Each New Gen Finds It More Difficult to Surpass the Wealth of Their Parents | Hacker News Reader

Each New Gen Finds It More Difficult to Surpass the Wealth of Their Parents

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27 pointssafaa199325 comments

I think a lot of commentary on this problem doesn't fully account for the historical conditions that allowed for such a rapid increase in material prosperity for the average person in the 20th century (especially in the US), and the historical conditions leading to its partial reversal.

The population was expanding so rapidly, and enough actual investment (in terms of value delivered in the form of usable roads, not $) was made in infrastructure, that a young family could acquire a home without having to buy from existing homeowners. Because of suburbanization and very high demand, massive amounts of new housing was built on inexpensive land.

Retirements were generally funded with pensions, and there was still a general societal expectation that you'd take care of your parents when they became old. This was more practically workable as most women became homemakers or only worked part-time once they had children. Medicine was not as advanced as it is now, so people weren't kept alive in poor health for as long as they are now, and there weren't as many uber-expensive treatments necessitating people to save up large amounts in case they needed them for care later. With way more working adults per retired adult than now, and with retirements more funded via cashflow (of children's jobs or from a company's revenue) rather than ROI like they are now, there was a lot less pressure to extract value out of businesses.

And on top of all that, Asia (except Japan) was basically undeveloped, and Europe (and Japan) was destroyed - the rest of the world almost non-factors economically. There was very little pressure to lower wages due to international competition.

There are no simple or obvious fixes to these problems. Promoting housing construction could help a lot, but besides that, we don't have a ton of options. The "pie" of existing assets will always grow unless it's destroyed (in war mostly), so it will always be harder and harder to earn your way into a decent slice. As technology improves international competition will only become more of a factor in price, not less. And there is no "solution" to the increased number of retirees per worker, or more advanced medical care costing more, that isn't horrific. But on the bright side it doesn't seem like these problems will get that much worse than they are now.

Wealth seem so so. I want a more rich and cultural world for people to hope for, and be able to hope & trust in that society. Wealth is just one way to assure people of their lives, and it's an expensive assurance.

The suggestion that wealth has to go up, while also there always being more people, seems fraught with scary ramifications. We do need a world that feels on an upswing! That the youth have opportunity & things to look forward to! But I think a wider view is important. And I worry that wealth alone isn't enough; I worry that even if we were finding it easy to suprass our parents wealth, we'd we might still find it horrible and daunting.

This I think is confined to 21st century western world. Asia (India + China largely) on the other hand is seeing a reverse phenomenon where the next generation frequently end up being more wealthy than their parents and grandparents.

This “western world” chart is showing approximately 5 generations from the “big economic boom” that created the middle class.

India and China are just now seeing the emergence of generation 2 or 3. What will it look like by gen 5? Based on the experience of young adults in China right now, not so great. India? We’ll see.

economics have been largely unpredictable since the industrial revolution. i have no idea what the situation will look like in 1-3 generations when the largest gen dies off, declining birth rate, etc

it does suck for a large number of young people who have no hopes of ever owning a home close to jobs. Right now if I'm searching for homes in my urban region (the whole region), the graph of prices shows a mode at 1-1.25MM. Even current rates notwithstanding, this is a bafflingly high price for a region of 5 million people, statistically 90-95% of have no hope of affording prices that high without some external wealth (e.g. parents).

My concern with economic debates is that there are always enough statistics to play with to make whatever point desired.

For instance: why compare wealth and not income? And if we do, at what age? Do we compare individuals, or households...?

I don't want to say it's wrong per se, just that I've been misled enough before that I don't want to trust anything.

>the economy has become polarized, resulting in a diminished middle class and an exacerbated wealth gap that is increasingly formidable to overcome. This reality has not escaped the notice of new generations, who are progressively more politically active, radical, and discontented with capitalism....A telling indication is that your parents' income now stands as the most reliable predictor of your future earnings

I think the data is interesting but I don't understand the interpretation of the data. Knowing nothing else, isn't the pattern of the graph somewhat suggestive that inequality is going down and your parents income is having less of an effect on your future income?

There's obviously a lot going on with change of wealth over time, but if we lived in a society where children of the 90th percentile and 10th percentile had the same chance of exceeding their parents wealth that would seem to suggest that people were playing with different floors. That seems to be closer to the older generations than the new ones.

My somewhat cynical belief is that income is more meritocratic than it used to be and downwardly mobile children of wealthy people would like to blame wealthy people - instead of accept the reality that their life at the 50% percentile feels less materially wealthy simply because they are comparing it to their childhood at the 90% percentile.

>capitalism

Millennial here. The FOMC deciding rates my whole life was hardly capitalism.

Bond investors may be equally to blame. They willingly bought bonds at those yields.

Does it really? What about abundance as a measure of wealth? Every generation has orders of magnitude more abundance that the prior. We have an abundance of things that our parents and grandparents couldn't even imagine.

the stuff is rather unsatisfying unless you can rub it in the face of somebody

A smartphone is so unbelievably amazing

There is no abundance like being able to afford housing while you are still young enough to grow a family. Chatbots and streaming services are no substitute for that.

Are you willing to forgo your abundance and live with the things you parents and grandparents had in order to get that house, or are you wanting both? It's always hard to have both.

How is that relevant? Houses aren't more expensive because of improved technology. They are more expensive because we chose to make them more expensive via certain developmental policies like car-dependence and suburban sprawl.

It's a mixed bag. At the time, car-dependence and sprawl were the solution.

They still are, anyone claiming we can move away from them is ignorant. They're city folk who have never seriously tried living in a rural area in the US, or had a need for getting to other cities on a regular basis.

I wouldn't go that far. It's also possible to do denser, transit-oriented, actual urban, development. Which is what happened naturally everywhere prior to WW2.

I'd also say that the "rural vs. city folk" dichotomy is nonsense for several reasons, not least because The Sprawl is not at all rural. Indeed, continued sprawl destroys rural areas, converting farmland into tract homes, parking lots, Home Depots, and Starbuckses. Rural towns -- actual towns, with Main Streets, the stuff of Small Town America -- used to exist, and sprawl is its enemy.

But, yes, continued development is absolutely necessary. Home building has not kept up with population growth.

You're just wrong here.

In a rural area your grocery store may be a 10-15 minute drive or more, good luck establishing a bus route for that.

I think we're talking about different things. I'm talking about the process that turned orchards outside San Francisco into Palo Alto, Mountain View, and I-280. I'm talking about what turned Connecticut or New Jersey outside NYC into a collection of parking lots and onramps. That which shat itself all over Virginia horse country outside DC. The entire essence of Dallas and Houston -- of basically all Sunbelt cities. That is The Sprawl. Each of those places could be a Tokyo or a Paris, but it isn't. Americans lack the organizational capacity, the taste, the standards, and the ambition.

I'm not talking about Hiko, Nevada or Rapelje, Montana.

yes, if you turn a rural area into a non-rural area, suddenly you can do things that you can't do in rural areas.

In other news, water is wet.

So your answer is no, you're not willing to forgo the abundance your parents and grandparents never knew at the same age. Asking how is relevant is just a deflection.

Have 1 phone per family, get married at a young age, have 1 TV that's small or maybe no TV, no computer, no game console, 1 crappy car that you know how to fix, cook cheap food at home, then buy your crappy starter home of 2-3 bedroom with 1 bathroom.

Somethings cost more some cost drastically less. At 22 you probably owned more clothes than your parents did at that age. You probably owned more if everything than they did. We live in a land of abundance of trivial trash that no one is willing to give up to get that house they go on and on about. This is trash the previous generations never had as an option or they would have fallen prey to it as well. So apparently we have much more disposable income than prior generations even if we don't have the same income levels.

if you add all those things together, they don't even come close to the increased cost of housing. My middle class parents had one TV and entertainment center growing up and it cost around $2k and that's early 90s money. we have 3 big flat screens now and they don't add up to $2k and that's in today's dollars. We certainly eat out more than they did, but groceries were a lot cheaper back then too. This isn't a "Dave Ramsey" type problem for most people. All the avocado toast and Starbucks you could possibly eat and drink won't add up to being able to afford a $1 million starter home.

This is a very silly comment when you look at actual prices. Even adjusting for inflation house prices have doubled or tripled in a lot of places while wages have remained stagnant.

No amount of scrimping and saving will overcome the fact that the house I grew up in is now $600,000 more than they bought it for when the average wage is like $55,000.

I’m not even a generational doomer type. Millennials and Gen Z will probably broadly be ok in the long run. But pretending that not owning a house is a problem of excess is just stupid when looking at the math.

These conversations focus strictly on the middle class. This ignores the idea that there's always a hungry group from poor families able to earn multiples more than their parents.

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