The long slump has revealed the preferences of the aging polities of the Western world. [Economics blogger Steve Randy Waldman:] “Their overwhelming priority is to protect the purchasing power of incumbent creditors. That’s it. That’s everything. All other considerations are secondary”—-including economic recovery.
We
could jump-start the economy with a massive jolt of monetary and fiscal
stimulus, but such a policy would risk inflation and pose a threat to
retirement savings. So we don’t do it. We could borrow money to finance
infrastructure programs that would set people to work now and enrich
society over the long haul—but that borrowing would have to be serviced
by taxes to which older Americans fiercely object. So we don’t do that
either. - D Frum
Modern politics are so insane that now I'm quoting David Frum! Well, at least guys like Frum, Brooks, and other sane conservatives from the "Buckley school" (http://www.kqed.org/a/forum/
It's humorous that some deficit hawk conservative politicians claim that we need to balance the budget now so we don't saddle future generations with terrible debt. Well if they cared so much about the kids, then why are they cutting gov. spending that would directly benefit kids now and in the future (infrastructure, education, etc.). And in the meantime, they're cutting taxes to the rich (who are mostly old people + the nerds in Si Valley) and expanding or maintaining unsustainable Medicare spending (the Bush Era Rx drug expansion, with its lack of price bargaining, has cost America more than all the wars on terror combined). Old fogies are now more libertarian-leaning and opposed to an activist gov. compared to when they were younger hippies. Well that's understandable - they made their dough and now they want to be left alone to enjoy it, unless the activist policies benefit them of course.
The Fed was created to have a dual mandate: keep inflation AND unemployment at reasonably low levels. Now it's just concerned with inflation and protecting the value of capital (and who controls the capital?). Most non-ideologues with half a brain realize that we can't "cut our way to prosperity". Even with major budgetary restructuring, spending cuts during a recession will hurt a lot more now vs. what they may help in the future. You have to spend, and gradually throttle back and pay it down when you're enjoying more robust growth. So for the conservatives to focus on debt without addressing lack of growth is like the doctor working on your acne but ignoring your tumor. When their "cut the debt AND give rich tax breaks" argument fails, then the GOP turn to the "roll back job-killing regulations" line. There is some truth that inconsistent and irrationally complex US regs can be a business hurdle, but I think smarter regs are the answer vs. no regs. Plenty of thinking conservatives support that view.
But going back to the generational war and inflation... one side-effect of Keynsian spending is that inflation will rise. It's an economic maxim. That means that savings and other assets will lose a little value. And rich old savers don't like that (aww, their $100M net worth is now worth $99M, shucks). They'd rather force the young to suffer in order to protect their coin. And it's not like we're talking about pre-Nazi Germany or Zimbabwe here. Inflation in the US is at historic lows and very stable vs. most of the world. Everyone is flocking to buy dollars and US Treasuries. A few points rise won't kill us in order to stimulate growth, and in fact may have a few side benefits: makes our debts cheaper to pay off and our exports more attractive, for example. Like most of economics, a rise in a certain metric always has both pros and cons.
The Millennials could be the first US generation with a bleaker future (on average) than their predecessors, with the "American Dream" out of reach to more of them. Their parents and grandparents (Boomers and Gen X) should be ashamed of themselves for putting their progeny in such a situation. I've already posted about the pains that unemployment causes on a recent graduate's psyche and lifetime earning potential (http://www.blogger.com/
As political scientists Theda Skocpol and Vanessa Williamson found in their study The Tea Party and the Remaking of Republican Conservatism, the general anti-government attitude of today’s retirees is heavily seasoned with mistrust and dislike of today’s youth. “[Y]oung people feature prominently in stories Tea Partiers tell about undeserving freeloaders.” They don’t exempt their own children—in fact, it is often their own children and grandchildren toward whom they direct their angriest scorn. As one elderly activist quoted by Skocpol and Williamson puts his generational irritation: “My grandson, he’s fourteen, and he asked me: ‘Why should I work, why can’t I just get free money?’” (A comedian’s riposte: “The Tea Party is God’s judgment on us for teaching our parents how to use the Internet.”) - D Frum
Important tenets of conservatism is self-responsibility and earning what you get. I guess that's why many of them are so against welfare and other "handouts". They see success in a context vacuum; everyone can be a self-made man, and if you fall short it's your own fault so don't cry for help. Well if that's true, then why are the most successful Westerners today more often the children of powerful, educated, and rich people? Why do guys like Donald Trump get to keep failing and get more chances (and handouts)? I can spare you the rhetoric, you know it's not an even playing field out there. It's like the Yankees mocking the A's for not winning enough. But I can see where some of them are coming from. The fogies worked their asses off and now want to enjoy their retirements, as their predecessors and their values said they deserved to. But at what cost? It's not the 1950's anymore. Will they protect their twilight years at the expense of millions of future Americans - not just the Millennials but many generations after them? Because I assure you that our mistakes from this botched recovery will burden America for at least the next half-century. And it's not like every fogie is rich. My wife and I often comment about the haggard elderly people in SF rummaging through trash cans to find recyclables. Those folks deserve a social safety net, but why should George Bush Sr. get gov. benefits? Even if he is an ex-president, that doesn't mean he deserves to be a burden on the nation when he's already self-sufficient.
In nature, organisms exist purely to produce the next generation, and protect them until they are strong enough to flourish on their own. In fact, after some species procreate, they die. They have fulfilled their biological purpose, and return their matter to the earth for others to use. Of course I am not advocating elderly euthanasia here, but there is some logic into the old helping the young. Because ultimately there is more to gain from that. Think of Shell Silverstein's famous "The Giving Tree". That story still makes me cry. What if the tree complained all day and nagged the boy/man to keep giving it better fertilizer? It's not right. Maybe in our modern economy it's a bit different, with old people running gov. and industry. So their brains are still needed for society. But the innovation and energy are coming from the young, and I don't think old people are the only ones qualified to lead. So kids should be given the majority of resources, because the future of our civilization depends on their success. And they will do the same for their kids when they age. There should be no higher duty and privilege for a parent to sacrifice for his or her young (within reason of course, and I don't mean buying them a Mustang for their 16th birthday). But unfortunately, our culture places a higher premium on personal legacy, hedonism, and the good-and-bad tradition of filial piety in some cultures. So the old would rather have the young serve them, maximize their imprint on the world, and enjoy life rather than sacrificing for the progeny, which should be hard-wired in our DNA.
Look at Fukushima (http://www.bbc.co.uk/news/
------
A couple minor quibbles:
- The top 1%
isn't old people and Silicon Valley. It's predominantly corporate
executives and non-executive finance workers, plus a smattering of
lawyers, doctors etc. Silicon Valley engineers are well-paid, but it's
100-200k, not the 400k+ it takes to make the top 1%. Moreover, they're
not socially connected to the corporate and financial elite that we're
generally talking about when we discuss "the 1%."
- It's not an economic maxim
that a side effect of government spending is that inflation will rise.
That's true outside of a liquidity trap, because the additional g't
spending will compete for resources that are in use, driving up the
price. But in a liquidity trap (where the real interest rate at which
the market clears would require a nominal interest rate below 0%), many
of those resources are idle. Government spending that uses those
otherwise-idle resources doesn't necessarily create inflation. This is a
deeply non-intuitive but important result. It's also the reason that
the tripling of the monetary base over the last few years has occurred
without creating inflation (to the deep surprise and disappointment of
the commentators on the right who've been predicting hyperinflation for
the last couple years).
More
broadly, I don't think old-vs-young is the right division along which to
analyze America's current set of problems. There is a fault line
there, where there are differing interests and opinions, but it's not
the main one anymore than the everybody-vs-public-sector-
These other
divisions are certainly real. And they're made worse by our economic
situation. Human psychology is such that losses count for more than
equally-sized gains, so people are much less acrimonious when dividing
up the new parts of an increasing pie than they are in apportioning
losses from a shrinking pie. The result is that when we have economic
pain to apportion, those divisions of old-vs-young and left-vs-right and
so on become a lot more acrimonious.
But they're not the cause of our current problems. The cause is best understood along that insider-vs-outsider division.
Well what I meant about the 1% is that those financial execs and other professionals tend to be over 50. I don't have data on it, but I would guess that their voting behavior is closer to that of the non-poor elderly than that of the young. For the Si Valley comment, it was mostly a joke aimed at the founding execs like Brin and Zuck (and the VC, PE moguls of the Valley). Connections to big finance are not really necessary - their net worth puts them at the 1% (maybe not their base salary but their total net worth) because big finance wanted a piece of their businesses. Come on, I wouldn't hate on the noble, lowly, public-good-serving engineer with his stock options and Porsche. :)
Good point about inflation; sorry I didn't expand on that point that there needs to be crowding out and scarcity for prices to rise from G spending. As you said, when resources are idle (as they are during the recession), it's almost a no-brainer to spend to utilize those resources (and laborers), even if there isn't market demand for their output. At least they won't be languishing in the unemployment line depressed and frustrated.
I agree about the insiders vs. outsiders distinction as the most critical one. I just thought Frum's piece was interesting, and describes an angle of the situation that we don't often discuss (especially coming from the right). The old-vs.-young thing may not directly apply to policy and power, but more like social-cultural roles and priorities.
------
Ah, ok. I've long considered the old-vs-young issue to be a fairly standard trope of the right - my mother's pretty far right, and I've been hearing about it from her for most of two decades.
My
suggestion on reframing it as insiders-vs-outsiders is to suggest that
as the richest country humanity has ever known, we have the ability to
support both old and young. What we don't have the ability to do,
apparently, is to support both old and young while also supporting
fraud, looting and widespread criminality among the elite.
"Old-vs-young fighting over a shrinking pie" is only a reasonable way
to look at it if you ignore the big chunk of pie the elite has stuffed
under their shirt and is pretending doesn't exist.
-------
It seems to me that alot of these divisions (young v. old, black v.
white, left v. right, labor v. business) are creations to keep us
divided mentally to keep us from thinking past the current paradigm.
I
like your insiders v. outsider comparison. That's the closest I've
seen. Unfortunately, so many outsiders think they'er insiders and
therefore will demonize or denigrate the outisiders as 'others'.
the young v. old prevents alot of people from seeing that the
'young ones' in the streets are there fighting for them, too. they're
not fighting against them, but the framework established keeps those
older, disgruntled ones from joining ranks (like they are in greece).
I think the issue is that many of us out here don't understand the
issues. These divisions are tools used to prevent the general
population from understanding those issues. They are angry, sick of
being ripped off and tired from overwork, just as the ones who've taken
to the streets. But, they're told over and over again that the ones on
the street are whiners and complainers, young lazy blah de blahs... 'not
you's'. Therefore they become the target of your disdain and not the
ones who are working you to death, robbing you blind, etc. etc.
Until the 99 in this country sees that we are truly 99 to 1, the 1
will continue to utilize the media techno fog machine to keep us blaming
each other while they pick our pockets clean.
-------
Thanks for the comments you two. I agree - why do the old see the young
as a threat? The old made the young, and the young are Americans, so
it's not like we are foreign invaders. Unless there is some weird
psych-stuff going on regarding
self-resentment and whatnot (Frum's comment that the old hate their own
grandkids even more than stranger kids), I don't get it. Those without
large savings literally depend on the young for survival. They don't
have to be all humble and grateful, but at least don't talk so much
shit. We're not going to send them to the death panels, and it's the Tea
Party that wants to cut or privatize the Social Security "Ponzi
scheme". I guess it's part of that conservative suburban paranoia,
"bowling alone" syndrome? Especially in America, inter-generational
communities are not as common (though they are getting more so due to
the recession). The young keep to themselves unless they need grandma to
babysit, and the old keep to themselves at FL and Palm Springs golf
communities. I guess it's like the GOP and Dems in DC not socializing
after work anymore, and now cooperating less on the job.
As L said, we don't make the effort to get to know the other side, we don't empathize, and it's easy to just feel hostility for the unknown, even if they share our last name. Humans are susceptible to groupthink and mob mentality, but don't draw the lines as young-vs-old, black-vs-white cliches, but instead fair, sharing people vs. greedy assholes, or sensible open-minded folks vs. ignorant, intolerant zealots? At least then it's not on demographic lines (too tribal and crude), but on behavioral and personal choice lines. In the sensible group, you will get young, old, rich, poor, black, and white together. They will interact, exchange ideas, and get stronger. Maybe then the old will see that the young have a lot in common and are fighting for them too, as L said. And the real enemy are those who have everything, want more, and pit the rest of us against each other to fight for the scraps.
J: curious to hear what some of your mom's thoughts are about the generational divide. I figure I could guess some of them. Don't worry, believe it or not I was partially raised by a grumpy Tea Party old white lady (whom I love very much - the only ultra-rightie I will ever love haha), so I've heard it all. Maybe the old also blame the young (and the illegals, and the Muslims, and the liberals, etc...) for what they feel is the decline of America and its values? I guess there was always some of that with the Swing Kids, hippies, and punks of the past, but now it seems like nastier scapegoating. Before they just hated our music, now they hate everything about us. They blame the young (even though we have no power or money) because it's easier than looking in the mirror. But do the old really think that their demographic is best suited to right the ship now, in 2012? To me, it's just depressing that the old prefer to idolize and trust a Romney or Palin rather than try to empathize and help our a poor single mother trying to raise her kids and get an education, who never did anyone any harm.
Also, isn't insider vs. outsider a fairly traditional paradigm as well? Monarchies, Catholic Church, Guilded Age, etc. were all manifestations of basically the same struggle. I guess modern plutocratic America is the first time in a democracy where insider power is so concentrated and has so thoroughly bought the political process without using force. America's income inequality metrics are bad and about the same as China's, yet our political and economic systems are vastly different.
As L said, we don't make the effort to get to know the other side, we don't empathize, and it's easy to just feel hostility for the unknown, even if they share our last name. Humans are susceptible to groupthink and mob mentality, but don't draw the lines as young-vs-old, black-vs-white cliches, but instead fair, sharing people vs. greedy assholes, or sensible open-minded folks vs. ignorant, intolerant zealots? At least then it's not on demographic lines (too tribal and crude), but on behavioral and personal choice lines. In the sensible group, you will get young, old, rich, poor, black, and white together. They will interact, exchange ideas, and get stronger. Maybe then the old will see that the young have a lot in common and are fighting for them too, as L said. And the real enemy are those who have everything, want more, and pit the rest of us against each other to fight for the scraps.
J: curious to hear what some of your mom's thoughts are about the generational divide. I figure I could guess some of them. Don't worry, believe it or not I was partially raised by a grumpy Tea Party old white lady (whom I love very much - the only ultra-rightie I will ever love haha), so I've heard it all. Maybe the old also blame the young (and the illegals, and the Muslims, and the liberals, etc...) for what they feel is the decline of America and its values? I guess there was always some of that with the Swing Kids, hippies, and punks of the past, but now it seems like nastier scapegoating. Before they just hated our music, now they hate everything about us. They blame the young (even though we have no power or money) because it's easier than looking in the mirror. But do the old really think that their demographic is best suited to right the ship now, in 2012? To me, it's just depressing that the old prefer to idolize and trust a Romney or Palin rather than try to empathize and help our a poor single mother trying to raise her kids and get an education, who never did anyone any harm.
Also, isn't insider vs. outsider a fairly traditional paradigm as well? Monarchies, Catholic Church, Guilded Age, etc. were all manifestations of basically the same struggle. I guess modern plutocratic America is the first time in a democracy where insider power is so concentrated and has so thoroughly bought the political process without using force. America's income inequality metrics are bad and about the same as China's, yet our political and economic systems are vastly different.
