1/Today's @bopinion post is about a very important trend, and contains a very big idea.
It's about how Millennials (and young Americans in general) haven't been able to build wealth, and how to fix that.
bloomberg.com/opinion/articl…
It's about how Millennials (and young Americans in general) haven't been able to build wealth, and how to fix that.
bloomberg.com/opinion/articl…
2/Just 6 or 7 years ago, the word "Millennial" meant "young people". It carried a connotation of rebelliousness, freshness, and youth.
No longer.
No longer.
3/Millennials are easing into early middle age. The average Millennial is now in their 30s. Their rebellious youth is over.
But economically, they aren't ready. Repeated recessions, inequality, and student debt are dragging them down.
bloomberg.com/opinion/articl…
But economically, they aren't ready. Repeated recessions, inequality, and student debt are dragging them down.
bloomberg.com/opinion/articl…
4/Hopefully you saw this epic thread about how and why Millennials haven't been able to build wealth the way earlier generations did. If not, check it out.
5/And here is a whole mini-book full of careful studies detailing how and why Millennials haven't been able to build wealth.
Hint: It's not because they're failing to save money.
newamerica.org/millennials/re…
Hint: It's not because they're failing to save money.
newamerica.org/millennials/re…
6/The housing crash and the Great Recession were a big part of it. 
7/Student debt is also a part of it, but mostly for people who drop out of school. Millennials with bachelor's degrees actually are almost equal to previous generations in terms of wealth. It's those without degrees that are way behind.
stlouisfed.org/open-vault/202…
stlouisfed.org/open-vault/202…
8/Old people's wealth has increased over the past 30 years, while young people's wealth has fallen.
9/Meaning that old people now control even more of society's wealth than before, and young people even less.
10/A big reason for this is homeownership. Young people own fewer homes than they used to.
11/The middle class typically holds most of their wealth in their homes. Stocks are a rich person's game.
12/At this point you may ask: "So what? Millennials will just inherit those houses, and that wealth, when their parents die!"
Two huge problems with this. First of all, most of that will go (unfairly) to white Millennials. Second, it'll be too late to help them start families.
Two huge problems with this. First of all, most of that will go (unfairly) to white Millennials. Second, it'll be too late to help them start families.
13/So what do we do?
One policy is a one-time cancellation of student debt, and a shift to income-based payment going forward. This will help college grads, but it will also help the huge number of people who drop out of college and have to pay back debt without a degree.
One policy is a one-time cancellation of student debt, and a shift to income-based payment going forward. This will help college grads, but it will also help the huge number of people who drop out of college and have to pay back debt without a degree.
14/Another idea is to implement a wealth tax and give the money out to people, possibly in the form of a UBI.
Problem is, it takes a long time for income to turn into wealth (if it ever does). Also, it may not give people the sense of security and control that a house does.
Problem is, it takes a long time for income to turn into wealth (if it ever does). Also, it may not give people the sense of security and control that a house does.
15/The solution almost certainly has to come from housing. Housing wealth must be redistributed!!
16/So how do we redistribute housing wealth? On the tax side, we just tax it. But as for how to get wealth into the hands of young people, I have a Big Idea.
And that idea is based on Singapore.
lkyspp.nus.edu.sg/docs/default-s…
And that idea is based on Singapore.
lkyspp.nus.edu.sg/docs/default-s…
17/Singapore has a very interesting and unique housing system.
The government builds most of the houses. Then it sells them to private owners (actually it sells 99-year leases). People can then resell their homes. This is their main form of wealth.
lkyspp.nus.edu.sg/docs/default-s…
The government builds most of the houses. Then it sells them to private owners (actually it sells 99-year leases). People can then resell their homes. This is their main form of wealth.
lkyspp.nus.edu.sg/docs/default-s…
18/The government also gives financial assistance for young families to buy homes. Buying a home cheaply, and being able to sell it for a much higher price when you retire, means you build wealth over your lifetime.
19/In other words, Singapore does what the U.S. did with the G.I. Bill and the construction of the suburbs -- but it does it for every generation, not just one or two generations like we did.
20/Now, I'm not suggesting we copy Singapore's system EXACTLY. But we can do something like it.
Step 1: Have the government build and then sell lots of new housing, using eminent domain to acquire land cheaply.
Step 1: Have the government build and then sell lots of new housing, using eminent domain to acquire land cheaply.
21/Step 2: Give young people downpayment assistance to buy their first home, just like we do for veterans with the G.I. Bill. Fund this downpayment assistance with an inheritance tax.
22/Step 3: Use the pace of government housing construction to make sure that young people own a decent return on investment over their lifetime, but not so high of a return that the next generation is priced out (as has happened with the Boomers pricing out the Millennials).
23/And voila! Housing wealth, and the independence and security and sense of ownership that come with it, for every generation.
Good for the Millennials, good for the Zoomers...good in perpetuity.
Good for the Millennials, good for the Zoomers...good in perpetuity.
24/Conservatives are going to get annoyed at the idea of taxing inheritances, and having government build houses.
But they should think about this: If you don't give young people a stake in the system, it will exacerbate social unrest.
bloomberg.com/opinion/articl…
But they should think about this: If you don't give young people a stake in the system, it will exacerbate social unrest.
bloomberg.com/opinion/articl…
25/With my proposal for a Singapore-style housing system, we could give every young American generation a fair stake in the economy and the country. And we could bail out the generations that we've screwed over with economic mismanagement.
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bloomberg.com/opinion/articl…
(end)
bloomberg.com/opinion/articl…
