The War on the Young

by limist • 16 years ago

48 97 16 years ago

kiba6• 16 years ago

Even with those massive disincentive against me, I still dream of changing the world through my games and getting rich in the process.

asnyder2• 16 years ago

While interesting, some aspects of the article are misleading or meant to incite. For example, the section talking about student aid mentions the current administration's plan to increase student aid, but fails to mention the proposal of doing away with the bank subsidies completely and thus providing more aid instead of lining the pockets of bankers (http://www.whitehouse.gov/the_press_office/President-Obama-M...) contradicting the counter point to his argument.

davidw• 16 years ago

> meant to incite.

Which is mostly what you'd expect from a site like mises.org or anything else that is highly political in nature.

kiba6• 16 years ago

Won't this increase the demand for college education, thus allowing colleges to raise their price even higher?

asnyder2• 16 years ago

I don't know. Perhaps. However, with the current economic conditions I would think that many that attend school under normal conditions might not be able to attend without aid.

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.

sgoraya2• 16 years ago

Certainly possible - This is why I have opened a college savings, 529 plan for my 4 week old son (you can never start saving too early).

joe_the_user3• 16 years ago

The subsidies to banks are incentives to loan. Fewer incentives seems likely to result in a fewer loans at higher prices.

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.

hristov• 16 years ago

Another one of those conservative anti-deficit articles that would have been very timely if it appeared before the war started, but of course it appears after the war and the incredible amount of money it is costing us.

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.

kiba6• 16 years ago

The blog article is from a Libertarian, not a conservative institution.

sp332• 16 years ago

No, then you had conservatives talking about how the deficit does not really matter.

Are you sure they were conservatives, and not just Republicans?

limist2• 16 years ago

Except that the Mises Institute and (I believe) most Austrian economists are anti-war:

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.

TomOfTTB• 16 years ago

I don't see this as Conservative as much as it's Libertarian (See the anti-War on Drugs part for example). From that stand point Libertarians have always been vehemently against not only the war in Iraq (http://www.thegreenpapers.com/Vox/?20030310-0) but in many cases the one in Afghanistan as well (http://libertarians4peace.net/). Libertarians in general are non-interventionist in regards to foreign policy.

So I think your criticism is misplaced here

abstractbill2• 16 years ago

Libertarians have always been vehemently against not only the war in Iraq ...

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).

Judson• 16 years ago

If by conservatives you mean libertarians (Austrian economists tend to be libertarian), you only have check out Peter Schiff or do a search on mises.org to hear the "decrying of deficit spending".

Also, you may want to check out some more articles on mises.org to fully understand what deficit spending does to the economy.

drewcrawford• 16 years ago

> 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.

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".

kiba6• 16 years ago

The institute was only established in 1982 so it is impossible to argue that the institute advocates against deficit spending for well over 50 years.

It might be true for many Austrian economists to advocates against deficit spending, though.

pmichaud• 16 years ago

I think the minimum wage argument was weak, but he's basically right: young people have a whole bunch of problems to look forward to.

bwh27• 16 years ago

Agreed. I read "Laws dictating the minimum wage and regulating child labor play a significant role in preventing young people from finding jobs" and rolled my eyes a little.

hga6• 16 years ago

OK, so tell me why we don't have movie ushers anymore.

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?

jsm386• 16 years ago

Young people today will most likely become the first generation in US history not to surpass their parents' living standards.

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?

kiba6• 16 years ago

Maybe the economy will manages to weaseled their way out despite the huge obstacles that has been placed in front of it.

It look like the government is doing everything it can to make the obstacle even higher and thicker though.

DanielBMarkham6• 16 years ago

This is a new idea. The current generation is the first generation that everybody thinks will not do as well as the preceding one.

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.

shawndrost• 16 years ago

Citation?

Alex39173• 16 years ago

"Young people today will most likely become the first generation in US history not to surpass their parents' living standards."

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."

marciovm1232• 16 years ago

This is correct if you consider "better standard of living" to mean "better standard of living relative to rest of the world". In terms of actual consumption and productivity, young people in America will have far richer lives then their parents, because the exponential increase in technology we see every day is creating wealth at a ridiculous pace. Our parents did not have iPods, cell phones, e-mail or social networks (facebook, hacker news). Try living without any of these for a day to see how "rich" your parents were at your age; who knows what will be around 20 years from 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.

markbnine• 16 years ago

Ugh. Equating technology with wealth is extremely naive. Standard of living refers to cost of food, housing, health care, etc.

donaldc2• 16 years ago

It is actually less likely that the children of the top 1% will have a better standard of living than their parents, than that the children of the middle or lower percentages will. The parents in the top 1% have a standard of living it would be hard for their children to top.

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.

Alex39173• 16 years ago

The question wasn't whether their kids would be in the top 1%, it was whether or not they'd have a better standard of living.

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.

pixcavator• 16 years ago

Ask a basketball player (top 1%, in height): "Do you think your kids will be taller than you?" If he answers Yes, he’d be wrong: http://en.wikipedia.org/wiki/Regression_toward_the_mean. Update: same thought as donaldc.

gridspy2• 16 years ago

And how many raised their hands when he asked if their children would have a lower standard of living?

Perhaps he simply had a reserved audience.

Alex39173• 16 years ago

There were other questions where almost everyone in the audience raised their hands.

teeja• 16 years ago

The population of the world keeps increasing. The supply of non-renewable resources keeps diminishing. Sooner or later, some generation is not going to live as well as its parents. It seems we decided to let that happen.

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.

jimbokun2• 16 years ago

"The population of the world keeps increasing."

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).

maurycy• 16 years ago

Good article.

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.

joe_the_user3• 16 years ago

Oddly enough, the post-WWII generation did much better than the present generation without being notable for risk taking.

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.

hga6• 16 years ago

That's not a very telling point, since we were the industrial nation least trashed by WWI, and were considerably strengthened by how the war compressed say half a century's worth of technological progress into a half a decade.

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.

DenisM5• 16 years ago

Look at the big picture: the aging of the population means that the eldery must enslave the young, or they will have nothing to eat when they are old and infirm. Long-term savings is a fictitious concept - nothing we produce today will be of any use 40 years later so when you are old you will depend on the young to provide your food. When that happens you better have a way to compel them to part with fruits of their labor. Saddling the young with debt seems to be the current retirement plan for the old. It ain't just about bankers.

joe_the_user3• 16 years ago

Well, San Francisco had to contract out to Korea to fix the Bay Bridge, so it's quite possible that nothing we make in America will be worth anything in forty years. But there's quite a bit of useful forty year stuff.

DenisM5• 16 years ago

What are the kind of things that will retain their value after 40 years that you or I could stash away for retirement?

donaldc2• 16 years ago

nothing we produce today will be of any use 40 years later

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.

DenisM5• 16 years ago

You can't just stash a building and cash it out 40 years later. You would have to maintain it for all that time and it's a huge liability. By the end of the day the building will be much worse than the ones being built at that time, really the only value of it will be the land is stands on. Any value in the building itself will come from recent renovations, not 40 yo investment. Thus the building is not a savings mechanism. The land may be, though.

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.

hga6• 16 years ago

DenisM is talking about the principle that present consumption must come out of present production. Yeah, there are some things that are neither consumed nor depreciate quickly, like houses ... but who's going to pay grandma's property taxes? To repair or replace her furnace? Replace her hip? Etc.

Note that DenisM uses food as his example and try to find his meaning instead of the few exceptions.

DenisM5• 16 years ago

present consumption must come out of present production

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

Therefore the premise of my argument is that the idea of long-term savings is fictitious.

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.

sganesh• 16 years ago

This guy doesn’t know what he is talking about. Mises institute has a bunch of crackpots that are not respected by actual economists:

http://motherjones.com/kevin-drum/2010/02/market-economics

kiba6• 16 years ago

Do you have a better argument than an appeal to authority?

jwb119• 16 years ago

i'm not sure mother jones qualifies as a neutral source either

(despite the quotes from krugman and friedman about biz cycle theory)

nir• 16 years ago

But it is saying something if both Friedman and Krugman agree on this.

limist2• 16 years ago

Don't you find it telling that critics of Mises and Austrian economics rely on ad hominem (personal attacks), appeal to the majority, and appeal to authority as their main argument forms - all of which are fallacious?

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.

run4yourlives• 16 years ago

>Young people today will most likely become the first generation in US history not to surpass their parents' living standards."

I'm pretty sure that was Generation X. Myself at 35 being on the tail end of that group; we're hardly "the young".

papaf• 16 years ago

Myself at 39, educated above but living below my parents standards. I'm not complaining since I'm very happy, but it is interesting that my generation is already experiencing this drop.

House prices and a competitive job market are the main forces keeping my standard of living lower.

mark_l_watson2• 16 years ago

Good article, as usual for mises.org (I credit their material a few years ago for motivating me to get out of the stock market).

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.

kingkongreveng_• 16 years ago

You generation is screwed, too. Social security net revenue went negative this year. You'll never see a dime. Medicare will also be bankrupt much sooner than anyone thinks.

Only the "next older generation" has made out on these ponzi schemes.

mark_l_watson2• 16 years ago

You are right about the next older generation getting even a better deal, but I am not complaining on my own account: when I graduated from college in the 1970s, it was really easy to buy a home, and generally have had an easy life style.

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? ...

jsz02• 16 years ago

I just don't get libertarians. They're great at pointing out problems but never seem to offer realistic solutions. No doubt most of these issues he raises are valid concerns however what's the alternative? The free market will magically fix everything? We know from the Great Depression and in more recent times the free market is only concerned about maximizing profits for themselves. The government may not be supremely efficient at running some of these things but at least we have a say in the process. 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.

Semiapies13• 16 years ago

I just don't get safety freaks. They're great at pointing out dangers, but never seem to offer realistic solutions. No doubt many of the activities they criticize are harmful, but what's the alternative? Not hitting ourselves with hammers and not walking barefoot on rusty metal and hoping that our bodies will somehow magically avoid trauma and tetanus?

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?

bwh27• 16 years ago

The author complains about Medicare, Social Security, student loans, and the War on Drugs. Whether or not you agree with those programs, do you think it's practical to just stop them? While I agree with many libertarian sentiments, I rarely find a libertarian argument that even attempts to explain a transition process.

jsz02• 16 years ago

It's simply shifting the problem. End Social Security? Great we solve the money problem. New problem: Lots of old people are going to die. Pase it out slowly? New problem: Lots of voters support Social Security and want to see it continue in some form. So obviously the solution is somewhere in the middle and there are no easy, ideologically pure, answers.

camccann• 16 years ago

I just don't get libertarians. They're great at pointing out problems but never seem to offer realistic solutions.

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.

xenonite2• 16 years ago

thanks for the article, but it has right the opposite direction than what is complained about here in Germany.

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.

xenonite2• 16 years ago

the article says that accepting a low wage will make you independent. I wouldn't conclude like that. Working with low wages will seldomly enable to get a better standard.

If you aren't a top performer, you'd have to live forever with those wages. One job is be enough for a living.

emilind• 16 years ago

You guys know the mises.org folks are a bunch of racists, right?

efalcao• 16 years ago

I think I'm going to start redirecting a portion of my savings to some sort of a basket of foreign currencies.

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.

The War on the Young

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