Have the Boomers Pinched Their Children's Futures? [video] | Hacker News Reader

Have the Boomers Pinched Their Children's Futures? [video]

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61 pointsycombinete132 comments

Not sure it was done intentionally but generations following are pretty thoroughly fucked.

Eg average salary vs average house price charts

https://www.reddit.com/r/dataisbeautiful/comments/e1jrvw/oc_...

It was intentional but it was a small, very wealthy group that did it and is looking for a scapegoat for their sins in the form of your parents.

https://www.nakedcapitalism.com/2013/11/identity-politics-an...

Your article and the video both seem to agree that the different economic outlooks of the generations were achieved through policy, and the video demonstrates a split in voting by age. In this case it certainly takes two to tango - the wealthy to buy these politicians/policies, but also a certain bloc of voters has to keep voting for them.

>it certainly takes two to tango

It certainly doesn't. See https://www.cambridge.org/core/journals/perspectives-on-poli...

>Multivariate analysis indicates that economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while average citizens and mass-based interest groups have *little or no independent influence*.

>the wealthy to buy these politicians/policies, but also a certain bloc of voters has to keep voting for them.

Why would you assume they only bought one party? The whole point of buying the political system is to constrain the options of the voting populace so it doesn't really matter that much who they choose.

The trick after becoming very wealthy via corrupting the political system, as Lord David Willetts knows, is to act surprised when you succeed and blame everyone's mom.

For my own curiosity it would be interesting to see housing prices bifurcated between London and not London. Other thoughts because the UK is a little bit special in the sense that most of the housing stock is quite old I believe...how do the prices look when comparing newer/older stock. I am wondering if new stock accounts for the price increases. Lastly, it would be interesting to see the role of the population, how much has the price changed per capita. Has there been a large influx of foreign money that has helped drive these prices higher and higher. Which could also be interesting to look at, perhaps you need to break the prices apart between luxury and non-luxury, maybe you get massive jumps in price with luxury properties.

That chart is basically all of western world. Some countries more than others but the pattern is pretty universal

Unsure about east & developing countries

No disagreement, just stating questions that I think would be an interesting analysis on top of the aggregate data. Home pricing has definitely outgrown wage growth.

London is the absolute extreme for house price, but the south west is often incredibly bad for house price to average income ratio.

Having said that there has been a definite case of “having cake and eating it too” from the boomer generation: when the retirement age was set it waa very close to life expectancy.

Now it’s 15-30 years behind, and the young are expected to fund those years of idleness from the elderly, often having enjoyed none of the state-supplied freebies the elderly got, while the elderly sit on the housing stock which should be used for young families.

This is nothing to do with luxury condos and foreign money (though those two are likely correlated in London) - it’s basic breakdown of social contract.

We also have some very odd taxation in the UK with regards to property.

We have Council Tax (similar to property tax), which is a monthly charge for local services. Oddly based on house value in 1991 and regressive (richer you are, the less proportionately you'll be paying).

Stamp Duty, which is a tax on buying a house. We punish people for moving out of houses that are larger than they need, to a smaller one.

So we've got generations of people who weren't particularly rich, but have ended up in very valuable houses - and there's simply no incentive for them to get out of them.

We've sprinkled on some incentives to help first time buyers, but they're massively outweighed by the lack of 'stick' applied to the other side of the market.

In my neighborhood (just outside the M25, so desirable for younger families), at least half of the houses are occupied by old people that are rattling around in houses that are far to big for them. They are waiting as long as possible to downsize because they like the house that they have been in for 40 years, and the asset continues to appreciate. We bought such a house last year, where the old owners couldn't climb the stairs anymore and they moved to a retirement 'caravan' somewhere. Their similarly old neighbors thought that they were making a big mistake, but we suspect that they needed the cash.

Four bedroom houses in commuting towns with garages and gardens, that are better suited to families, should not be endlessly lived in by retired people. As per a sibling comment, the social contract is broken, and there seems to be little incentive for existing owners to move the stock on.

I think part of what we are seeing is a skills mismatch. It's not that the jobs aren't there imho, just that the population has not caught up. You'd think with the absurd amount being spent on college education this would not be the case, but alas it is.

Also we are seeing a lot of retiring trades workers and a shortage there. I have a feeling some of these professions are going to see a resurgence in wages relative to other areas of the economy.

I have been programming for 11 years but always have a hard time finding a job. My friends almost had no job through their entire 20's. They have degrees in stem, software, medicine, and chemical engineering.

Every field feels either dying or saturated. Every company gets hundreds to thousands of applicants per day online. If you walk in the building they tell you to apply online. It has been like this for as long as we have known.

The actual data does not align with your anecdote. Unemployment is historically low.

In so far as data is used to qualify politicians and support agendas, this argument is nothing more than a thought-terminating cliche. Data is so abused and any statistician or quantitative person can tell you how hard it is to collect quality data and support a conclusion with certainty without fooling yourself. And that's assuming good intent, the malicious/self-interested case is totally in play here, especially with regards to unemployment.

As so "trust me bro" is in effect eh?

is it incomprehensible to you that "the data says" is a "trust me bro" statement?

Yes, given that it is reported by trusted institutions such as the St Louis Fed. Now if you have alternative data or sources which are in conflict please share.

The conclusions you draw from data do not disprove what the GP said.

First you should be citing labor participation, and unemployment says nothing about the quality of jobs. Nevermind that even labor participation is definitive either. And considering the site "truflation" finds inflation since 2020 to be at 22%, that's a quarter devaluation of purchasing power which seems accurate to anyone participating in the economy. And to everyone celebrating "low" inflation now, that devaluation never goes away as the interest rate compounds and wages just aren't rising that fast either.

The point is that governments are trying to paint a rosy picture when many people participating in the economy do not believe it to be so rosy. And considering that politicians are performing atrociously, the reality is probably that the numbers are not capturing the reality of the economy.

Something is not right if that is also true for CS grads as there are more CS grads than ever, unless they are moving into unrelated fields or worse, working part-time at a supermarket. For example, how many more web developers does the world really need especially when we have tools like Wordpress? Or is the industry hiring 10 people for every one person job?

Ha, my web developer friend got laid off, couldnt find a job, and now he drives the bus.

My other friend who has worked finance his whole life has had to work at a hardware store now.

People I know at software gigs are constantly telling me theyre scared of getting layed off. That includes at apple.

I know two junior devs who are working at grocery store, and a bar right now.

It is very strange isnt it. There must be some nuance to be found in the data. Multimodality at the least.

We are also seeing an immense mismatch between worker productivity vs salaries. Per worker productivity has increased a lot since the 80s but most of the value added hasn't been translated into wages but captured by the capital elite.

While this happens it doesn't matter so much that societies adapt their skillsets, workers will keep experiencing wages depressed relative to their productivity. At some point this will completely break the social contract.

Maybe some has been captured by the "capital elite" or whatever that is (I think personally that is more a function of globalism). But it's also just been captured by society itself. We now have access to far more goods and services than ever before, and for incredibly cheap.

> Maybe some has been captured by the "capital elite" or whatever that is (I think personally that is more a function of globalism).

Whatever that is: it's the people who have capital to deploy, the ones who have workers, it's not a difficult concept.

> But it's also just been captured by society itself. We now have access to far more goods and services than ever before, and for incredibly cheap.

That is just products getting cheaper due to technology for production, the surplus value of labour is not in this equation. Society didn't capture part of the surplus of value, we just got cheaper products while wages stagnate and the capital class accumulated more and more of wealth.

Buying trinkets doesn't make you wealthier.

It's an inflation phenomenon, it largely stems from the explosive growth and centralization of the government post-WWII and subsequent abolishment of the gold standard. You exchange labor for Nancy Pelosi's (alternatively replace your preferred congress person) Chuck-E-Cheese tokens and those tokens are being created out of thin air (treasuries being the gold replacement) to finance whatever war, bureaucracy and any other boondoggle imaginable.

Now instead of getting tokens that are constrained in their scarcity (gold based), you've got constantly depreciating ones, which means your employer can pay you less every year without lifting a finger. The playing field is in their favor in an inflationary environment cause it's now the laborers' burden to search for new employment if they want a raise.

1 worker with a computer in 2000 can do the job of 25 workers in 1970.

It does not follow, however, that the 1 worker with 25 times more productivity should be paid 25 times the salary. That's financial insanity.

Unless the government voted to map work week hours to productivity so the 1 workers earns the same but works 25 times less. That's financial insanity mandated by the will of the people (i.e., the world we already live in). ;D

It doesn't need to be a linear correlation, but there should be some correlation between worker productivity (aka produced value per hour of labour) vs wages. It hasn't happened, at all [1]. And that's ridiculous, workers are much more productive while real wages have stagnated when inflation is taken into account.

> When it comes to the pace of annual pay increases, the top 1% wage grew 138% since 1979, while wages for the bottom 90% grew 15%

> Middle-class wages are stagnant—Middle-wage workers' hourly wage is up 6% since 1979, low-wage workers' wages are down 5%, while those with very high wages saw a 41% increase

[1] https://www.epi.org/publication/charting-wage-stagnation/

> I have a feeling some of these professions are going to see a resurgence in wages relative to other areas of the economy.

This is what should happen to wages in a competitive labor market where there is a legitimate shortage of a particular skill, but unfortunately companies will try to do pretty much anything except raising wages. So instead of paying plumbers $100/hr, the positions just go unfilled, and there's currently a multiple-month wait for any plumbing work where I live.

Where is that?

In Washington, DC, non-emergency plumbing calls might take a week. Emergency (forgot to turn off the outside water during a cold snap, basement flooded) seems to be handled quickly.

Let's just say NorCal, well outside the Bay Area. Agreed, somehow emergency service is fast, but non-emergency has quite a waiting list. Same for other types of trade service like HVAC repair, and even house painting. Another thing that can't be understated is how hard it is to just get these guys to call you back. Nobody answers the phone, and when you leave a message I'd say maybe 25-50% even call you back. Here I am with a fistful of money and nobody wants to take it.

It also took me 8 months to schedule a first-time doctor's visit, so maybe it's just the new normal for everything--not just the trades.

> It's not that the jobs aren't there imho, just that the population has not caught up. You'd think with the absurd amount being spent on college education this would not be the case, but alas it is.

It's the opposite. Many companies are too picky with their coffers

Let's see a graph that goes back a few hundred years?

If you have one feel free to share

Linked from the reddit post, this article (though US specific) has much more data that uses median vs average and breaks down by region..

https://listwithclever.com/research/home-price-v-income-hist...

This means almost nothing without accounting for interest rates.

Financing adds another complexity layer sure, but not sure how you conclude it means almost nothing

If you're trying to buy something super expensive with a salary that is small in comparison then you're going to have a bad time regardless of if it is outright or via financing.

If I'm understanding this chart correctly, people in the US people are now spending less on housing as a portion of disposable income than they did in 1980: https://fred.stlouisfed.org/series/MDSP

This also doesn't account for houses being larger, safer, and better (e.g. air conditioning) than they were 40 years ago.

PSA: In British English, "pinched" can mean "stolen". E.g. "he pinched my laptop"

> From mid-14c. as "to pain, torment." Of tight shoes, from 1570s. Meaning "to steal" in English is from 1650s.

https://www.etymonline.com/word/pinch#etymonline_v_16335

In my home city of Houston, Texas there are a lot of old "shotgun" houses from about 100 years ago which really are just a bedroom attached to a kitchen. The tiny box in the front would not really qualify as a living room in most places.

I wonder why we dont see new houses built at this size.

Its not a tiny house, and totally liveable. I feel like a new one should cost between 50-100k$. Why do we only see mega houses being built.

Those were built when land had little value. Today the land is worth far more than the house. Who would build a $50K house on $200K worth of land?

We need a lot more 50-100K living spaces, but they only way we're going to get them is through density so that $500K worth of land can be split between 20+ families.

Houston may be an anomoly but there are tons and tons of vacant lots everywhere. Many of them are only like 10-20k and 15-20 minutes from the city center. Usually in areas full of mexicans. But no houses on them!!

Houston is also an anomaly because there are no zoning laws to speak of, so if Houston wanted to do this (and it does in some areas!) it could.

Theres still tons of bullshit regulations. Cant even build a damn fence without getting a sign posted saying you get a fine. Or your own plumbing. etc.

This may be true in high density cities, but it's not reflected in my recent house purchase (~4 acres, 1650sq.ft. manufactured house).

I had always thought of the property as the valuable part, and I still value it more than the house (houses are replaceable), but,

a) the value of the property is less than 10% of total purchase price, b) The mortgage broker did not consider the value of the land AT ALL when writing the mortgage, c) I don't own the property, I rent it from the county.

Depends on local market, but housing material doesn't contribute much to house prices. Land, permits, development charges, fees, make up an enormous percentage. You don't have much on labor.

In other words, no one will buy a shack for $500k when a proper house would cost $600k

Then we just have to trim down the regulation. A society can only afford regulation when it is wealthy. If people start getting broke again you have to be adaptable and remove it so the price floor goes down. Laws cannot be ratchets.

Bedroom+Kitchen are relatively easy. The problem is bathrooms. If you have access to sewer, you’re in great shape—no problem. Otherwise, you need land for a septic system (tank and leach field). How much land you have, how well that land percs [0], underground obstacles, and regulations in your municipality all determine how expensive that system will be. They are usually in the 5 figure range, sometimes reaching the high end of that range if there’s limited space (requiring specialized equipment like a continuous air pump).

[0] Percolation Test - how permeable the soil is to water. Often abbreviated to “perc test”.

Well now we know the problem. Overregulation, and corruption. Id rather have a primitive toilet than be homeless.

Well, no, it’s public health. Innovation in plumbing over the past millennium has directly lead to drastic reduction in disease.

Of course. Much regulation comes with a quality floor increase and safety benefits. (Some of it is just corrupt regulatory capture. Companies trying to prevent competition via legislstion.)

Even if you assume the regulation is with good intentions, when people become poor again you cant afford the high costs of the regulation, and it has to be removed for practicality, or exceptions for small low cost dwellings.

Imagine if you mandated that all houses must have 3 bathrooms for public health. People would just dissobey. In the same way that all the poor people I know drive cars without car insurance, but risk losing their liscense which takes them to their only source of income.

You cant wish problems away by making everything illegal.

It sounds like you’re advocating for housing the poor in shantytowns without proper sanitation. That’s an uncommon position to argue for, but I’m sure you can find some resources about why that is a less-than-desirable outcome for the poor.

Also a Houstonian. Those are getting torn up and replaced with $1-$2M three story townhouses with the absolute quickness. But I agree with you. Those (relatively) tiny homes are cute.

He's missing the massive other piece of this puzzle where integrating the third world into the world labor market effectively wiped out a lot of entry level/mid level manufacturing and remote services jobs, which cut labor competition and effectively capped a whole bunch of salaries across multiple sectors, stopping the wage growth from productivity growth that usually happens. Integrating the third world is still an exceptionally good idea, as the massive wage growth happening there has lifted literally over a billion people out of abject poverty and suffering, it's just going to suck for another 5-10 decades as labor prices equalize and excess labor in the third world is used up by far more productive pursuits than subsistence farming.

As far as his solutions, they aren't very good. What we should be doing instead is crushing all the planning permission BS, rezoning to allow a lot higher density and fast tracking projects to build housing supply and push housing prices down via that method. If one could go from buying land to having a finished multi story residential with main floor shops/highrise/whatever built in a dramatically shorter time on a vastly larger swath of potential land more would get built and prices would fall.

On the subsidy side of things the floor and cap idea is ok, it should really just be applied specifically to health care and have tiers based on some combination of income and wealth that determines what your copay is and where your copay for health tops out. That would directly tax what is costing the system the most and directly target high wealth/income boomers who are disproportionately using healthcare mostly without raising taxes on the young who are struggling. If this was combined with the housing reform above it would also probably increase supply of land to build more density as boomers are forced to sell their secondary properties to cover healthcare copays (if they are house rich and cash poor as many are).

Children can live with their parents or parents can live with their children.

No new wealth is created but the difference is stark for growth prospects.

This talk by Lord David Willetts, at the Royal Institution, is more substantial than the title might suggest.

A miniature summary: the relative size of the Boomer cohort has created enough gravity to warp society around them as they have moved through it; changing society and policy to their advantage. This is the effect. No claims are made to intention.

It is focused on the United Kingdom.

It also contradicts that age old rule of the internet where the answer to the question in the title is always, "no".

The original book on which this is all based is also excellent reading.

Lord Willetts is now a Conservative peer, but was a demographer for the Conservative Party. The policies that have impoverished the young are all Conservative policies: allowing the cost of housing to grow faster than wages, privatisation, and deregulation.

In the eighteenth century, Edmund Burke argued that a conservative party must remain pragmatic, and until Thatcher, the Tories had the discipline to do so. For the past four decades, they have chained themselves to one ideology, and the fortunes of one generation. As that generation fades, so will the party.

In the coming general election, the question is not whether the Conservatives will hold power - that matter was settled long ago - but whether they will ever form government again.

I don't see any dips in those graphs from when Labour was in power?

Because you can’t change housing policy from the past several decades in one term, no matter which government or party you’re referring to.

Every single time I see these statistics, I think that this modern form of capitalism can only exist with modern life expectancies.

Should human lives be shorter, we'd have real transfer of capital between generations. Should our lives be longer, we'd realize that 5% over 100 years (a multiplier of 130 times) is absurd to allow as passive income, and we'd most lively remove most options of passive investment.

It doesn't make sense to say "pinched". Much like the debt isn't being "left to their children" - the children will likely choose not to pay it, it isn't written in stone. What they can be accused of is refusing to build a better future for their children.

They legislated and partially fossilised the state of society in the 1980s, redirected mush of the physical growth and development to China and set up a slowly declining society in a weird type of fast growing stasis. It is unarguable that the technical state of society in 2024 is better than in the 80s. But looking at Asia, the rate of growth outside of tech is not where it really should be for a healthy economy. Energy availability per capita is down however, and adjusted by the M2 a lot of the financial indicators haven't improved as much as people like to pretend. It is a politically stressed situation where a lot of people feel - justifiably in my view - like they are worse off.

It'd be fascinating to have a counterfactual where the boomers didn't get spooked and execute the nuclear industry. If energy prices had dropped by an order of magnitude, we'd probably be seeing a different world right now.

Leaving debt for your children but don't want the shame? I have a solution, leave so much debt that nobody could even imagine your children paying it all off, that way you can say condescending stuff like "will likely choose not to pay it, it isn't written in stone" while writing that they will service that debt forever in stone.

If you don't pay, who doesn't get what they are due? Who specifically is reliant on that repayment in the future? How will their life be worse if they don't get repaid? Does anyone actually know?

What most Americans want is a solid job, a house in a quiet area with a couple of kids and a dog, room to swing a cat, being able to get home for dinner at 6, the ability to get around and do a few things. Basically the Homer Simpson style life (without the wacky adventures)

That used to be achievable for most people. It's not now.

In the case of USA, the debt is Govt debt so it means Govt shutdowns cutbacks etc. Every other board in the house was burned for extra warmth. Now our economy is "service" based, I guess that is some sort of inter-generational joke where we are now expected to go "service" ourselves.

Huh? In general when people die with net debts, it's not to the government; it's mortgages and other consumer debt.

I'm not saying Govt is inheriting personal debts. I'm saying the bigger issue is the Govt debt as a percentage of a largely bullshit economy.

Imagine the government prints the money and closes the debt that way. Nobody in the present has lost anything they can point to. They lost a promise which isn't worth much. The person who lent the capital could have bought something nice ... however many years ago. Today, they just have to recognise that they made a mistake many years ago. They gave a gift and mis-recorded it as an asset in their accounts.

At this point, there isn't really a plausible path where the US debt gets paid down. The plausible path where they pay interest on the debt is also vanishing, 5% interest rates are overwhelming the ability of the US to pay. They are well on the path where even rolling over the principle will be infeasible. Anyone who believes it is a safe bet that they get paid back in real terms is rather optimistic, they're gambling. And in that environment, why should the inheritors of the debt play along in this silly game? They'll print and be done with it.

Personal debt is also a non-issue, where I imagine it gets extinguished on death. There isn't really a path here where future generations get saddled with debt. The problem is they'll have a future where their parents didn't build enough infrastructure.

I suppose the video might be about the UK, but the situation there would be largely similar to in the US, on a smaller scale. The problem is the lack of investment in the past, not the debt in the present.

> Imagine the government prints the money and closes the debt that way. Nobody in the present has lost anything they can point to.

Cool, why don't the boomers lead the way with this innovative plan while their retirement is on the line, instead of waiting to be clear of the blast zone?

They are.

Nobody is planning on paying the US debt back by repaying it, for example. That option has been all but officially ruled out. The printing is an ongoing thing.

The US governemnt currently "owes" $34,000 billion.

Who specifically is relying on that debt being paid back? What will happen to them if they don't have that debt repaid? What will they do with that money if the debt is repaid?

For a loan with a house as collateral, an unpaid debt means foreclosure. This is a hassle for the bank but not an existential threat.

> That used to be achievable for most people. It's not now.

That’s not really true. Home ownership rates for, example, are higher today than in 1950. And houses are twice as big as they were back then.

The whole point of this post is that statistics in aggregate obscure the effects between generations.

The first-time homebuyer is now the smallest proportion ever among homebuyers, and doing so at the oldest age recorded.

It’s not really that different breaking it down by generation: https://www.redfin.com/news/gen-z-millennial-homeownership-r.... Millennials have somewhat lower home ownership rates than boomers did at the same age, but I suspect most of the difference can be explained by:

1) millennials starting their lives four years later due to college becoming much more common;

2) millennials choosing to live in urban areas rather than cheaper suburbs, as compared to boomers.

That’s a great article. I suspect the difference in statistics is that RedFin only represents mortgages, not the 30% of sales in cash.

I’m not sure it supports point 2), though. The comparison is between millennial and Gen Z.

> while writing that they will service that debt forever in stone.

Eh? In general, in most jurisdictions, debt essentially dies with the debtor; if it can't be paid from the proceeds of the estate, then that's the end of it.

I don't mean to offend the parent poster, but this post gives me strong Shaney[0] vibes.

[0] https://en.wikipedia.org/wiki/Mark_V._Shaney

Is there an aspect of the comment you think is illogical, a non-sequitur or otherwise mildly objectionable?

I found the original comment unclear and hard to follow. It has some garden-path elements… like “partially fossilized”, which most people will parse as an adjective, but here is used as a transitive verb (unusual / surprising usage). The sentence has lots of clauses in it. The key idea in the next sentence is shoved into a clause behind “it is inarguable that”, which readers will stumble over like a pile of children’s toys sitting in front of the door. The multiple ideas in the paragraph are presented without connecting phrases. There are some phrases which seem nonsensical, like “fast-growing stasis”. It’s not like such a phrase is wrong, but it’s nonsensical at a surface level, which forces readers to stop and think about alternative readings.

It is just a comment on HN. I don’t think it’s fair to ask authors to edit or carefully craft HN comments. However, there are some problems with the way that comment is written.

Thanks for the helpful feedback; it is hard to get that on the internet. Although...

> There are some phrases which seem nonsensical, like “fast-growing stasis”. It’s not like such a phrase is wrong, but it’s nonsensical at a surface level, which forces readers to stop and think about alternative readings.

That was intentional, and catches what I meant. The English speaking world is improving everything with unprecedented speed. Simultaneously, there seems to be an extreme amount of political tension that is linked to stagnation of a few key measures like wages and per capita energy use.

It is a weird situation of stasis (really more decline these days) and change for the better. Without observing both, the political situation wouldn't make sense.

Yes, and I also think that we should expect readers here to respond to the most coherent reading of a comment, but I know a lot of us don’t spend the time to figure out what someone means.

In “fast-growing stasis”, because it’s an unexpected phrase, you could follow it closely with an explanation…

> …in a weird type of fast-growing stasis, where some measures grow at an incredible pace and others stagnate.

Or use scare quotes to call attention to the unusual usage…

> …in a weird type of “fast-growing stasis”.

Honestly I found it hard to apprehend the meaning of most of the text. This is a failing on my part and something I associate with reading authors like Yuval Noah Harari, it seems to be a combination of my not possessing a context which is assumed, and perhaps a logical progression which doesn't map well onto my own thought processes. Whatever the reason, the result is that the statements appear pointlessly vague and the argument which is being constructed appears to me to be merely a disorganised heap.

A sibling comment did a good job of responding to your question, but I could point to the phrase "a slowly declining society in a weird type of fast growing stasis" as typifying just this sort of (to me) impenetrable description.

> adjusted by the M2 a lot of the financial indicators haven't improved as much as people like to pretend

When you wrote this, did you have in mind particular indicators, people who like to pretend they've improved, how they should be adjusted by the money supply? Did you expect that the reader would find this statement familiar? I'm not a particularly sophisticated follower of contemporary economics, but I didn't have any idea what you were getting at here, unless it was something similar to, e.g. "median household purchasing power relative to the national budget has declined so much that the tax burden today hurts the consumer's quality of life much more than it did in 1960, contrary to recent editorials I've seen in The Economist". However I don't believe you intended such a blunt interpretation, as if you did it could have been stated much more straightforwardly.

> Much like the debt isn't being "left to their children" - the children will likely choose not to pay it, it isn't written in stone.

What form do you think this debt takes, that the children can choose not to pay it?

A big part of this debt is a bunch of elderly people who feel they have paid into "the system" their whole working lives, and now they need their cancer treated, their hip replaced, their cataracts treated, their heart problems treated, their slips trips and falls treated, their strokes treated, their dementia treated, and so on.

And it turns out the system wasn't building up a balance all those years they were "paying in" - actually, the money was spent as soon as it came in.

Every one of these elderly people has a vote. And every single young person has elderly people as their parents.

To me it seems unlikely any politician would get elected with a policy of 'choosing not to pay' for healthcare for the elderly.

If the elderly take on the entire productive economy, they will lose. The reserves aren't there to do that. There isn't an English speaking economy that can afford that level of debt, and the old can try to compel the young but they don't have the number of healthy bodies that would be needed to win.

We're dealing with law vs. reality on this one. Reality has a big edge. A broke millennial living in their rental apartment with a lousy job cannot cure their parents of cancer and doesn't have the time to look after them. It does not, physically, work. The boomers should have spent their efforts setting up a good medical system instead of trusting it all to their feelings and not investing anything.

Maybe it will all work out. That'd be nice. I assume a lot of people will have pretty miserable retirements and in hindsight they should have been a bit more fiscally responsible in their politics.

Not sure what health care costs represent in a budget of elderlies, surely a lot. But not even a quarter of all this dept is to cover health care provided to retired contributors. Just look at the ratio the entire health sector represents.

Yes the system hasn't been balanced, but all that "money"- went into so many other things old generations have accumulated. Stock (at a decently valued purchased price, not the hyper bubbled dollar per share the stock markets trend at these days). Real Estate, and real estate and real estate.

A few % of the elderly sit on wealth worthy hundreds of millions, billions of dollars worth of property. Taking rents while workers indirectly pay that rent in everything they consume, not just to live somewhere.

Not paying the debt while still catering to eldery's health is an option. It would just deprive some of them from wealth they wouldn't even have time to spend in 100 life times in medical bills plus everything else.

The debt problem will likely be solved along with the property valuation non sense. Health care is, almost, a non issue in comparison.

Inflation is the mechanism by which wealth and power is transferred from the old to the young.

Now you understand why our recent bout of inflation has been weaponized to become enemy #1.

I think a more widespread opinion is that inflation is a wealth transfer to borrowers from lenders. Households borrowing in the form of a mortgage might lend in the form of a savings account. Older people access income through entitlement programs, without borrowing. I think this supports your argument better, that certain media lie about inflation because very few of their captive audience are borrowers.

Seniors who are living on entitlement programs are the ones likely the hardest hit by inflation, and they're neither lenders nor borrowers.

I think seniors are lenders, recovering their investments from mutual funds. They’re only hard-hit when their retirement accounts failed to outpace inflation. The usual pattern is to move from stocks to bonds, so we observe seniors grappling with the performance of bonds. We don’t look deeper to see their speculative lending into the stock boom of 1980-2000.

Some seniors are lenders, living off their retirement savings.

Some seniors are living without retirement savings, living on $1200/month of social security.

Debt might not be passed to children, but when the parent's assets are liquidated and sold on death to settle high taxes on inheritance, it is clear that they effectively are even at a local scale.

Assets that would've been inherited by the children, as a form of generational wealth transfer, are cut off. High government debt means high taxes.

Those assets are liquidated and heavily taxed. Rent seeking behaviour then limits that generation's ability to grow their own asset base. A mortgage for a home, a person's main store of wealth, is now more about how much lifetime debt you can sustain rather than a reasonable price for a reasonable asset backed loan.

The whole thing is insane. Welcome to a world where you own nothing, die with nothing and pass nothing on. This prevents the accumulation of wealth (power) over generations, keeping the poor poor and helping the rich become richer.

End of life care is going to obliterate generational wealth long before taxes, it doesn't even get taxed until you're over 13 million in the US. IMO, generational wealth should be taxed more as it's a huge source of sustaining inequality and trivial to avoid/plan around if you're rich.

This could be fair (?) if you are a billionaire. If I've been saving and investing most of my life, and I end up leaving €2-3m to my children, why would the taxman take 20-30-40% of it? (since you don't mention a percentage I came up with it).

Why should I be punished for 'not giving money back to the economy' (spending - ~25% VAT)?

Saving money gives the bank the ability to loan it to someone else (or even me), thus growing the economy.

Investing money gives the company (assuming stocks/etc.) funds to grow.

Am I being punished for not paying a VAT or ~25% (spending) but instead of paying 'only' the 15%-19% for capital gains tax (when my children close those positions)?

Heads I lose, Tails I lose?

Since you’re talking about fairness, Mossack Fonseca had 214,000 accounts. Many rich people are taking an option you don’t mention.

> Investing money gives the company (assuming stocks/etc.) funds to grow.

How does that work? If I buy 100 shares of MSFT from some other shareholder, no funds are going to Microsoft.

£325000 in the UK. Less than the price of a one bedroom flat in London 15 years ago.

> it's a huge source of sustaining inequality

The biggest source of inequality is that humans are essentially unequal, and you only have to see the outcomes among siblings to see that this is true.

If a family cannot ensure equality among siblings, certainly a government will fail horribly.

I'm not sure why a back redistribution of wealth between Boomers and their children does not happen.

In Russia you would be set for an absolute boomer domination, since they could privatize the apartments they rented from state after 1991 (virtually for free), and keep them, but their children would get nothing and will have to rent. But in fact that does not happen because as boomers die off, their grandchildren get apartments inherited by their parents. Not by any law but by intra-family wealth redistribution.

Maybe US & UK Boomers were the exception in that they lived in economic environment where they could earn such wealth from scratch, so they are just not ready to share?

Unfortunately a lot Millennial and Gen Z Americans are going to watch their inheritance redistributed to the healthcare industry, instead of themselves, as their parents continue to age.

Yes.

Taxes are an investment by the old into the futures of their children.

Boomers grew up with a max personal income tax bracket of 90%, and an effective corporate income tax of 25-30% (it is 5% now).

Anyone who has studied macroeconomics 101 knows this.

The Chicago school bent over backwards trying to make the Laffer curve true, but it never was, nor will be. It doesn’t even pass the smell test: obviously any rational economic actor would maximize net profit regardless of the marginal tax.

Grocery stores make a 2% margin, yet are a thriving industry. That alone invalidates the Laffer curve.

The Laffer curve almost must be true by definition:

   1. If the tax rate is 0%, you will get zero tax revenue, by definition.
   2. If the tax rate is 100%, presumably no one will generate (reportable) income, and you will again get 0% tax revenue.
   3. Somewhere between there (the current tax rates, for example) you get revenue.

The above equals "the Laffer Curve".

The thing people get wrong is assuming that they know where the shape of the Laffer Curve, or just where the maximum of it is. I am not an economist, but I'm going to guess that economists disagree about the above, so people arguing in bars (or online) are guaranteed to be wrong.

All of which to say that the Laffer Curve is a thing, but it doesn't prove that 90% is too high, or 5% too low without drawing conclusions about its shape.

Correct: I should have been more precise.

The particular shape of the Laffer curve espoused by the Chicago school, so called classical economists, is incorrect.

Thank you.

I'm so very tired of this kind of nonsense.

Every generation has unique challenges and opportunities. Each will have economic winners and losers.

Sometimes I forget that so much of this stuff is so inaccessible. Capitalist apologetics are really drilled into us (at least in the US) since day 1. I guess I'll just leave this here and move on:

http://www.vatican.va/content/leo-xiii/en/encyclicals/docume...

It's wild to watch all of these takes as though the jury is still out, or it's gonna happen sometime in the future when the last boomer dies. It started happening before 2008, was accelerated by the financial collapse, and is affecting Gen Z as well as Millennials. Neoliberalism's failure caused the center to fall out of western politics. If you look at polling, only older, wealthier, or college educated people are really holding the middle together. They're a shrinking group. Our political future is populist, whether that's on the right in the form of fascism or on the left in the form of communism is up to those movements, but it's happening.

The effects were only seen in 2008 because that's when the modern 'everything ponzi' first started to waver. But that die was already cast before 2008 and many people were already fucked but just didn't know it yet. I think one of the biggest differences between Millenials is that initial period of ignorance allowed Millennials to be optimistic and that optimism was good for their mental health. The poor mental health of Gen Z has made their bad situation worse. In general Millennials didn't expect social security to last until retirement, the Gen Z people I've met do not expect society to last. Like Gen Z, I do think there will be an economic implosion, possibly precipitated due to a lost war. The Suez Crisis of 1956 marked the end of the UK empire, history might repeat and the failure to rope in the Houthis might mark the start of the end of the US empire. I think Millennials, Gen X, Boomers, etc may end up finding out that their retirement investments are no longer valuable and which will really suck for everyone except Gen Z which didn't have any to begin with. But maybe the slow process of economic death drags on for many more decades and the Boomers get to die out in peace.

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