The Dow Jones Industrial Average hit a historic 30,000 recently and likely left younger generations feeling further alienated from capitalism.
A bit of reductionism, sure. But consider: According to a Gallup Poll this past year, nearly 50% of millennial and Gen Z respondents held a positive view of socialism. That compares with 39% for Gen Xers and 32% for baby boomers.
A YouGov poll found that 70% of millennial respondents would vote for a socialist compared with 44% among Gen X and 36% for boomers.
Of course the word socialism has many definitions despite the right’s pearl-clutching attempt to paint President-elect Joe Biden, a moderate Democrat, as a co-conspirator of Castro’s Cuba.
At least part of the driving force for the millennial attitude is that while Wall Street shareholders have been enjoying the longest bull market in history (briefly interrupted by the March pandemic jitters), many young people have been repeatedly kneecapped by capitalism.
The oldest millennials entered the workforce during the recession that followed the 9/11 attacks, many starting out in a hole of low earnings.
Then came the Great Recession, which again had an outsized effect on those early in their adult careers. A working paper by Kevin Rinz of the Census Bureau reports that while millennials’ employment levels recovered from 2009 to 2019, their earnings did not.
Now comes the pandemic and economic shutdown, where unemployment shot to levels not seen since the Great Depression. The rate has come down since, but remains elevated as another shutdown looms because of a second wave of COVID-19.
Millennial coders can start out making more money than most people ever will. But they are a minority among young people.
One must go back to the 1930s to find another generation so repeatedly hammered by economic collapse. Many saw capitalism as hopelessly outmoded, especially in the early years of the Depression. Socialism, communism and fascism made enormous gains. (The far left never forgave Franklin Roosevelt for saving capitalism, with guardrails installed to prevent the laissez-faire excesses of the 1920s).
Generations aren’t monolithic, of course. Consider boomers, whom many blame for all the country’s ills.
Early boomers — say 1946 to 1954 — got drugs, sex, rock ‘n’ roll and pensions. Later boomers got fear of AIDS, disco and 401(k)s. My cohort was the first to be forced into this much less secure and less attractive retirement plan compared with the old pensions. We were on our own, companies pleading destitution while lavishly rewarding shareholders and top executives. Later boomers were also on the receiving end of the re-engineering of American business in the 1980s, where the old corporate social contract was severed and the job security of the past slipped away.
Still, some generalizations can be made. Most boomers came of adult working age in relatively good times, albeit with the 1970s seeing the energy crisis, “stagflation” (high inflation and low growth), and the beginning of the end of an era where all income groups enjoyed similar fruits of economic growth.
Those prosperous decades ensured that young people could get a good early start in their prime working years, pulling down good wages. This was before many rungs in the ladder up were sawed away and whole industries (e.g. daily newspapers) consolidated or were decimated by technological leaps and other forces. College was affordable.
Americans born in 1980 and after face all the headwinds that first hit the later boomers and Xers, along with new ones. For example, college is much more important for gaining higher incomes than in the past, yet it’s very costly. One reason is tax cuts hitting higher education. But the result is students carrying very high debt that takes years to pay off. The average student loan balance this past year was $35,620, according to the credit-reporting service Experian. The cost of college was much lower for previous generations.
At least partly a result, millennials are less able to buy houses — typically the biggest source of family wealth — and are starting households later. According to the Pew Research Center, a majority of young adults are living with their parents, a phenomenon not seen since the Depression.
So, the question becomes what kind of “socialism” does a majority of this cohort support?
Certainly not that of Stalin’s Soviet Union (communism was the final stage of development, under Marxist theory, never yet attained); the body count was in the tens of millions, freedoms were squashed, and economic failures led to the collapse of the USSR in 1991. And they wouldn’t want the authoritarian regime of the People’s Republic of China, either.
Sen. Bernie Sanders’ support among the young suggests they want something like Scandinavian social democracy. These countries are distinguished by high taxes that fund an expansive social safety net, free college education and universal health care.
Yet countries such as Sweden, Denmark and Norway are also capitalist, with property rights, corporations and a competitive free market.
Daniel Schatz of New York University, who has studied those countries, argues that Sanders oversimplifies the Scandinavian welfare state and the ability to translate it to the United States.
“Research has suggested that the Northern European success story has its roots in cultural rather than economic factors,” he wrote in an opinion piece for NBC News. Sweden, Norway and Denmark, with a population “roughly comparable to the greater New York City area, historically developed remarkably high levels of social trust, a robust work ethic and considerable social cohesion.”
Also, these countries were forced to adjust taxes and the welfare state when their cost began to hurt their economies.
With the Senate likely staying under Republican control, any attempt at social democracy in the United States will be a dead letter, at least for the near term. The nearly 74 million people who voted for Donald Trump earlier this month resist any form of “socialism” even as they enjoy some of its elements, such as Social Security and Medicare.
The pre-1980 American system worked pretty well. The safety net was stronger. Business regulation ensured more competition and less corruption. Banks and Wall Street didn’t enjoy such toxic prominence as today. Antitrust enforcement was strong. The top tax rate on the rich was more than twice what it is today. Money didn’t dominate politics.
This was the product of the New Deal and then a bipartisan consensus that existed until the election of Ronald Reagan in 1980.
But the young don’t remember. And the young, we’re always told, are our future. So don’t expect support for some form of socialism to go away, no matter how high the Dow goes.