Stumbling and Mumbling

Author: chris dillow   |   Latest post: Sat, 8 May 2021, 1:46 PM


On generational difference

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There's been a little pushback to this claim by Ezra Klein, but I suspect there's a lot in it:

I've been struck by the generational divide within the Democratic Party. Washington is run by 20- and 30-somethings who run the numbers, draft the bills, brief the principals. And there is a marked difference between the staffers and even the politicians whose formative years were defined by stagflation, the rise of Reaganism and the relief of the Clinton boom, and those who came of age during financial crises, skyrocketing personal debt, racial reckonings and the climate emergency. There are exceptions to every rule, of course - see Sanders, Bernie - but in general, the younger generation has sharply different views on the role of government, the worth of markets and the risks worth taking seriously.

We have lots of evidence that our formative years can shape our perceptions many years later. For example, Ulrike Malmendier has shown that people who experienced recession in their youth own fewer (pdf) equities than others even in old age; that CEOs who saw the Great Depression run their companies more conservatively (pdf) than others; and that FOMC members (pdf) who saw higher inflation when young and impressionable are more likely to be hawks. And Erin McGuire writes:

Individuals who begin their lives by observing an economic downturn remain pessimistic and risk averse with respect to investments over the course of their lifetimes.

Napoleon, then, was correct: "to understand the man you have to know what was happening in the world when he was twenty." Napoleon

This, I suspect, bears upon the debate about how big a threat is inflation. Oldsters (like Larry Summers?) whose formative years saw high inflation are more worried about it now than are the (western) under-40s who have never experienced it.

This is consistent with David Hume's thinking. What we see when we are in our teens and early 20s are impressions, things which enter our mind with "most force and violence." What happened before then is what we read about in books, and what happens after are events which have less impact on our crusty minds. They are ideas, which are mere "faint images".

Now, put yourself in the shoes of someone who is, say, 30. The financial crisis happened when you were in your late teens, and your subsequent years have seen stagnant real wages, unaffordable housing and high student debt. The impression you get is that capitalism doesn't work. Of course, some older folk will tell you that there was a time when capitalism was functional, but for you this is a mere idea, a faint image.

By contrast, someone in their late 40s might well have had the collapse of communism make a forceful impression on them, whilst they saw affordable housing and years of economic stability. They have a much more favourable impression of capitalism therefore.

But of course, not all of us wrinklies have such an impression. My formative years were ones of violent class struggle, industrial decline and the deep recession and mass unemployment of the early 80s. Hence my sympathies with the likes of Grace Blakeley and Aaron Bastani.

Many of my contemporaries as teenagers had experiences like this:

Father (who left school during the full employment of the late 50s): Get off the settee and get a job.

Son: There aren't any jobs.

Father: There are if you look.

Much effing and jeffing by both parties. Son slams door and walks out - to visit his grandad who, having grown up in the 1930s, knows his predicament.

Of course, not all 50-somethings share the formative experiences of my youth. David Cameron and Boris Johnson are around my age. But the 1980 recession looked very different from Eton than it did from a single-parent terraced house in inner-city Leicester. Napoleon's point still holds. Class matters, as well as age.

We could extend the point. One reason for the generational divide over Brexit is that older folk who came to maturity before we joined the EU have the impression that we can do well outside the EU, whilst younger folk who have known nothing but EU membership see no reason to rock the boat.

All of this (as you'd expect) is to echo Marx:

The mode of production of material life conditions the general process of social, political and intellectual life. It is not the consciousness of men that determines their existence, but their social existence that determines their consciousness

The conditioning, however, is not simply mechanistic: it's not that this year's economic circumstances alone influence our thinking, but rather that those of our formative years do so.

This helps explain why some bad ideas - such as a belief in fiscal rectitude - linger on after their material justification has vanished. We do not sufficiently update the thoughts acquired in our formative years, but rather are Bayesian conservatives who cleave to our priors. OK, boomer?

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