Generation Screwed Fights Back: Investment Implications
Written by Peter Diekmeyer (CLICK HERE FOR ORIGINAL)
Numerous data points suggest that Western youth are increasingly disenfranchised, mal-educated and in debt. How that will affect investment outlooks is unclear. The good news is that some Millennials – in Canada of all places – are starting to fight back.
So says Aaron Gunn, executive director of Generation Screwed, a movement sponsored by the Canadian Taxpayer Federation. The group will be conducting its annual retreat of volunteer student coordinators later this month in Quebec City.
There they will upgrade their strategic planning, team building, and activism skills, which they can bring back to campuses across the country to raise awareness of critical issues, such as government debts, unfunded liabilities, and unfavorable demographics facing today’s young.
“We call ourselves “Generation Screwed” because governments are spending money but leaving the bills behind for the young to pay,” says Gunn. “Apathy is our biggest challenge. Many youth are so burdened with the demands of getting a start in life, they are unaware of the lousy hand they are being dealt.”
The key driver of Generation Screwed’s popularity is the country’s rising national debt, which according to the organization’s debt clock, now exceeds $600 billion. And that doesn’t include provincial and municipal obligations. Worse, according to Gunn, the federal government’s 2016 budget projects $99 billion in new borrowing during the coming four years.
Less sex, but “screwed” in so many ways
“Generation Screwed” seems like an odd name for a generation which, according to a recent Washington Post article, is having less sex than previous generations. That said, the movement Gunn leads is particularly timely because Millennials are – to the use the CTF’s term – being “screwed” in so many ways.
The average U.S. student debt is now USD $27,000 – $1.2 trillion overall, according to the Economist Magazine.
Worse, due to the power of academic interest groups, teachers’ unions, and the politically correctness movements, students’ education is increasingly disconnected from reality and poorly adapted to the job market. Most students learn essentially nothing about money management, for example: one of the most important life skills.
Upon graduation, students enter what Donald Trump calls a “rigged” economy, where older workers are entitled to union, government, academic, and other jobs with benefits that are protected by a slew of credentialism strategies. The young get stuck with unpaid internships, work part-time, or do contract work.
Given their poor financial, employment and educational circumstances, not surprisingly, more than half of 18-34 year olds live with their parents, according to Pew Research.
Three quarters of declining productivity: a “new normal,” secular stagnation … or decline?
Lack of new blood in many protected sectors, ranging from governments, “too big to fail” banks, and the automotive industry, will almost certainly hit productivity. In fact, that may be happening already. Recent U.S. GDP data show that productivity fell for a third straight quarter in Q2, a first in more than three decades.
Bill Gross, a portfolio manager at Janus, has described today’s economy of rising trade barriers, household deleveraging and increased government regulations as a “new normal.” Larry Summers, a former U.S. Treasury Secretary and others suggest the US economy is in a period of “secular stagnation.”
For long-term planners who worry about funding pension plans, managing government debt (nobody talks about paying it back anymore) or building careers, the stakes are high. That’s because things are likely far worse than even Gross and Summers, both of whom are restricted in what they can say due to the institutions they represent, will admit.
According to a range of researchers – including Laurence Kotlikoff, John Williams of Shadow Statistics, and the Fraser Institute, – the United States and Canadian governments regularly use massaged data and off balance sheet liabilities, to paint a brighter picture than actually exists.
No sympathy from governments
Gunn and Generation Screwed remain undeterred. This despite the long odds, and tough opponents – particularly seniors’ groups lined up against them (in the United States, the powerful American Association of Retired People lobby group, for example, will stop at nothing to protect members’ existing entitlements – the country’s youth are an afterthought).
Nor are Millennials likely to get much sympathy from governments, which increasingly resemble hospital geriatrics wards. The average age of a U.S. Congressman is 61. That of a Canadian Senator is 65. The average age of a U.S. Supreme Court Justice will be 75 by the end of the current U.S. Presidential cycle.
“I know the odds are long,” says Gunn. “But changing mentalities is a slow process. We just keep focused on doing it one person at a time.”
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Generation Screwed Fights Back: Investment Implications
Written by Peter Diekmeyer (CLICK HERE FOR ORIGINAL)
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