perhaps I would have understood the author's point more had he even bothered to explain what laws regulating child labor he was talking about and why they're a problem. Instead, he just skipped that and focused on minimum wage.
If you aren't a top performer, you'd have to live forever with those wages. One job is be enough for a living.
Why did I never hear conservatives decrying deficit spending during the Bush years, when deficit spending ballooned. No, then you had conservatives talking about how the deficit does not really matter.
Now it is too late, the cat is out of the bag. We need deficit spending just to keep the damn economy from collapsing, and no politician will have the guts to just exit the wars.
Are you sure they were conservatives, and not just Republicans?
http://en.wikipedia.org/wiki/Ludwig_von_Mises_Institute#Miss...
The Institute characterizes itself as libertarian and expresses antiwar and non-interventionist positions on American foreign policy, asserting that war is a violation of rights to life, liberty, and property, with destructive effects on the market economy, and tends to increase the power of government.
So I think your criticism is misplaced here
Certainly not all of them though. ESR is the prototypical Libertarian in my mind, and has written about how awesome he thinks the Iraq was is/was (for example: http://esr.ibiblio.org/?p=651).
You might pick a more representative prototype. Even someone as iffy as Ron Paul makes more sense.
But yes, like every single other political group outside of pacifists, you could find pro-Iraq libertarians. However, the huge majority of libertarians were vehemently against the war in Iraq. Many of them balked at the war in Afghanistan.
(Also, a footnote: Libertarians are members of the Libertarian Party, libertarians are people who have libertarian views.)
I supported the use of force in Iraq and Afghanistan based on utilitarian principles -- I felt (and still feel) that less people will die and less pain would be inflicted by the use of violence in those areas) I find that the careful and appropriate use of force by the state does not conflict with my libertarian views.
So there's another example for you.
I supported the Iraq war at first, and I was very keenly aware how thoroughly that put me outside of the libertarian mainstream.
(Oh, yes, and a tiny, tiny fraction of libertarians, some minority of whom care about the LP.)
Can't comment much on "fake" libertarians, though. I haven't seen much evidence that they either vote the same way each time or not. It might be that different candidates draw out different groups of these middle-grounders.
I'm not much on big-L libertarianism, mainly because so many of them are all over the board on policies, usually taking the core ideas beyond where they are practical. Libertarianism is best practiced when it has a healthy respect for the social contract, such as the use of national force on occasion.
As for "fake libertarians", I really don't know whether you are or not, and I'm not highly concerned - though many of your lines are reminiscent of the typical Team Red "if you guys were just a little closer to our ideas, you'd do such much better" shtick.
The simple truth is that actual, consistent libertarians predominantly opposed the war. I'm no more interested in historical revisionism on that point than I am in revisionism on the war itself.
I'm not interested in revisionism either, and looks like you've failed to make any kind of point at all here. I was simply providing another piece of anecdotal data for your discussion -- which I've done.
Also, you may want to check out some more articles on mises.org to fully understand what deficit spending does to the economy.
The Mises institute (as others have rightly pointed out) is not conservative, but libertarian. Fiscal conservatism and libertarianism are similar, but there is a distinction.
The Mises institute has been talking about deficit spending for well over 50 years now, regardless of who has been in power. If you haven't read Mises' Human Action (c. 1940) which deals extensively with this, I would recommend you to do so.
Please investigate a bit about what you're saying before you try to write off a writer as "well the cat's out of the bag now".
It might be true for many Austrian economists to advocates against deficit spending, though.
(despite the quotes from krugman and friedman about biz cycle theory)
I'm reminded of when you see someone cite a creationist and one evolutionary biologist's disagreement with another on some detail of evolutionary mechanisms in order to argue for Intelligent Design.
Considering that the track record of mainstream economist predictions about the economy are horrid (just try trading their predictions), we should consider plausible, alternative points of view.