The root illness remains undiagnosed, but here it is: the baby boomers, that vast generation of Americans born in the first two decades after World War II. The body politic rests on the slab because boomers put it there, because decades of boomerism produced the problems and disaffection of which 2016 was merely the latest expression.
.. the unusual prevalence of sociopathy in an unusually large generation.
.. How does that disorder manifest? Improvidence is reflected in low levels of savings and high levels of bankruptcy. Deceit shows up as a distaste for facts, a subject on display in everything from Enron’s quarterly reports to daily press briefings. Interpersonal failures and unbridled hostility appeared in unusually high levels of divorce and crime from the 1970s to early 1990s. These problems expressed themselves at generationally unique levels in boomers, to a greater extent than in boomers’ parents or children at comparable ages.
.. They were the first generation to be raised permissively, the first reared on television and subject to its developmental harms, and the only living group raised in an era of seemingly effortless prosperity.
.. By 1994, boomers held a majority of House seats, a proportion that peaked at 79 percent in 2008 and remains a still formidable 69 percent. The rest of government went the same way: Boomers make up 86 percent of governors, about three-quarters of the proposed Cabinet, and much of the judiciary and bureaucracy. Except for youthful Silicon Valley, the private sector also fell into boomer hands decades ago and remains there.
.. Since it was politically untenable to locate blame in obvious places, other explanations were manufactured for the nation’s woes. (Immigrants!)
.. boomers who, despite their hippie reputation, are net Republican.
.. So what if Social Security faces partial insolvency after 2034, or that climate change has scientists and generals fretting for the world circa 2040? By then, the median boomer will be dead.
.. Nor do I assert that all of their co-generationalists are sociopaths. They aren’t. But I don’t shrink from arguing that an unusually large fraction of boomers behaves sociopathically, with the power to realize their agenda.
.. It explains why Reagan lowered taxes on income while raising them on capital gains (when boomers had salaries but not portfolios), why Bill Clinton lowered taxes on houses and stocks (when boomers owned those in quantity), and why Bush II cut taxes with unseemly attention lavished on the “death tax” (just as the boomers’ parents neared expiration)
.. Today’s seniors (boomers) are much wealthier relative to the present young than the seniors of the 1980s were to then-young boomers.
.. All those tax breaks, bailouts, easy money, deregulation, and the bubbles they spawned supported that boomer wealth accumulation while shifting the true costs to the future, to the young.
.. no amount of tax reallocation could keep the government together and goodies flowing, so boomers tolerated astounding debt expansion
.. BOOMERS show no appetite for maintaining the assets their parents accumulated. Public higher education, nearly free for boomers, has become dauntingly expensive. Infrastructure is neither built nor maintained
.. overconsumption, underinvestment, and appetite for risk
.. When problems grow large, boomers resort to deceit, and the huge degradation of truth suggests just how bad things have gotten. Whether it be misrepresentations by Worldcom, Lehman Brothers, Bill Clinton, Newt
.. The dubious draft deferments of the 1960s became the off-balance-sheet obligations of the 1990s, ginned-up weapons of mass destruction of the 2000s, and today’s phantom terrorism in Bowling Green and Sweden. “Alternative facts” are just the most recent consequences of the boomers’ declaration of epistemic bankruptcy.
.. If Trump has given America one gift, it’s a free hand to condemn the generation of which he is the impeachable id.
Why Don’t Americans Save More Money?
Maybe the only way to make people richer in the long run is to take their money away from them.
In 2008, several researchers studied the stereotype that minorities spend more than whites on “visible goods”—like clothes, shoes, jewelry, watches, salons, health clubs, and car parts. They discovered that, even after controlling for income, minorities save less than whites and spend more on such conspicuous consumption goods. But the story wasn’t just about race. White people in poor U.S. states spent more of their income on visible goods than whites in higher income states.
.. One possible explanation is that people spend more to signal that they’re not poor, Megan McArdle suggested. “If you’re a member of an identifiable demographic with low average incomes (southern, racial minority, rural) you are likely to be treated as if you are poor,” which makes it harder to get both social respect and work, she wrote. In a perfectly homogenous country with all white people, there would be less reason for the poor to signal their wealth with expensive visual cues, since they already look just like the rich. But in a diverse country where some demographic groups are stereotyped as poor, lower-income people might be more likely to pay for clothes and cars that say “I’m not who you think I am.”
.. They even discovered a positive relationship between the income of the state’s richest households and the number of personal bankruptcies in that state.
.. The American middle class made up for decades of flat wages with debt. But the last two studies offer a cultural explanation. Minorities and poor whites have spent more to signal that they are not poor, while Americans in general have spent more to signal that they are just like the rich.
.. A college graduate at 29 is 30 percent more likely to be married than a peer who never finished high school. That helps to explain why nearly 60 percent of first births in lower-middle-class households are now to unmarried women.
.. The lottery is a $70 billion government-financing initiative disproportionately funded by the poor.
.. But it’s not clear that higher earnings will necessarily lead to wealth creation for the poor. In the 1990s, after all, rising incomes were plowed into homes that eventually destroyed the savings of many poor and middle class families.
.. In a world obsessed with the wizardry of behavioral nudges, perhaps policymakers should consider putting away the magic wand and just do the paternalistic thing: Force people to save more, by expanding Social Security or by creating new forced savings policies.
100 CEOs Have More Saved Up for Retirement Than 41 Percent of U.S. Families Combined
Together, 100 American CEOs have more saved up for retirement than 41 percent of American families combined.
The CEO with the largest nest egg on the report’s list was David C. Novak, the former chief of Yum Brands (which owns KFC, Pizza Hut, and Taco Bell), and now its executive chairman. At last count, Novak had nearly $250 million in his retirement account
.. For the purposes of comparison, the average Yum employee had about $70,000 in his or her 401(k). That means the Novak’s retirement savings are more than 3,330 times the size of the typical Yum employee’s, which makes the ratio of average CEO pay to average worker pay—300:1—look relatively small.
.. for all American households nearing retirement age, the median retirement-account balance is about $12,000. So, it’s not so much that these CEOs have a lot (they do) but that everyone else has next to nothing.
The Global Saving Glut and the U.S. Current Account Deficit
Why is the United States, with the world’s largest economy, borrowing heavily on international capital markets–rather than lending, as would seem more natural? What implications do the U.S. current account deficit and our consequent reliance on foreign credit have for economic performance in the United States and in our trading partners? What policies, if any, should be used to address this situation? In my remarks today I will offer some tentative answers to these questions. My answers will be somewhat unconventional in that I will take issue with the common view that the recent deterioration in the U.S. current account primarily reflects economic policies and other economic developments within the United States itself.
.. To be more specific, I will argue that over the past decade a combination of diverse forces has created a significant increase in the global supply of saving–a global saving glut–which helps to explain both the increase in the U.S. current account deficit and the relatively low level of long-term real interest rates in the world today. The prospect of dramatic increases in the ratio of retirees to workers in a number of major industrial economies is one important reason for the high level of global saving. However, as I will discuss, a particularly interesting aspect of the global saving glut has been a remarkable reversal in the flows of credit to developing and emerging-market economies, a shift that has transformed those economies from borrowers on international capital markets to large net lenders.