Larry Littlefield's blog

How Then Shall We Live: “Retirement” in the Wake of Generation Greed

There is a commercial on the airwaves right now that I just can’t stand: an investment company provides some quotes from a series of people on the first day of their retirement – the first of an average of 6,000 days, they say. That’s an average of 16.4 years. For most of human history, however, “retirement” has meant a brief period of leisure after a full life of working, generally a period when working was no longer possible. According to the Historical Statistics of the United States, the 1890 the decennial Census found 68.3% of American men age 65 and over to be in the labor force, working or looking for work, even though back then “work” usually meant physical labor. The figure drifted down to 54.0% in 1930, before the passage of Social Security, and may have hit bottom around 1985, when just 16.8% of married men 65 and over were in the labor force. The large-scale entry of married women into the labor force obscures other trends, but the percentage of single women age 65 who were in the labor force fell from 19.7% in 1970 to 9.7% in 1998.

For a fortunate generation or two, some workers were allowed to spend decades in retirement, often having as many non-working years supported by others as they had previously worked. That was possible because younger generations were richer, larger, better educated and more productive, and could easily carry the smaller number of modestly living retirees from prior generations. It was also possible because those older generations had saved for retirement. Today, younger generations of Americans are no larger, no better educated, and lower paid than the retirees they are expected to carry. The generations now in or near retirement have been more affluent during their working years, and expect to live similarly well in retirement, and yet most of them have borrowed rather than saved. Those younger, for the most part, will not get pensions, and may not get much Social Security. But encouraged by Wall Street firms seeking fees, the myth of decades of high consumption leisure lives on. Something that is only really possible at other people’s expense.


Message From Wisconsin and California

So why did blue state Wisconsin re-elect far right Governor Scott Walker? And why did two California cities overwhelmingly approve pension cuts for current employees, with one effort led by a liberal Democrat?

Because a growing share of the rest of the 99 percent are realizing what was done to them. How the public employee unions, relentlessly pursing their own interest with retroactive pension deals and not concerning themselves with the consequences for others, have wrecked the future of public services all over the country. Realizing it after tax increase upon tax increase, service cut upon service cut, year after year, even as those at the losing end become worse off themselves.



How Then Shall We Live: Food (RIP Windsor Terrace Key Food)

At first glance, food doesn’t even need to be in this series of posts. For most of human history, getting enough food was the primary preoccupation of human beings. In 1909, food accounted for 27.3% of the spending of the average U.S. household, according to Consumer Expenditure Survey data cited here. The figure was 43.0% for “normal families” in 1901. Today, food only accounts for 12.7% of the spending of the average American household. That share has been going down, and the share of total spending on housing, transportation, and health care has been going up, as food has become cheaper and cheaper. And 5.2% of total spending is for food away from home, which is money spent not so much on food as on people who cook it, serve it, clean up and provide a place to eat it. Even the 7.5% of spending on food at home has a substantial non-food component, in partial or full meal preparation and packaging. Increasingly, American’s rely on ready to eat, or heat and serve, food even at home. But for those who make cheaper and healthier choices, the variety of foods in a typical supermarket – compared with 40 years ago – is tremendous. Everything from a variety of whole grain breads to yogurt to 1% and 2% milk, none of which were widely available in the 1960s.

Despite the abundance, if not overabundance, of low cost food, however, “food issues” continue to be raised in the national dialogue. The food aid industry continues to assert that many Americans are going hungry, despite a “food stamp” program that is an absolute entitlement and would seem to make this unlikely. In 2009, according to a survey cited by the now-cancelled Statistical Abstract of the United States, 14.7% of U.S. households were “food insecure,” up from 11.0% in 2005. At the same time, the U.S. is suffering from a soaring rate of obesity, a malady that is spreading throughout the world as the U.S. way of life is copied. Total calories in the U.S. food marketplace went from 3,200 calories per day in the 1970s to 3,900 in 2005, although much of this is wasted. Blame has been cast on “industrial food” and on “food deserts,” places where full service grocery stores are in short supply. But is there really a problem? And if so what is it?


Sorry About the Lost Comment

The latest spam attack trashed my post and somehow got rid of the link that allowed me to delete individual comments, so I had to turn comments off. Note to SOBs: If anyone puts spam on one of my recent posts, I will delete it, and if I can't, I will remove all comments.

How Then Shall We Live: Transportation in the Wake of Generation Greed

Decisions on housing and transportation are inter-related, because in some places one automobile per adult is required while in other places there are alternative ways of getting around. And one of the big changes over the past 50 years is a decrease in the share of Americans living in places where there are alternatives, and an increase in the number of households with more than one motor vehicle. According to the 2010 Consumer Expenditure Survey, in fact, the average American household had 2.5 people and 1.9 vehicles. The large-scale entry of women into the out-of-home workforce explains some of this, but the average American household only had 1.3 workers in 2010. Considering only those households with a respondent age 35 to 44, the averages were 3.3 people, 1.3 children under 18, 1.6 wage earners – and 2.0 vehicles. In much of the U.S., if you don’t have your own car you are home-bound, or at least think you are. You cannot even go for a walk without getting in a car.

There are not many places in the United States where people can expect to live without any of their own motor vehicles for their entire lives. I don’t expect that to change. There is enormous demand, however, for places where young people and seniors can get around without having to drive, and where families with children can get by with just one vehicle. That demand far exceeds the supply. And that is something that will have to change, because younger generations will not be able to afford one car per adult. Not on their lower salaries. Not given their larger burdens. Not in a future when Americans are not the only people on the planet rich enough to compete for the world’s fossil fuels, with the most of cheaply accessed fossil fuels having already been used up.


How Then Shall We Live: Housing in the Wake of Generation Greed

The bursting of the housing bubble seems to have awakened some people to some realities about housing. Housing isn’t a household’s largest investment, it is a household’s largest expense, and one of the expenses that is easiest to cut. A house or apartment is a place to live, and it doesn’t make sense to lock oneself in by buying one unless one’s personal and career circumstances are very settled and they are likely to stay in one place indefinitely. Moreover, young people are the buyers of houses, while older people (and today financial institutions collecting money for wealthy bondholders) are the sellers. Young people can take back many of the financial disadvantages that older generations have foisted on them, in lower wages, higher future taxes, and future reductions in public services and benefits, by paying those older generations and financial institutions rock bottom prices for housing (and stocks). Holding out until the cost of their housing is perhaps 10 or 15 percent of their income, rather than stretching until it absorbs half. And if older generations are unwilling to sell cheap, then more jobs will be created by the young moving to new housing units in new types of neighborhoods, rather than merely paying up for the existing oversized housing in auto-dependent neighborhoods that prior generations have chosen.

And yet not everyone has absorbed those lessons, and there is no guarantee they will stick. There was a housing bubble in the late 1980s too, but only in the Northeast and in California, and many of my peers were financially crushed as it deflated, particularly those who had purchased apartments with the expectation of selling for more and buying their permanent residence later. At the time I thought a lesson had been learned and the bubble would not be repeated. Wrong. Moreover, the federal government has been going $hundreds of billions into hock, money younger generations will have to pay back, to keep the price of housing – and the value of paper wealth backed by houses -- from falling further. So what to do about it? <


How Then Should We Live? Thoughts on Possible Adaptations in Household Economics in the Wake of Generation Greed

Just over four years ago, when any real opportunity to improve the New York City schools was de-funded by the pension deal to allow New York City teachers to retire years earlier, it was for me both a last straw and an epiphany of sorts, as reflected in this post. Our common future has been sold, and the increasingly frantic efforts by the beneficiaries to delay the reckoning and shift the blame only amount to selling the future even more. What is best and fair for everyone, now and in the future, was never really up for discussion among those in the room making deals in their own interest, I now understand. The result could be, and perhaps should be, institutional collapse.

Realistically, I concluded, “perhaps all the time, energy and money directed toward trying to reform or improve our social institutions, particularly our government institutions, would be better spent preparing to do without them.” Or try to replace them. But rather than writing about such preparations, I’ve spent most of the last four years tallying the damage and venting. Over the next few posts, however, I’ll try to review what the household economic situation is now, and what it is likely to become, for each of the most important goods and services each household needs to obtain and pay for – housing, transportation, food, health care, education, and income in retirement. I’ll review the reasoning behind my personal choices, choices people make mostly in young adulthood, and describe the options that will remain in the environment Generation Greed will leave to those who. I’ll describe how federal, state and local policies enacted by Generation Greed politicians have affected those choices. This post provides some background, while those following, written as I have time, will go through each of the major categories of household expenditures in turn.


Mutual Financial Companies In The Era of Generation Greed

Looks like some of those damn capitalists are making uncomfortable comparisons between executive pay and shareholder (or in this case policyholder) dividends again. From the Boston Globe: “Phantom stock and phony options still add up to nearly $200 million in very real United States currency, all of which (the former CEO) took out of Liberty Mutual in his last four years as chief executive…The only phantom anything are the dividends that never got paid to the policyholders that actually own Liberty Mutual. What these owners got were rate hikes, while Boston and Massachusetts residents gave the company $46.5 million in tax breaks, all to help fund an utterly grotesque level of executive pay.” The board members and current executives defend that pay. “Friday’s performance revealed that these guys are so out of touch that they truly, honestly believe they’re worth that million a week, or $192,000 a day, or $24,000 an hour - and can’t for the life of them imagine that you don’t. They actually believe the system is fair, the one they stacked with interlocking boards of directors of like-minded people paid a couple of hundred thousand dollars a year to approve each other’s pay.”

Generation Greed Wants to Use Up the Future and Dictate it Too

Last March featured one of the angriest opinion pieces I have ever read in Planning magazine. The subject was the Republican House Transportation bill, which seeks to eliminate dedicated funding for mass transit and other alternative modes while increasing funding for highways. This would restore the situation before the arrival of pro-choice Ronald Reagan, when the cities were taxed (in many cases into oblivion) to build infrastructure for growing suburbs, in a development pattern the free market would not have chosen. My interest in the article is not based on the specific issue – frankly given the damage it had done I wouldn’t mind if all federal infrastructure spending was eliminated, and everyone had to pay for their own. It is based on the “big picture” discussion at the end.

“Budgets allocate resources, demonstrate priorities, and determine winners and losers in any society. So where does this leave those who are now choosing different options when they are provided by the market? The Gen Xers and the Millennials are making very different choices than their parents or grandparents. Their brand loyalty is up for grabs. And that frightens the dumb growth industries that now seek to tilt the playing field back in their favor.” Aha. And guess what, aside from the one percent and future retired public employees, Gen Xers are poorer than Boomers, and Millenials are poorer than Gen Xers. And they are being forced to pay more for less government to offset the greed of the generations who went before, and control the government. They can’t afford the lifestyle older generations had chosen any more than the older generations could, which is why older generations made younger generations pay for it. You’d think older generations would leave them alone to get by as best they can. But no.


Who Are Those Similar Natural Gas Customers?

We try to be thrifty with our energy use around my house, so it’s natural for us to wonder how we are doing, compared with those in similar circumstances. To evaluate if there is something else we could be doing to use less. In the month to March 13, for example, we used 131 therms of natural gas according to our National Grid bill, for heating, hot water and cooking. Is that a lot or a little?

It seems that either National Grid sort of wants us to know, or there is some regulation requiring them to tell us. More likely the latter, based on the quality of information provided. According to our bill, “similar customers’ average usage high/low range” was 37 therms to 297. So what does that tell me about our 131? Nothing.


Posters and Politics

The Daily News had an article yesterday about the big money owed by former (and future) Mayoral candidates Bill Thompson, John Liu and Bill de Blasio for campaign infractions four years ago. “Putting signs on public property is a campaign no-no, and each citation carries a $75 fine” according to the News. Well yes that is the law, and always has been. But to understand what this city used to be, and still is under the surface, and might be going back to, you have to consider the way it used to be enforced.

Against challengers who were not a part of the political machine, but not against incumbents. The fines for the incumbents would be waved as long as they eventually took the signs down. Now just imagine that you are an ordinary citizen, an outsider, upset about the way things are going, and decide to run for a public office, as I did in 2004. But you did not know about this little tradition. You see other candidates putting up signs, so you put up signs, say 500 little photocopies. And then they come after you not for $37,500, but for $187,500, because they issue a new ticket every day. They can go after your house, if you have one. They can go after your paycheck, if haven’t had to leave your job because you were a candidate. The judges, all put on the bench by the local pols, might reach an accommodation if you had leaned your lesson. And not about putting signs on public property.


Hedge Funds Kiss Our Assets Goodbye II

I wrote the post "Hedge Funds Kiss Our Assets Goodbye" back in 2007. I was reacting in terror to the fact that then-NYC Comptroller William Thompson was shifting to "alternative" assets such as hedge funds and private equity. In an effort, I believe, to hide or deny the fact that the retroactive pension enhancements his union supporters got in deals up an Albany would wreck public services, by somehow getting the fantasy 8.0% rate of return.

Well now the New York Times has found those pension funds that shifted to alternative investments ended up paying higher fees to Wall Street while getting lower returns. Which is just what anyone who wasn't being paid to say otherwise would have predicted. I'm hardly a financial whiz, but the ripoff was clear to me. The Times article talks about what happened to public employee pension funds in Georgia, Pennsylvania, Oklahoma, California and Austin Texas -- but not New York -- over the past five years. So can someone tell me...how screwed are we?  The ongoing spiral of tax increases and service cuts to pay for those deals is bad enough as it is, without Wall Street ripping us off more.


Did Obama's Lawyers Bring Up (42 U.S.C. 604(c)) Saenz v. Roe?

President Obama and the Democrats thought they could mute opposition to health care reform by adopting the Heritage Foundation Romney plan, and imposing a regressive mandate instead of a progressive or proportional tax. It seems that may not turn out to be the case. Romney now claims it is fine for states to provide/require universal health insurance, but not the federal government.

But what about the Supreme Court case overturning a key part of the Welfare Reform Act of 1996? The Court ruled that states could not limit the benefits of those who move (or are sent) from less generous states to more generous states when they were in need, while benefitting from the lower taxes of the less generous states before and after. How does Massachusetts prevent South Carolina from sending its citizens north to that state when they fall ill? Why do they end up in New York, on our Medicaid plan, instead? New York had better find out, and take action.


New York’s Local Government Employment: Has A Trend Reversed?

The annual rebenchmarking of Current Employment Survey data revealed a happy surprise for New York City; private sector employment has gone up more than previously thought. But it also revealed a surprise for the rest of New York State. Based on annual average data, local government employment fell for the second year in a row. The spreadsheet can be accessed here.

From 1990 to 2009, at a time when New York City’s local government employment fell by 10,500 jobs (2.2%), local government employment in the rest of New York State increased by 127,400 jobs (23.3%). There was little population growth in the rest of the state during these years, and if once excludes the Health Care and Social Assistance sector, which is substantially government-financed, private sector employment in the rest of the state fell by 114,800 (3.5%). But from 2009 to 2011, while local government employment in New York City fell once again by 14,200 (3.1%), local government employment in the rest of New York State also fell, by 16,400 (2.4%). So has the “everyone on the payroll” policy finally ended in the rest of the state, are the rising number of ex-government workers being paid to be retired crimping the number being paid to work, or is this just a temporary result of the recession?


Esquire Magazine Outs the Generational War

Perhaps now that one part of the MSM has broken the wall of silence, the sad reality will come out in the open. The young are clueless, but always have been. That's why in the past it was up to those older to look out for their best interests. Then the majority decided to stop doing so.

"Nobody ever talks about generational conflict. Who wants to bring up that the old are eating the young at the dinner table? How are you going to mention that to your boss? If you're a politician, how are you going to tell your donors? Even the Occupy Wall Street crowd, while rejecting the modes and rhetoric and institutional support of Boomer progressives, shied away from articulating the fundamental distinction that fills their spaces with crowds: young against old." Actually, it should be the young and the old who care about their own kids against those who don't. 



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