Mish at Global Economic Analysis wrote recently of a tidal shift in economic outlook underpinning the recent shift into a deflationary cycle. In many ways, I wonder if boomers pulling a 180 on spending habits aren’t the decisive shift here.
Gen. X’ers were raised, after all, with boomers collectively (if not individually; the aggregate is not predictive or descriptive of individuals within that aggregate) telling us that we as a generation would never have the same standard of living or the same opportunities as they did. Whether it was consequence-free sex drugs and rock and roll, or steady paying jobs, or free public educations, or affordable houses with predictable asset inflation allowing a comfortable retirement, it was made clear to us at an early age that whatever deal was made with the boomers long ago, we were not to be cut in on it. And often it was suggested that it was somehow our fault for it, because we were spoiled or lazy or fatalistic or something.
What they did not collectively expect while saying this, however, is that they too would not necessarily enjoy those things in perpetuity, that they too could have all of this taken away in a flash. Increasingly, the past 30 years are looking more and more like one colossal bubble, backed by ever-increasing amounts of debt to mask the inconvenient fact that most non-plutocrats’ incomes did not rise much relative to inflation, even as productivity and assets like houses and the cost of living did. Prop 13 was a way for that generation and those older to lock in their assets while starving the rest of society, a Faustian bargain to preserve those interests. As it turned out, it did not work; you cannot sell out a large part of your society indefinitely without crashing the whole edifice, and thus the foundation of one’s own prosperity as well. We are all, ultimately, in this together, and the conservative Republican promise to the have-somes and the have-a-littles that you could successfully defend what’s yours by screwing the have-nots has now been revealed to be a cruel lie. In reality, we rise and fall as one people, and beggaring your neighbor eventually lowers your own property values and 401K, and results in bankrupt governments unable to fill potholes or provide the basic services that one relies upon.
Psychologically, then, X’ers who have had this all drilled into our heads, are rather better prepared for what comes next. To many, the depression that everyone else is suddenly waking up to, where nothing can be taken for granted, where debt is more likely than assets, where the system seems stacked against you, where the middle class dream of a stable job, an affordable education, and home ownership seems a cruel trick, was already a reality. To be fair, it was often more perceived than evident, or rather many of us never trusted the supposed good times that we were cut out of, but in the end what’s going down now strikes many of us as “well, it was only a matter of time.”
But to those boomers (and Americans generally) who thought they would make it through these hard times unscathed, the coming depression is going to be quite a shock. And I suspect that the sudden crash in consumption that has been the symptom of the deflationary cycle that we’re heading into will turn out to be, in the final analysis, heavily generationally inflected. When those who thought they would have enough realized that they might not, they pulled those edges in and fast.
What this means for generational conflicts over resources and policy in the coming Thermidorean Reaction is as of yet unclear,; they may well tear the Democratic party apart, or they may bring generations formerly at odds into a solidarity of shared misery. What happens next, in many ways, may end up deciding the political trajectory of the next several decades, in Yolo County, California and the nation.
originally at surf putah