Check Your Assumptions

I found this article by Ramesh Ponnuru at Bloomberg, “Millennials Really Are Suffering”, frustrating. Here’s its kernel:

So it’s refreshing to read a book by a right-of-center author who takes the side of the generation born from 1981 through 1996. The millennials aren’t whiners, Wall Street Journal editorialist Joseph Sternberg writes in “The Theft of a Decade”: They have legitimate complaints about economic trends that have hit them particularly hard.

People in the middle of that generation reached adulthood just as the economy fell into the most severe recession since the Great Depression. That recession was followed by a disappointingly slow recovery. Sternberg notes that the effects of entering the labor force in a weak economy are not transitory: Lifetime earnings are measurably lower.

I think that Mr. Sternberg is trying to draw conclusions that can’t be supported by the available data and the problem resides in the assumptions that are being made.

In 1970 measuring a young person’s income relative to those of their parents’ at their age by averaging the incomes of the young person and those in their age cohort, averaging the income of the parents and their age cohort, and comparing them was fairly reasonable. But circumstances have changed in such a way that is no longer reasonable. In 1970 4% of Baby Boomers were immigrants or the children of immigrants. Now it’s four times as many or even more. Comparing today’s Millennials with previous generations is comparing apples and oranges.

Let me say it another way. What policies would have made a difference for the Millennials? That’s a serious question. I don’t think that any policies other than immigration and trade policies would have made much difference.

The other disagreement I had is with Mr. Sternberg’s inclination to blame the Baby Boomers. Nancy Pelosi, Steny Hoyer, James Clyburn, and Mitch McConnell are all members of the Silent Generation not Baby Boomers. The Silent Generation has been running the country for 30 years and are extremely reluctant to let go. The Baby Boomers are just holding their coats.

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