Thursday, July 14, 2011

The financial crisis and generational warfare (2 Dec 2008)

Many someone should ask financial analyst James Quinn what he really thinks of Baby Boomers:
Of course, not all Baby Boomers are shallow, greedy, and corrupt. Mostly Boomers with power and wealth fall into this category. There were 76 million Baby Boomers born between 1946 and 1963. They now make up 28% of the U.S. population. Their impact on America is undeniable. The defining events of their generation have been the Kennedy assassination, Vietnam, Kent State, Woodstock, the 1st man on the moon, and now the collapse of our Ponzi scheme financial system. They rebelled against their parents, protested the Vietnam War, and settled down in 2,300 square foot cookie cutter McMansions with perfectly manicured lawns, in mall infested suburbia. They have raised overscheduled spoiled children, moved up the corporate ladder by pushing paper rather than making things, lived above their means in order to keep up with their neighbors, bought whatever they wanted using debt, and never worried about the future. Over optimism, unrealistic assumptions, selfishness and conspicuous consumption have been their defining characteristics.

It's hard to disagree with any of the analysis, though the tone is occasionally scarily combative. I wonder whether as the recession worsens or drags on, if such sentiment will spread from the disgruntled-analyst sector to the younger generations at large, whether it will shape policy toward the social safety net for the elderly: Will we say, the Boomers blew their chance and lived beyond their means; if they don't get the Social Security benefits they expected, then tough shit. It's natural to want to hold irresponsible borrowers responsible for our overleveraged economy, especially since, as Rebecca Wilder points out here, household debt has yet to drop: "lax lending standards on credit cards allowed consumers to become overly indebted to credit card creditors. Interestingly enough, revolving consumer credit was still 43% of overall credit on November 12, 2008. When will it fall?"

But in many ways, the forces that have driven us into debt are systemic, institutional -- the interlocking forces of assets replacing savings for many families, of status hinging on consumption levels, of the service economy supplanting heavier industry, of more aggressive omnipresent marketing, etc. But I wonder whether there is cyclical generational component to attitudes toward consumerism. As part of the generational warfare, the practices of frugality have been co-opted by hipsterism as a kind of ironic, oppositional stance to the boomer generation. In the 1960s, boomers allegedly rejected their parents' prudent austerity for hedonism, reconceived as the essence of freedom. Perhaps those of us born in the 1960s and 1970s will now war against that hedonism (which turned into financial imprudence) out of necessity, but we will feel all righteous about it as if it were our generation-defining choice.

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