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How the baby boomers wrecked the economy for millennials

A Wall Street Journal columnist and I disagree about what went wrong.

A photo illustration of a $5 bill and a crowd of people. Photos: Getty Images, Photo illustration: Javier Zarracina/Vox

Did the baby boomer generation destroy the economy for millennials?

Joseph Sternberg, a columnist at the Wall Street Journal and himself a millennial, argues that they did in his new book, The Theft of a Decade: How the Baby Boomers Stole the Millennials’ Economic Future. According to Sternberg, millennials have found themselves saddled with a broken economy and a combustible job market thanks to the careless choices of baby boomer politicians.

I’ve interviewed anti-baby boomer authors before, but what makes Sternberg’s book stand out from the rest is his unique diagnosis of the problem. Rather than focus on market excesses, financial malfeasance, or corporate greed, Sternberg believes the problem is that Republicans and Democrats have continually sought a “third way” between state intervention and market freedom. The result, he writes, is a dysfunctional system that encourages corruption and rigs the game in favor of Big Business.

I had some objections to Sternberg’s argument, so I reached out to him and asked him to make his case.

A lightly edited transcript of our conversation follows.

Sean Illing

What do you mean when you say the baby boomers stole the millennials’ economic future?

Joseph Sternberg

I guess the way to answer that is to take a step back and think about the big question I was trying to answer when I sat down to write the book. And that question was, do millennials have a point?

We’re saying, “We’re having trouble finding our feet in the job market. We’re struggling to deal with our student debt problem. We’re struggling to climb onto the property ladder.” And the boomers are looking at us and they’re saying, “Life has never been as good for anyone as it is for you. You guys can’t complain about not being able to climb onto the property market when you’re paying $4 for a Starbucks coffee, $8 for avocado on toast for brunch.”

So I was really trying to figure out which side of that argument is right, and I think the millennials are right. We have really suffered from the aftereffects of the financial panic and the Great Recession a decade ago, in a way even previous generations that graduated during recessions haven’t.

For example, I talk about how we discovered that we were hitting the job market for the first time right when the unemployment situation from the Great Recession was the worst, and how ever since then, it took a long time for the unemployment rate to drift downward. That meant that we were having to compete with older workers in the labor market during the phase when we were really trying to find our way. That has a lot of implications for the economic instability that a lot of millennials still feel because it turns out to be really hard to recover from that.

We suffered from the educational debt phenomenon because when we couldn’t find jobs, a lot of us went to college. Or we got graduate degrees. Our boomer parents encouraged us to fund a lot of that with debt, on the premise that it would eventually pay off in the job market.

But that was clearly wrong, and we’re paying the price for it.

Sean Illing

We agree about all that, so the question is really, how did this happen? What are the policies or the decisions most responsible for this situation?

Joseph Sternberg

I think it’s less about specific policies and more about an attitude that led to the policies. The boomers did face their own challenges. They’re saying, “Well hey, hang on a second. We graduated into the stagflation in the late ’70s, and the economy in the early ’80s was a mess, and we recovered from that.”

But the problem is the boomers extracted from that certain attitudes about the way policies should work. A big problem was this kind of economic centrism that developed on both the left and right in various ways.

Sean Illing

Can you clarify what you mean by “economic centrism”?

Joseph Sternberg

What the boomers were really trying to do throughout most of their political careers was to have both the protective power of the state but also harness the productive power of the market. And that produced many policies during the ’90s that tried to steer a lot of investment into particular corners of the economy, like the tech economy.

It showed up in things like the ownership society that we heard a lot about in the George W. Bush administration, where policymakers tried to use the long arm of the government and institutions like Fannie Mae and Freddie Mac to try to boost ownership for boomers who had been worrying that they were getting left behind in the housing market.

However, that actually created a lot of instability in the economy, which produced this lingering crisis for millennials.

Sean Illing

I want to push you a little on this because, frankly, I was frustrated by what seemed like a determined effort to excuse some of the excesses of capitalism in your book. You’re comfortable blaming “economic centrism” for a lot of failed half-measures, but you go out of your way to defend corporate greed and the financial industry. Why is that?

Joseph Sternberg

The reason I tried to veer away from the role of finance and corporate greed in all this is that I think it’s a potential trap for us. Greed is obviously a factor here, and I think conservatives are often too dismissive of that. I get that argument.

But I also think that we need to think a little bit bigger about some of these issues. And what I worry about is that if you focus solely on the financial greed or some particular aspect of some particular industry, there’s a good chance we’ll end up making the distortions a lot worse.

For example, I point to a problem that we’ve developed right now in the financial system, where if you are a large company that can tap the bond market, this has been a terrific decade for you. But if you’re a small company that needs a bank loan in order to hire that fourth employee, who’s probably going to be a millennial, you’re really suffering.

And that’s what can happen if you try to focus too much on trying to clamp down on specific behaviors within the financial system, within the banking industry or the like, and you lose sight of the bigger discussion that we need to be having about how these distortions were created in the first place and how trying to lean on specific levers of economic policy or push specific regulatory buttons simply creates more distortions.

Sean Illing

I think you’re trying to wall off criticism of the market system itself, but let’s try to get at this another way. You write that the real problem is that political leaders “have gotten in the way of the best parts of our financial web.”

But I think you make a serious mistake by inserting a barrier between the incentives governing Wall Street and the incentives guiding politicians. Because our political system runs on private money, the incentives of Wall Street become the incentives of politicians. It’s the corporate lobbyists who write the laws, who shape the policy, who set the agenda.

I think your analysis deliberately obscures this part of the story.

Joseph Sternberg

I won’t argue with you about the extent of lobbying that goes on, and I think that this was actually a characteristic of boomer governance, that you would have these revolving doors on both sides of the aisle between industry and government. I totally agree about that.

I’d recast the problem a little bit, though, and say that it’s about the lobbying opportunities that pop up the more the government tries to regulate that kind of activity. And I think that this is a kind of conversation that millennials actually need to have, and it’s also something that we really need to keep in mind if we are going to go down the path that politicians like Elizabeth Warren or Bernie Sanders are advocating, where they are arguing for more activist regulation of some of these parts of the economy.

This kind of regulation inevitably creates winners and losers, and the winners are generally the people who are inside the system and have the wherewithal to lobby for a particular outcome that they want. The losers are the little guys on the outside of that.

I think that actually now the thing that we need to be careful about is suggesting that the regulation always benefits the little guy. I think the regulation usually benefits the big guy.

Sean Illing

Well, maybe the problem is the centrism you noted a minute ago. Maybe a more sweeping overhaul, of the sort Elizabeth Warren or Bernie Sanders suggests, is necessary.

Aside from that, you also pin a lot of blame on individual politicians for making the wrong sorts of investments in the country or the economy. But if there’s been a change in the sorts of investments political leaders are willing to make, it’s not because the voters forced those changes, and it’s not because the politicians decided on their own to abandon public infrastructure and invest in labor replacement, for example. It’s because the special interests that prop up Washington pushed them in that direction.

My sense is that you ascribe too much agency to political leaders and don’t focus enough on the forces shaping their decisions in the first place.

Joseph Sternbert

I can definitely see that kind of argument, and it’s an important conversation to have about how these things came to be. The issue of how much agency to ascribe to politicians, how much of it is driven by the lobbying activity, I guess that’s partly unknowable, and it’s especially difficult to get to the bottom of it while the policymaking is actually happening.

But I’ll be honest and say this is probably where my bias is as a free-market conservative, although not necessarily as a Republican. My instinct is to think less about a more activist government and instead focus on cutting off the opportunities for the lobbying and the rent-seeking before they even arise, rather than trying to manage the effects afterwards.

Sean Illing

Right, and I think it’s that bias that frustrated me a little bit, and to be honest I have my own biases here. But your book reads to me like a defense of conservative economic orthodoxy, only it’s masked in this millennial-friendly package. But as far as I can tell, it recapitulates the same arguments I’ve heard from libertarian conservatives for years.

Joseph Sternberg

Well, I’m not sure that’s an entirely fair characterization of what I’m trying to say in the book. I think that you would struggle to find people who would say the market got us into this so let the market get us out of it.

I think the more common refrain that you tend to hear on the right is that actually, the government interference in the market got us into the crisis and so we need to find ways that we can dial that back to get us out of it. I mean, that’s why you tend to find conservatives who are so panicked about the issue of Fannie and Freddie, and their history before the crisis and their fate since then.

I think it’s important for millennials to revisit some of these arguments instead of assuming that the financial crisis has settled them. One of the problems that we face politically is that a Republican was the president at the time the 2008 crisis started. And in fact, some Republican politicians might feel very invested in some of the policies, especially in the housing market that contributed to that crisis.

Whereas what’s really interesting, from my perspective, about what’s happening on the Democratic side, is that it seems that with the possible exception of Joe Biden, a lot of the Democratic politicians who were more associated with that Clinton wing have been fading, and what you have is the emergence of politicians like Elizabeth Warren or Bernie Sanders who weren’t invested in that “third way” policy framework from the ’90s and 2000s that dominated before the crisis.

Sean Illing

I have to push a little bit more here because I think you have a tendency to drift into a “both sides-ism” argument in the book.

You write: “The standard response from both political parties — now firmly under boomer management — has been to double down on economic theories and policies left over from when they were younger.” That’s very misleading to me.

Yes, the Democrats were complicit in the neoliberalization of the economy, but it’s the GOP that has consistently pushed trickle-down economics well after it failed; it’s the GOP that continues to this day to push an extremist philosophy of deregulation; it’s the GOP that imperils our future by refusing to act on climate change. I think you do a disservice when you erase this distinction, when you pretend it’s about boomers and millennials rather than Republicans and Democrats.

Joseph Sternberg

No, I’m not sure I would agree with that. I think the nature of these political arguments is that where one assigns blame is, I think, partly shaped by your own prior opinions, and your own understanding of the way that the economy works.

You can also make an argument from the Republican side that there are people in the Republican Party who were arguing for more market and less government all along who were probably right. That perhaps if we had been more successful at taming Fannie and Freddie before the crisis, we wouldn’t have found ourselves in the situation that we did come 2008.

I’m not expecting that everyone is going to agree with this book, but I think we need to not assume that a lot of these policy issues have already been settled in one direction or the other. It’s important for millennials to benefit from some of this left and right, back and forth, that the boomers experienced, even if we’re going to end up coming out in a different place than the boomers did.

Sean Illing

We’re probably just going to keep going in circles on some of this, so I’ll ask you this: Let’s say you’re right that the boomers have ruined the economic future for most millennials. What are we supposed to do now? Is this book pure fatalism or do you see a path forward?

Joseph Sternberg

I do see a path forward, and you have sussed it out. I think most people agree that trying to find some middle way, in which we meld the state and the market, isn’t really working. So that leaves us with two options: You can either have more state and less market, or you can have more market and less state. And I think that certainly a lot of the energy among millennial voters seems to be in the more state direction.

I guess my point is that there are dangers in that approach. If we go down that road, are we actually creating more opportunities for the kind of distortion, or the rent-seeking, that actually got our parents and us into this jam in first place?

What I’m really trying to do here is help open up a broader political discussion about millennials, to think about what we need to take a much more careful approach to making sure that we are actually making the right decisions here. And we shouldn’t close ourselves off from the thought that actually, sometimes, the market can be an important tool for us to solve some of these problems plaguing us right now.