Have young people gotten a bad hand? - The Daily Reckoning
The Daily Reckoning by Bill Bonner
On This Day - 14 January 2013
Have young people gotten a bad hand? A  A  A

Baltimore, Maryland

Those poor young'uns. Run of bad luck, right?

Incomes going down. Jobs scarce. Growth at half the rate of the '50s and '60s...or less. No more go-go in the housing market. No stock market gains - in the aggregate...in at last 12 years. Households are poorer than they were 20 years ago...except, of course, households of the old and the rich.

All that college debt (more than $1 trillion). And the official national debt (a little over $16 trillion). And the unofficial, but very real national debt, which we've seen calibrated by Professor Lawrence Kotlikoff at $222 trillion and by Professor Niall Ferguson at $238 trillion.

Yes, it is too bad ...but some people just are unlucky. Black cats cross their paths. They break mirrors. Every day is Friday the 13th for them. Guess America's young people are like that.

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Yes, young people have gotten a bad hand. But wait. Is it just bad luck...or dirty dealing? Is this the luck of the draw...or the old false shuffle?

Where did all this student debt come from? Wasn't it a good thing that the feds were willing to take money from parents and lend it back to their children? Or was it just another zombie flim-flam?

First, the feds realized that people who go to school don't show up on the unemployment roles - until they get out. So they wanted to keep people in school as long as possible.

And it wasn't as if the young people got to keep the student loan money. They had to pass it on - to older people in the education industry. And then, after enduring years of brain-numbing schooling, they have to pay the money back...again, to older people.

And how are they going to do that? An article we mentioned recently focused on law school grads who couldn't get work. How about all the sociology majors? What about the history majors...the literature majors...the politics majors...and all the other university graduates who are completely unprepared for the real world of work? Not only are they unprepared...the longer they stay in school the less able they are to work in the real economy. Because the 'educated' they are - with the ideas, information and habits of the school world - the less well adapted they are to the real world.

What can they do? Go to work for the government!


People with a lot of schooling usually come to believe that schooling - rather than actually being able to do something - should determine what rank people hold in society. A person with a master's degree, for example, believes that he deserves a higher station in life than one with no degree at all.

Ultimately, this way of looking at things - favoring credentials over performance - tips the whole society towards zombiedom. Zombies (and the feds) never really produce anything of value. So, they can't get their status (to say nothing of their income) based on what they actually do and what other people think it is worth. They prefer substitutes. Degrees! Certificates! Licenses!

People in the government earn more and work less than people in the private enterprise economy. When this is brought to the attention of the government workers they reply: 'but we're better educated!'

We're beginning to explore the whole education scam...stay turned...

In the meantime, let's look at dirty dealing in health care. Our parents had no "health care" to speak of. When we were ill, they took us to the doctor and paid the bill. There were a lot of very poor people where we grew up. Our local doctor never turned any of them away. She (one of the first women doctors in the country) did what she could with what she had to work with.

Then, "health care" costs rose. Doctors began to get sued. Old people wanted more treatments and more pills. People became more aware of the many things that could go wrong. Discomforts that would have been stoically accepted as "part of growing old" needed attention. New tests and devices were put into service.

The cost of family health insurance is now about $15,000 a year. Overall, spending per person on "health" has reached over $7,000 annually.

Who does the spending? Old people. Who pays the costs?

Well, there's the dirty dealing. Instead of allowing people to spend as much of their own money as they want (which would put the burden of health care on those who needed or wanted it), the feds set up a system that basically takes money from younger people and redistributes it (in the form or almost unlimited consumption of 'health care') to older people.

Only 1 out of 10 dollars spent on health care comes directly out of the pocket of the person doing the spending. The other 9 come from others...usually younger others.

More to come...

Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.

The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.

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1 Responses to "Have young people gotten a bad hand?"


Jan 15, 2013

Exactly. The last sentence of healthcare expenditure as the author says comes from the younger ones particularly the middle class and lower. Fortunately a good percentage of the urban or metro middle class younger people can afford today as they are well paid but what about the tier two and tier three cities and towns and worse in the case of villages due to the rising healthcare. If the US as a developed economy itself faces the heat then proportionately the developing countries too faces the same today.

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