Remember This Day

For 40 years, the trends have been as follows:

1) The generations born in 1957 and earlier get richer and richer, and freer and freer of obligations to others (including family obligations and taxes), while those born later get progressively poorer and more burdened by responsibilities to those older.

2) The executive/financial class and political/union class cut deals with themselves, and use control of the federal, state and local governments, and private sector organizations, to get richer and richer.  And the serfs get poorer and poorer, and go deeper and deeper into debt, to pay for it.

3) The connection between those who are taking more and putting in less, and those who are forced to put in more and accept less, is disguised by separating them in time via debt.  The media refuses to allow a discussion of the link between the two.

When this crisis is over, how do you think these various groups will have turned out? What will each lose? Will some actually gain?

In five or ten years…

1) Will the rich be richer?

2) Will executive pay be this high or higher?
3) Will the former middle class be poorer?
4) Will taxes be higher?
5) Will public services be worse?
6) Will old age benefits for later-born generations be reduced?
7) Will the life expectancy of those born after 1957 be lower, and/or the death rate higher?

8)  In NYC, will mass transit service and other public services degrade even more, and will state and local taxes, having been repeatedly increased, increase yet again?

Will all this happen yet again?  These are the questions. Remember this day, years after the virus is in the rear view mirror.

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Now consider all those checks that are being sent out.  Today’s seniors who are retired and have not lost ANY income as a result of the shutdowns have been getting them. That means they are BETTER OFF than they had been, as a result of an economic calamity intended to prevent an increase in deaths mostly by seniors.  The same is true of public employees with seniority, and not at risk of layoffs.

And look at that stock market rocketing up, and all the bonuses getting paid to those at the top as a result.  Once again the federal government has intervened to prevent asset prices from falling, to the benefit of older and richer asset holders, and to the detriment of younger asset buyers.  Including those who wish to buy houses at affordable prices, and those who are saving for their future and now face rock bottom or negative returns.  All so those older and richer can cash out at higher prices.  

And think of all the money that is being borrowed.  On top of all the money that was already borrowed.  Who will pay it back?  People whose pay is being cut, and those who have lost their jobs entirely?  Sooner or later someone will become much worse off to pay for all this. That cost will probably show up in the future when today’s seniors are no longer around.

Look at all the politicians of both parties, at all levels of government, all from the same generation, blaming each other, but all doing the same things.  Protecting privilege.  Deferring sacrifices until they can slither away.  Now that they have the virus to blame, they are doing the same things, to benefit the same interests, and to destroy the future of later-born generations and the less well off.  But they are doing those same things times ten. 

Don’t let them say circumstances beyond our control.   They did it.  All of them.  I said so before the virus even hit.

https://larrylittlefield.wordpress.com/2020/01/19/new-yorkers-are-going-to-pay-more-and-be-forced-to-expect-less-but-shouldnt-let-them-say-its-fair-or-blame-circumstances-or-scapegoats/

One might say the pandemic response has been yet another policy that will benefit earlier born generations at the expense of poorer, later-born generations.  We had no choice.  It had to be done, to try to protect those over the age 65, those with health problems, and others with the bad luck to be among the younger and healthier people who end up being severely affected by COVID-19.

But the price paid by the adults who lost their jobs, and the children who lost part of their education, will be permanent and devastating.  To the point where I predict the years of life lost due to the economic and social consequences of the response to the pandemic will eventually far exceed those lost to the pandemic itself.  Over and above the pre-existing trend of the suicide rate of later-born generations rising, and their life expectancy falling, for years before COVID-19.

What should happen is what should have happened long ago.  Generation Greed, the executive/financial class, and the political/union class should be told they have taken too much, not put enough in, and from now on every decision will have to prioritize limiting the damage to everyone else.  With some sacrifices, and no more benefits, for themselves.  Including letting asset prices plunge to real market levels, so later born generations can pay less for houses and get higher future returns on their retirement savings.  

Instead, when the Trump Administration cut taxes for rich and corporations, and then bailed out asset prices at a time when they were falling toward sanity, the executive/financial class got to take even more at the expense of the common future once again.  Now, with the Biden Administration in office, the political/union class and Generation Greed are planning to do the same.

What has been proposed?

1) More stimulus checks for today’s retired, who lost no income due to the pandemic.

https://www.washingtonpost.com/opinions/2000-vs-600-stimulus-payments-isnt-the-real-issue/2020/12/28/a870d838-4945-11eb-a9f4-0e668b9772ba_story.html

Bringing the total to $6,400 extra for a retired couple for the first year.

2) A permanently higher Social Security benefit for today’s seniors, with nothing done about the fact that later-born generations are facing huge benefit cuts and/or payroll tax increases.  And additional tax cuts for non-poor seniors.

https://larrylittlefield.wordpress.com/2019/02/17/social-security-the-democrats-join-generation-greeds-theft-of-the-future-from-less-well-off-later-born-generations/

3) A big increase in Social Security payments to retired public employees who have contributed very little to the program, because their public sector income was exempt.  Further increasing the eventual tax increases on or benefit cuts for future generations, to “save Social Security!” yet again.

https://www.marketwatch.com/story/eliminating-social-security-provisions-that-reduce-benefits-for-some-state-and-local-workers-is-not-the-way-to-help-retirees-2021-01-04

4) A full state tax exemption for retirement income in Michigan, a state where the richly paid and pensioned autoworkers or prior generations were followed, under union contracts, by later-hired generations of temps earning $15 per hour, so those pensions could be paid.

https://www.freep.com/story/news/local/michigan/2020/02/06/retirees-push-whitmer-repeal-pension-tax-state-budget/4665388002/

(Big tax cuts for the retired generations that bankrupted Connecticut have already passed in that state).

5) More pension increases for those working for the City of Chicago — and living outside it.  Passed by big margins, over the objections of that city’s Mayor.

https://chicago.suntimes.com/city-hall/2021/1/11/22225434/firefighter-pensions-increase-illinois-senate-bill-passes-chicago-mayor-objects

We can expect no better from the New York State legislature, given what they have already done, over and over.

6) Federal money for a 20 percent pay increase for teachers — and more teachers, because they are “understaffed” at just 10 students per instructional worker nationwide, 7.9 in NYC, 6.5 in rural areas of NY state.

https://www.wkms.org/post/what-biden-presidency-could-mean-education#stream/0

So they can have cash pay parity with workers who don’t get summers off, don’t get to retire in their 50s, and can be fired in red states – and get even more compared with other workers in New York.  And get more out of classroom assignments, leading to an additional “teacher shortage” and demands for still more staffing, to increase union dues revenues.

I suppose some of this could be done by making the additional payments of $3,200 per family member per 12 months permanent for public employees and the retired, after benefits have been cut off for the unemployed, the former self-employed, and small businesses.

All with borrowed money.  And then, when a federal financial crisis hits, these interests will face none of the sacrifices.  Again.   In part, because they keep digging the hole deeper until Generation Greed is dead and gone of fully “grandfathered” into whatever it promised itself.

The new conceit is that the federal government can borrow an unlimited amount of money, and no one will ever be made worse off ever in any way to pay it back.  Well, what are the current consequences, for those born starting in 1958 and in particular starting in 1980, of all the past future-selling deals that benefitted those born between 1930 and 1957 or so?  Does no one see what has already happened, at the federal, state and local level?  That is how past administrations, past congresses and state legislatures, past business practices, and an entire generation of leadership should be judged.

And while a different political party is in charge, the same generations are still in charge, and the extent to which things become even worse for ordinary people not in on the deals, in later-born generations, five and ten and twenty years ago is how the new administration should be judged.

I didn’t hear Joe Biden acknowledge, in his inauguration speech, that on average later-born generations of Americans have been made worse and worse off by self serving deals, in business and in government at the federal, state and local levels.  I didn’t hear him say that later-born generations have been asked to make most of the sacrifices to protect those older from COVID-19, and their needs have to come first when the pandemic is over.  If he doesn’t tell that truth about past administrations, then what can we expect from his administration?

There was, and recently has been, talk about race, and the need for “people of color” to become better off compared with White people.   Or, more realistically, for White people to become worse off relative to people of color.  The latter, however, may have already happened.

After the 1980 Census, and the 1990 Census, the NYC Department of City Planning produced a Labor Force Report with the newly available statistics.  I worked there at the time, though not in the unit that produced the reports.  They included a table of average annual pay — by race, educational attainment, and industry sector.  Curious, and having some time on my hands, I restructured the tables and found something amazing.

Among New York City residents, the average White high school dropout earned more than the average Black, Hispanic or Asian high school graduate.  And the average White high school graduate earned more than the average Black, Hispanic or Asian with some college or an associates’ degree.  And the average White with some college or an associates’ degree earned more than the average Black, Hispanic or Asian with a college degree.  And the average White with a college degree earned more than the average Black, Hispanic or Asian with a graduate or professional degree. (Whites with graduate or professional degree earned more still).  On average, therefore, New York City’s Black, Hispanic and Asian workers would have been better off changing their skin color to White than furthering their education.  That was true both in 1980 and in 1990.

Looking at the data by industry sector, I found no such racial differences in the low-paid Retail Trade sector, which at the time also included eating and drinking places, and a few additional things other than stores, that are now in other sectors.  And no such racial differences in the high–paid Finance, Insurance and Real Estate sector. These are free market sectors, where everyone is getting paid what the market will bear, based on their educational attainment. 

Instead, the big racial differences were driven by the Government sector, and other sectors where political power, and union contracts, determine who gets what.  Including, at the time, Transportation, Utilities, Construction, Wholesale Trade.  I referred to these as the “white welfare” sectors.   Sectors where some people got a deal to be paid more than other people with similar educational backgrounds.  And that’s just among those who lived in NYC. We know the best-paid members of the political/union class who worked in New York City lived in the suburbs before retiring early to Florida.  Even among those who were theoretically required to live in the city.

http://www.nypress.com/news/ohara-vs-hynes-KYNP1020050413304139995

The racial solution, back in the day, was “affirmative action,” allowing additional Blacks, Latinos and Asians to get more of those above-market-rate deals, leaving Whites with fewer.  As of 1990 it had not made much of a dent among residents of NYC, the data showed.

Needless to say the Department of City Planning, ever concerned to avoid controversy, never let that re-tabulation get out of the building.  I wonder what a similar tabulation would have shown for the United States, and what a new tabulation of Public Use Microdata Sample data from the American Community Survey would show today, nationally and locally?  Since I don’t have such a PUMS file, a statistical package to run it on, and recent (the past 38 years) experience using such statistical packages, I’ll have to speculate.

Back then, when I was in college and graduate school, I read a great deal about the consequences of the “deindustrialization” recession of the early 1980s from “liberal” economists such as Robert Reich and Barry Bluestone.  One of them (I think it was Reich in the 1983 book The Next American Frontier) noted that workers in some industries, such as auto manufacturing, were paid more than those in others, such a fast food, because of the higher level of productivity, and profit, in the industry.  The higher productivity, he said, was a function of the job, not the worker, and there was no reason that someone should be paid less to assemble hamburgers than to assemble automobiles, if the level of knowledge and skill required was the same.

Over the next few decades some sort of equalization did in fact happen, but not in the way Reich would have preferred.  There was no reason, businesses decided, for someone to be paid more to assemble automobiles than someone else was to assemble hamburgers, if the level of knowledge and skill required was the same.   In fact, only the hamburger assembler should still have a job, because the automobile assembly could be outsourced to a low-wage country, or automated by robots.

I’m not sure about New York, where the political/union class still decides who is and is not in on the deals that the serfs have to pay extra for, but outside of New York I suspect that many of those “white welfare” enclaves have disappeared, and almost all pay is at (falling) market rates.  Meaning businesses have to hire who they can hire at those lower wages and benefits, and later-born generations of Whites are paid no more than similarly educated Blacks, Hispanics and Asians.

Consider this report:

It finds that in 2016, the sixth year of economic recovery, young adults were paid less, on average, than prior generation of young adults had been in 1975, the worst recession year of that decade – despite higher average educational attainment, and a higher share in the labor force.  Later-born generations are also more likely to be Black, Hispanic or Asian.

Perhaps the most cynical interpretation of all the generational inequities I have chronicled over the years is that people like Pat Buchanan looked into the demographic future and decided its “not our country anymore,” and decided to cash that future in.  With higher debts, less infrastructure investment, and the collapse of institutions.  But where is the proof that anyone in power has cared about White people without college degrees since 1980, or those without graduate degrees, since 1990?   

And yet, politicians of both parties get elected – despite screwing the later-born of all races – by turning those of different races against one another, to distract attention.  The culture wars are intentionally engineered; otherwise people would be content to be themselves and not feel the need to determine the lives of anyone else.  The essence of the American way.

And to the extent that those “white welfare” deals remain, those who get them are the entitled members of the Democratic Party coalition.  So as money gets scarce I wouldn’t expect the Democrats to do much for later-born generations of people not in the deals, regardless of race. As has been the case with Trump’s promises, they’ll get the leftovers, if there are any, and then pay the bill.

If ever, at any time, five, ten or twenty years from now, anyone currently under the age of 62 is forced to pay more in taxes, or accept less in public service and/or old age benefits.  Then the additional money spent now to benefit those who had already taken more than their share, and put in less, will be part of the reason.  And the Democratic Party now is in charge of New York City, New York State, and the United States, with no one else to blame. 

Of course things will get better from the depths of this disaster, thanks to a gusher of money at the expense of later-generation’s future priorities and needs.  That isn’t the test. No one should tolerate, at any time in the future, the assertion that borrowing more and more was fine back then, because interest rates were low, but there will have to be “shared sacrifice” now, because things have changed.  Not five years from now, or ten years from now, or twenty years from now.  Not ever.  

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I wrote the first part of this last March (2020), as a comment on another blog, and as for the response at that time, by the people in charge then (with the exception of Trump mostly the people still in charge now), we already have our answer.