How the baby boomers stole the millennials’ economic future | LIVE STREAM

good morning everyone and welcome to AEI we look forward to this discussion today there's nothing like starting off a Tuesday morning with a little bit of generational warfare so we trust you've come prepared and we'd like to welcome all those who are viewing from at home or at their desks as as well as we kick off this discussion I'm going to go ahead and introduce our speaker and our respondents and then we will have our speaker just server come up here and offer some remarks and then his respondents will will give their reaction to his remarks and then that will be followed by a discussion and then at the appropriate time we'll break and allow you to weigh in with questions the title of the book we're here to discuss today is the theft of a decade how baby boomers stole the Millennials economic future and the author is Joseph Stern Berg who's a member of the editorial board of the Wall Street Journal where he writes the political economics column he joined the Wall Street Journal in 2006 as an editorial writer in Hong Kong where he edited the business Asia column which is where I first interacted with you years ago and before that he was an editor and writer at the New York Sun and the public interests and began his career as a journalist right here in Washington DC mr. stern Berg is a graduate of the College of William & Mary in Williamsburg responding to him today first is my colleague here at AEI Ramesh Ponnuru who's visiting fellow here and examines the future of conservatism with a lot of attention on healthcare economic policy and constitutionalism many of you know him as a longtime senior editor for National Review where it covers national politics in public policy and you can also find his regular column at Bloomberg view and finally joining us as another respondent is Connor Williams a fellow at the Century Foundation where he writes about education immigration early childhood education school choice and work-life balances for American families he's an expert on American educational inequity English Learner students Dual Immersion programs urban education reform and history of progressivism so welcome to our respondents today and without further ado please join me in welcoming Joe Sternberg to the podium thanks Ryan and thanks to all of you for coming as the Orion pointed out I started my journalism career here in Washington about 15 years ago and I fondly remember attending AEI events at the old office yes certainly I think they're a big draw for young people who are trying to get their bearings and thinking about economic issues policy questions and so that means it's very flattering that I've now been invited here to give my own talk and also a little bit daunting so I will try to live up to all of the people who have spoken to these events before and I'm going to do that actually by focusing on two of the big questions that I tackle in the book economic questions and then I suspect we're going to talk a little bit about the politics later in the program the two economic questions that I've been focusing a lot on as I've been talking about Liz Booker first off what happened to Millennials are for the past decade because I found that there's a lot of confusion about this point there's a lot of confusion about whether anything did happen to Millennials over the past decade that was unusual compared to what had happened previous generations so I'm going to spend a few minutes arguing to you that actually Millennials have had a really rough go in the economy over the past decade and that this is a real problem for us I'm a millennial myself that's very unusual to what previous generations have faced and of course the second question is who did it and so I'm going to argue that actually a lot of what we are living through right now as a result of various policy choices instead of forces of economic nature or the natural evolution of the economy and I think that this way of thinking about policy choices instead of inevitability should have a big impact on the way some of these issues play out politically over the next few years so before I get into either of those questions I want to quickly define what a millennial is because this is the other thing I've discovered a lot of people seem to be really confused about and the big point is that we're older than you think we are so when I'm talking about Millennials in this talk I'm looking at a generation that was born around 1981 to 1996 so that means a lot of us were just at the age where we were entering the labor force when the financial panic and the the Great Recession hit and the youngest of us are already out of college so if you came here expecting me to talk about all of these snowflakes that we hear a bell during college campuses you're going to be disappointed that's not our fault that is Generation Z the people who are coming after us so if we're talking about what happened to Millennials I think that the the start and the end of that discussion has to be the labor market and this is a big part of the story that I tried to tell in the book because it malfunctioned for us in a spectacular fashion that was really unusual compared to a lot of previous economic downturns that America had been through yes certainly we saw a spike in youth unemployment because we saw a spike in overall unemployment and of course young people are always the most vulnerable in any economic downturn but I think that what made it different this time around was the severity I mean we're familiar with thinking about the Great Recession as the worst downturn America had suffered since the depression and that means that inevitably inevitably young people were going to be hard-hit by that and what exacerbated the fact is that we had an enormous cohort of young people entering the labor market at that time you know depending on how you count they're anywhere between 71 and 80 million Millennials floating around in the American population right now and so that meant that the economy was trying to absorb an enormous cohort of young you know still developing their skills workers during the worst downturn that we had suffered in 80 years and the other interesting thing about this downturn is that it seemed to affect a lot of different companies differently and some of the hardest hit companies in this downturn there particularly tended to be the smaller companies that young workers are most reliant on for initial opportunities and so that meant that you had a lot of you know unemployed Millennials floating around and you arguably had more unemployed Millennials than the unemployment data suggested because we also lived through a trend where more and more of us were going to school as a form of warehouse for ourselves while we waited for the job market to recover you know you can see evidence for that in a spike in you know attendance at higher education right around the time of the Great Recession that I don't think is explained just by this normal trend where Millennials we're always going to go to college and higher numbers than our parents would have done and you can also detect hints of it in survey data and now that suggests that a lot of Millennials feel underemployed in their jobs now that they've graduated you know I think the you know one interpretation if that might be that we have unrealistic expectations about doing glamorous work what right after we graduate but I think there's also a strong case that you ended up with the Millennial labor force that had acquired a lot of education and training to try to inoculate ourselves against the effects of the downturn and then discovered that that didn't work for us now these bad labor market dynamics have fed directly into to the other big things that have happened to Millennials are for the past decade one is the student debt crisis that we hear so much about I mean one implication of a lot of Millennials finding their way into higher education to try to protect themselves from the downturn was a dramatic accumulation of student debt during this period and then another implication of that is that if the job opportunities still weren't available for us when we graduated that debt burden seemed so much more unmanageable than it would have been otherwise and you know that is an important point that I think you know casts a new light on some of the politics around the student debt issue right now Millennials I think often feel cheated by some of the investments that we've made in higher education because the labor market returns haven't been there for us as a consequence of the fact it took the economy such a long time to recover you know in terms of the employment situation you know the next shoe to drop as a result of the bad labor market we've suffered over the past 10 years is going to be the housing market and I think here Millennials often find ourselves caught in a catch-22 because the places were there are job opportunities for us tend to be in thriving urban areas here in Washington New York Austin Texas Los Angeles Seattle but those are the places where housing is least affordable for us and Millennials often find themselves in a trap where the job market even once you're in a place where you can find a job isn't quite delivering the wage level that will allow you know allow you to afford housing in the areas where you've had to move for work and yeah I think that that is something that is creating a lot of strain for Millennials and I think it's important to understand when we're talking about what happened to Millennials is that actually for a lot of people in this generation is not a question in the past tense you know there's a lot of research that suggests that these effects are going to be very long-lasting for this generation you know there's growing evidence to suggest that if you enter the labor market in a downturn when unemployment is unusually high it will take you a decade or more to recover the cumulative lost earnings that you miss out on earlier in your career you know I think that you Millennials right now find themselves saddled with a lot of long term student debts that are going to you know long outlast the downturn that might have helped push some of us at the margin into additional education and housing is going to be a real challenge because if you are a millennial now and again some of us are older than you think we are I'm 37 I'm a millennial myself and you know people especially the older end of the range who haven't been able to climb onto the housing ladder ladder yet find themselves wondering if they will ever be able to and have the house paid off by the time we'd be expecting to retire so I think that's important to keep in mind if we're having a political discussion a little later this morning because I think there can be a tendency to think that if the economic growth is very strong now over the past couple years that has solved a lot of these problems and I think that it's important to remember that that is helpful but from the perspective of a lot of Millennials it isn't entirely a satisfactory solution that there's still a lot of problems lingering out there now the second part of this issue that I want to touch on before we get into the panel is just the question of who did it now of course I'm arguing that the result of this was a lot of these phenomena are the result of policy choices both before during and after the financial panic and the Great Recession now that is not always a common view especially among some boomer economists who you know often argue that the transformation America is going through economically right now as a result of you know demographic change or globalization in some way or just the normal forces of economic evolution but I think that there is actually an element of policy choice to a lot of this and that should inform a lot of the political debates that we have moving forward one issue I talk a lot about is just the dynamics of investment in productivity growth in the economy I think the Millennials have been living with the consequences particularly since the Great Recession of an American economy that increasingly struggles to unlock business investment in enhancing productivity and you can point to a lot of policies that were part of the baby boomer policy consensus that may have a graffitied that you can point to a lot of regulations or regulatory bias in favor of replacing capital instead of replacing labor instead of augmenting it in the economy you can point to a lot of education policy environment that places a lot of burdens on eighteen-year-olds to invest in their own educational future without any guidance from anyone else in the economy about what skills our training will actually be useful for us once we get into the working world and I do have some sympathy for the boomers in all of this I mean and this surprised me a little bit when I was writing the book because I did expect there to be more generational warfare than maybe there is I think that the boomers lived through an earlier version of some of these transformations in the economy in the 70s and 80s I think that the problem was that often they didn't learn quite the right lessons from those experiences and so the tendency would become to double down on policies that hadn't worked you know one issue that I talked a bit about in the book was the boomer attendance a team mistake the outputs of a secure economy such as wage growth you know strong labor unions or labor power in the negotiations with employers yeah there was a boomer tendency to mistake those outputs of productivity growth for inputs into economic security a tendency to focus on trying to regulate for those things instead of thinking more carefully about how do we boost the investment of the productivity in the economy that will deliver the economic security that we're all looking for you know one issue that I think that we're also going to have to talk a little bit about will be something like monetary policy which feels very obscure to a lot of Millennials but I think is actually a really important part of many of these investment misfires you know what was interesting I think during the firefighting phase of the financial crisis was the extent to which boomers tried to double down on a housing bias that they had created in the economy instead of thinking more carefully about whether we were really implementing policies that we're going to help particularly the small companies as opposed to the large companies the small firms that hire more younger people than the economy and you know certainly do after the Great Recession we saw a big doubling down in new things like a focus on education or trying to up aggressively as a solution to an economic problem that the boomers didn't always seem to understand and you know that has had a lot of implications for Millennials too so you know the that I think is broad summary I've left a lot of little ideas floating around out there that maybe we can latch on to during the discussion and the Q&A so I don't want to talk very much more than that it just allows some of those ideas to percolate but I think the big point of this exercise for me was that first there really is a problem and I think that in order to have a balanced political discussion about a lot of these issues moving forward I think that both ends of the political spectrum are going to have to realize that Millennials younger voters are not crazy for thinking that we have serious economic problems that are continuing to linger and then my my final point which I hope is a theme that comes out clearly in the book is just a plea for you know continued creative thinking about a lot of these problems because clearly Millennials are casting around for new solutions you know for something that seems to deviate from what felt like a boomer era consensus on how to tackle a lot of these issues I think that my take on the big political trend this notion that Millennials are invariably gravitating toward the socialist left is not necessarily that we're entirely persuaded by those arguments because some of the polling can be a little bit mixed but that we you know are looking for more competition in terms of answers to these problems that we want to see a more dynamic discussion about a lot of that and so particularly speaking to an audience here at AEI my plea to people who are on the rightward end of the spectrum or the free market and is to take these problems seriously and really focus intensively on engaging with a lot of the issues that Millennials are concerned about right now I think I'm just going to leave it there because I feel like I've talked on for a bit much and I have been talking about the book for about a week now since it was released and I've discovered that for me the panel discussion and the Q&A are a lot more fun than the me talking part and I'm sure that's the case for all of you so I'm just going to head over and let Connor and Ramesh offer some of their thoughts well hi I'm Connor Williams I'm here just let me offer a few reasons why I'm here first time here ostensibly because I'm a fellow at the Century Foundation it's a think tank just up the road a bit to the left of AI and so I'm ideological diversity today but I'm also here because I'm a dad father two children and I'm here as the youth voice because I cording to Joe's book I'm a year younger than he is but most say I'm here because I biked to AEI today and that's to say I biked because I like biking and it's just easy way to get around but it also saves me in the order of two to three thousand dollars a year according to my calculations terms have saved gym memberships in terms of money I didn't spend on parking or public transit that is one of the many things I do on a day to week two month two yearly basis to kind of scrimp together enough enough money for all the other things that I have to pay for including especially those two kids so that's to say that I'm here because I am and I want you to filter everything I say for the rest of this through this lens I am your success sequence I am a every single rule that usually as a conservative on the panel says those Millennials are so promiscuous in their reckless and there's a Lakatos on their toast and their leagues I am the sober minded man the one who got a job at nine saved a ton for his own college who was in a first generation college single income family of six went to college on heavy financial aid married the girl that I dated in college in my 20s had a couple of kids and my twice about to have my third which again forgive me I just tear out that's because that's where I'm going I went to grad school I kept working there I have my entire life everything that the success sequence people say keep your nose clean and work hard and get a degree way I did all of that and I realized something after we had our kids and this is how I got passionate about this was saving aggressively for retirement I was putting money in 529 s as soon as kids were born to save for their college I paid down my own student loan debt we're on our way on my wife's student loan debt we just weren't getting to any of the milestones as fast as my parents did I was out earning my dad currently and I think also know also at every stage of my career out earning him and still not able to put it all together this just again I followed all the rules was so ticked off about this and so I wrote a piece for the Guardian which is part of how I got here on this stage Bernie Sanders boosted it on Facebook which meant that the entire Internet gave me feedback and it turns out that the internet wanted to play a game for my version of this book if I ever can scrape together enough money to take the risk to take the time congratulations to actually write my version the game they want to play is that you should adjust game so we're gonna play now this is what the mistakes I made this so you shoulda just gone to a different College a cheaper one you should have just not gone to college or if he did go majored in something else and then repeat with grad school you shoulda just moved to a less safe neighborhood where you live in the city you live in you should have just left the city entirely moved to the suburbs you should have just left cities and moved to a different region a cheaper place a smaller town you should have just bought a car so you could live in the suburbs you should just not bought a car you should have got a car at a different time you should have married someone else married at a different age you should have not gotten married yet you should have had kids at a different time a different number of kids you should have not had kids at all you should have had your parents die already you should have saved more for retirement you should have used your retirement to buy the house you should have gotten the side job another side job a couple of side jobs and there were some things they didn't say which again we're all sort of my like unearned luck when I call it privilege exactly because this is just luck I never really got catastrophic ly sick the couple of various accidents and traumas that we went through were all cancer scares not cancer they were all minor issues around car accidents and assaults and things like that they never said well you shouldn't have gotten arrested because I didn't the point was all those things are true right it is true that all of those choices have a lot to do with upward mobility it's also the case that I made most of those choices between 18 and 22 or 18 and 25 and at the time was living forwards now understanding backwards I could have maybe had a better smoother financial path if I had majored in something else or had a different number of kids or what-have-you but I had no way of knowing that all I was doing was following the rules making what were eminently defensible reasonable choices for somebody my age to make and it turned out those were according to the internet deeply consequential choices that I should kind of feel bad about that's what it means to be a young ish because let's be honest this is about my last ever panel is the youth voice this will never happen again to be a young ish working father in the United States right now feels like that it feels like every choice you make no matter how serious you take yourself and how anxious you are about it and how carefully you sort of weigh your options you're always at a much higher risk than you used to be but just kind of going sideways and you've got an extra five years before you can retire and I'll go sideways and you know you got into the housing market but you got in after all the growth had pretty much gone in that assets so overvalued now it's just not gonna pay off so that's what I'm here I'm the canary in the mine I'm here to tell you that if a guy like me who again had college educated parents first-gen college but still a white guy I'm a straight guy have a PhD my relationship sort of survived college and survived till now everything went could have broke my way I still it's taken me a while to put it all together I warn you that the people who are flocking to radical solutions to our political present they're flocking because oftentimes they don't have either my luck my privilege or just the really defensible choices they made just didn't pan out and it's not really their fault it's just that we've made the path so precarious now so on that turns if you remain I'm sure you'll agree Wow Connor is bringing the ideological diversity as he promised I'm bringing the generational diversity being a Gen X guy here I frankly thought that the book should have talked a little bit more about my generation and our impeccable musical tastes are admirable introversion and all the other characteristics that make us so universally celebrated I I tend to have a certain allergy towards the kind of generational politics towards overstatements generalizations about generations that tend often to exaggerate what different age cohorts have in common and underestimate the diversity within generations but I liked this book more than I thought I would going in with that predisposition I thought there was there were a lot of places where there was nuance and thoughtfulness and and it was throughout a very intelligent and humane I should say I'm allergic to generational politics on on both sides so it is certainly true that particularly as the age profile of American conservatism has gotten older you are hearing more and more complaints about young people these days and yeah you hear a lot about the avocado toast I don't I don't know why that's that's become quite the flashpoint that it has but it is and and you know why are they socialists and you know why won't they get married already you know and and so forth I don't know that the book is totally avoided some of the pitfalls though of that kind of thing so many times during I was I would read something about you know Millennials reporting much higher degrees of worry about their financial future than baby boomers and I thought well is that a cohort effect or is that just an age effect is that just something that people in their early 30s are more likely to do than people in their late 50s who presumably have already ideally you know made and executed their financial plans or at least have a better sense of of how things are turning out for them I did agree with the emphasis on the huge lingering effects of the Great Recession I think it is it is important to think about the well-documented fact that to join the labor force in the middle of a recession is to take a hit to your lifetime earnings it's not just a hit to a couple of years that you then sort of bounce back from I didn't agree with a lot of the analysis of policies that led to the recession or that were responsive to the recession in particular I thought that the discussion of monetary policy and interest rates out there had to laugh what he was talking about how monetary policy feels obscure to a lot of Millennials I couldn't trust me that it's true for across the generations that binds us all binds us all together so for example there's a discussion of how the average 30-year fixed mortgage rate was lower in the 90s than in the 80s and then lower still subsequently well a lot of that is what you would expect when you've got a declining inflation environment when you've got a declining risk premium and it's an exaggeration of the extent to which there was a kind of policy choice toward lower interest rates and an underestimate of the extent to which that's just sort of market forces would lead you and city you know the idea that sort of that over the last ten years we've hurt millennial economic welfare by holding interest rates artificially low I mean to the extent that we can look at international evidence on this I don't know that the that it's particularly promising for that thesis if you look at the eurozone area for example which tried to have a less expansion airy policy which raised interest rates in the middle of the Great Recession I don't know if that you'll find that the outcomes were particularly better for young people from doing that I'll try to move along here and generally more optimistic about millennial economic outcomes then this book may lead you to be on retirement security for example partly because I'm influenced by the work of Andrew Biggs at the American Enterprise Institute I tend to think that a lot of there are some very important discrete problems some of them highlighted very ably in the book about the entitlements but that young people are saving at higher rates than previous generations and that they're just their material welfare is higher and is likely to continue to be higher than that of their predecessors as is often the case with these sorts of analyses there is a discussion about the change from defined benefit to defined contribution pension plans and it's a balanced discussion that mentioned some of the drawbacks of defined benefit plans but at the same time you don't you usually ignore and and here it's also ignored but most people didn't have those access to those defined benefit plans to begin with and if you look at what to sort of your median worker is experiencing it's a better retirement security situation than they had I guess the last the last point I would make is that I don't you know look there's a lot of smart analysis about some what we should change with the education soar what's gone wrong with her education system was wrong with housing markets and so forth and to the extent that you get young people or younger than me people interested in some of these topics and and give them sort of a thesis that they can they can fit that analysis into that's helpful on the other hand is theft really the right way to be thinking about this problem does it encourage the right kind of problem-solving mindset or does it encourage really a kind of whiny and gratitude because you know I think there been some serious mistakes in education policy some serious mistakes and monetary policies that work very few of them strike me as things which boomers did to enrich themselves at the expense of successor generations which normally when we think of theft we think of somebody taking something and enriching themselves I get I don't think that almost I don't think much that's in this book really lends itself to that thesis I think it's what is what really come across in this book is a set of policies that people adopted for Intel for for sensible reasons although not always correctly for understandable and nonl arsonist reasons but that in one way or another are working less and less well over time and when a policy works less and less well over time that means it's going to work less and less well for younger people that I think is is the real story that this book tells and I think it's a very important and useful story great well I mean thanks both of you and you've actually are very helpfully given me a lot that I can bite into in my comments here and you know I want to start with sort of a take to be the big overarching theme of Ramesh's comments which are that you know maybe it isn't so bad for them all angles after all and to which I can only say that I think the you know Connor has given a very good coherent explanation for why Millennials don't think that way and you know I think that we need to be really careful when we're talking about these issues that we you know not lose sight of kind of what the the actual valuable signal that the millennial perceptions of some of these problems are trying to tell us you know I think that actually the politics around of this actually is a signal that even if you know I'm sure that if you were looking at Connors household balance sheet or if you were looking at you know as various financial outcomes you know you can come up with headline data that will tell the very positive story about that and I think that that can miss a lot of the you know dynamics that feel likely are going on at a household level and I mean I don't necessarily want to argue that you know when I should never push back against a perception if you think that perception is wrong but I think that one of the points that I wanted to make in the book is that we need to be alert to the fact that particularly in an environment where politically a lot of younger voters are telling us that they feel like something is going wrong economically for them that actually is a signal that we need to take seriously and I think that I'm trying to suggest that there might be things that are lurking beneath some of the headline numbers that suggest that there are actual problems going on here and I'm you know certainly sympathetic to this argument that the generational issue is often overstated I think that you know the term millennial itself had its origins in this book in the late 80s Early 90s generations the history of America's future which I think made a lot of social claims about different generational cohorts that haven't really stood the test of time very well but I think that it is reasonable to talk about these issues these economic issues in generational terms just because you know whether by accident or by terrible luck it happens that that way you are capturing the effects on the cohort of the people who happen to be young at the time the Great Recession hit and you know you can start talking about some of the economic implications of that you know on issues like the monetary policy the effective interest rates I think I'm not quite inclined to let boomers off the hook for a lot of those decisions because one of the things that I found there striking as I was researching the book is just how little is still understood about yeah but the practical effects of a lot of the monetary policies before and after the Great Recession and the way that those policies interacted with the economy in the way that could have big implications for younger people who were entering the labor market that I yeah there's some there are some strands of research they're starting to suggest that actually the you know pro-growth benefits of Fed policies over the past decades were concentrated in areas that were already economically healthy that they didn't necessarily do very much to lift boats in you know regions of the country that were struggling there's growing you know reason to believe that those policies were really good for bigger companies that could borrow by accessing the bond markets but they were a lot less helpful for smaller companies that might rely more on bank financing and also happen to be the companies that hire a lot of younger workers like Millennials in that marketplace I mean one of the things again that I and I mentioned this in my opening remarks on issues you're particularly on monetary policy but in a lot of other areas so I think we do also need to push back against some of these notions that a lot of these trends were just inevitable I mean I don't think that there was anything inevitable about some of the trends and mortgage rates that we happen to see both before and after the crisis and the recession and I think that we're starting to see some interesting research that looks at the extent to which actually monetary policy it might itself might cause some of these phenomena that we then assume are just naturally happening because a risk premium or falling or inflation is declining yeah some of that is actually a choice it's not a natural consequence of anything and so I can certainly take the point that there will be a lot of argument about particular villains that I identify in the book or you know about what the policy solutions might be but I don't think that we can let ourselves off the hook quite so easily by arguing that a lot of the stuff just kind of happened this is fascinated me I came here prepared to say you know one of my problems I think with the book is generational solitaries and other things sort of echoing Ramesh actually I think the problem is rich people not old people this is a class solidarity issue really but now I kind of need to stand up for millennial this is nothing I brought stats I did a little research before him because I was saying before we in the green room right there's a there's an article on millennial rage now that goes viral like every other week pretty much so I dug back and found a couple of these compelling stay I mean one of the fascinating things if you don't think there's a problem is to ask boomers how they paid for post-secondary education if they went you ever have you ever done this and the boomers in the Audion we should feel like I should ask you but I remember talking to a relative who told me that she she paid for college entirely with no debt for years private no financial aid working at a grocery store on break that was it she'd go home for like Christmas winter break work work all summer that was it tuition bored room covered everything so I did a little research dug this up at minimum wage right now for rather for boomers the hours of minimum wage work that it took to pay for four years of public college was 306 and minimum wage you could pay for four years for a millennial now on average four thousand four hundred and fifty nine we have 300% more student loan debt than our parents do did and we're half as likely to own homes now it could just be the guys like Mia whining I mean it could be but I think that we do have some macro data that the current situation around credential creep around zoning around I think a bunch of things that are actually you conservatives are amenable they're having a conversation about how we've we've made it in misery ting to live near good job markets and what-have-you I think there's a good local exclusionary zoning policies that we can work across a house on but I don't think we should deny that people who are trying to put it all the pieces together and our facing it very weird and very expensive path upwards so I seem to been slotted into this position of denying that there are problems that affect the economic welfare of Millennials it is not a rule that I wish to play I what I do think is that focusing it in a generation away tends first of all to exaggerate the problem and second to exaggerate the sort of the Maleficent's or the the idea that boomers made this made these terrible self-serving choices that are hurting the Millennials and you know just there are serious problems that there should we should work on tackling the higher education credentialism the the growth of licensing requirements which again was just sort of would be absurd to regard through the lens of kind of generational self-interest why that that why the number of job categories that require government licenses has expanded its I think that it is sort of an incidentally boomer focus story but let's think about a boomer was born in you know nineteen fifteen height of the baby boom he's becoming an adult he's got a risk of going to Vietnam the crime rate is high and rising he's going to get into an economy where growth is significantly slower than it had been in the 1950s and 1960s he runs into stagflation something that the best and the brightest don't really have great answers to and so it would be very easy to tell the same kind of story woe is us our predecessors have made terrible decisions saddled us with these huge problems for which there aren't obvious solutions we've also got the risk of you know global thermonuclear war that'll destroy all of us and it just seems to me you know look every generation gets both the assets and liabilities that have been handed down and it's just not useful or productive to concentrate on the liability side of that well I would just like to push back against that a little bit first off because I want to be clear to any boomers in the audience it is safe for you to read this book because I do have a lot of sympathy for this argument which I believe you me I have heard quite a lot over the past week from older readers that the boomers also faced a difficult economic environment I think and I discussed this at some length and in the book in fact I think that this is a part of an explanation for the bad policy choices that the boomers themselves have made over the past 30 or 40 years because we often think about the boomers as you know inhabiting these this Halcyon era of stable employment where you could have the one family they're the one earner household and the you know a wife if she chose to would have the option of staying at home to look after the children and that you would have the lifetime employment if the reality is that that is the economy that the boomers grew up in in the 50s or 60s it is not the economy that they ever really worked in and for boomers who were graduating and entering the labor market starting in the seventies in the era of Vietnam stagflation and you know and then through the traumas of the very early eighties as the American economy tried to recover from that I have a lot of sympathy for the argument that the Boomers did face a difficult time earlier in their working lives which is why for example one other author who's looked at these issues is referred to them as a generation of sociopaths you'll be relieved to think that I think that's unfair I mean the way I came to think about the policy side of this is that the boomers understood that something had gone wrong for the in the 70s that you know that the economy was not working the way it had for their parents and a lot of what we've seen since then have been policy attempts to address those problems now you know you can argue about whether you think that it was a theft or not but I think that certainly the thrust of many of those policies in effect even if not entirely in intent all the time has been to favor the interests of you know the boomers who were making the policies that you know they thought were intended to solve the problems that they had had you know rather than trying to take a somewhat more holistic view that might encompass an economy that would work you know that would retain some kind of intergenerational balance yeah the the housing market that led up to the crisis I mean to fascinating degree I realized that you know the real emphasis on homeownership in Washington actually had its origins in the 80s at a time when the boomers started to worry that they weren't buying houses in the proportion that their parents had and you can't argue that that you know boomer emphasis on housing it just kind of happened by accident I think that you can look at an awful lot of policy prods along the way that were intended to push boomers into homeownership without really thinking about what the broader effects on the market over time might be you know I think that you certainly Ben this is probably an area where Connor and I could have a very long disagreeing conversation with each other but I think that one problem you can point to especially in the Obama era was this tendency to look for policy solutions that would recreate the appearance of the economic security that the boomers had grown up with you know that could recreate the strong unionization that could recreate the general feeling of economic security without focusing enough on recreating the productivity boom of the 50s and 60s it created that kind of so curity so you know I think that you it is entirely fair to have a conversation that talks about how some of these policy choices have created an economy that over time has lost a capacity to maintain some kind of intergenerational balance over time yeah I mean certainly I'm open to the argument about whether or not you want to call that a theft but the policy environment definitely happened I kind of feel like I needed to sort of let you guys finish this well you know we Gen Xers we're not assertive so I'm guessing I'll let you have the last word on that on that question for now but then let me actually because I want to complain too because you know I and I didn't agree with every other guy I'm still astonished to the degree to which sitting next to a gen Xer all of a sudden I actually felt the generational solidarity that I read your book ends at it's not a thing so this has been fascinating but one thing that actually has the again is the success sequence guy here how about to have my third kid and there was nothing in there about that chunk of money which is I think it's actually sort of the the missing part of your big reveal at the end of the book you actually Millennials aren't quite as young as you think which is true but insofar as you're talking about a chord that's trending towards 40 at the the upper edge there are there's a lot of us who have now entered into the the world of having children which is enormously expensive and also again just not there as part of this generational analysis there's nothing in there really about the cost of child care or about how having kids influences a bunch of your long-term professional trajectory of the long-term college savings they're sort of occasional mentions around how instability around housing either renting or homeownership prevents people from forming families but there's not a lot about the actually once you're in there how that actually contributes to this long-term really difficult asset formation problem that Millennials have well I mean I think that this again a fair point I mean part of the reason that maybe it felt a little less urgent to me when I was writing the book is just because the reality is that for a lot of people in the Millennial cohort your family formation has been delayed by a lot of these tendencies so I think that you know especially when you put it that way it is almost interesting that you so much of the millennial political debate right now is focused on issues like homeownership or the student debt problem or job security in general I think that there is definitely some interest on some of these more family oriented issues but I think that maybe when we will reach a point when that discussion will become a lot more urgent but for now I think that if the family formation isn't at the point where huge numbers of Millennials are grappling with that problem just yet you know that might affect some of the these dynamics I mean I think there's a lot of the solution to that is going to end up you know being in issues like the labor market that I do talk about I mean I think that one way that I wish that we could start thinking about these issues like the ability to have the resources to raise a family I think that actually is an output of an economy it's an output of an economy where investment is firing properly it's an output of an economy that is seeing strong productivity growth since we aren't living in that kind of economy at the moment you know that will create a lot of these knock-on stress factors so I mean even if I don't necessarily get into it in the book I think the young you know it's possible to extrapolate from you know some of the themes in the book into some of these other issues jump in on that know I think that you know it's Millennials may not be sort of grappling with raising kids and the financial problems that creates but maybe the reason they're not grappling with them is because of the financial problems that that come along with kids but it's not just the financial problems I do think that there's there was a there are a bunch of things that have come together and made it harder both economically and culturally for young people to start families and there are you know some some places where I think we should we should be looking at those specific problems that we can that we can tackle an I think higher education is part of that right I mean I think the extent to which we have told a lot of people again not as a kind of generational conspiracy it's just been a it's been a large a big consensus that spans generations everybody's got to go to college or they're gonna be a you know a loser for life and you're not going to be able to afford it I think that is something that has that has made people wait longer and longer before they start thinking about having kids because I think that they need to build up these financial assets first and that may be you know again higher education childcare some of the issues around raising children specifically as opposed to sort of looking at the economy in general may be fruitful there's no question for what it's worth I have a column sitting with an editor right now this is if you look at the 2020 already primary campaign debate it's notable we're not talking about k12 hardly at all there's very little in terms of k-12 education reform but amongst the existing candidates at least on the Democratic side there's a ton on child care proposals and various universal pre-k funding and ways to get at post-secondary cause like they're absolutely pushing on exactly this which for what it's worth again like this is the family economics of that you should adjust game we looked very seriously at moving out of DC to the suburbs to another community a couple of times part of the problem is is that we save about what with our two kids so far it's about 20k a year for child care in DC so multiply by 2 to cute kids and since pre-k starts at 3 years old for full-day pre-k and DC that's $80,000 of not spending we've done on childcare because pre-k took over at 3 years old we moved to the suburbs we have to wait until kindergarten kicks in at 5 years old so then you sit here you say well I can save some money on housing and in the long run that probably the better investment then not spending on child care but within our current income that might I don't know we can actually swing that move well you should check with the internet they've got a lot of constructive life advice [Laughter] but you know I just want to follow up on the you know should have just issue that you talked about because I think that that ultimately is a terrific way of thinking about these problems and the way that the economy looks to Millennials because yeah and again speaking as someone of a more free market orientation on a lot of these issues and particularly to an audience here at AEI I think that you know there is room for people to be concerned that for so many Millennials success often seems to be not the product entirely of your hard work or your investment in yourself or your own training or your skills but they're also as the strong contingent element of it and it does feel like it has become more contingent over time and I think that you know it's it's youth useful for you know people on the conservative end of the spectrum to engage in that conversation because then we can talk about policy origins from our side of the aisle that can help opening that up I mean for example if you're looking at issues like inequality which is a political preoccupation for Millennials I think that it's it may be good for us to be able to talk about that in terms of issues like how much is rent-seeking the deciding factor economic success early some industries or companies in the economy versus the old arguments that we used to have about these issues where you could plausibly argue that inequality is actually just a normal output of a properly functioning market economy and you know that is a very different discussion from the discussion I think that people in the leftward end of the spectrum want to have about these issues but I'm also not already sure that just ignoring some of these questions when Millennials are telling us politically so loudly that these are preoccupations for you know voters of our generation you know I think that just kind of saying well you know the boomers had it bad - or every generation goes through something like this I mean first off I don't think that that's entirely true if you look at the uniquely bad situation that Millennials face having graduated into the worst economy America had seen in 80 years and I also think that that isn't going to be a really satisfactory political solution to some of these discussions that we have going on I think that's right let me just the last thing to say before we go to Q&A is it's interesting to be at AEI and sort of hear a little bit almost like Marxist false consciousness all these Millennials just don't understand right I'm willing to just trust them on the merits that I think that it's not an accident that they're gravitating and moving left when they're finding it like moving far left because that's where they're finding answers to people explaining look you're dealing with a real challenge of just finding what looks like a clean path to putting your life together the person the party the platform that gives a real answer to that a meaty substantive answer to here is how you're going to make it into some kind of financial security and long-term lifecycle growth they're going to control the political future that's it if you can speak to and it doesn't have to be just Millennials I've had it bad and some unique millennial thing it's that much like we like to talk about Europe like if the problem in Europe is youth unemployment and that's fueling their radicalism our problem is we have this sort of general sense amongst many people my age and younger that there just isn't a path up and they sort of know who they see it as the villains I don't think we have to say that they don't understand I think I trust them as individual rational actors to really get this yeah well I don't know if I've heard anybody say the Millennials don't understand things and have suffered from false consciousness I so I'm happy to go with that okay so we're going to turn to time for some questions here from you and just my only rule hours here at AEI is that your questions are actually questions and that you leave the extended remarks to our three speakers on the stage here and Joe if it's okay with you I'll let you go ahead and just call on on people as they do so I don't need to be the the middle man up here but I but I will be the bad cop at the end and cut us off so that we get out of here on time well we had we never we have a roving there and then we'll go back there for the second question good and we do have a roving my just please let that get to you before you ask your question Thanks thank you very interesting presentation I'm gonna take a comment of Ramesh's and turn it into a question since we're not in sherds far wish forest with Robin Hood and his merry band of thieves the notion of stealing something implies that the person doing the stealing has some is trying to obtain something is is is doing it for a self oriented reason and so my so I'm wondering whether what's whether there really has been a theft or whether this was just a series of perhaps misguided policy decisions and not which are not really merit do not really married being called immoral a word you use several times no I I think that you can think about it in terms of a theft just because the policy decisions always seem to be so reinterred toward defending the economic interests of older voters over the you know potential interests of younger voters I think that you you know the housing example there's a terrific instance of this because you know that was a situation where especially after the financial crisis the orientation of so much policy out of Washington was to try to keep people older people who already own their homes into those homes as much as possible at the expense of any sort of thought about what the long-term implications of that might be in terms of distorting the market your younger buyers and we've actually seen that those distortions are continuing to rack up I think that a growing concern now is after we've had this environment our interest rates on mortgages have been so low you know especially for the past decade you know suppressed by Federal Reserve policies you know how many boomers are finding themselves locked into their homes because it's too expensive to borrow and take out a new mortgage if you have to move and yeah the amount of frustration that I've heard from Millennials including people about our age and their mid to late thirties about the situation I had one email from a millennial woman who was complaining that she found it very she and her husband found it very difficult to buy a home in their community because they were discovering that there were so many boomers who had allowed themselves to become locked into these houses and they're just basically squatting in houses that were too big for them instead of allowing a normal life cycle to develop in that kind of market where they might downsize so that new families can rise up into that and you know you can I'm sure that people will argue that you know we didn't mean it and maybe it's a theft maybe it's not a theft but I think the yeah if you look at it in aggregate there has definitely been this bias in favor of you know older voters you know often implemented by older policymakers and I think it is entirely fair for us to ask you know whether especially over the past ten years of this policy environment is adequately accounted for the situation that young people are finding themselves in didn't the crisis result from too many people who really couldn't afford a home being allowed to buy one yeah and that was a consequence of particular boomer era policy fixation on home ownership and you know it's useful actually to phrase the question that way because you know part of my journey of discovery as I was writing the book is that I thought that so much of this was just going to have started at the Great Recession I actually found that a lot of these phenomena I'm describing had their origins before that part of this is a much longer term story that just ended up getting worse as a result of the policy solution to the crisis itself and yeah that also is important to understand because there's a certain bipartisan element to this yeah I think that one warning again I would make for a more conservative audience here at AEI is to not think that Barack Obama is the only problem in terms of some of these policy issues I think that we also have to have a discussion on the the right side of the political spectrum about things like whether we got housing policy right in the run-up to the financial crisis when we had a Republican in the White House I think we had a question over here I'm just wondering and you know I don't know whether I'll read your book but you have particular suggestions or recommendations for measures that could be taken short of the far left things that are being floated especially in light of the fiscal situation of the federal government measures that could be taken to equalize like so I take a lot of money out of my retirement plan and give it to my children or I didn't focus so much in the book on specific policy proposals because just as a reader I often find my eyes glazing over a little bit if you get to the bulleted list in the last chapter of a book and I think the what I'm trying to do is just find a way to state these problems that can trigger a bigger discussion about what the solution is going to be I mean you talked about fiscal policy which is something that I discussed at some length in the book it hasn't really come up here but you know again that is an instance where there is going to have to be a big discussion and not just about getting the numbers to add up correctly but also just a bit as a matter of political choice and making sure that we don't allow boom or or you know allow social payouts to boomers under some of the old-age entitlements completely swallow up the scope that Millennials will have to make our own fiscal decisions as we do start getting elected to Congress so you know that that's an example of how you know I almost think that it's helpful to get a little beyond just thinking about it in terms of technocratic levers that you can try to pull or having a bulleted point list in the back of the book and try to think a little more holistically about what some of these problems are you know I think as Connor pointed out it is undeniable that the political response to this among Millennials so far has been to shift to the left and very far to the left and I think it is because there is a certain that appeal to having politicians that will at least recognize that some of these vectors I'm describing are problems now I think that you can have a really interesting argument in pointing out that a lot of those solutions on the far left are not the right solutions that they actually threatened to make some of these generational balances worse but before you can even engage in that kind of argument you have to have a clear understanding about exactly what the problem is and I think that's the way that I'm trying to move the ball forward you know down the field with the book as much as you know any thought about offering specific you know what do we do now policy ideas if I could just jump in on the fiscal stuff where I think we probably agree on a lot now if you think about Social Security for example or the key decision is really made 77 to move to a wage index for benefits point a time I white add when people the midpoint in the baby boom were about 22 years old and not in charge and there but no real change in Social Security except a modest scale back in the mid 80s since then and everything's been running on autopilot and nobody's really fixed that it does seem to me that ventually you are going to have to either raise taxes probably with the burden of that following on upper middle class people under about 55 or you're going to have to cut benefits probably with the burden of that falling on upper middle class people under about the age of 55 and so you basically you know who you to be paying most of this bill and it's just a question of you know how exactly that structured and whether we work up the will to do it there's a question here thank you very much my name is yeah I fancy I like his approach because I meet a lot of minions and I discussed with them and they would tell me all of these things because this is basically an academic issue and I always said to it what are you going to do about it and they have not a clue I came to this country 1967 as a private student a face not similar but situation of Constraints I figure out like most of us who came figure out how to solve it so did you in your story get a few of them we'll make some suggestion like the gentleman there was trying how he was when when navigating always for them I think what is need to be done is for this millennium so start thinking to become entrepreneurial in how they solve the problem where that I'm going to a patch that has been established as I wouldn't know I think there is definitely going to be an aspect of that and I hope that we're going to see a lot more intellectual entrepreneurship out of the millennial generation I mean on a certain level I find this tilt to the the far left you know favoring politicians like Bernie Sanders or Elizabeth Warren a little mystifying because you have this young generation is all about the hip and new and the high-tech and yet we are embracing the economic philosophies that have their origins in the Victorian era and a bunch of older politicians you know coming out of you know either socialist movements in Vermont or faculty lounges the you know helmet yeah I sometimes find myself wondering how much do they really understand about the situation you know Millennials so I mean one of the things that I'm hoping is that particularly as we start aging into that period of our lives where we do become more politically active where we do get ourselves elected to Congress that we can have that discussion and I think it'll be really helpful on you know particularly the left right now but also potentially on the right if we can kind of separate ourselves out a little bit from you know what our elders are trying to tell us and actually engage in some new entrepreneurial thinking for her and about what the policy solutions to these problems might be I would just caution that socialism isn't maybe you know it's not the new Drake album but it's it's not as a hold of capitalism right I mean it lock in Mandeville and the underpinnings of our existing economic organization are older just as far as that joke goes but also just I want to believe there's an entrepreneurship boom coming - I would love I have my own oddly enough I'm a mine or very minority stake holder and my family's brewery on Seattle which you know shout-out to flying lion but entrepreneurship is risky and what I think you're going to find is that from Millennials who are barely able to chart a path towards paying down some student debt and get some kind of secure housing near a job that would help them put their lives together taking entrepreneurship risks is not high on their it doesn't feel safe they've already been taking a lot of risks they they took $100,000 worth of debt or so to get their undergraduate degree and now you're telling them well you launch yourself out there with some idea and see if you can make it in the battle place of the market I mean that's that's a tall order for people who are living pretty precarious lives already if I could jump in on we've circled around this discussion of sort of millennial politics a few times here seems to me when you're thinking about why Millennials are voting this heavily Democratic as they are and seem to be favoring socialism over capitalism to higher stand than previous generations there's a couple different things going on one you actually I think not seeing a real increase in support for socialism so much as you're seeing a decrease in support for capitalism and that's I think you know for some of the reasons we've discussed here that the particular the last ten years graduating into this labor market and so forth that it's been a kind of traumatic experience for a lot of people and then the second thing which which Jo mentions in his book but which I think conservatives are sometimes in a way to sort of to hung up on the generational thing to focus enough on a lot of it is that young people are less white than older people and everything we have seen in politics for the last 50 years suggests that that means you're going to have more democratic and less Republican voting behavior and you know we so I guess what I would say there is you know there's a there's an economic component to that but we can be as pro avvocato toast as as possible if conservatives don't do better among Hispanics and Asians and blacks they are going to do worse among young people than they do among older people that is just demographic reality do we have time for one more do we have one more question or I think we've got actually do we have time for two more questions okay why don't we maybe do you and then you there that one we can choose which one we actually I'm John Dolan I'll start by saying I think finding common ground is a great place to go forward on this argument and I am sympathetic to the plight that the economic plight that Millennials have and I think that if you couch discussions in that framework as opposed to theft you'll have a more receptive audience going forward I think the other element that is the is I'll pose in the form of a question is the blame is miss focused in my mind I've not heard having not yet read the book the role of globalization I heard a hint at the astronomical increase in the cost of education but I've not heard specifics as to what to do about that so I would I would say what are you going to do about introducing your audience to the notion that globalization might have a role as opposed to blaming another generation and what are you going to do about the cost of education going forward okay and then we hit a question here thank you with what 22 people coming into the democratic run for a president and all of these promises three more this morning we don't know it's we've been but you do you think with the burden of student debt is kind of the catalyst to the demise or evolution of the conservative movement because I have for example I have friends who are lifelong Republicans conservatives out in cincinnati ohio rural cincinnati ohio who here hey Elizabeth Warren is saying $50,000 and I'm gonna break from my party to do that because it's in my self-interest so what is your take on the promises that are going to keep on coming okay well so you know on the globalization question that is something that I touched on I was you know a little bit in the book because that was actually the big issue that the boomers were grappling with through most of their economic lives I mean remember you know one of the contributing factors to a lot of the disruptions that the boomers experienced in the seventies and into the 80s was the fact that the American economy had been so unusual in the 50s and 60s because major competitors like Japan and West Germany had been completely offline as they were recovering from the war now I mean one of the things that I think is interesting is that and you can kind of see this a little bit if you start looking at some survey results on millennial attitudes toward issues like trade I mean my sense and I'm curious to get counters you on this is that we just take it for granted that we are living in a more globalized economy now and so from that perspective at least on the conservative side right now you know someone like President Trump is propably a distraction for us because when I see a lot of his fulmination zhan trade policy it actually sounds like something straight out of the conversations that the boomers were having with themselves in the 80s because that really I think is where a lot of his rhetoric on the started in fact I found a New York Times clipping at one point of him in the 80s claiming the differently he had been in charge of negotiating trade policy with Japan instead of Reagan America would have gotten a much better deal so you know I think that one of the interesting policy challenges that Millennials face is that we are going to be making economic decisions in an environment where we are actually taking for granted some of the phenomena the the boomers didn't take for granted in terms of globalization or trade on you that might open up an interesting discussion I mean on the student debt issue I think that it is undeniable that the fact that you have some politicians who are talking about this and seem to be holding out a solution is a big draw for a lot of younger voters now the problem is and this is something I think that we need to at least on the rightward end of the spectrum need to be a lot more frank talking and how is that you have to ask whose money here are some of these politicians politicians being generous with and the reality is that if you look the age ranges of the different cohorts and the population right now so much of this generosity is actually going to be at the expense of millennial taxpayers so you know on the one hand you can understand why people are drawn to that argument but on the other hand you get a little frustrated that you know we often talk about this issue on the right in terms of you know not wanting the state to get too involved or the fiscal mechanics of just thinking about it in terms of dollar terms and we aren't thinking about the fact that some of these politicians are actually giving us gifts with our own money and you know I think that that is an opportunity to engage in some of these discussions as long as you're starting from the premise that this is actually a serious problem and there's a big political demand for a solution to it so excuse me it just seemed to me that there's there are different pieces of the student debt puzzle that I think vary in their urgency and they sometimes get lumped together in a misleading way so I'm not so much concerned about people who finish school with really high debt burdens but are also on a path towards high lifetime incomes partly as a result of that borrowing where I am concerned is the people who have gotten a significant amount of debt often not the highest but but but but a real debt burden and then did not finish did not get the degree because what we're seeing is first of all that's a lot of people and second that the economic outcomes for people who have some college are actually closer to those of high school dropouts than they are to those of college graduates and one of the things that so I win a way in a way that's a narrowing of the problem in a way maybe it's a broadening of it too because maybe the way to think about this is that we have a system that is geared towards getting people to finish high school enroll in college graduate college get a job that requires a college degree and that is this that is the the path to success that we are aiming for and it works for only one out of six young people in America and maybe we need to look at this entire system and and try to move away and I would just say that that is a nuance that I talked about in the book and it is a frustration of a lot of these debates that are happening on the Democratic side right now because you know the student debt crisis is not among people who owe more than a hundred thousand dollars of student debt you know that's only about 5% of the total number of borrowers the default rates are much lower than people who owe smaller amounts I mean speaking as a journalist and at the risk of offending my brothers and sisters in the profession I will argue that one of the reasons that people think that that is where the crisis is is because those borrowers are appropriately just proportionately represented in the social circles of a lot of quarters but you know we do need to and it would be nice again if we could engage in a somewhat more nuanced discussion instead of always getting wrapped around the axle of something like the Elizabeth Warren plan that seems to be contemplating repaying large amounts of student debt for people who actually don't need the help you know and potentially the cost of all Millennials in terms of the tax burden of doing that including the taxes that would ultimately be lovely doing people who do need the help this is an important discussion and I hate to cut it off but we are at time so great questions great discussion and I'd like to point out that given the hostility with which the internet and Twitter talks about these issues I'd like to celebrate the civility with which we discuss them today so please join me in thanking Joe Sternberg on our panel do you Mike

Channel: American Enterprise Institute

Views: 63,563

Keywords: AEI, American Enterprise Institute, politics, news, education, Entitlement benefits, Job market, Children’s future, Post-2008 economy

Id: cwCSnkCr8uk

Length: 79min 45sec (4785 seconds)

Published: Tue May 21 2019