Millennials kill industries because they're poor: Fed report | Hacker News Reader

Millennials kill industries because they're poor: Fed report

businessinsider.com

32 pointsjoeyespo19 comments

Maybe millennials are just more efficient at spending the little money they have and don't want to spend more than they need to, which coupled with the new business models the Internet & recent technologies allow makes some legacy business models (cable TV, etc) unsustainable?

Most of millenial trouble can be attributed to baby boomers.

I hear this incredibly often. Can you explain why this is, or do you have a link or two that's convinced you on this point?

I understand NIMBY-ism which, to some extent, is responsible for impractical zoning laws and, in turn, higher rents and home prices.

Beyond that, however, why is this the case? Wasn't America just more prosperous in previous decades, due to the political/military victories we enjoyed, and the lack of international competition we faced?

I’m not sure it holds more true now than in times past, but I believe the argument generally goes that the older, richer generation has exploited the land and taken on huge amounts of debt, all while jacking up the prices of the things that gave them their advantages (education and housing brings the initial arguments in this vein). And, further, that the older generation will die before needing to address all of these various natural and societal debts, leaving the younger, poorer generation on the hook for their excesses.

Edit: just want to clarify that I’m only vaguely familiar with the arguments that I am parroting here

It is more generational, not really specific to baby boomers. Zoning laws, estate laws etc basically, things that make most assets/expenses of today expensive.

Just look at the difference between https://www.populationpyramid.net/united-states-of-america/1... and https://www.populationpyramid.net/united-states-of-america/2... . Also look at world population change in the same period. I don't see that discussed much but when the shape of populations change (which causes how things are funded to change as well and where resources are used) society has to change too but that is a lot harder and takes a lot longer.

"Average real labor earnings for male household heads working full time were 18% and 27% higher for Gen Xers and baby boomers when they were young compared with millennials, the study found. For young women, the difference was smaller — 12% for Gen Xers and 24% for boomers"

12-27% seems like a huge number and I wish the article went into detail about it. Are they simply in school instead of working? Are salaries lower? Are they simply not getting jobs?

Never ending austerity keeps people poor and shrinks markets.

Austerity? America? Ha the US hasn't even TRIED to balance a budget since Clinton. No every politician has to promise deep tax cuts if he wants to get elected. Ostensibly the US economy is booming yet the deficit is at $800 million.

The millenials I have known (USA) are exceptionally bad at managing their finances. Anyone poor who thinks it makes sense to pay $20+ to have a Five Guys lunch delivered often enough to be on a first-name basis with the delivery guy needs their head examined.

Software engineer here. I don't know ANYONE who would do that! I do know some people who spend $20 on lunch frighteningly often, though.

Wealth inequality between young and old has reached record high levels: https://www.forbes.com/sites/evapereira/2011/11/08/wealth-in...

Some possible causes: zoning laws, which benefit existing homeowners at the expense of future first time home buyers, have been piled on over the last 40 years.

The economy in general has become much more regulated. In the financial services industry, regulations around existing laws, like the Bank Secrecy Act, have steadily increased over the last 40 years, and several major new laws, like the Community Reinvestment Act and Dodd-Frank, have been passed.

The result is regulatory compliance costs making up 10% of expenses for banks with less than $100 million in assets, versus 5% for banks with between $5 billion and $10 billion in assets:

https://www.communitybanking.org/~/media/files/compliance%20...

Similar trends are seen in other major industries, like healthcare.

Greater burdens on small businesses means less new business creation, which we've seen:

https://money.cnn.com/2016/09/08/news/economy/us-startups-ne...

And more benefits being accrued to incumbents.

The public relations efforts of entrenched parties is totally overwhelming Millenials' efforts to cope too. Millenials are supporting many of the same political trends that are locking them out of industries.

For example, the recent astroturfing campaign by the hotel lobby to turn the public against Airbnb and create public support for more regulatory barriers to renting one's place on Airbnb was very successful:

https://www.nytimes.com/2017/04/16/technology/inside-the-hot...

And Millenials make up a significant percentage of the dupes.

Dodd-Frank is a very good thing. It’s not that regulation is intrinsically bad, it’s regulation that entrenches existing wealth.

I can't imagine something that destroys small business as much as Dodd-Frank being a good thing on the balance:

https://www.mercatus.org/publication/how-are-small-banks-far...

Some relevant statistics:

https://www.americanbanker.com/opinion/no-there-arent-too-ma...

>>Community banks have been instrumental in helping the nation recover from the financial crisis and economic downturn, yet their numbers continue to dwindle, declining by roughly 1,500 since 2009.

>>A new survey from the Federal Reserve and Conference of State Bank Supervisors found that community bank compliance costs have increased by nearly $1 billion in the past two years to roughly $5.4 billion, or 24% of community bank net income.

It is when banks handing out shady mortgages crippled the entire economy and resulted in taxpayers having to shore things up to the tune of trillions of dollars. Some people are either too young to remember or too willful to remember, but 2008 was a dark place, and if it means a marginal impact on whatever destined-to-be-doomed small business is not getting off the ground due to increased scrutiny, I say good deal.

Also Mercatus is a part of the Koch-aligned segment of GMU, to save any other onlookers some time understanding why the specific set of survey questions was posed the way they were.

EDIT: also a lot of this information is dated because regulations were already weakened for small banks specifically: https://www.reuters.com/article/us-usa-house-banks-lobbying/...

>>if it means a marginal impact on whatever destined-to-be-doomed small business is not getting off the ground due to increased scrutiny, I say good deal.

It's not a "marginal impact". Regulations like Dodd-Frank impose a massive structural impediment to smaller business competitiveness that contribute to growing income inequality, and growing consolidation/centralization of industries. The Mercatus study shows just how much it increases costs for smaller banks.

And it's not just "destined-to-be-doomed small business" that's eliminated:

https://www.politico.com/agenda/story/2016/09/community-bank...

>>“Unfortunately, we became a victim of Dodd-Frank,” a northeastern community bank CEO recently wrote me. “In a few short years, an otherwise healthy community bank with strong capital and satisfactory earnings could no longer meet a number of financial benchmarks set by the regulators. These conclusions forced the bank to sell now when our shareholders and some of our employees would be less adversely affected.” The result: the bank merged with a larger bank and half of the employees lost their jobs.

There are government programs like the GSEs and the FDIC that promote irresponsible mortgage lending. Those should be targeted for reform/elimination before centralizing and regimenting the industry with labyrinth laws like Dodd-Frank is considered.

What part of FDIC do you find to promote irresponsible mortgage lending? And that’s another story from before the regulation was re-targeted to lessen the burden on small banks

The FDIC protects depositors whose banks engage in irresponsible mortgage lending. It erodes the micro-economic incentives for creditor discipline that derive from 'skin in the game'.

As for the partial roll-back, it's better than nothing, but we'll see in five years if it will have much of an impact:

https://bankdirector.com/issues/regulation/crapo-bill-only-d...

And you know the history of what happens when FDIC doesn’t exist I assume, which was that banks acted the same way and regular people got washed out.

Reply on news.ycombinator.com