Young people have a different view on the world than older generations who have made the most from capitalism
Youth is the one thing that most people would want – a chance to live it all over again – but it is not an easy time to be young at the moment. Young people are facing the toughest job market in decades after having gone through an education system which has been neglected for years with more money being spent on pensions instead. So it may not be surprising that youngsters are not as keen on capitalism as older generations. And this is not just part of a rebellious phase but rather a response to an economic system which is geared to benefit long-time members to the detriment of new-comers.
To start with, let’s look at the job market. Unemployment rates remain stubbornly high in most countries with developed economies but the proportion of young people without jobs is typically substantially higher. For example, more than half of younger workers in Spain and Greece are unable to find work. Joblessness not only has temporary effects such as a loss of income but studies have shown that youngsters who enter the market when the economy is sluggish often earn less over their lifetimes. The current situation for young people goes beyond this to talk of a “lost generation” who may become disillusioned with the job market and remain disengaged even when employment prospects improve.
This situation is made worse by a system fronted by labour unions geared to protecting the jobs of existing workers who come from an older generation. This trend has been most damaging in Europe where the efforts of unions have resulted in a two-tier labour market. Older workers have secured themselves stable jobs due to rules resulting in high redundancy costs whereas younger workers are typically employed on short-term contracts which are first to be terminated when job cuts are needed. The rise of globalization also means that new-comers to the workforce are competing for jobs with workers in China and India as well as people in their hometown.
This increased competition for jobs along with automation of work using computers and other new technologies has taken away many of the administration jobs that were the mainstay of work for the older generation. Better paying jobs are increasingly limited to jobs requiring higher levels of education but this too is an area where young people have been short-changed. Education is faced with spending cuts and students are being asked to bear a substantial portion of the costs as countries deal with high levels of debt as well as demands from older workers for lower taxes. The irony of this situation is that spending on pensions and medical bills for the elderly is on the rise at the same time as education is suffering from cutbacks – societies are spending money on the old rather than investing in a new generation.
The housing market provides further evidence of the different fortunes of the older and younger generations. Trying to get onto the property ladder is only getting tougher for first-time buyers whereas existing owners of property are benefitting from higher prices. House prices have been surging in some places despite the economic doom and gloom as governments in many countries have even been bringing in measures to push up prices for real estate as a means to revive economic growth (which is why a rebound in UK house prices is not all good news).
With lower pay in less stable jobs (or unemployment) awaiting many youngsters, they are likely to be the first generation in a long time that will end up worse off than their parents. The older generation must take part of the blame with many elements of the economy set up for their benefit – a seemingly obvious outcome in a world defined through competition where everyone from companies to political parties are battling it out. The spoils from winning in this competitive environment are on the wane in wealthier countries as global economic rebalancing shifts more wealth to China and other countries on the rise (which is part of A New Inconvenient Truth).
Youngsters have experienced the harsher side of a market economy and it is no surprise that they see the current system as not working in their favour. Surveys show a growing distrust of capitalism and increasing support for social spending among young people. The disillusionment of young people has also extended to politics so it is later generations which vote and give direction to the policies of government. But it seems obvious that changes beckon as the younger generation with their different experiences and views on the world take over the levers of power. Marketing experts have been quick to jump on changes in habits of different age groups such as Generation X or Y. Politics may see similar changes coming with the rise of a new generation – it will be interesting to see what world they will build for themselves.