November 30, 2015
I’m serious, here’s how he begins his column (titled “Generational warfare, anyone?”) this morning:
“An enduring puzzle of our politics is why there isn’t more generational conflict. By all rights, younger Americans should be resentful. Not only have they been tossed into the worst economy since the 1930s, but also there’s an informal consensus that the government, whatever else it does, should protect every cent of Social Security and Medicare benefits for the elderly. These priorities seem lopsided and unfair.”
Yeah, think about that one. We have seen an enormous upward redistribution over the last 35 years. Without this upward redistribution the wages of a typical worker would be more than 40 percent higher today. This money has gone to Wall Street types—you know the folks who sunk the economy and then got us to bail out their banks when the market would have sank them. The money has gone to CEOs who put in their friends as corporate directors. The friends then return the favor by paying the CEOs tens of millions of dollars a year.
The money has gone to drug companies who use their political power to get Congress to give them stronger and longer patent protection and folks like President Obama’s trade team to extend this protection around the world. It has gone to doctors and dentists who have used their political power to strengthen the protectionist barriers that ensure them ever higher pay. And it goes to folks like Samuelson’s employer, Jeff Bezos, who has pocketed around $4 billion as a result of the exemption of Amazon from the requirement to collect state sales taxes.
But Samuelson and his friends are disappointed and puzzled that they can’t get young people angry over their parents’ and grandparents’ $1,200 a month Social Security check. Life is tough.
Addendum:
In going over the harm that the wealthy and their employees have done to the young, I should also mention the lost output due to the collapse of the housing bubble and the inept macroeconomic policy that we have pursued because of the whining of the deficit hawks. The chart below shows the drop in actual and projected GDP (as of 2015) with the Congressional Budget Office’s projection of GDP in 2008, the last year before they recognized the damage from the housing bubble. It shows the Social Security Trustees projection of the cumulative shortfall in Social Security over its 75-year planning period.
Source: CBO, SSA, and author’s calculations.
The lost output from the crash and subsequent years of weak GDP growth is over $17 trillion. That comes to more than $50,000 for every person in the country. By comparison, the Social Security Trustees project a shortfall of less than $11 trillion.
It is also important to note an important distinction. While the $17 trillion in lost output due to the housing crash and bad macro economic policy is money thrown into the garbage, the overwhelming majority of the Social Security shortfall is money that our children and grandchildren will be paying to themselves. This amounts to the higher taxes that will be needed to cover the cost of their Social Security over a longer period of retirement, due to their longer life expectancies. It is hard to see what part of that story the baby boomers should feel guilty about.
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