That may not be a surprise, but I don’t mean it in a, “Get off my lawn!” kind of way. I mean I’m worried for millennials. I’ve touched on this a couple times in earlier posts, but my thoughts coalesced into worry following a piece on The Daily Show.
In the piece “Vitamin Flop” which aired on April 13, The Daily Show highlighted a failed business venture of Donald Trump’s which seemed to have targeted recent college graduates in a multi-level marketing “opportunity.” Check out my “Donald Trump’s American Dream” post for the details.
Here’s what Donald Trump had to say in the 2009 promotional video:
“At no time in recent history has our economy been in the state that it is today. It’s a mess. The economic meltdown, greed, and ineptitude in the financial industry have sabotaged the dreams of millions of people. Americans need a new plan. They need a new dream.
“The Trump Network wants to give millions of people renewed hope and with an exciting plan to opt out of the recession. Let’s get out of this recession right now. With cutting edge health and wellness formulas and a system where you can develop your own financial independence, The Trump Network offers people the opportunity to achieve their American Dream.”
Most of the 20,000 marketers for The Trump Network were recent college graduates who couldn’t find jobs in their chosen fields, or people who lost their jobs during the recession. The vast majority of marketers did not see the promised riches and most likely lost money on their network marketing businesses. I’m sure Donald Trump, on the other hand, made out very well from the 2-1/2 year business venture.
So this is an example of a billionaire using his wealth to further enrich himself at the expense of others (It takes money to make money). Those who lost out were mostly millennials because they were desperate and inexperienced. It doesn’t seem fair, does it?
Here are some other areas in which I see a transfer from the less fortunate to the Top 1%:
1. Rental real estate: The wealthy from our country and abroad are purchasing large numbers of residential property, especially in large cities. Real estate prices have soared and rents have followed. The rule used for decades is that you shouldn’t spend more than 30% of your income on housing. In a Bloomberg article from July 2014, forty-one million U.S. households exceed that rule. High rents which affect the poor and middle class will act as a tax and be a drag on the economy;
2. Banking: Most capitalist countries use an independent reserve banking system to stimulate and slow economies by way of interest rates. While interest rates have been near historic lows for several years, any increase in rates disproportionately benefits those with money to invest and harms those with little money. Millennials, who have had less time in the job market, are generally less affluent than people from prior generations;
3. Social Security: The Federal Insurance Contributions Act (FICA) mandates the collection of money from working people in this country and payments to retired people. Some of the retirees who receive these regular federal payments are wealthy, but that does not disqualify them from the plan’s benefits. If there are no changes, the entire Social Security fund is expected to run out of money completely by 2034. Millennials will not receive benefits unless major changes are made, but they and their employers are still paying 12.4% of their income into the system;
4. The republican presidential candidates’ tax plans, if enacted: Based on flawed data, all plans cut taxes on the wealthy to stimulate the economy. Some also cut taxes on the less wealthy, but all raise taxes on the poor which will be an economic drag. With such large proposed tax cuts, either the deficit and debt will balloon or federal spending will be cut dramatically which will gut social welfare programs. Neither of these outcomes will benefit Millennials.
Now you can see why I’m worried about Millennials. On the plus side, their adaptation skills are much more advanced than for us older Americans. They are technologically savvy and can do well in the sharing economy. In other words, they have positioned themselves to be less dependent on the institutions upon which we rely.
I guess Millennials will be okay after all.