Lambert and I have inveighed repeatedly against using cute marketing categories (GenX, Millennials, Boomers) in political analysis. Generational cohorts do not have agency. Please identify a GenX party or a Millennial lobby, for starters. But that typology nevertheless proved to be very successful in stoking yet another implementation of the Jay Gould saying, “I can hire on half of the working class to kill the other half.” And as Gould intimated, the rich who were pulling the strings remained as the real threat to the common man.
Nevertheless, the moneyed have successfully stoked generational hatred as a Trojan horse for their own interests. One noteworthy example was billionaire and Soros fund manager Stan Druckenmiller. In the years shortly after the financial crisis (there was a period when unemployment among recent college grads was higher than among high-school-only job seekers), he sponsored presentations on college campuses that presented Boomers (and not other age cohorts) as leaching off the young. His talks focused on Social Security and Medicare, contending that Boomers were getting a great deal and the young would get nothing like that.
That argument was designed to create that reality. Social Security and Medicare are pay as you go programs, despite the convenient fiction of a trust fund and depicting them as insurance. Even so, “fixing” them, even on that basis, requires only some tweaks, one of the most important being raising the ceiling on incomes subject to payroll taxes. Many economists, particularly Dean Baker, have made detailed proposals and proven out the math.
Financiers like Druckenmiller have also been promoting the Social Security remedy of privatizing it. Imagine how much Wall Street would make by getting its greasy mitts on such ginormous assets.
Moreover, consider how we wound up where we are. The shift to financialization actually started in 1976, when real wage gains and productivity gains started diverging. To put it more colloquially, laborers stopped getting their fair share of efficiency improvements, and that only got progressively worse over time. 1976 was too early for Boomers to have had anything to do with that policy shift; even the oldest Boomers were barely seasoned enough to be establishing themselves as politicians or pundits.
Milton Friedman, born 1912, was singlehandedly the most effective promoter of neoliberalism and demonizer of government intervention and safety nets, depicting them both as contrary to “freedom”. Louis Powell, author of the then extreme right wing Powell memo, which set forth a long-term, open ended strategy to roll back the New Deal and make Americans more receptive to business-friendly policies, was born in 1907. Jimmy Carter, the first modern US president to adopt deregulatory policies (for instance, of trucking) was born in 1924. Ronald Reagan, who campaigned on the idea that government was the problem, was born in 1911. Alan Greenspan, who as Fed chair actively promoted a hands-off, bank friendly economic regime, was born in 1926. His regular partner in inequality crimes, Bob Rubin, was born in 1941.
Even our most powerful pols today, Joe Biden and Nancy Pelosi, are not Boomers.
In particular, the shift away from growth and prosperity based on rising wages to based on asset growth and more consumer access to credit as a cover-up for stagnating real wages, really took hold after Volcker decided he’d had enough with raising interest rates to the moon to discipline labor. The resulting fall in interest rates kicked off a very long period of disinflation, which continued through 2007 and set the price for a long asset price boom (admittedly with some hiccups along the way).
Now obviously Boomers of some means benefitted from housing and stock price rises. But were they actually better off than older cohorts, where not just many white collar workers but also union members, had defined benefit pensions? And due to limited rentierism, particularly in housing costs and medical care, those stipends were not shabby in purchasing power terms?
That is not to say that younger cohorts have not suffered in relative terms as the neoliberal con of asset price goosing has started hitting its limits. But the big winners have been the wealthy, as income and asset concentrations in the top 1% and 0.1% exploded in the neoliberal era.
Now to the Financial Times sighting, that the young are finally realizing who their real enemies are.
When millennials first emerged, blinking, into the adult world in the 2010s, they quickly bonded over shared adversity….
It was a grim decade, but at least they had each other, and were united against a common foe in the shape of the wealthy, homeowning baby boomer generation…
as the targets of millennial ire increasingly recede from view, they may soon be replaced by another privileged, property-owning elite much closer to home: millennials who have benefited from family wealth….
In the UK and US alike, the average millennial had accumulated less wealth in real terms by their mid-thirties than the average boomer at the same age. But this aggregate picture obscures what is happening at the top end of the distribution.
In the US, while the average millennial had 30 per cent less wealth than the average boomer by age 35, the richest 10 per cent of the cohort are now about 20 per cent wealthier than their boomer counterparts were at the same age, according to a recent study by researchers in Cambridge, Berlin and Paris. Not all millennials are created equal.
My analysis finds a similar picture in the UK. The average millennial still has zero housing wealth at a point where the average boomer had been building equity in their first home for several years. But the top 10 per cent of thirtysomethings have £300,000 of property wealth to their names, almost triple where the wealthiest boomers were at the same age.
So, while it’s true that in both countries the average young adult today is less well off than the average boomer was three decades ago, that deficit is dwarfed by the gap between rich and poor millennials, which is widening every year…
The fact that some thirtysomethings now own pricey homes in London, New York and San Francisco, despite it taking the average earner 20 to 30 years to save up the required deposit in these cities, gives away the open secret of millennial success: substantial parental assistance.
Research from property broker Redfin in February showed that 36 per cent of young Americans had financial help from family when buying their first home…
Bee Boileau and David Sturrock at the Institute for Fiscal Studies found that more than a third of young UK homeowners received help from family. Even among those getting assistance there are huge disparities, with the most fortunate 10th each receiving £170,000, compared with the average gift of £25,000.
Parental assistance of home buys is one of those key facts out in the open where weirdly few have connected the dots. I have to admit to it not registering with me how many of my friends casually remarked that they’d bought a condo or house for one of their kids, or alternatively, made a stealthy big contribution while the child depicted the equity as all theirs. Even the home I just sold, my mother’s in Alabama, was purchased by a couple who’d sold their house in Charlottesville very well and thus could easily have bought a pricier house (they’d missed out on several bids). Even so, they plan a very big renovation and the wife’s mother, who lives near by, planned to kick in.
This wealth gap is yet another aspect of the collapse in income mobility in the US. It has been true since at least the early 2010s that those born into the bottom 40% of the income distribution have just about no chance of moving out of that bottom group. We are now seeing even more stratification and ossification at the top.
