

Dear 22 Year Old: Concerning your economic Future - g0atbutt
http://www.drurywriting.com/keith/20something.future.htm

======
jballanc
There is a word for this sort of viewpoint: Luddite fallacy
(<http://en.wikipedia.org/wiki/Luddite_fallacy>)

It amazes me how people fail to see their own Luddite-ism. Look, here's the
deal: The Luddites protested the mechanization of the textile industry during
the industrial revolution. Their reasoning was that if one person maintaining
one machine could do the same work as 100 individual laborers, then that would
mean 99 people out of work. It turns out, what businesses actually did was
_keep_ all 100 workers employed and instead turned out 100 times the product.

The U.S. (and the rest of the developed world) is only in trouble if we cannot
continue to grow our economy exponentially (and keep in mind that an
exponential increase in efficiency or an exponential decrease in material
costs is just as good as an exponential increase in gross product). What
really _kills_ me, though, is that the very thing that we need to achieve
sustained growth is the _very same thing_ that people are trying to cut out:
funding for science and technology research.

Every time I hear some Republican's campaign add talk about: "Can you believe
we spend money digging up dinosaur bones in China? Shouldn't we spend that
money at home?", I die a little inside. If China overtakes the U.S. as a world
power, it will be due, in part, to the rapid increase in Ph.D.s and research
funding that they are currently undertaking.

In the history of the world, there has never been a time when the most
powerful nation was not also the most technologically advanced.

~~~
ataggart
"This sort of viewpoint" is fundamentally different from the luddite fallacy.
The crux of the fallacy is misapprehending the results of productive increase,
thus mistaking a Good Thing for a Bad Thing. That's not what's going on in the
article (unless you have a very different perspective on intergenerational
debt).

Now it is certainly true that we'll be in less trouble if the economy grows
faster than the hole being dug, _but a hole is still being dug_. If things
improve it would be in spite of, not because of, the indebtedness being
incurred. Again, the luddite fallacy is not applicable.

It is also certainly true (and proven over the centuries) that investment of
capital accumulated through deferred consumption can, when applied toward
improvements in technology, yield productivity gains, thereby improving the
balance sheet of the inventor and the living standards of the common man. Such
gains will emerge from the market, revealing what works and what doesn't, and
in not working will free that capital to be put to more productive ends. It's
not at all clear to me that a debt-funded, politically-allocated system will
yield better outcomes.

~~~
Experimentalist
I think "Ludic fallacy" might be a more accurate fallacy to cite.

The Ludic fallacy refers to making predictions based on past events, even
though the probability of future outcomes includes variables not contained in
the past dataset.

------
gamble
Right now, in the wake of the most significant financial crisis in decades and
with the country staring down enormous structural deficits, the most
contentious issue is whether it's fair to let tax cuts expire for people
making more than $250k/year.

America isn't _remotely_ close to a serious debate.

The problem with articles like this is that they assume the country is still
capable of negotiating changes that would require significant shared
sacrifices. The last thirty years, and 2008-2010 in particular, show exactly
the opposite. Americans are going to insist on high spending and low taxes
until a serious, generational crisis like the Great Depression makes that
impossible.

Can anyone seriously look at the political culture today and imagine that a
VAT could become law? Or that anyone is going to fall on their sword to cut
Medicare and Social Security benefits? If anything is clear about American
politics since the emergence of movement conservatism, it's that any attempt
to increase taxes or tackle popular social programs is political suicide. Look
at Obama's health care bill. I hope you like it, because _no one_ is going to
touch healthcare again in our generation.

I expect exactly nothing to be done about America's problems until those
problems are so serious and the social dislocation so severe, that one party
assumes near-dictatorial control of Congress and the motivation to use it, as
happened during the Depression. There was an opportunity for rapprochement
after the 2008 election, but that moment has passed. Now it's only a matter of
time until the next, far more serious crisis.

If you want to plan for the future, don't assume American politics is somehow
going to become more rational on its own. Plan for the crisis. Invest
defensively. Don't assume the existence of government programs or the absence
of sudden, sharp tax hikes.

~~~
philwelch
* Look at Obama's health care bill. I hope you like it, because no one is going to touch healthcare again in our generation.*

Well, no one's going to take on the mantle of vast reform anytime soon, but
there isn't an administration in recent history that hasn't tweaked health
care a bit one way or the other.

~~~
stretchwithme
I think it will be touched again. When everybody realizes they can just pay a
fine instead of buying expensive insurance, then just load up on it when they
get a serious illness, the insurance companies will be clamoring for a redo.

------
Locke1689
There seemed to be a disconnect here. Just because one is a Baby Boomer (i.e.,
has life experience) that doesn't give one the magic ability to predict the
economic future of, really, the entire world. This article takes the tone of a
wizened elder bestowing his wealth of knowledge on the younger generation but
it's really just another futurist taking potshots on what's to come for the
United States.

At this point there are so many people talking of what's 'inevitable' that I'm
disinclined to trust anyone who has a prediction range longer than a week.

~~~
_delirium
> At this point there are so many people talking of what's 'inevitable' that
> I'm disinclined to trust anyone who has a prediction range longer than a
> week.

I would at least give it more credence if it was from someone who appeared to
have _any_ sort of track record with or familiarity with economics. Looking at
this guy's past columns, I see a pretty strange mix of stuff:
<http://www.drurywriting.com/keith/>

~~~
Locke1689
Ugh. Yeah I found this.

 _I teach practical ministry courses at Indiana Wesleyan University. I write a
weekly Tuesday Column during the school year and am usually backpacking or
bicycling in the summer._

A real economics guru we've found.

~~~
anonymous245
Have the "real" economics gurus like Greenspan (snicker) delivered?

~~~
akl
I'm sure some people might argue he has, but ultimately it doesn't matter in
this context; failure of 'real' economics gurus to succeed does not mean any
random person is equally capable in the subject.

------
ianisborn
Being a 22 year old myself, I'm grateful that nothing in here is surprising to
me and that my parents made me start a savings account when I was young (like
10 or something). To be honest, I don't think I've met anyone from my
generation who expects to see money from social security when they retire.

~~~
jsz0
Social Security is good till 2040 at minimum. Some modest adjustments can
extend it even further and more radical changes gets it to the 22nd century.
All of this is possible without even touching the ~50% of the budget that goes
towards military spending or raising payroll taxes significantly. My personal
opinion is we shouldn't even consider cutting a single social safety net until
military spending has been slashed. Even China is now limiting the growth of
military spending yet in the US this topic is totally off the table.

~~~
rflrob
From your tone, it sounds like youre critical of the original article, but
Social Security collapsing in 2040 means, for anyone in their 20s, that they
wont see a payout. What was proposed in the article was, to my twenty
something view, "modest adjustments".

------
Reclix
Interesting thought on the tax loophole closing (when considered a bit more
broadly). If we must put up with high taxes, then what's the point if only the
people who can afford clever accountants can find a way to shuffle money to
loophole their way into lower tax brackets? I used to work for a Hollywood
account, and every single actor has their own company for this reason.

Wasn't it Warren Buffet that mentioned he pays less taxes than his secretary?
Or is this propaganda that I've been duped into believing?

~~~
_delirium
Warren Buffett did say that:
[http://www.timesonline.co.uk/tol/money/tax/article1996735.ec...](http://www.timesonline.co.uk/tol/money/tax/article1996735.ece)

Whether it's a good example, propagandistic, etc., is another story, but on
the factual question of whether he said it, he did. The main reason isn't so
much loopholes as source of income: employment income (what his secretary
gets) is taxed at a higher rate than investment income (what Buffett gets).

------
hop
Son, There is massive opportunity out there waiting for you to seize. Be
thankful you were born in America and have the opportunity of free enterprise.
Our country has a lot of debt and there will be inflation ahead, and taxes
will likely be higher too, but they will be higher for everyone else so don't
sweat it - wealth is relative.

Be frugal, marry wise and start a business. Take risks now while you are
young. The future is bright.

------
anigbrowl
Most prognostications about social security seem to be predicated on a closed
demographic system, and take no account of immigration's impact on the ratio
of taxpaying workers to retirees. Now would be a sensible time to come to
grips with this question, but of course in a time of high unemployment and
electoral angst, it's politically radioactive.

This is the best analysis of the issue that I've come across, and well worth
the reading time:
[http://www.ssab.gov/documents/IMMIG_Issue_Brief_Final_Versio...](http://www.ssab.gov/documents/IMMIG_Issue_Brief_Final_Version_000.pdf)

------
tapp
"You shouldn't expect (student loans) for your own kids... You might have to
be your own kids’ bank when they need $40,000 for college like you did
(they’ll need more)"

I believe that's exactly backwards - they should need less total money if that
happens. If student loans immediately ceased to be available, couldn't we
expect the price of college education to drop in response?

~~~
crpatino
Yes, and no...

If no student loans are available, affordability goes down followed by demand.
The bottom feeder Universities get wiped out of the map first, but enrollment
will fall across the board.

If a critical mass of applicants exist to support a reduced University System,
a new equilibrium point will be found, and education cost will be cheaper.
However, if this is not the case, the only survivors will probably be a
handful of Ivy League schools, who will actually _raise_ tuition and cater to
the children of the wealthy.

------
SlyShy
As an 18 year old reading this sort of writing makes me want to leave the
country. Except that I'd be taxed for ten years after expatriating, and there
isn't any country that I know of as being similarly entrepreneurial. If anyone
has suggestions, though, I would love to hear them.

~~~
akozak
You can't control everything. Stop worrying about things you can't change and
start enjoying life.

~~~
loewenskind
This doesn't contradict what you said but: you can change what country you
live in.

------
sbov
I thought that this applied to those 40 and under.

~~~
brc
yes, me too. There seems to be an entire generation of people missing from
this thought bubble. It's not going pass from a bunch of 50 and 60 year olds
straight to 25 year olds without skipping the ones in the middle. The ones
that worked through the 90's recessions and probably remember the '80s
recessions as well.

------
known
Founding Fathers of the United States failed to anticipate the Negative
effects of _globalization_ and _internet_.

------
rmk
Very well-written. I wish I shared the pastor's optimism!

