You Might Have to Take Out Grandma

Just today, I realized something and its best summed up by a quote I heard from a co-worker, "I love humanity...but then I met people." As hilarious as it is to think about it, it really makes sense. Every person is different by nature and for the most part, there are going to be a ton of things we disagree about. Democrat or Republican? Family Guy or South Park? Pat's or Geno's? Higher taxes or lower taxes? The list goes on and on but there are still plenty of things that also make us similar as well. We all have feelings, we all (more or less) don't like being treated like garbage...blah blah blah...we are all human beings in the end. However sometimes I wonder if people have forgotten that fact. Between Madoff, Enron and corruption in the government and clergy, all you have to do is just read the news and you'll find something that makes you wonder, what the hell is happening? Here's my statement on that: The younger (and generally poorer) generation is suffering due to the decisions of older (and generally richer) generation.

First, let me make a vast gross generalization that quite frankly I'm willing to stand behind. The past two generations (in aggregate, not any particular person) really made a mess of things. They pushed financial deregulation to an excessive degree, allowed big businesses to block the passage of universal health care and borrowed copious amounts of funds only to leave us with the bill. The results? A financial crisis that rivaled the Great Depression, health care costs inflating at an almost unfathomable rate and an excessive debt burden that, barring ridiculous long-term economic growth, we will have to pay back in kind. Here are my personal views in full disclosure on this stuff:

1. There's no such thing as too much or too little regulation. There is good and bad regulation. A lack of good regulation (allowing credit default swaps) or an excess of bad regulation (Regulation Q back during the Great Depression) cause financial crises. If you think bankers are scumbags, I personally agree with you. But to think they are any more scummy than any other profession with inherent conflicts of interest is not fair. People will react to incentive structures whether we like it or not. Yes, we can create laws to keep people in check, but we also need to enforce those laws (I'm looking at you SEC, OTS, Office of the Comptroller, etc.)
2. I like the idea of Universal Health care for three reasons. First, it removes a very preventative barrier to people starting their own businesses therefore creating more companies and more jobs. For all of you who can't find a job and don't want universal health care, you have no right to complain about being unemployed. You are preventing a very real program that would allow more start-up companies, one of the foundations of this country and the primary driver of economic growth. Second, universal health care is an eventuality whether we like it or not. It is cheaper when everyone pools together in insurance, and so long as the population in this country grows, it will becoming a better option in the future. We might as well get it started now. Third, insurance companies, when allowed to work in a market system, have a very real misalignment in incentives. When you pay upfront for a future service in a specified event that is contingent on the company you paid agreeing it should pay you for said future event, it is in the best interest of the company to say that you don't qualify for payment. As a side note, I'm totally fine with medical expenditures being tax-exempt if that is what you feel is a better system. However, for all the people who are roadblocking real health care reform (and supporting those who also block health care reform), don't complain about your high bills because you are asking for it.
3. Our country has a debt addiction that stems from a combination of our desire to not accept a lower standard of living (or living within our reasonable means) and the political game of no one wanting to raise taxes & cut spending. I think Fareed Zakaria spoke to this perfectly and here is his view on the matter from his show GPS:

Everyone agrees Washington is a mess. In a poll released last week, two-thirds of Americans were angry at the way Washington works, and there's plenty of blame to go around. Washington is blamed for partisanship, dysfunction, paralysis, problems are never honestly addressed, we kick the can down the road, et cetera, et cetera. You've heard it all.

But, in one sense, Washington is delivering to the American people exactly what they seem to want. In poll after poll, we find that the public is generally opposed to any new taxes, but we also discover that the public will immediately punish anyone who proposes spending cuts in any middle class program which are the ones where the money is in the federal budget.

Now, there is only one way to square this circle short of magic, and that is to borrow money, and that is what we have done for decades now at the local, state and federal level. At the root of this problem, writes Jacob Weisberg, the editor of "Slate" magazine, is our national ambivalence towards government. We dislike government in the abstract, but we love government in the particular.

Strong majorities don't want any more stimulus spending, but 80 percent of the public wants unemployment benefits extended, and more money put into roads and bridges. Another term for that, as Weisberg notes, is stimulus spending.

The lesson of the polls in the recent elections is that politicians will succeed if they pander to this public schizophrenia. So, the next time you accuse Washington of being irresponsible, save some of that blame for yourself and your friends.

If you are wondering why I listed all of these things, It's because they are important to our generation (mainly 21 to 29 year old people) and the impact that they will have on us. Unfortunately our generation is tasked with not only figuring out solutions to all of these problems, but will have to also live with the fallout of not tackling these problems. Once again, in full disclosure, there is a real chance that all of these problems will be fixed without direct intervention. However, I'm not willing to bet that the past two generations will put us on the path to growth. This gets to the basis of the first part of my statement. The younger generations in this country have far more problems to worry about than the generations before us. Between increased competition from aboard, a dismal education system compared to other developed countries and a rapidly polarizing political system among other things, it seems that we were given a hand of 2, 9 off suit compared to the older generations who seemed to have a pair of aces when they hit their 20's.

Speaking of which, let me make some comments about the older generation. First, let me define them precisely. I would argue the generations that were capable of being politically active (influencing policy) from the 1970 to 2000, are the main culprits. I will leave out WWII vets and Korean vets as many of them were actually past their most politically active moments by the 1970's. Second, before I criticize them, let me applaud them for some of their achievements. Many important civil rights movements that paved the way for social change were started by these generations and many people in the country are better off for it.

Now my criticism. How about helping in the formation of some policy that will lay the groundwork for success for us and future generations economically? Congrats on promoting social equality but it won't mean much in the long run if their isn't economic growth because polarizing socioeconomic classes can be just as devastating as racial, gender or social status divides. The older generation's reckless abandon in terms of policies that promote long-term growth has screwed the younger generations (you know, the older generation's children). We are now shifting from gender, racial and social divides to divides based on wealth (and indirectly age). Personally, I feel that this is even more devastating in the long term than gender or racial divides as usually the hierarchy of society perfectly mirrors the wealth distribution in a company. Do you know of CEO's that makes less and has less political sway than an entry-level worker? By having the new divides be based on wealth and indirectly age to a certain degree, it becomes clear to me that the younger generation has to compete with the older generation who currently have a better hand.

Unfortunately, I don't really see any solution in the near future with the way the system currently works. The point of capitalism to a certain degree is that the capitalists can control the direction of a country. When people ask, "What the hell is going on?" my general answer is "The people in power are abusing it and a lot of the problems you see are symptoms of that." Too bad that the people in power are also the people who have the biggest capital stores and too bad that those people tend to be the older generation whose polices got us here in the first place.