Intergenerational Equity and Boomers

Intergenerational Equity. My first challenge with this blog posting was to decide how to categorize the concept.

Is this topic about history, politics, sociology, marketing, health & fitness, media or science?

Yes.

These two words describe perhaps the most divisive and encompassing aging issue of the next 30 years. I settled on Social and Political Issues as the best categorical fit because that's the arena where this concept will take on emotional force similar to other words such as Social Security, Medicare, Medicaid, entitlements, unfunded liabilities and so on.

The notion of "intergenerational equity" is a stimulating catch-phrase for some of the most important debates of our time involving the fundamental social contract between young and old, from now through mid-century. What is this concept?

Intergenerational equity is based on the belief that Boomers are about to bankrupt the nation as they enter the time of their lives when federal entitlement programs become accessible. David Walker, departing Comptroller General of the United States, has quantified "unfunded liabilities" in the neighborhood of $46 trillion by mid-century (also including monies owed for federal retirement, military retirement, military healthcare, and other related government obligations). 

This huge debt has to be paid by someone if we stay on the current path (and if pundits are correctly reading the crystal ball). Boomers will ostensibly hand this invoice to their children and grandchildren. Then this generation will die off having been good parents and grandparents but lousy ancestors. Our debt-ridden progeny will watch the nation's standard of living race in reverse.

Intergenerational equity is the mother of all guilt trips. It suggests that the Boomer generation has only one moral and ethical choice: to deconstruct the nation's entitlement programs so that younger generations will not be penalized by the size and cost of a rapidly aging society. It means that we accept what our parents would not: federal entitlement programs are a Ponzi scheme, perhaps history's greatest embezzlement, robbing from younger generations to pay for the hobbies and wasteful surgical procedures given freely to elders.

Intergenerational equity means cancelling the social contracts that help pay for some of the costs of growing old, becoming sick and eventually dying in America. And when we cancel these contracts, we ultimately "do the right thing" by lifting potentially crushing fiscal burdens from the backs of younger generations. We recognize that this nation does not owe, nor can it afford to fund the lifestyles of a geriatric leisure class.

The arguments in favor of intergenerational equity include:

1. Entitlement programs are unfunded liabilities backed up by IOU's in the form of government bonds. There are no trust funds in the sense of bank savings accounts. The ink is already red for Medicare / Medicaid, and Social Security starts costing more than it takes in through taxes around 2017.

2. Younger generations should not pay the healthcare and retirement costs of their parents and grandparents. The only equitable system is pay as you go, and that's not what Congress has done with Social Security and Medicare surpluses. They've spent the money already.

3. Medical breakthroughs are extending lives beyond the span originally granted us as biological organisms, and we are dying later in life of horrific and lingering diseases such as Alzheimer's due to society's growing technical mastery over other diseases such as heart disease and cancer.

4. It is the moral obligation of older generations to make the future better for their offspring, as did the GI Generation create a post-World War II economic boom that so enriched the lives of young Boomers. As this society careens toward bankruptcy, Boomers are creating the unprecedented circumstances where younger generations can expect a declining standard of living relative to their parents.

The arguments against intergenerational equity include:

1. Boomers have freely and without much complaining paid Social Security and Medicare taxes that are now benefiting older generations. The oldest Boomers have been paying these taxes with every paycheck for over 40 years; the youngest for over 20 years.

2. Boomers have enriched the overall economy with their wealth and free spending, creating booms in everything from housing to desktop computers. This generation's riches have greatly benefited older and smaller generations. For example, if you owned a house in 1970, you have enjoyed the benefits of a rapidly appreciating asset, thanks to Boomers flooding the market over the next 25 years. This generation's wealth has benefited their children, the 80-million Millennials, in the form of loving material indulgences from birth onward, college educations and now respite for some young adults returning to their parents' homes as "twixters."

3. So what if the primary economic engine of America becomes healthcare focused? The 20th century can be thought of as an automobile economy that created a national highway system, parking garages, suburbs, shopping malls, gasoline companies, car companies, and drive-through Starbuck's. This economy created millions of jobs in highway construction, real estate development, retailing, oil & gas exploration, and franchising. A healthcare economy can also create millions of jobs for physicians, nurses, biotech engineers, genetic researchers, and home healthcare aides. Technologies developed to prolong productive life (and engineer negligible senescence) have extraordinary market value and could be sold as exports to other countries, such as rapidly aging Europe, Japan and China. In other words, the money always comes from somewhere and goes somewhere.

4. Scare mongers leading this charge have personal economic interests in mind. If you study the composition of the Boards of Directors for some of the most outspoken advocates of privatizing entitlement programs, you'll discover mutual funds managers, investment advisors, and former government officials who would make fortunes as the U. S. government hands entitlements to the private sector.   

This blog posting is but a peek behind the curtain where the wizards of social engineering are pressing buttons that can easily frighten and confuse the public, just as the Wizard of Oz successfully intimidated Dorothy and her friends. But scare tactics and intimidation should not be the impetus for sweeping economic, social and political reengineering.

Intergenerational equity rolls off the tongue with a satisfying taste of moral rectitude, but this concept demands a full and articulate analysis by informed Boomers. Let's pull back the curtain hiding the wizards before we believe these naysayers and their strident stories of national financial collapse. Let's understand their motivations before we embrace their ideas.

Comments

[Avedon]

You forgot the part where between Reagan and Clinton, Boomers have actually paid for their own retirement in extra payments while they were also paying for their parents and grandparents.

And you also forgot the part where if Boomers who can no longer work and have no income are left to their own devices - having already paid twice for Social Security - they will either live on the street or live with their children. That's okay for younger people if they don't mind seeing their parents live on the streets, but the rest of us won't be able to use that extra money we will supposedly have, since we will have to be supporting our parents with it. And, of course, paying their medical costs out of our own pockets.

Does that sound like a sensible plan?

Something like half of old people in America were out-and-out poor before SS, and the situation was so awful that the nation as a whole demanded Social Security. Take it away and you have the same problems.