The Rolling Stone magazine prescription of the policies it believes Millennials should fight for, published earlier this week, is a recipe for economic disaster.
There seems little question that Millennials, or generally people born between the early 1980s to early 2000s, have found it more difficult to climb the ladder of economic opportunities over the last few years.
As the writer of Rolling Stone piece, Jesse Myerson, recently put it:
Itʼs a new year, but one thing hasn’t changed: The economy still blows. Five years after Wall Street crashed, America’s banker‑gamblers have only gotten richer, while huge swaths of the country are still drowning in personal debt, tens of millions of Americans remain unemployed – and the new jobs being created are largely low‑wage, sub‑contracted, part‑time grunt work.
Selective indicators are commonly cited when portraying a situation of generalised economic difficulty faced by young Australians.
The latest ABS labour market statistics shows the trend unemployment rate for people aged between 15 and 19 sitting at a staggering 17.2 per cent, compared with a 5.8 per cent unemployment rate for people aged 15 years and over.
Census data shows home ownership rates among young people in Australia have declined over recent decades, with the percentage of home owners aged between 15 and 34 years (with or without a mortgage) falling from 86 per cent in 1981 to 72 per cent in 2011.
A concerning development is the increasing prevalence of late teens and young adults continuing to live with their parents, a sure indicator as to how difficult it must be for some people to make ends meet.
According to ABS Census data, approximately 29 per cent of people aged between 18 and 34 (without a partner or child) lived with one or both of their parents in 2011, up from 21 per cent in 1976.
In fairness, current economic circumstances do not pose doom and gloom for each and every Millennial.
Average incomes earned by young people have been steadily rising in real terms; youth labour participation rates remain high; students are building up their human capital in schools, universities and technical colleges (although the quality of educational services is an important issue); and some, in fact many, are proactively setting out into the market establishing their own businesses.
Young Australians wouldnʼt envy the parlous economic circumstances faced by American, British, French, Greek, Italian and Spanish Millennials, either, but the key issue is that our local economy has, nonetheless, been performing well below its potential.
And an underperforming economy means fewer available opportunities for young (and old) people to earn their own incomes, and hence enjoy acceptable improvements in living standards.
If it is more opportunities that Millennials need, then the socialistic ideas espoused by Myerson ‑ guaranteed public sector jobs, guaranteed minimum incomes, hefty property taxes and collective land ownership, confiscating financial assets, and government banks ‑ are the exact opposite of what will deliver prosperity.
To prevent the deepening of the ʻeconomic hellholeʼ for the young, as Myerson describes it, here are five alternative ideas ensuring a more dynamic and prosperous future.
Emancipate our entrepreneurs
Young people have long shown a creative, entrepreneurship spirit when producing new goods and services catering to the needs and desires of consumers.
To get the creative economic juices of Millennials flowing more freely, entrepreneurs should be afforded greater freedom and dignity to explore, in their own ways, productive methods to please the consuming public.
Studies have shown that a less intrusive government, imposing lower taxes and enacting fewer regulations, is a key to promoting entrepreneurial conduct, and, so, by getting out of the way governments can best help young people exhibit their inherent economic talents.
Free our labour markets
For many young people not seeking self‑employment, securing lower paid entry‑level jobs, at the beginning of their working lives, allows them to build the necessary skills and experiences to subsequently progress up the career and income ladder.
But stringent labour market regulations, including mandatory minimum wages and penalty wage rates, tend to price young people, and others on the fringes of the labour market, out of work altogether.
Occupational licensing is another major regulatory problem, preventing youngsters and others, such as migrants, from easily accessing opportunities to earn incomes for themselves.
The raft of labour market regulations, often advocated by insider labour unions as a way to preserve their cosy featherbedded employment arrangements, must cease if Millennials are to tap into more extensive working opportunities in a growing economy.
Stop the reckless spending
In 2007 many thousands of Australian Millennials fervently voted for a Labor Party which promised to end reckless spending, a publicly‑stated commitment by Kevin Rudd which never came to fruition.
After six years of significantly increased government spending, and much of it of negative economic value, the structural fiscal problems posed by the level and scope of such expenditures have become all too painfully obvious.
There remains much low‑hanging fruit to withdraw government from the functional areas of cultural and economic affairs, however the public sector will remain a threat to future economic prosperity for as long as its financing and provision activities dominate the fields of education, health care and social welfare.
These areas of activity are far too important to be interfered with by the state. Far from harming the interests of Millennials, significant reductions in expenditure by the public sector, including in the ʻnew commanding heightsʼ of social spending, should open up opportunities for alternative, diverse non‑state forms of financing and provision.
Deep spending cuts will also helpfully displace a few cronies, so abhorred by the Millennials, from their positions of dependency upon extractive government.
Cut the public debt
The rapid increase in Australian public debt since the 2008‑09 ʻglobal financial crisis,ʼ largely to fund consumptive and redistributive spending, should be of great concern to Millennials.
As explained by economist Hans Sennholz, ʻa government debt is a government claim against personal income and private property, an unpaid tax bill.ʼ
With public debt enabling the cost of financing government spending to spread out over generations, the eventual tax bill will be lumped upon the Millennial generation without their political consent.
To minimise the plunder of the young by the old, outstanding debts must be repaid, as soon as possible, through a return to surplus budgets (founded on spending cuts, not tax increases) preferably in conjunction with a comprehensive privatisation program.
End paternalist government
To borrow a phrase from Myerson, the nanny state blows.
Using subsidy, taxation and regulatory means to forcibly redirect consumer choices, paternalistic government not only economically disempowers individuals from at least making inexpensive choices, to the detriment of attaining reasonable levels of consumer surplus.
Application of policy in this context is also inherently arbitrary and, it follows, unjust, since the force of government is utilised to entrench fiscal and regulatory discrimination across individuals.
If anything, paternalism in public sector policy is hypocritical policy because, after all, middle‑aged and senior politicians in their youth enjoyed the benefits of cheap drinking and smoking without nanny state force weighing upon them so heavily.
As I have speculated elsewhere, Millennials tend to be practising libertarians, eager for the freedom to earn, invest and consume, not to mention keen to attain the freedom to just be themselves.
But it will be only through breaking the chains of intrusive government, avoiding the Myerson prescription for politics in evermore nooks and crannies of our lives, that the hopes and aspirations of young people will be realised to the greatest extent possible.