July 19, 2021
Kids! You can talk and talk till your face is blue!
Kids! But they still just do what they want to do!
Why can’t they be like we were,
Perfect in every way?
What’s the matter with kids today?
– “Kids” from the 1960 Broadway musical Bye Bye Birdie
Now by “kids,” I don’t mean very little kids… Every toddler has a firm understanding of property rights and private enterprise. Indeed, one of the first words spoken by toddlers is usually “Mine!”
The kids I’m referring to are defined by demographical experts as “Millennials,” born between the late 1980s and the mid-1990s, and “Generation Z,” born between the late 1990s and the early 2010s. Or – to give a less academic description of this age cohort – “Everybody who doesn’t know how to drive a stick shift.”
Of course, it’s a big fat over-generalization to say these kids don’t understand free markets… Some of the more open-eyed and entrepreneurial do. Just as some savvy youngsters can take Dad’s restored Corvette on a date and not come home needing a transmission rebuild and a clutch replacement.
But what’s the use of a puny little over-generalization when it comes to writing an editorial? An opinion that can’t stand exaggeration can’t stand the smell test. Blowing truth out of proportion can be entertaining… Blowing falsehood out of proportion can be January 6, 2021.
I’m not sure if you remember books, America, but it’s what people used to sink their faces into to avoid dealing with family and strangers. Our editor-in-chief, P.J. O’Rourke, has written a few in his time, and he’s re-releasing his bestselling Eat the Rich, complete with a new chapter to take on the absurdity of 2021 economics. And as an American Consequences subscriber, you can have access to the newly released edition for free! Claim Your Copy Now.
Anyway, you know the kids I mean. (Alexandria Ocasio-Cortez, born 1989.) They think wealth comes from the top down… that wealth is distributed from above by benevolent government, by grudging multinational corporations, by random billionaires paying (not enough!) taxes, by philanthropic largesse, or – if the kids are lucky – by their parents.
They think everyone has more or less the same claim on this wealth… Descending as it does from the mysterious economic firmament, wealth should fall alike on the just and the unjust. Everyone ought to get drenched when it rains pennies from heaven.
The kids have no idea that wealth comes from the bottom up. Wealth is not distributed, wealth is made. And the process of making it is called work. Work consists in taking something of lower economic value (a shovel) and using it to create something of higher economic value (a ditch for the Keystone XL pipeline).
Except forget that example… The Keystone XL pipeline has been canceled – presumably by the same people who think that crude oil, like money, arrives magically from the sky.
But it’s still important to have the right to own a shovel and the right to go to work with that shovel in whatever way is most profitable to you. That’s the basis of a free market economy – whether the shovel you have happens to be an actual call-a-spade-a-spade shovel, a retail business, a restaurant, a skill, a specialty, or an accumulation of capital ready to be put to work.
Would you rather have an economy where we all own the shovel in common? This would mean a government Department of Shovels to oversee shovel allocation. The federal shovels would go first, I’m sure, to the “shovel-deprived” even if they live on the 10th floor of an apartment building in Manhattan with nothing to dig up but the parquet flooring in the front hall. That’s the basis of an unfree no-market economy.
The Millennials and Generation Z have grown up in strange times, times that have muddled free market lessons.
For people in their early 30s – the age at which you give up on the garage band, have the dermatologist patch the hole where your lip stud went, and start looking for regular income while dad turns your old bedroom at home into a man cave – economic life began about the same time as the 2008 economic crash. Both the George W. Bush and the Barack Obama administrations insisted that nothing but massive government intervention could rescue the economy. The only way to save the free market was to limit its freedoms.
To further confuse that free market “teachable moment,” economic growth (COVID aside) has been steady ever since the 2008 to 2009 investment banking collapse. This was the result – as all economic growth is – of work. But it’s hard not to be tempted into a “post hoc ergo propter hoc” fallacy and think, “Because economic growth happened after government intervention, government intervention caused economic growth.” This is like thinking, “Because I got pregnant after the office Christmas party, office Christmas parties are how babies are made.”
However, there’s just enough truth in that thought to further muddle free market understanding. The government has been having quite an office Christmas party, handing out the cheap champagne of artificially low interest rates. These do stimulate the economy – but in a way that’s probably going to produce a bastard of an economic situation in the future.
(A situation Millennials and members of Generation Z have no experience with. For someone born in 1989, that “stagflation” illegitimate brat of the 1970s is as distant in time as the Great Depression is to me.)
And permanent low interest rates teach youngsters the exact opposite of common sense: There’s no upside to saving and no downside to borrowing.
If you save, you gain no return from it… Your money isn’t working. It’s the shovel on the 10th floor of a Manhattan apartment building. And if you borrow… Well, borrowing is renting money. What if someone told you that you could live rent-free in a 10th floor apartment overlooking Central Park? Yes, someday the landlord is going to come and change the locks. But that’s a long-term problem. People aren’t always good at seeing long-term problems, especially if those people haven’t been alive for a long time.
Many other social and financial eggbeaters have stirred mixed-up thinking about markets…
The bull market has run for so long that it seems to be all bull… The market part has been left behind and forgotten. In the midst of a bull stampede, the marketplace’s careful research and thoughtful analysis are abandoned. The guiding force becomes luck.
To put it another way, investment has gone Vegas. It’s as if the mob came and took your money manager away and installed slot machines in his place. The payout has been pretty good – so far. But Bugsy Siegel didn’t open The Flamingo Hotel on the Strip in order to enrich you.
Money has become not only chancy, but notional. Money used to be a physical bankroll or a book of checks (and balances) that was added to soon after goods or services were rendered and was subtracted from, with careful counting, for goods or services received. You always knew how much you had – an amount known as “not enough.”
This former Goldman Sachs banker urges you to take these four vital steps right now to preserve your family’s wealth while you still can.
Now, money is a computer code embedded by incomprehensible means in a microchip or a password key. It goes away without so much as a wave of farewell and sometimes does so automatically. Where it comes from (if analysis of consumer spending and personal finance is anything to go by) is anyone’s guess.
Meanwhile, prices no longer seem to be determined by supply and demand. We’ve never had a greater supply of knowledge. Everything that humankind has ever discovered, learned, or thought is at our fingertips. In fact, we don’t even need the plural… One finger is enough to swipe on a smartphone.
So why have kids experienced a tremendous inflation in knowledge’s price? What’s with the cost of higher education? Why, given such an ample supply of tutorials, do colleges demand such exorbitant tuitions?
What are they doing at these colleges? Still writing all the textbooks out on parchment scrolls with goose quill pens? Having the caps and gowns made by bespoke tailors on Savile Row? Holding classes only at the Yellowstone Club in Big Sky, Montana (membership initiation fee $300,000), with students arriving by helicopter? Or did climate change cause the ivy at the Ivy Leagues to run wild and grow so fast that it smothered all the professors in the nation?
I can find no supply-demand equation that explains the expense of college, so I can’t blame recent college graduates who are carrying a Yellowstone Club membership worth of student debt for being skeptical about old-fashioned ideas concerning supply and demand.
At the same time that kids have experienced brutal inflation on campus, all sorts of other things that used to cost them dearly have become strangely, disturbingly, cheap. There once was a considerable cost in money, time, effort, and getting the car keys to a night of hanging out with friends, an evening of entertainment at the Cineplex or Drive-In, or an LP, cassette, or CD of the latest music. And a wooing meant a restaurant, a club, a dance, or at least a drive to a Lovers’ Lane. Now all these are as free as electrons in the ether. Surely the laws of economics have been canceled.
So has “The Job” – you know, that thing you used to get when you were young and keep until you retired. Not that there was anything so wonderful about it. You were Dagwood, colliding with the mailman as you rushed out late for work where you’d get yelled at by Mr. Dithers all day and look like a fool in your silly haircut, wearing a bow tie, and having only one big button in the middle of your shirtfront.
But there were advantages to the 9-to-5 at a single place of employment. You got to see the way the company worked, understand the way it made – or lost – money, and learn how business decisions are made.
The “Gig Economy” that replaced “The Job” is opaque… Mr. Dithers is a text message. What does the company make or sell – other than more highly-priced shares of its own stock? Where is the company even located? Cupertino? Mumbai? The Cloud? If you go to the water cooler, you’ll be drinking alone. When you’re up in the middle of the night making a Dagwood sandwich, it’s not because you’re off-duty. You’re never off-duty. Working in the gig economy can make it seem as if the free market is free, mainly, to do whatever it likes with you.
Or maybe it does come down to not being able to drive a stick shift. My first car, inherited from my grandmother, was a 1956 four-door Ford sedan in an unfortunate shade of salmon pink. A basic point in free market thinking is a sense of agency – you, and you alone, are responsible for getting and spending. You’re in charge. With a feeble six-cylinder engine, a balky “three on the tree,” no power steering, and no power brakes, my Ford showed me that I had to use my own strength and ability to get it to do what I wanted it to do (like not stalling when the light turned green).
Now, when I get in a new car, I am greeted with a chorus of beeps and bongs telling me to buckle up, close the rear hatch, fill the gas tank, not wander from my traffic lane, and so forth… plus a set of visual displays detailing every function of the car and instructing me on how to back up when I’m in reverse and mapping my destination when I’m in drive. The car is in charge of me.
And even though I purchased the car in the free market, I can’t help feeling that I’m the one who should have been bought for $40,000.
But the single greatest factor making it hard for kids to understand free markets is the disappearance of market freedom’s complete opposite.
Not long ago, nearly a third of the globe was run by communists, and in the Communist Bloc there were no free markets. Production and consumption operated wholly from the top down – kopecks from heaven, except it didn’t seem to rain very often.
I don’t think I really had any idea of the value of economic liberty until I visited the USSR in 1982. The Soviet passenger jet in which I flew had wooden duckboards on the floor of the aisle. Warm water was served by large, angry stewardesses. I traveled to Moscow from the near-empty airport that hadn’t been mopped since the Khrushchev era on a bus that hippies would have rejected as too decrepit to make it to Woodstock.
I got downtown at 9 p.m. on a Friday night and the city was… closed. No shops, restaurants, movie theaters, or any commercial activities were visible, not even billboards. There was no traffic. Streetlights were a hundred yards apart. In ranks of gloomy buildings, I could see an occasional window showing the kind of illumination you get from an appliance bulb.
In the morning, I wandered through a metropolis that seemed to have been built without the use of a spirit level or a plumb bob. People were dressed the way you dress to change the oil in your car. Not that they had cars… The few automobiles, with their styling 30 years postdated, burped smoke and broadcast rattles. I could have made a fortune – if fortunes were allowed to be made – standing on a street corner with a screwdriver and a wrench, adjusting carburetors and tightening bolts.
There was only one department store in Moscow – GUM (an abbreviation of the Russian for “Main Universal Store”). Here, you stood in a line to select an item… stood in another line to pay for the item… then stood in a third line to be told that the item wasn’t available.
I was almost crushed by a horde of women shoppers rushing to a particular counter because it had been announced that a shipment of Bulgarian gym shoes had arrived.
The lack of competitive and innovative market forces was evident in the most trivial ways. Tip a Soviet “Cosmos” brand cigarette downward and all the tobacco would spill out… Although, this didn’t matter because the way a box of Soviet wooden matches worked was you’d take a match out of the box, strike it against the side, and the match head would fall off. Then you put the matchstick back in the box because it was just as likely to light when you struck it as the rest of the matches in the matchbox.
I wish I could send today’s kids to Brezhnev’s Moscow. But it’s gone, replaced by Putin’s Moscow. This new city is, arguably, as bad or worse than the old one, but much flashier. In fact, Moscow is now so recognizably Vegas-like flashy that I’m not sure a kid could tell the difference, at a glance, between Russia’s evils and America’s errors and inequities.
Failing international time travel, my second choice would be time travel of the domestic kind. I’m not picking on kids today for being young and dumb… They’re no younger and dumber than kids definitionally are. The problem is the circumstances they’ve grown up in. This isn’t the first time that American circumstances have led people to hold immature and stupid economic ideas.
A Joke From the FDR Years
Moses said: “Pick up your tools, get on your asses and camels, and I will lead you to the Promised Land.”
Roosevelt said: “Put down your tools, sit on your asses, light a Camel, this is the Promised Land.”