In his latest article,
Angst
in America, Part 7: The Angst of the Millennial Generation, John Mauldin
hits on some important aspects of our millennial kids that might provide some
insight. As I sit here typing this, I
can readily think of six families that have their college graduated kids living
at home with them. Calling them
millennials is actually misleading as they are post millennials or Generation Z
(mid 1990s to early 2000s) kids.
Regarding these kids, we have noticed behaviors that are
very strange for us to understand. The
most noticeable are that they do not go and do things together often in concerted
efforts. They are more than willing to
use technology to do something together and never leave the house, at least
until they are 21 and “legal”. They do
not have a drive to accomplish necessary things like getting a driver’s license
as soon as they can do so. They are
content to wait until they feel ready.
One family I know has an 17-year-old and he is just now getting his
permit. He does not live in a big
city. They nor we understand how to
comprehend this and it is very easy for us to jump to laziness when it could be
some kind of societal shift we do not understand. I personally find it difficult to believe
that a whole generation is suddenly lazy.
Tyler Cowan has a book entitled, The Complacent Class: The Self-Defeating Quest for the American Dream. Edward Luce reviews the book in the Financial Times on February 17, 2017.
“In this book Cowan expands the
scope of argument to sociology. He
believes America’s restlessness of spirit is giving way to a safety-first
society. Instead of pushing on to the next frontier, Americans are busy
gentrifying the neighborhood.
We used to suffer from the Nimby
syndrome – ‘not in my backyard’. Now we have graduated to Banana – ‘build
absolutely nothing anywhere near anything’, says Cowen. Public life is stymied
by Cave (‘citizens against virtually everything’) in which politicians fall
back on Nimey (‘not in my election year’). Politics has reduced itself to a
theatre of symbolic gestures in which pressing issues are left unaddressed.”
I find that analysis spot-on. Where does this generation find its heroes? It’s not astronauts risking everything to
tackle a new frontier in the face of a dismantled NASA. This spirit of risk-aversion has infected
corporate America and the U.S. Government.
Corporations used to have significant R&D budgets, but now they
spend it on legal compliance and human resources to avoid lawsuits or meet
government regulations. The government
sets the pace for avoiding all risk to the point of self-defeating rules of
engagement in war. The idea of risk, and
therefore of having a real live hero, is becoming a lost commodity.
This may or may not because the majority of the population
is aging and older societies take fewer risks.
Older people also try to hold on to what they have. With such an influence, should it surprise us
that the millennial generation is the least entrepreneurial of all?
It is important for us to consider these thoughts of societal
influence, which many of us have noticed before, and couple them with Marc
Faber’s thoughts in his March 2017 Gloom,
Boom, & Doom Report.
“The generation of millennials born
after 1995 have been shaped by the debt-growth induced 1990s’ period of boom
and prosperity, which was driven largely by rising asset prices. The good side
of generation Z is that they are not interested in wars (they seldom ever
belong to warmongers) and care little about politics. Unfortunately, they have
only a scant knowledge of the meaning of “freedom” and “personal
responsibility”.
However, they are concerned about
political correctness, about having the latest-model iPhone and the number of
likes their photos receive and how many followers they have on Facebook. But
most of all, they are concerned about extracting as much as possible from the
government in the form of subsidies and other kinds of benefits. It is a
generation that avoids hard work (such as on the factory floor), and is content
to work part-time in bars and restaurants, and to live a carefree existence. It
is also the generation whose major contribution to civilization may be the
invention of “retirement before working.”
Needless to say, this concept of
retirement before working has been fostered and encouraged by governments,
which, with their generous transfer payments, make it more economical for some
people not to work, and to collect all kinds of tax-free benefits, than to have
a low-paying occupation and pay taxes.”
I actually disagree with this assessment in regard to the
politics. I think many do care about it
and discuss it. They seem to be even
more polarized than the rest of America in my opinion and settle on the left or
right fringes.
“Retirement before working.”
I personally love that concept.
Enjoy life and do things while your health is good and you are mobile,
before you are saddled down with responsibilities like kids, houses, and
jobs. The problem is it isn’t realistic
- it simply isn’t reality. This concept
is definitely something most people of my generation would never understand and
the reason is when we graduated we had no money or resources. How could you possible do anything with no
resources?
I personally believe that a major unknown problem for these
kids is the lack of a purpose. Our
purpose was to be able to take responsibility for ourselves. To become self-sufficient and make enough
right decisions so we might live a better life than our parents. That’s what our parents wanted and it’s what
we wanted. Today, I don’t see that as a
driving force in a culture where there is a knowledge that no quantity of wrong
decisions will make it possible for you not to be taken care of by the
government. So, with that purpose not
immediately self-evident and not instilled as a required step of life in this
world, everyone has to go find a cause.
They want to believe they are making a difference. It might be very daunting to look up at those
who have gone before you and realize you most likely can’t do better than they
did. That is the reality of the current
economic situation in America. So, if
society grades your worth on what you earn and you can’t earn or conceive a way
to accomplish even what your parents did, then how are you going to have
worth? A spiritually ignorant person with
no training in personal responsibility as a first goal for themselves and to
society must grab onto a cause and believe that by protesting/marching they
have a purpose and as a result, worth.
Those who do not fall into this trap simply do very little
because they don’t know what to do. They
might be brilliant or athletic, but with no direction or deep desire inside
they “float on” until conditions require change and they can find stasis again.
I personally find this deeply disturbing. Hitler was able to tap into the youth in his
rise to power and they served him against those who could have toppled him
before he got too far. I can easily see
a very charismatic leader with the press behind him creating a movement that
could be very difficult to counter. I
saw significant signs when Obama was the leader of how this could occur. I think we are at a fragile time and the
country needs a father-figure leader to reinforce the youth into
responsibility. Otherwise, there will
not be a middle-class and that will create a very unstable economy and the
economy is the strength of America in the absence of a defined spiritual
conviction.
Joel Kotkin writes in the strangely titled column, The High Cost of a Home Is Turning American
Millennials Into the New Serfs, that
“The problems facing millennials
include an economy where job growth has been largely in service and part-time
employment, producing lower incomes; the Census bureau estimates they earn,
even with a full-time job, $2,000 less in real dollars than the same age group
made in 1980. More millennials, notes a recent White House report, face far
longer period of unemployment and suffer low rates of labor participation.”
More than 20 percent of people 18
to 34 live in poverty, up from 14 percent in 1980. They are also saddled with
ever more college debt, with around half of students borrowing for their
education during the 2013–14 school year, up from around 30 percent in the mid-
1990s.
All this at a time when the return
on education seem to be dropping: A millennial with both a college degree and
college debt, according to a recent analysis of Federal Reserve data, earns
about the same as a boomer without a degree did at the same age.”
Marc Faber continues, “This is a serious problem. According
to a study by the Huffington Post (February
3, 2016), “President Barack Obama has said that a college degree ‘has never
been more valuable.’ But if you borrow to finance your degree, the immediate
returns are the lowest they’ve been in at least a generation, new data show.
Wages for the typical recent college graduate working full
time have risen just 1.6 percent over the last 25 years, after adjusting for
inflation, according to the Federal Reserve Bank of New York.” At the same
time, student debt burdens for the typical bachelor’s degree recipient who
borrowed for college have increased about 163.8 percent (see Figure 2).”
This shows us that in 1990 a typical college student with
student debt graduated with that debt equivalent to 28 percent of their annual
earnings, but in 2015 that number is equivalent to 74 percent of their annual
earnings. If we plot out the current
trend of the last 25 years, in 2023 the average college graduate will owe more
in student debt than they can obtain in annual earning. Today, 42 million Americans owe $1.3 trillion
in student loans, of which, 90% are owned or guaranteed by the U.S. Dept of
Education. Currently, about 7 of every
10 college graduates borrows to pay for their education, this is up from 5 of
every 10 in 1990.
So, not only are college graduates not making an equivalent
income as they did 25 years ago with relation to the cost of living, they are
in significantly more debt. John Adams
said in 1826, “There are two ways to conquer and enslave a nation. One is by the sword. The other is by debt.” In addition to this student loan debt, auto
loans have risen a record $30 billion in the third quarter of 2016 alone. In 2010 there were $700 million in auto
loans, today there is $1.1 trillion.
This is a startling statistic.
How, in the face of stagnant wages, student debt, and a no-growth
economy can there be so many auto loans?
I find myself considering that responsibility conversation again.
All of that conversation regarding debt and we have yet to
discuss home ownership, the average person’s single largest debt of their
lives. I find it awkward and
frightening. In LA, San Fran, NYC, and
Miami, rent costs take 45% of a worker between the ages of 22 and 34’s
income. In NYC, it’s above 50%. Is it any wonder then, that rather than
strike out on their own, many millennials are simply failing to launch? The number of people between 18 to 34 living
at their parent’s home has shot up over 5 million since 2000. Between the years 2004 to 2016, home
ownership for the age group below 35 declined by 21.2%. Home ownership for the age group of 35 to 44
declined by 16.7%. That’s a 38%
reduction for the youngest among us according to a CNBC Census.
It is a simple economics decision for them with such
staggering debt. It is not that they do
not want to buy homes or are part of some “evolution of consciousness”. Survey after survey indicates that 80% of
renters express interest in acquiring a home of their own. Roughly 80% of millennials indicate they plan
to get married, and most of those are planning to have children one day.
Plotting such a future is a terrific challenge. In a society where instant gratification is a
real influence and objects you buy are throw away and replace, teaching the
patience and wisdom of apprenticeship along with wholesome values that will
lead to health and wealth are nearly impossible and are certainly not
encouraged anywhere.
The Frenchman Alexis de Tocqueville warned that the tyranny
of the majority is conformism. He warned
that this modern tyranny (of conformism) would “degrade men rather than torment
them.” Let us hope that these new
generations are not a complacent class because of such debt mountains before
them. Edward Gibbon wrote in his
description of the Athenians societal downfall: “In the end, more than they
wanted freedom, they wanted security. When they Athenians finally wanted not to
give to society but for society to give to them, when the freedom they wished
for was freedom from responsibility, then Athens ceased to be free.”
The greatest economical gifts parents can provide to their
children is an education where their child has no debt and an auto that is
reliable and paid off. This alone puts
them ahead of 70% of their peers.
In my opinion, the real question is what kind of education
is necessary in a world of educated people in debt?
John Mauldin comments that one of the most difficult
chapters to write in his new book is on the future of work:
“New technology, while destroying
old jobs, would create new jobs and opportunities. A clear example of this is
the use of drone technology by the military. It requires about 100 people to
prep and launch and maintain an F-16 for a single mission. Keeping an unmanned
predator drone in the air for 24 hours requires about 168 workers laboring in the
background. A larger drone, such as a Global Hawk surveillance craft, needs
about 300 people working in the background to make the mission feasible. One of
the real problems for the Air Force is recruiting enough people with the savvy
to fill these needs.
But here’s the problem. The world
is dividing into people who can manipulate information using computers and
those who can’t. The differential in wages between these groups is significant. … Enter
Tyler Cowen, whose book Average Is Over I
have been reading and mulling over for some time now. Cowen says the ability to
mix technological knowledge with the ability to solve real-world problems is
the key to being a big earner in a polarized labor market. The productive
worker and the smart machine are becoming ever more complementary. As one
reviewer said, “Only those who can learn to think like smart machines or at
least enough to understand their operation will get success. Individuals who
work with genius machines will need to retrain and learn new systems
constantly.
The new jobs will only be available
to those who have real aptitude and real training. You may be highly educated,
with a PhD in music or literature or even in economics, but the demand for your
skills is nowhere near as high as the demand for a super nerd who dropped out
of college and can sling code in his sleep. If, on the other hand, you
understand how to generate leads and new subscribers using Facebook – something
that really doesn’t require a computer science degree but does demand a highly
focused and integrated understanding of web technology and marketing – you’ll
find people lined up to throw money at you.”
I have to admit that for the first time in my life, I feel
the pressure of not knowing enough about how to manipulate the computer
programs and operations to make it do exactly what I want it to do. I know I am behind in this area of
technology. My biggest problem is do I
find a way to educate myself back into it to be current or just hire young-uns
to do it? It is a real dilemma and the
absence of time for the education while doing my normal job will most likely
answer this for me.
I assume I am not the only older person in the work force
feeling this way. So, I have to express
some validity to Mr. Mauldin’s thoughts above.
On the opposite side of that spectrum, less than 2% of the population
works in the agricultural field. We are
one new insect we can’t kill or some new plant disease away from not having
enough trained people in this field of work to produce in new locations to feed
ourselves.
With so many new cars on the road, one would have to assume
auto mechanics will be a growing field for a long time as well. I can attest that finding a reliable, fairly
priced mechanic is a difficult thing to find.
There will always be a viable employment out there for the
hard worker, eager to learn and always be learning, and especially one who can
mix technology into their productivity.
Even the farmer and mechanic must do this in today’s world.
