"The mind is a compact, multiply connected thought mass with internal connections of the most intimate kind. It grows continuously as new thought masses enter it, and this is the means by which it continues to develop."

Bernhard Riemann On Psychology and Metaphysics ca. 1860

Today's Elites


Saturday, September 17, 2011

Once Again, the Wrong Axioms


The War Against The Young: Warning From Italy and Japan
The war on the young is led “by cadres of elderly men, content to manage decline” and exacerbated by younger generations, who don’t seem to know what’s going on or understand the gravity of the financial situation that will hit them in the future. Luke Johnson, writing in the FT, describes the Italian and Japanese version of this trend.
Neither country has renewed itself because vested interests have failed to take the tough decisions. Their traditional cultures have not caught up with modern lifestyles. The male bureaucrats, policymakers and bankers who run all the important institutions must be forced to take radical steps to unleash the energy and imagination of their young, because in both countries they are very pessimistic. Many cannot obtain the job security and standards of living their parents took for granted. Traditional employees enjoy cast-iron protections, so companies are reluctant to create such positions.  So, only temporary or part-time work is available for most newcomers to the workplace.  Consequently, young Japanese and Italians pursue increasingly cautious lifestyles.  Nearly 80 per cent of unmarried Japanese between the ages of 18 and 35 live with their parents.  The ratio is nearly as high in Italy.Such unadventurous living means people do not grow up, and do not take risks – such as having children or starting a business. Meanwhile, their parents bask in comfortable retirement, busy consuming their considerable savings.Both nations are burdened by weak leadership, over-regulation, feeble productivity growth and a lack of economic dynamism – despite plenty of natural ingenuity and ambition. It appears that the vitality of Italy and Japan is being sucked out of their cultures by deteriorating demographics, high taxes, the burden of caring for elderly relatives and a youthful cohort with a diminished sense of self-confidence or optimism.The war on the young is most intense in countries (and, in the US, industries and states) which have the blue social model deeply embedded in their social institutions. It is an interesting struggle: these days, the young face serious trouble finding employment and will be saddled with debts run up by their elders as they grow up.
The older generations benefited from a kind of escalator system in life.  You step on the escalator after finishing your education and it almost automatically carries you upward in life, with higher pay and higher status until, at retirement, you step off and enjoy a good, level standard of living for the rest of your days.
One of the younger generations’ biggest problems is that many of those escalators don’t work anymore.  In Italy and Japan, companies are reluctant to hire young people on what American universities call “tenure track”; unsure about their future needs and resources they don’t want high cost employees that can’t be fired.  The older workers are too powerful to dislodge — just as in American universities the tenured professors are too powerful to give up tenure.  So younger workers increasingly are hired if at all on temporary contracts, with lower benefits and fewer prospects for promotion.
To succeed today, many young people need to recognize that no job will be waiting for them when they finish studying.  They are going to have to create their own opportunities.  It is a good time for creative entrepreneurs.
The young will not find it easy to strike off on their own, especially as fewer opportunities makes them more risk-averse.  But the examples of Italy and Japan suggest that many young people today face a choice: collective depression about their sorry state of affairs or somehow spurring elder generations to seize and nurture the potential embodied by passionate and hard-working youths everywhere.
Italy and Japan have particularly bad cases of the blues; with relatively small numbers of young people and large ones of older people, the old are not only cunning and entrenched in positions of power: they can still beat the kids in elections.  Politicians reinforce generational privilege rather than acting on the knowledge that, in the end, an economy that doesn’t work for the young is an economy doomed to decline.
What many countries need, and I include the United States, is a real youth movement composed both of younger people and of future oriented oldsters that looks at every political and social question from the standpoint of how does it affect the interests of youth.  This isn’t about convening death panels and cat food commissions for grandma, but it’s about making sure that our institutions and our policies are opening opportunities to the young rather than closing them off.

Why did the author think he must add the bit about cat food commission and death panels? Because he is assuming a zero sum game where there is just so much goodies to be parceled out. The whole article reeks of that type of cultural pessimism. The fact is we have a world  that dearly needs to invest in the real physical economy in order to sustain future generations. Why isn't this happening? Because we kowtow to the lunacy of bailing out the too big to fail financiers' gambling debts. We have lost our collective marbles and sorely need to snap out of it. No one needs to be sacrificed on the altar of Mammon. Not the elderly nor the young. That altar needs to be burned down to the ground. Right now there is a bill in Congress to reinstate Glass-Steagall that would bring back the separation of these financial racketeers from the traditional functions of banking. This is only a preliminary step to extending credit for the type of long term investments that can end the very wrong idea of lifeboat economics.

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