The new gen­er­a­tion gap

Financial Mirror (Cyprus) - - FRONT PAGE -

Some­thing in­ter­est­ing has emerged in vot­ing pat­terns on both sides of the At­lantic: Young peo­ple are vot­ing in ways that are markedly dif­fer­ent from their el­ders. A great di­vide ap­pears to have opened up, based not so much on in­come, education, or gen­der as on the vot­ers’ gen­er­a­tion.

There are good rea­sons for this di­vide. The lives of both old and young, as they are now lived, are dif­fer­ent. Their pasts are dif­fer­ent, and so are their prospects.

The Cold War, for ex­am­ple, was over even be­fore some were born and while oth­ers were still chil­dren. Words like so­cial­ism do not con­vey the mean­ing they once did. If so­cial­ism means cre­at­ing a so­ci­ety where shared con­cerns are not given short shrift – where peo­ple care about other peo­ple and the en­vi­ron­ment in which they live – so be it. Yes, there may have been failed ex­per­i­ments un­der that rubric a quar­ter- or half-cen­tury ago; but to­day’s ex­per­i­ments bear no re­sem­blance to those of the past. So the fail­ure of those past ex­per­i­ments says noth­ing about the new ones.

Older up­per-middle-class Amer­i­cans and Euro­peans have had a good life. When they en­tered the labour force, well­com­pen­sated jobs were wait­ing for them. The ques­tion they asked was what they wanted to do, not how long they would have to live with their par­ents be­fore they got a job that en­abled them to move out.

That gen­er­a­tion ex­pected to have job se­cu­rity, to marry young, to buy a house – per­haps a sum­mer house, too – and fi­nally re­tire with rea­son­able se­cu­rity. Over­all, they ex­pected to be bet­ter off than their par­ents.

While to­day’s older gen­er­a­tion en­coun­tered bumps along the way, for the most part, their ex­pec­ta­tions were met. They may have made more on cap­i­tal gains on their homes than from work­ing. They al­most surely found that strange, but they willingly ac­cepted the gift of our spec­u­la­tive mar­kets, and of­ten gave them­selves credit for buy­ing in the right place at the right time.

To­day, the ex­pec­ta­tions of young peo­ple, wher­ever they are in the in­come dis­tri­bu­tion, are the op­po­site. They face job in­se­cu­rity through­out their lives. On av­er­age, many col­lege grad­u­ates will search for months be­fore they find a job – of­ten only af­ter hav­ing taken one or two un­paid in­tern­ships. And they count them­selves lucky, be­cause they know that their poorer coun­ter­parts, some of whom did bet­ter in school, can­not af­ford to spend a year or two with­out in­come, and do not have the con­nec­tions to get an in­tern­ship in the first place.

To­day’s young univer­sity grad­u­ates are bur­dened with debt – the poorer they are, the more they owe. So they do not ask what job they would like; they sim­ply ask what job will en­able them to pay their col­lege loans, which of­ten will bur­den them for 20 years or more. Like­wise, buy­ing a home is a dis­tant dream.

Th­ese strug­gles mean that young peo­ple are not think­ing much about re­tire­ment. If they did, they would only be fright­ened by how much they will need to ac­cu­mu­late to live a de­cent life (be­yond bare so­cial se­cu­rity), given the likely per­sis­tence of rock-bot­tom in­ter­est rates.

In short, to­day’s young peo­ple view the world through the lens of in­ter­gen­er­a­tional fair­ness. The chil­dren of the up­per middle class may do well in the end, be­cause they will in­herit wealth from their par­ents. While they may not like this kind of de­pen­dence, they dis­like even more the al­ter­na­tive: a “fresh start” in which the cards are stacked against their at­tain­ment of any­thing ap­proach­ing what was once viewed as a ba­sic middle-class life­style.

Th­ese in­equities can­not eas­ily be ex­plained away. It isn’t as if th­ese young peo­ple didn’t work hard: th­ese hard­ships af­fect those who spent long hours study­ing, ex­celled in school, and did ev­ery­thing “right.” The sense of so­cial in­jus­tice – that the eco­nomic game is rigged – is en­hanced as they see the bankers who brought on the fi­nan­cial cri­sis, the cause of the econ­omy’s con­tin­u­ing malaise, walk away with mega-bonuses, with al­most no one be­ing held ac­count­able for their wrong­do­ing. Mas­sive fraud was com­mit­ted, but some­how, no one ac­tu­ally per­pe­trated it. Political elites promised that “re­forms” would bring un­prece­dented pros­per­ity. And they did, but only for the top 1%. Ev­ery­one else, in­clud­ing the young, got un­prece­dented in­se­cu­rity.

Th­ese three re­al­i­ties – so­cial in­jus­tice on an un­prece­dented scale, mas­sive in­equities, and a loss of trust in elites – de­fine our political mo­ment, and rightly so.

More of the same is not an an­swer. That is why the cen­treleft and cen­tre-right par­ties in Europe are los­ing. Amer­ica is in a strange po­si­tion: while the Repub­li­can pres­i­den­tial can­di­dates com­pete on dem­a­goguery, with ill-thought­through pro­pos­als that would make mat­ters worse, both of the Demo­cratic can­di­dates are propos­ing changes which – if they could only get them through Congress – would make a real dif­fer­ence. Were the re­forms put for­ward by Hil­lary Clin­ton or Bernie San­ders adopted, the fi­nan­cial sys­tem’s abil­ity to prey on those al­ready lead­ing a pre­car­i­ous life would be curbed. And both have pro­pos­als for deep re­forms that would change how Amer­ica fi­nances higher education.

But more needs to be done to make home own­er­ship pos­si­ble not just for those with par­ents who can give them a down pay­ment, and to make re­tire­ment se­cu­rity pos­si­ble, given the va­garies of the stock mar­ket and the near-ze­roin­t­er­est world we have en­tered. Most im­por­tant, the young will not find a smooth path into the job mar­ket un­less the econ­omy is per­form­ing much bet­ter. The “of­fi­cial” un­em­ploy­ment rate in the United States, at 4.9%, masks much higher lev­els of dis­guised un­em­ploy­ment, which, at the very least, are hold­ing down wages.

But we won’t be able to fix the prob­lem if we don’t recog­nise it. Our young do. They per­ceive the ab­sence of in­ter­gen­er­a­tional jus­tice, and they are right to be an­gry.

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