Are Young People in Their 20's Too Stupid to Realize They're Being Ripped Off?
Why aren't young people in their 20's and early 30's more furious? Why aren't they marching in the streets for Paul Ryan's budget?
They're nothing less than victims of a vast, Madoff-like Ponzi scheme. From John Goodman's Health Policy blog (with a major hat tip to James Pethokoukis, who for my money is the best financial reporter in America):
Think about everything you will pay to support Medicare: the payroll taxes while you are working, the premiums during retirement, and your share of the income taxes that subsidize the system. Then compare that to the benefits of Medicare insurance, say, from age 65 until the day you die.
Are you likely to come out ahead? That depends in part on how old you are. If you are a typical 85-year-old, for example, you can expect about $55,000 of insurance benefits over and above everything you have been paying into the system. If you’re a typical 25-year-old, however, you will pay an extra $111,000 into the system, over and above any benefits you can expect to receive.
If you're young, you're being ripped off:
Why does Medicare favor the old and discriminate against the young? Because like Social Security, Medicare finances work like a chain letter. Although workers have been repeatedly told that their payroll taxes are being securely held in trust funds, they are actually being spent—the very minute, the very hour, the very day they arrive in the Treasury’s bank account.
No money has been saved. No investments have been made. No cash has been stashed away in bank vaults. Today’s payroll tax payments are being spent to pay medical bills for today’s retirees. And if any surplus materializes, it’s spent on other government programs. As a result, when today’s workers reach the eligibility age of 65, they will be able to get benefits only if future taxpayers pay (higher) taxes to support them.
Just as Bernie Madoff was able to offer early investors above-market returns, early retirees got a bonanza from Social Security and Medicare. That’s the way chain-letter finance works. But in the long run, there’s no free lunch. That’s why things look so dismal for young people entering the labor market today.
And yet: no protests in the streets. No marches. No student sit-ins. No youth agitation at all, really, except for a couple of College Republicans in blue blazers. What? Are they stupid? After all of that college tuition? Are young people in their 20's just dumb?
At a certain point, as the Bernie Madoff saga unfolded, a lot of us wondered if there wasn't some blame to be shared with the folks who believed his nonsense, who credulously cashed the checks in good years and bad, who never asked how he managed such stellar and consistent returns.
As a man in his 40's who is currently participating in the great swindle, I've got to say to the kids in their 20's: thanks for making it so easy.
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Jun '10
Re: Are Young People in Their 20's Too Stupid to Realize They're Being Ripped Off?
I told my nephew after he passed the New York Bar exam two years ago, congratulations, make a lot of money, 'cause I'm gonna need it. I could hear by his pause that he didn't know what I meant. Smart kid, just not smart enough, yet.
Edited on Jun 27, 2011 at 3:57pmJun '11
Re: Are Young People in Their 20's Too Stupid to Realize They're Being Ripped Off?
Yes. (See College Democrats' "Why I'm a Democrat")
Jun '11
Re: Are Young People in Their 20's Too Stupid to Realize They're Being Ripped Off?
Long time reader, first time poster.
As a member of the generation "too stupid" to realize they are being ripped off, I feel obligated to offer a defense of my peers, and I believe that generational analysis of the sort crafted by William Strauss and Neil Howe in their book, The Fourth Turning, can shed some light on the subject. People in their 20s and 30s today are, for the most part, members of the "Millennial" generation, which under generational theory falls into the "Hero" archetype, much like the GI generation that battled Hitler, Mussolini, and Tojo, landed men on the Moon, and produced public figures like John Kennedy and Ronald Reagan. (In between the two Hero generations we have had the Artist Silents, Prophet Boomers and Nomad Gen X’ers, if anyone is keeping track.)
(cont.)
Jun '11
Re: Are Young People in Their 20's Too Stupid to Realize They're Being Ripped Off?
The Hero archetype is characterized by pragmatic, material visions and a strong faith in the power of institutions, the latter of which explains why much of my generation does not protest en masse the skyrocketing debt and mind-bogglingly dysfunctional government to which we are shackled. Incidentally, it is for this very same reason that the Millennials did not turn out to protest the Bush administration for the wars in Iraq and Afghanistan, no matter how much their liberal professors may have wanted them to. It isn’t that this generation is more or less intelligent than any other, but rather that the mood in which they were raised made them very different from, say, the Boomer generation, who in their youth found any number of things sufficiently abhorrent to warrant a gathering in the streets.
(cont.)
Jun '11
Re: Are Young People in Their 20's Too Stupid to Realize They're Being Ripped Off?
So yes, the current social-political-economic paradigm is horribly dysfunctional and unsustainable. Yes, the Millennials have not taken to the streets in protest. And no, this should not invite the scorn of older generations currently doing their best to screw their collective children out of a future. Millennials are not some public-sector union concerned only with their seat on the gravy train. Don’t expect them to act like one. It is insulting.
Oct '10
Re: Are Young People in Their 20's Too Stupid to Realize They're Being Ripped Off?
Rob, I think your experience teaching college students (if I remember correctly) ought to be very instructive. If you're not a liberal when you're 20...
Dec '10
Re: Are Young People in Their 20's Too Stupid to Realize They're Being Ripped Off?
Mozart: Well said, sir.
I'm just into my thirties, so I'm not ever sure if I'm supposed to be in this group, but my little sister is, and I have friends who are.
They are not all stupid. The ones I know who are not stupid aren't out agitating, because they're busy squirreling away everything they can to try and weather the coming storm.
One of my good friends (he's like a little brother) is 25 right now, and he honestly is way ahead of me in the life chain. He's married, owns his house, and is quickly moving up the ranks at the fiber-optic communications company he works at. He never went to college at all.
I asked him one time how he managed to not be a colossal screw up, given his dysfunctional home life and lack of formal education, and his reply made me laugh out loud.
He said, "See, not only can I learn from MY mistakes, I can learn from everyone else's too."
He's been working 95 hour weeks, basically non-stop for the last three years, because he's willing to do the work, and because he knows he needs to make bag while the makin's good.
My little sister is of a similar mind, but is significantly behind him in actual results because she spent five years in Architecture school. At least she's finally gotten a job in her field.
Edited on Jun 27, 2011 at 5:26pmJul '10
Re: Are Young People in Their 20's Too Stupid to Realize They're Being Ripped Off?
Granted, your list doesn't seem so appealing at first blush.
When compared to debt that could have, but hasn't, been paid off, an interesting urban neighborhood without yards, houses with character that fall apart with every breeze, neighbors without jobs, and riding the bus daily, that boring suburban/exurban existence is a clear winner for those who want to have families.
It's just so easy for relatively bright folks to get ahead if they prioritize finances early.
Really, it's foolish to intentionally under-earn when your other responsibilities are minuscule. That's exactly when you have the time to build something without major conflicts.
Why validate impracticality?
Aug '10
Re: Are Young People in Their 20's Too Stupid to Realize They're Being Ripped Off?
Large banks betting they are "too big to fail", and bake future bailouts into their financial projections. Young people in their 20's are betting their generation is too big to be allowed to fail, and are correctly including a massive future social welfare bailout into their expectations. This allows them the luxury of caring about the non-existential political issues, like gay marriage or cramming uninsured young people into insurance pools.
To be fair, betting on a generational bailout is a rational expectation, given the federal government's history. After all, that was what got us the Social Security program in the first place.
Re: Are Young People in Their 20's Too Stupid to Realize They're Being Ripped Off?
Well, one strategy is to wait for all of these newly married gay couples to have their IVF babies and move to the suburbs and then join the Tea Party agitators for lower taxes and smaller government and entitlement reform. But we may not be able to wait that long.
Re: Are Young People in Their 20's Too Stupid to Realize They're Being Ripped Off?
Beasley
Rob Long: Why aren't young people in their 20's and early 30's more furious? Why aren't they marching in the streets for Paul Ryan's budget?
Are they stupid? After all of that college tuition? Are young people in their 20's just dumb? ·
We are not genuinely stupid, to over-generalize. We are a generation who possess rhetorical skills and the basic raw materials of intelligence. We have simply never been trained in critical thought. We have never been asked a question that couldn't be answered through multiple choice, or subjective personal reflection upon a subject.
My generation thinks that man's ability to create painless solutions is both genuine and endless. Thank you mothers & fathers for childhoods devoid of discomfort, and politicians who propagate this myth. Having rejected options A, B, and C they are simply waiting for an acceptable alternative to be dreamed up by a technocrat at some point in the future. · Jun 27 at 1:52pm
Edited on Jun 27 at 01:53 pm
I think you've analyzed it perfectly.
Re: Are Young People in Their 20's Too Stupid to Realize They're Being Ripped Off?
Mozart: Long time reader, first time poster.
As a member of the generation "too stupid" to realize they are being ripped off, I feel obligated to offer a defense of my peers, and I believe that generational analysis of the sort crafted by William Strauss and Neil Howe in their book, The Fourth Turning, can shed some light on the subject. People in their 20s and 30s today are, for the most part, members of the "Millennial" generation, which under generational theory falls into the "Hero" archetype, much like the GI generation that battled Hitler, Mussolini, and Tojo, landed men on the Moon, and produced public figures like John Kennedy and Ronald Reagan. (In between the two Hero generations we have had the Artist Silents, Prophet Boomers and Nomad Gen X’ers, if anyone is keeping track.)
(cont.) · Jun 27 at 5:10pm
Welcome, Mozart! Glad you posted. And I agree with you -- The Fourth Turning is a terrific book.
Oct '10
Re: Are Young People in Their 20's Too Stupid to Realize They're Being Ripped Off?
Whats this about Oldsters ? Just cut me a check for the taxes one paid for a lifetime of labors paid into the sytem, fat chance... Simple, Yes ?
Now there is a solution.... Run those numbers..Just buy us out and scrap the rest...
See how that works out...
Edited on Jun 27, 2011 at 8:04pmMay '10
Re: Are Young People in Their 20's Too Stupid to Realize They're Being Ripped Off?
Rob, Re: Dumb people Half the population is below the median IQ (by definition). In a fair fight they are bound to lose. This represents a real dilemma for libertarian-leaning folks. Education is not the answer, because good education will just make the smart people smarter.
Jun '11
Re: Are Young People in Their 20's Too Stupid to Realize They're Being Ripped Off?
Rob Long
Welcome, Mozart! Glad you posted. And I agree with you -- The Fourth Turning is a terrific book. · Jun 27 at 7:55pm
Thanks for the warm welcome Rob! Few places on Earth I'd rather be than a Ricochet comment thread.
Apr '11
Re: Are Young People in Their 20's Too Stupid to Realize They're Being Ripped Off?
I read that article this morning too.
Speaking for my generation I would like to say that we are not worried, because nothing really bad has happened to us yet. We have more things to keep us happy and occupied then any other generation in the history of the world, and much of it we can get for free from the internet. I myself, and friends of mine, have whole discographies, movies, comics, books, pornography all stolen from the ether.
Everything can begotten easily and relatively cheaply for the price of a 6mps line and maybe one or two subscriptions, and a computer. What does that cost? I would calculate it as probably coming to well under 2,000 dollars a year, or about 10% (probably less) of our income.
Many people I know have no interests in having kids, or a family. If you're living for yourself standards are lower. I mean a prepetual collage life I think is probably the aspiration of many people of my generation, and if your not paying for classes it's not that expensive.
"I don't want to grow up! I'm a Toys R Us Kid!"
Oct '10
Re: Are Young People in Their 20's Too Stupid to Realize They're Being Ripped Off?
Part of the problem is just taking taxation for granted, thanks to withholding. A Republican government could probably do the country a favor by requiring people to pay their taxes electronically each month. How often have you seen people try to save a quarter by sitting in front of a parking meter, looking anxiously for a meter attendant, while their friends go to a coffee shop to spend $4 on a latte and $1 on a tip?
Or give people a moratorium on paying taxes for the first year or two of employment. Youngsters, as Valiuth points out, have few expenses, so they don't care as much about losing money through taxes.
Nov '10
Re: Are Young People in Their 20's Too Stupid to Realize They're Being Ripped Off?
You've given me something to think about. While I won't have a math major or minor (and I don't even know what an endorsement means in your context), my last math class was whatever comes after differential equations (my school called it "advanced engineering math" or somesuch), so at least I'm better off there I guess.
Midget Faded Rattlesnake
For example, by temperament I'm fairly frugal, but through sheer inexperience I've sometimes wasted what I consider to be embarrassingly large amounts of money in retrospect (not that a person of less frugal temperament would be so embarrassed).
The only overspending I'm embarrassed about is how much I've spent on fast food - and that only because it shows. Then again, I'm not so frugal as some (but more than most, apparently).
Oct '10
Re: Are Young People in Their 20's Too Stupid to Realize They're Being Ripped Off?
I think this varies quite a bit, by region/culture.
Look, we've all grown up seeing the contradictions of the 60s/70s political/cultural consensus. That makes us pragmatic. It also--yes--does encourage critical thinking skills.
However, the political process isn't going to be influenced by a bunch of young people. There aren't enough of us. Agitating in the streets would be using the same contradictions that got us in the mess. The self-righteous indignation of mobs do not produce good social or political outcomes.