The War Against The Young: Wealth Update

It seems to me that there is not a single fact in this post that suggests that there is a “war against the young.”

Older people typically have a higher net worth than younger people because, if they’re smart, they’ve been saving for a lifetime.

In 2011, the average social security recipient received a monthly check of $1,177. Seniors fortunate enough to have a net worth of $170,494 excluding their home could count on additional monthly income of $426 if they managed to get a three percent return on their money (which is not easy today). That represents a total monthly income of $1,603. This is significantly less than the average monthly wage so my question is simple; where’s the “war on the young?”

But the reality is actually bleaker than this. Included in the $170,000 net worth is the equity that seniors have in their home. This equity can’t be monetized on a monthly basis which make’s Professor Mead’s thesis even weaker.

Finally, it’s important to remember that if the median net worth of American seniors is $170,000, as many seniors have a smaller net worth as have a higher net worth. What’s the monthly income of these seniors who haven’t accumulated much wealth?

If there is a “war against the young” Professor Mead is going to have to provide better evidence than this to prove it.

It isn’t necessarily a “war against the young” if there is such a disparity in wealth. In fact, it proves nicely the benefits of ownership and saving over time.

However, it is a war against the young when you combine this with the extraordinary toll entitlements will take on consuming national resources, especially since it is the young who will be paying taxes to support these programs and that the “trust funds” meant to support some of these programs (Soc Sec) are illusions.

Seniors will have to give their “fair share” too — real cuts in entitlements that will affect them.

The wealth disparity is more than just a “slanted factoid” in this case, it is quite relevant given entitlement programs are wealth transfers from young to old.

People over 65 have often inherited grandma’s house: perhaps she too was guilty of a war against the young?

In fact, unless you have some persuasive theory of a natural age-related distribution of wealth, you have little basis for comparison. The italics used for “47 times” aren’t much of a substitute for argument.

Mind you, what I’ve learned lately about the lunatic American system of student loans persuades me that on that topic you could argue that there’s been a war agin the young, waged by the universities.

I hope Mead doesn’t fall for this war on the young blather. As others have pointed out, a lot of the growth in geezers’ net worth is due to house values which are depressed from three years ago but sky high compared to 25 or 30 years ago.

Also, a generation or two back, a great many more average and above average income folks had defined benefit pensions. As conservatives rightly point out, today’s retirees and pre-retirees have had to save through their own 401-Ks and IRAs. Most have done so and consequently have a net worth that would have been hidden in their parents’ pension plans.

Third, and this is a guess, younger people are far more likely than oldsters to have taken on high indebtedness during the recent credit binge. If you have mortaged 95 percent of the house you bought, at any age, that will pretty much wipe out any positive net worth for any average income person.

Well, I’m looking at it from the high side of seventy, subsisting on $669 a month Social Security and food stamps just so I can have health insurance. From here it looks like as it always has, except we’re all a lot better off in our current positions than we’d have been at any time in the past.

Seems if people could get past their fear of this sea change we’re in, they’d see a much brighter future … for themselves, for their children and their grandchildren.

Capitalism has replaced whatever else there is. Our greatest enemies of the 20th century are now our most important trading partners. They used to call us capitalist pigs and now they all are one.

Consider for a fear-free moment what the addition of easily 3 billion producers and consumers will mean. We are on the verge of the greatest creation of wealth we have ever seen. And fear not, the top 1% will still have the majority of the wealth and the rest of us will be sitting pretty.

We should also take a moment and pat ourselves on the back. For the first time in history our species developed the means to truly destroy the world. And we survived it. We survived the 20th Century, arguably the bloodiest in history.

Cheers, I say. Cheers.

/dl

Prof. Mead, maybe someday you’ll lay the fault for “skyrocketing student loans” at the door of those responsible: colleges and universities.

This year, according to the College Board, tuition and fees rose 8.3% at public colleges and 4.5% at private colleges.
http://trends.collegeboard.org/college_pricing/report_findings/indicator/Tuition_and_Fee_Room_and_Board_Charges

The public schools may have had some cause, since the recession has hit state budgets. What’s the private schools’ excuse? The stock market is doing fine. Nobody’s endowment is hurting. Greedy, greedy. “Let’s gouge the suckers a little more. Obama has banned banks from student lending, the government does it all, and what pol will campaign on cutting student loans?”

Colleges and universities do it because they can.

Prosperity determines the underlying political system.
If the young can’t prosper from capitalism, they’ll demand something else, however self-defeating.

If there’s a generational war or class war going on now, nobody is winning. Everybody is losing. My son is a young family man, he is struggling. I’m middle-aged and we are struggling. My parents are elderly, they are struggling.

These statistics on wealth are misleading because they do not include the most important part of wealth, what economists call human capital. Young people have a lot of human capital compared to old people. Hence, the strategy of most people is to compensate for the loss of human capital as they age by increasing financial wealth, and that is what these numbers are capturing.

> Americans of all ages need to realize, though, that nobody ever wins a war against the young.

I doubt it, but the relevant question is not whether such a war can be won, but whether my generation can avoid paying for the previous generations and get the next generations to subsidize us.

The jury is still out on the former but it looks like the younger generation is insisting on subsidizing us.

I blame the federal government for massive student debt. When they removed the risk from the banks and put it on the US taxpayer as last resort, of course we’d get stuck with the bill.

That olds are significantly richer than youngs is a good thing. Young people are generally always poor – most all of us start with nothing. If anything, this information shows the benefits of the so-called ownership society – and what a young person can achieve with prudence (living below one’s means with minimal debt) and adequate opportunity, over time. Compounding; it’s the most powerful force in the universe. (A sentiment often attributed to Prof. Einstein). Over a lifetime of moderately prudent saving and investing, the result can be quite good.

Too bad a lot of the asset values are probably still inflated and likely to fall over the mid term a la Japan’s lost decade(s). And too bad our government-banking cartel that is the federal reserve currently promotes debt incurrence and profligacy and is actively punishing those that saved with its ZIRP. And for separate discussion are the ethics of the forced transfer payments including the generational transfer payments that are social security, medicare and debt service on the U.S. Treasury’s obscene debt.

Not much data on the debt loads carried by youngs vs. olds but debt obviously reduces net worth dollar for dollar. Interest payments are also destructive to wealth generation via compounding’s effects.

I am getting very tired of hearing Social Security being disparagingly called an entitlement. For those of us who paid into SS all of our working lives it is an earned income. Yes now a days there are many leaches receiving Social Security who have never paid into the program, and yes the federal government raided those funds to pay for their social giveaway programs. That does not change the fact that those who faithfully paid into Social Security are owed their benefits now. Cut the excessive salaries, medical and retirement benefits of all of the federal politicians and the rest of the bloated government employees first.

Many are saying “move along, there’s nothing to see here. But what about the part that says “the gap between the two groups has doubled since 2005. Even adjusting for inflation, the disparity is nearly five times the 10-to-1 ratio recorded over 25 years ago.” Are you all really so certain that there is nothing to be concerned about here?

Politico seems to employ idiots.

I should hope that people accumulate wealth as they get older, learn more, and work more years. Otherwise something is very very wrong.

As for the dubious concept of “a war against the young”, I am afraid aging will do that, just give it a while.

Reminds me of that Shaw quote, “Youth is wasted on the young.”

This is supporting evidence for the adage, “There are three kinds of lies – lies, damned lies, and statistics.”

http://en.wikipedia.org/wiki/Lies,_damned_lies,_and_statistics

The only war against the young arises from the predator class that feeds upon them. In this sense, the so-called war becomes more the punishing of the young.

And punished they are; as were we.

Should we not turn instead to the issue of how to help them? How technology and our mutual resources can be better used?

One might argue that today there has never be a more onerous or pernicious monopoly on the access to Capital than the modern syndicalism created by scoundrels and sociopaths that dominate our Congress and national political parties.

The best way to help the young is the best way to help ourselves; help the American family across generational boundaries. This could be accomplished by a revolution in access to capital.

Let every American citizen who so chooses borrow directly from the US Treasury in exclusive matter of buying a domicile, purchasing tuition for personal development or paying for a medical procedure. Let them borrow direct from the treasury interest free.

The present war is essentially no different that the current punishment: our society faces a crises of monopoly on the access to capital. The usury is destroying the old and consigning our youth to indentured servitude.

Not all things should be interest free — just borrowing for a personal domicile, personal development or personal medical procedure, and let if come direct from our Treasury.

What damage is done to our economy when a young couple with children cannot own a $140K home without paying additional interest >100% again the purchase price over the following thirty years — interest paid to private and monopolistic interests.

We need to liberate our citizens from this “war” against Americans by using the mutual wealth comprised in our Treasury to lend for highly-specific basics interest free.

There will still be monies lent at interest. There will still be commercial borrowing and much interest earned.

But let us liberate the wealth of our children from the usury and monopoly that is installed and protected by our corrupt Congress and the Washingtion DC syndicates that control our politics and dominate our government.

It’s war by fiat of usury. We should instead invest in our mutualism, our families and our nation. To borrow for strategic purchases interest free will liberate the personal wealth our children, our families and in turn will enrich us all.

The time has come to smash the usury monopolies installed and operated by our Congress. Let’s peel the financial Sandusky predators off the backs of our struggling youth.

Interesting. Some other reasons that contibute to this fact. The change in lending regulations that allowed more than one income on a mortgage creates greater debt in the young and greater riches after retirement. Another factor could be the flood of illegal immigrants, mostly young, who could well be depressing the average wages among the 35 year olds.

I’m 3 score and 12. When I was in college, tuition was affordable. (Some even worked their way through). The sales tax didn’t exist in most states or cities. The income tax didn’t exist is most states or cities. Much later, after a 2 year stint in the Army and working, my Social Security tax for the year was 365 bucks and by September or October I had paid up and saw a “raise” in my paycheck. The Medicare tax had just been implimated.
I had money left over at the end of the month which I saved. With those savings, I made the downpayment on a 2 family house where the tenant paid the mortgage and most of the property taxes which were really low. Well, low then. I grew to really dislike having tenants. (I even put down 20%) I had a 30 year mortgage at 9% which I paid off in 20 years. I invested some from time to time and won some and lost some. I always lived beneath my means.
In short, for us “older” guys, it was more than possiible to build some wealth. That’s not so anymore. There are too many “blood Suckers” now. It’s not the old vs the young, it’s the young vs governments.
An afterthought: I have been seeing the ads on TV for reverse mortgages. What does that portend for the younger generation who quite possibley will be be left nothing because “The folks” needed the money?
I don’t see a pretty future.

So we save as much as we can, while Uncle Sugar takes 15% of our salary to pay current benefits, paying way more than reasonable rate of return, and in exchange, we get back a lousy rate of return, and we are waging a war on the young? The boomer generation is getting squeezed by their parents and their children, and WE are declaring war? You might want to look at reality again.

In reference to social security, government created inflation and the dependency it creates over the long them, espcially in the long term, F.A. Hayek wrote in The Constitution of Liberty in 1960;

“…the real outcome is indeed likely to be such that most of those who retire at the end of the century will be dependent on the charity of the younger generation. And ultimately not morals but the fact that the young supply the police and the army will decide the issue; concentration camps for the aged unable to maintain themselves are likely to be the fate of an old generation whose income is entirely dependent on coercing the young.”

“Americans of all ages need to realize, though, that nobody ever wins a war against the young.”

That’s just crazy talk. We win the war against the young by recruiting them or converting them to our team. Seems just a little while ago I was on the young side and now I’m fighting to join the old team. 20 some years ago I thought old people (like 70) shouldn’t drive. Now, I’m less inclined to agree to restrictions on driving. Young people need to realize the changes they propose affecting seniors will be in place waiting for them in a few years. And those years go quicker than any of us want to believe.

It’s bizarre that many commenters here make comments disparaging the post, making plain and general comments about saving, yet fail to make any remarks about the growing gap between young and old. Why can’t they comment on that?

Is it really normal to have 47 fold gap?

The over-65s are accumulating the entire net worth of the under-35s EVERY SINGLE YEAR. Assuming the typical under 35 has worked for 5 years or so, that means the average over 65 year old is accumulating the same in 1 year that the under-35s earn in 5 years, ON AVERAGE. This does not seem right to me.

It is wrong to compare the wealth of the young compared to the old. Most people accumulate wealth as they get older. The bigger problem is that government is incurring massive debt to finance present-day consumption and leaving it to future generations to repay. Two of the signs I saw at the 9/12/2009 rally in DC read “Don’t force debt on our children” and “Stop Spending (stealing) My Grandkid’s $”. They were carried by older people concerned at the debt being loaded onto the younger generations. Those generations haven’t yet figured out that they are the victims. The debt will be repaid, one way or another, and it will come out of their pockets.

I think the real war against the young happened to my generation. It was called Vietnam.

On the bright side, I was paid 128.50 a month, didn’t go to Vietnam (some of us were luckier than others), and got the government to pay for my education.

Now I can listen to how unfair it is and agree. Yes, life is unfair.

Note the weasel words: “household income”. A big contributor to the breathless 47 number is the fact that far more “households” among the young are single parent (usually single mom) than ever before. Obviously, a traditional married couple, with perhaps 2 jobs, has a much higher “household” income than a single parent. This “household” income trick is being used dishonestly to foster this whole liberal “wealth inequality” meme that is in danger of wrecking our system.

I notice the other posters aren’t mentioning the unfunded liabilities in entitlement programs, the crumbling infrastructure we haven’t maintained or acknowledged the 2-tier wage and benefit structures popping up so the entitled class doesn’t’ have to give up the stuff which hasn’t been paid for…

Also consider the fact that down market or not, I couldn’t afford to by my house if I didn’t already own it. Could you? Try doing that on the bottom tier of the new two-tier wage system.

You would expect all generations to start at zero and work up from there. So it’s obvious that the old will have more than the young. Else they haven’t done much of anything good over their working years.

However, it’s a bit rich to say that young people have some moral failure for their personal debt when previous generations shifted their debt to the very young you disparage through public handouts not paid for.

While you also complain about the young racking up debt, think about who taught them their values… Good job people! Lets feel smug and superior while we sit on the porch and watch it all crumble away.

I have not read all the comments but this could be redundant.

This info as application in the recent common discussion of the growing income [sic, welath] gap int eh US. As Sowell has pointed out, there is an age component not taken in to account. Most be start out in the bottom quartiles and work their way up. So with the wealth gap bt young and old growing (and perhaps an aging population), you naturally have a growing gap bt the top and bottom in terms of wealth.

What war? The young are our children and grandchildren. They’ll end up with everything we have.