IPOD Generation

That stands for "Insecure, Pressurised, Over-Taxed and Debt-Ridden" according to the UK's thinktank Reform . "Reform’s work in 2006 and 2007 identified that the balance of taxation and public spending has tilted against young people, so that they now face an unfair burden, without being able to expect many of the benefits; and this at a time when their economic profile is already difficult. They are also faced with increasing levels of debt from higher education, much stronger labour market competition, lower growth in earnings and acute difficulties in getting onto the property ladder."

Generation Debt got a shout-out today in the UK Telegraph in an editorial about the effects of Britain's "borrowing binge" and taxation on young people. While I love the sentiment, most notable to an American eye are the references to government supports and programs that are unheard of here in America, like universal health insurance and "interest-free graduate overdrafts."

What Would a Depression Look Like Today?

A thoughtful, if conjectural, article at the Boston Globe.

"Unlike the 1930s, when food and clothing were far more expensive, today we spend much of our money on healthcare, child care, and education, and we'd see uncomfortable changes in those parts of our lives. The lines wouldn't be outside soup kitchens but at emergency rooms, and rather than itinerant farmers we could see waves of laid-off office workers leaving homes to foreclosure and heading for areas of the country where there's more work - or just a relative with a free room over the garage."

I can see people cocooning with their old laptops, stealing free wi-fi, blunting out the boredom by mainlining technology. Or, maybe we'd have more trade and barter, more community and creativity, more stuff made out of junk. Rent party anybody?

image: Swoon's Swimming Cities of Switchback Sea

Brian Lehrer Show This Am

I was on the Brian Lehrer show where we fielded tons of calls from people incensed about predatory credit counselors and credit card companies "helping" people in need with expensive new loans, interest rate hikes, and other chicanery. it's enough to make your blood boil.

If you need reputable help, try the National Foundation for Credit Counseling .

For more information on the Credit Cardholders' Bill of Rights look here. It would stop abuses like the "any time for any reason" interest rate hikes, or changing your due date so you get a late charge.

It passed the House in September, sponsored by New York's Rep. Carolyn Maloney. Let's make sure they don't forget about it.

Ivy League for Free?

OnlineUniversities.com is a curious website apparently set up in part to promote for-profit schools such as the U of Phoenix . I am agnostic to negative about that particular cause although I'm getting increasingly interested in quality alternatives to costly university educations--emphasis on quality.
Here is a cool link they sent me: Top 100 Ivy League lectures available for free online.

Update: Wow. ITunes U offers free access to 75,000 audio and video education files from top universities, museums, etc--literally a lifetime of learning.

Save. No, Spend. No, Save

What do they want from us, anyway? Without consumers to lead the charge, an economic recovery will be hard to achieve. And yet everyone agrees that we need to start saving more. So should I buy that coffee maker to stimulate the economy? Or should I save the money in order to “grow” the economy and provide for my own old age? I can’t do both.

To pull us out of this downward spiral, the federal government will have to provide economic stimulus in the form of higher spending and greater aid to those in distress...In normal times, it’s good to worry about the budget deficit — and fiscal responsibility is a virtue we’ll need to relearn as soon as this crisis is past. When depression economics prevails, however, this virtue becomes a vice.

Government Bailing Out Private Student Lenders?

As part of Paulson's leave-no-bank-behind rapidly morphing bailout package, the Department of Ed is now extending "relief" to private lenders like Sallie Mae.
"Federal officials say that as much as $60 billion in student loans may be eligible for purchase under the new expansion."

A cheaper and more precisely targeted way of making student loan funds available would be to raise loan amounts on federal direct loans. Instead of providing more corporate subsidies, the government could lend more money to students directly at lower cost.

What's Wrong: A Handy Guide

This is the most amazing infographic I've seen in a while. It comes from Science Magazine.
Personally, I address my life's work to combating apathy, ignorance, denial, and to some extent consumption. What are you going to fight?

The Economy's Down; Heading Back to Class

"After a decade of steady growth, the economic crisis has led to a spike in applications across the City University of New York’s community colleges...The increased demand comes as CUNY is wrestling with how to deal with steep cuts in its budget."

Meanwhile, in the Ivy League, "Prompted by inequalities in American society—or sensing that the economic crisis limits their short-term career opportunities—young people are applying in force to such organizations as Teach for America."


The question is, will better jobs be forthcoming even if people can get the skills?

What Does Obama Mean for Your Money?

The new president's first task is to control expectations for his many supporters, especially among the millions of young people who turned out for him in record numbers.

No, President-Elect Obama won't fix the economy overnight. And you are not getting a jetpack. Or a unicorn.

Among his likely policy proposals, here's what stands out for me in terms of young people's economic future. Keep in mind that we're all in this together--and we're in it for the long haul.

Jobs & The Economy: As if to underscore that he can't forestall the recession single-handedly, stock markets fell today and yesterday. Although he may be able to speed a second economic stimulus package for things like food stamps and unemployment even before the inauguration, longer-term his ideas may be stymied by the downturn.

A very important, swift proposal to rebuild our economy and create jobs by investing in green energy & infrastructure is laid out in detail in the Green Recovery report from the Center for American Progress and similarly in the activist Van Jones' new book The Green Collar Economy: How One Solution Can Fix Our Two Biggest Problems. Even conservative economists like Martin Feldstein back the idea that major federal spending, and quickly, is exactly the ticket to rebound the economy--rather than stimulating it by cutting taxes. Tax cuts aren't that favorable to young people anyway since we tend to be lower earners. Better to take advantage of training programs that can place you in good green collar jobs.

Student loans and Credit Cards: With a stronger majority in Congress, and lots of momentum for reform, it's easy to see Democratic advocates like Carl Levin and Christopher Dodd taking advantage to re-regulate the credit markets, increasing transparency and disclosure on credit cards and limiting fees and marketing to college students. While Obama's planned $4000 refundable tuition tax credit may be delayed due to budget constraints, more generous repayment plans for student loans passed last year--the Public Service Loan Forgiveness and Income Contingent Repayment Programs are likely to be continued and maybe even expanded as the hit to the budget is not as immediate.

Health Care: Unfortunately, the economic squeeze may make it harder for an Obama administration to act swiftly in expanding health insurance coverage, a key pocketbook issue for young people. It's up to all of us to continue pushing him on this issue. Initial proposals that could cost less and cover more under-30-year olds would be to increase federal support of state insurance pools for lower-income single adults, and possibly to support more state laws that require insurance companies to cover young adults through their parents' employers; an imperfect solution but it does increase access.

Proud Of My Country Again

Last night was a truly novel experience.
I was in a bar full of young people cheering, screaming, clapping and crying over our new president. My heart swelled with brand-new emotions--political emotions of pride, inspiration, patriotism and hope. I was in tears throughout his acceptance speech.

Who is this President Obama? He spoke beautifully! He said things didn't just make sense, they were highly intelligent! He was magnanimous in victory! He invoked the greatest moments of America's history, and our most shining patriotic values! He credited the democratic process and the millions of voters throughout the country for his victory, and he asked for our help, and yes, sacrifice, in meeting the difficult challenges ahead!

We took to the streets of Brooklyn where the whooping and hollering were joined by honking, high-fives and hugs, and dancing. I saw the same looks of amazement on everyone's faces that I felt.

This is an incredible day for everyone in America. But for young people who have never known in our adult lives any president except George W. Bush, who is the opposite of the above qualities in every possible way, it's an especially great day, because we helped make it happen.

Young people tripled and quadrupled their turnout in the primaries, providing the margin of victory for Obama in crucial states like Iowa. Rock the Vote alone registered 2.5 million. The news commentators already acknowledged last night that the recurring promise of the youth vote has finally been delivered in this election, as early reports showed record turnout on Election Day as well.

The Millennials, born after 1978, are more diverse, tolerant and progressive than their elders, and we have suffered harshly from the economic policies of the previous administration. We're the largest and fastest-growing group without health care and the second most likely to declare bankruptcy. We're burdened by student loans, credit card debt, and the environmental and economic crises created by our elders. But this is our moment to help change the social compact in America for good. This is our movement.

Yup

"We’re probably entering a period, in other words, in which smart young liberals meet a stone-cold scarcity that they do not seem to recognize or have a plan for.

In an age of transition, the children are left to grapple with the burdens of their elders."

I think some of us do recognize the limits of this age, especially in environmental terms. But our plans are half-formed at best.

Reality-Based Progressivism

It's the end of an era that's lasted my entire adult life.
Our "long national nightmare" of war, economic collapse, and environmental destruction--well, it's far from over. But the leadership that drove us into this brick wall looks to be finally, decisively, on its way out.

For liberals, progressives and Democrats, with political power comes a new responsibility. Instead of railing at the screwups of the other side, we have to lead. We have to come up with solutions that work, and we don't have a lot of room to maneuver, thanks to the unpaid debts we're inheriting.

I think one of the crucial concepts of the new Progressive era is going to be evidence-based policy. This is when policymakers commission lots of comparative research (comparing both states and other countries) and take advantage of natural experiments to determine what really works for things like covering the uninsured, improving educational outcomes for urban kids, making our government more responsive, reducing carbon emissions, and raising retirement savings. It's an approach that unites the work of Roland Freyer, Geoffrey Canada, Cass Sunstein, & James Hansen, to name a few.

At the end of today, we will finally (finally!!) have a national leadership in place that agrees with the basic premise that the government can and should solve problems for people. And obviously we have a lot of problems.
If we focus on what works, we can maybe blunt the ideological hangover from the last eight years, and build an even stronger and more lasting consensus for reality-based progressivism.

PS. By the way, that Onion article is really incredible to read today.
"During the 40-minute speech, Bush also promised to bring an end to the severe war drought that plagued the nation under Clinton, assuring citizens that the U.S. will engage in at least one Gulf War-level armed conflict in the next four years.

"You better believe we're going to mix it up with somebody at some point during my administration," said Bush, who plans a 250 percent boost in military spending. "Unlike my predecessor, I am fully committed to putting soldiers in battle situations. Otherwise, what is the point of even having a military?"

On the economic side, Bush vowed to bring back economic stagnation by implementing substantial tax cuts, which would lead to a recession, which would necessitate a tax hike, which would lead to a drop in consumer spending, which would lead to layoffs, which would deepen the recession even further."

Reinventing Michigan

Last night I spoke to a group of students at Alma College, a small liberal arts college in the very center of Michigan, about the economic crisis and the election. This state, of course, has been one of the canaries in the coal mine of the US economy, and the students were eager to discuss possibilities for change. One young woman, an economics major, said she'd seen foreclosed homes for sale on eBay, one of which, in Saginaw about an hour from the college, apparently went to a Chicago woman for $1.75. We talked about whether they, as new graduates, would be receptive to an opportunity such as Baltimore's 'urban homesteading' program of the 1970s, which sold abandoned houses at nominal prices combined with low-interest construction loans to help people restablize and rehabilitate moribund neighborhoods. (These days, of course, you'd want to put some of the financing towards an energy retrofit). But rather than stay and make a go of it in Michigan, many of them said they were majoring in foreign relations and looking to opportunities in countries like South Africa and South Korea.

The students I sat with at dinner were equally concerned with the environment as well as the economy, which is why it's little surprise most of them opposed the bailout bid of Michigan's largest company, General Motors. "If they can't make efficient cars that people want to buy, then what's the point of propping them up with subsidies?" another econ major pointed out. Based on the experience of a classmate, he suggested the company's Asian subsidiaries might be better at adapting to market realities, including the potential new reality of a price on carbon. I didn't get to ask the opinion of the college's brand-new chef, Chef Dan, who served our salmon and tiramisu. Apparently he had been an engineer at GM for 20 years before taking an early buyout and going to culinary school.

How to Beat "Card Bind"; Try Credit Unions

I'm quoted in a Wall Street Journal article.

"Applying and getting denied for too many cards can actually hurt your credit score. "Don't do what I did," Ms. Kamenetz says. "Don't start applying for cards without a strategy. You aren't going to get the cards you want right away."

The Filene Research Institute, which has had me as a guest speaker, is spotlighted in a Time story saying community banking institutions like credit unions are looking pretty spiffy in light of the financial crisis.

Tax & Spend, Work & Rest

A commenter writes:
"don't highly progressive taxes discourage work? why work harder if its going to be taxed at ~45%? (fed,state, muni, soc. sec.) this is at the root of why so many upper-middle class folks feel so poor, they are paid better, and many of them work much harder to earn this higher wage, but come april 15th much of this is taken away. after you consider all the extra time/effort they spent earning the money, they may have been better off not working to earn that extra marginal dollar."

The recent performance of European economies shows that with a robust social safety net, people will pay higher taxes and be productive too.

And actually, I'm in favor of upper middle class and richer Americans working fewer hours, buying less stupid crap, and emitting fewer carbon emissions. We need a new paradigm of productivity that involves the concept of ENOUGH.

Joe the Plumber--Or Is $250,000 Enough to Feel Successful?

The "Joe the Plumber" who became famous for 15 minutes during last night's final presidential debate may have been a Republican plant. He's not a licensed plumber and his name ain't Joe.

But I think the debate over him actually showcased a genuine philosophical difference between Republicans and Democrats about taxation and individual wealth.

Joe has made a lot of money and he wants to expand his business and employ more people. He doesn't want to be punished for his success with tax increases. Obama replied, "It's not that I want to punish your success. I just want to make sure that everybody who is behind you - that they've got a chance at success, too," and he ended with an exhortation to "spread the wealth." This is a statement that was mocked by McCain as being "redistribution of wealth."

No matter how much Obama keeps saying he's going to cut taxes on 95% of Americans (which is definitely a bit of a pander, I have to say), that particular part of his proposal doesn't seem to resonate with a lot of people. On the one hand, the struggling, working class lady profiled in The New Yorker last week just didn't believe that Obama could raise enough money to right the disastrous budget by increasing taxes ONLY on the top 2%, even though that 2% currently earns one-eighth of the national income.

"“How many people do you know who make two hundred and fifty thousand dollars?" ...
The circumstances of Snodgrass’s life made it impossible for her to imagine that there could possibly be enough taxable money in Obama’s upper-income category—which meant that he was being dishonest, and that she would eventually be the one to pay."

On the other hand, a law student who came up to me at Hofstra the other day had the opposite problem supporting Obama's plan. He happens to know quite a few people who make $250K. In fact, he aspires to make that much himself in a few years. "Who's looking out for the young professionals?" he asked me. Well dude... young white men with law degrees are not first in line for anyone's sympathy in hard times. Even when they have $150K in student loan debt and may never be able to buy a house.

One significant obstacle we face in this country is that the poor people feel poor, and the rich people feel even poorer. In fact, here in New York City, people who make more than $200,000 a year are the MOST likely to say that they feel that they're falling behind economically. It seems crazy, but that's because inequality and income distribution has gotten so skewed over the past 25 years that the richer you got the more people just above you were making, and their income was growing faster than yours was. It's all relative.

The way out of the madness is, precisely, the redistribution of wealth--aggressive, progressive taxes on income and especially on investments and wealth, to bring these two ends of the spectrum closer together, and to create a social safety net and more economic security for everyone. I intend to vote that way and to support that even when (if) I nudge into the bracket where it becomes against my own narrow economic self-interest to do so. In fact, I don't think it is even against my self-interest. I don't ever want to live in a country, or live a life, where $250,000 a year doesn't feel like enough.

Brian Lehrer Show Broadcasting Live from Hofstra U

Listen in tomorrow morning starting at 11 am EST for a student's-eye view of the election at the site of the last presidential debate, with live commentary from me, Michael Dannenberg of the New America Foundation's Education Policy Program, and Hofstra's provost.

Reality Check for Some Teens

I truly don't believe that they're all this way, but the Times says the times are tough for kids who expect a designer bag in return for math grades.


“The sooner we have these conversations in the family and as a society,” said Dr. Manning, the economist [author of Credit Card Nation], “the sooner we can focus on core values, and have a more realistic dialogue about the meaning of happiness and money.”

The Clock is Ticking

"Key policy players have largely wasted the past four weeks. Now they’ve reached a moment of truth: They’d better do something soon — in fact, they’d better announce a coordinated rescue plan this weekend — or the world economy may well experience its worst slump since the Great Depression."

The Bear Was Right

Nouriel Roubini, the economist who predicted everything that's happening now back in February, had this to say yesterday:

"The U.S. and advanced economies’ financial systems are now headed towards a near-term systemic financial meltdown as day after day stock markets are in free fall, money markets have shut down while their spreads are skyrocketing, and credit spreads are surging through the roof."

"The crisis was caused by the largest leveraged asset bubble and credit bubble in the history of humanity... excessive borrowing by financial institutions and some segments of the corporate sector and of the public sector in many and different economies: an housing bubble, a mortgage bubble, an equity bubble, a bond bubble, a credit bubble, a commodity bubble, a private equity bubble, a hedge funds bubble are all now bursting at once in the biggest real sector and financial sector deleveraging since the Great Depression."

... At this point severe damage is done and one cannot rule out a systemic collapse and a global depression."