Breeding A Generation Of Angry Young People
“According to a new report by the U.S. Department of Agriculture, middle class parents of a baby born in 2012 will spend about $241,000, raising their child from birth to age 18 – and that’s just for the basics.”
That averages about 12.5k a year and just over a thousand a month. It does not seem much for the middle class Singaporean. The slow bleed of tuition fees (and wait lists), extra curricular activities and toys will snowball into the college they choose that will hit the pocket hard and deep after they turn 18. During that time, some may only watch helplessly as the lucky and entitled ones live out their dreams, as the rest get left behind.
Yet the thought of $241,000 and the 23 poor Indian children who died last month from the poison served in their free meals, does serve as a grim reminder.
There is one emotion that is running high these days – anger. I attribute it to the age of the worldwide web and a public that is more informed and aware than ever before.
And what is the big deal ? The big deal is that the world is becoming aware of the increasing inequality.
In the past week, I have come across 3 posts about it.
Robert Reich : Why The Anger
“But I think the deeper explanation for what has happened has economic roots… — … for the last three and a half decades, the middle class has been losing ground. The median wage of male workers is now lower than it was in 1980, adjusted for inflation. …
Meanwhile, income, wealth, and power have become more concentrated at the top than they’ve been in ninety years.
As a result, many have come to believe that the deck is stacked against them. …
When average people feel the game is rigged, they get angry. And that anger can easily find its way into deep resentments — of the poor, of blacks, of immigrants, of unions, of the well-educated, of government. ”
http://economistsview.typepad.com/economistsview/2013/08/reich-why-the-anger.html
Tim Hartford : Why We Might Care About Inequality
“the knowledge that the more unequal our societies become, the more we all become prisoners of that inequality. The well-off feel that they must strain to prevent their children from slipping down the income ladder. The poor see the best schools, colleges, even art clubs and ballet classes, disappearing behind a wall of fees or unaffordable housing.”
http://economistsview.typepad.com/economistsview/2013/08/why-we-might-care-about-inequality.html
Jerry Z. Muller : Capitalism And Inequality
” Inequality is an inevitable product of capitalist activity, and expanding equality of opportunity only increases it — because some individuals and communities are simply better able than others to exploit the opportunities for development and advancement that capitalism affords.”
http://www.foreignaffairs.com/articles/138844/jerry-z-muller/capitalism-and-inequality/
I can imagine it could be the same for other countries than America. The resentment is brewing “as the top 5% pull away not just from the bottom 40% but from the 55% below the top 5%.”
http://www.zerohedge.com/news/2013-08-15/guest-post-rising-inequality-and-poverty-can-they-be-fixed
Mentioned in another of our posts, Ad Hoc Commentary – The Investment-less Recovery, if the stock market continues to rally after a summer correction, then 2014 will be the year of resentment. Chances are the unemployed, especially the young unemployed, will be resentful of the booming stock market. Nobody likes to be “left behind”.
It is happening as classic cars, coins, stamps, violins and wines outperform the MSCI World Index. Source : http://www.economist.com/blogs/graphicdetail/2013/08/valuable-goods?fsrc=scn%2Ftw%2Fte%2Fdc%2Fvaluablesindex And new funds are founded just to invest in fine wines and cognacs as old as Marie Antoinette. Source : http://www.scmp.com/comment/blogs/article/1296818/invest-cognac-old-marie-antoinette.
This is even as student loans in the US close in on US1.2 trillion dollars and “The State-cartel debtocracy’s dependence on debt for “growth” no longer yields positive returns; it simply indentures future taxpayers to fund current consumption.” Source : http://www.zerohedge.com/news/2013-08-15/guest-post-rising-inequality-and-poverty-can-they-be-fixed
Another side effect would be the growing problem of moral bankruptcy as the chase to close the gap begins. The decay has set in deep as it is unveiled that almost every financial instrument is manipulated, all the way to aluminium warehouses (http://www.nytimes.com/2013/08/13/business/us-subpoenas-goldman-in-inquiry-of-aluminum-warehouses.html?_r=0).
Why not, if you have the power to do so ? And those who criticise obviously are not in the seats of power. That is the reason for the 30,000 applicants for the 500 Unicredit banking jobs and the 17,000 applicants for Goldman Sachs internships.
Keeping the anger down by ensuring the population is clothed and fed is the main focus of the populist governments. But it does little else to address the availability and affordability of opportunities.
As the rhetoric goes, inequality is here to stay and is an inevitable outcome of a mature capitalistic economy. It is worse in some places than others and we all cannot migrate to the nordic states where according to Miles Corak, Great Gatsby’s have better chances.
http://milescorak.files.wordpress.com/2013/07/income-inequality-equality-of-opportunity-and-intergenerational-mobility.pdf
The Mile Covak Great Gatsby Curve
Until then, we will just be breeding a new generation of children to be angry adults when they grow up, for by then, the gap would be even greater.
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Creating Value And Closing The Gap (tradehaven.me)
Its Not InSane But Its Unhappy To Be Poor (tradehaven.me)
Maybe it is time for a new way to allocate resources… after all money was invented quite a long time ago and reinvented again with tweaks.
At the rate the system is developing, it is bound to break down at some point. Most developed economies in general has 70% of GDP attributed to domestic consumption. With the middle class squeezed, government indebted and wealth concentrated in the hands of a few, would the present system still hold up?
Simple solution – CREATE MORE MIDDLE CLASS.
Over past decade middleclass has grown 309% in India, 139% in Russia, 132% in Egypt