Tuesday, March 20, 2012

Musical chairs not zero sum game

Today there is a sad but revealing story in the New York Times about the way the generations are faring in Italy.

Assunta Linza is a " bright-eyed 33-year-old with a college degree in psychology, has been unemployed since June, after losing a temporary job as a call-center operator."

Her father, who is 60 and has: "a fifth-grade education, took early retirement with full benefits at age 42 from a job as a workman at the Italian state railway company."

The bottom line of the article is that young are doing badly and the old (ish) are in good shape.

After the dreadful article in the FT about "intergenerational conflict" and reading this personal account from Italy I started thinking about the assumptions that are dictating our perceptions of the fortunes of the old and the young.

The FT and the various groups of lefties who are peddling the "intergenerational conflict" argument are stuck in the zero-sum-game (ZSG) thought process. This means that because the old are doing OK (a fact that I would question) it must then be their fault that the young are having a hard time. OK, you can shoot a lot of holes in the facts used to substantiate these arguments but ZSG theory drives all of their thinking. The solution is that the state should intervene and "do something" - I guess that means taxing even more of the oldies income and wealth.

I think the correct way of viewing what is happening is the MCH. Let me explain.

This is Stroud's Musical Chairs Hypothesis (MCH). What we are witnessing is the temporary outcome when the music stops and today's youth find themselves standing whilst their parents and grandparents are sitting down. The music has been playing with different songs like - the problems of massive public and private borrowing - alongside that memorable theme, "the world is moving from the West to the East" with the background tune of" technology is changing the nature of work". There are even traces of the tune, "the young are poorly educated and employers prefer workers from overseas".

Then all of a sudden the music reaches a crescendo and the world's financial system goes into a convulsion.

Don't feel too bad about things because it looks to me like the music is starting again and this time the melody will be "the young have demographics on their side". Give it another decade and today's Yoof might well be sitting in the seats whilst their parents are desperately trying to find adequate health and care services.

We are living through interesting times. Dick Stroud

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