Millennials grew up hearing the world was at their fingertips. But as adults, they are having a hard time making their mark, as the economy worsens and the cost of everything soars.
After entering the labor force following the 2007 financial crisis, many young Americans learned the hard way that pursuing a higher degree meant taking on a great deal of debt. Later on, they faced a tough after-school reality, as few managed to find gainful employment. As they eventually realized, surviving in the grown-up world meant taking on any job available to survive. But that meant they couldn’t afford the things they thought they would.
Making long story short, millennials were handed a bad deal from the get go, thanks to government’s incessant intervention in the education and housing market, distorting the signals that would have given these young men and women a better idea of what they were getting into. Now, a report released by the Organization for Economic Co-operation and Development (OECD) is further helping to clarify just how dire their situation is, as it has concluded that the rising costs of living are keeping young people from entering the middle class.
Worse yet, the report explained, young adults are having a hard time starting their own families as they struggle to pay off their debt and buy a home.
According to the report, while millennials consume a great deal, being a driving force of the economy, they are falling behind.
Not being able to live a comfortable life, unlike their parents and grandparents, people in their 20s and 30s are having a hard time adjusting. But while this is true in most of the wealthy countries in the world, OECD’s researchers are not calling for an end to the monetary and regulatory policies that drove the costs of living up everywhere in the first place. Instead, Gabriela Ramos, chief of staff for the OECD, is calling for governments to intervene further.
“Our analysis delivers a bleak picture and a call for action,” Ramos said. “The middle class is at the core of a cohesive, thriving society. We need to address their concerns regarding living costs, fairness, and uncertainty.”
To the intergovernmental organization, the fact the top 10% of earners in the richest countries now hold half the wealth means that governments must get involved now. After all, inequality and the rising housing costs are millennials’ main issues, researchers said.
But despite the OECD’s recommendations, there’s little governments can do by getting more involved. Instead, governments must step out of the way if they really want to help.
Only Freedom Can Fix Government’s Mess
Central banks around the world have been in love with printing money for quite some time.
In the United States, low lending interest rates coupled with increasing balance sheets helped to pump easy money into the economy. What followed was a long period of malinvestment enabled by the government and the Federal Reserve, prompting an artificial growth that was unsustainable in the long run.
After a few rounds of bailouts and even more easy-money policies, things were clearly not going anywhere as there was no real increase in saving. As economist Ryan McMaken put it, a market economy can only see an increase in spending when there’s “real saving and investment” beforehand. So any growth that follows a central bank’s creation of new money may even seem sound, despite being artificial. But when the bubbles created by government’s bad monetary policies bust, we see more foreclosures, defaults, and bankruptcies. What follows is the recession, which allows for the market to heal itself as real wealth is “redirected toward truly profitable sectors of the economy that don’t rely on constant stimulus and easy money from the central bank,” as McMaken put it. Unfortunately, that’s when governments step in to “fix” the economy, doubling down on the same policies that led to the recession in the first place.
If the OECD is serious about helping young adults, urging government to implement more interventionist policies isn’t the way to go. Unless, of course, the organization wants to prolong young people’s suffering.