Brooks and Krugman

In “The Self-Reliant Generation” Bobo gurgles that millennials lean to the left, but because of several other characteristics, they may not help the Democratic ticket in November.  In the comments “gemli” from Boston had this to say:  “What does Mr. Brooks expect young people to do when they see what is happening all around them? Millennials haven’t detached from “solid supporting structures,” like religion, marriage and government. These supporting structures have crumbled like the rest of our country’s infrastructure. … Brooks makes a dire prediction: there will be change in the future. This may come as a shock to conservatives, but considering the shambles in which they’ve left the social and political institutions, we can only hope he’s right.”  Prof. Krugman, in “When China Stumbles,” says Beijing’s financial troubles shouldn’t add up to global devastation. But more than math is involved in economics.  Here’s Bobo:

Last month Fox News released a poll showing Hillary Clinton leading Bernie Sanders in Iowa by 14 points. But the amazing part of the poll was the generation gap. Among likely caucusgoers under 45, Sanders was crushing Clinton 56 to 34 percent. Among the older voters, Clinton was leading 59 to 24.

When you look at numbers like that you get the impression that this millennial generation, having endured the financial crash and stagnant wages, is ready to lead a big leftward push.

Indeed, a Harvard Institute of Politics poll of Americans 18 to 29 found that 56 percent want a Democrat to win the White House while only 36 percent favor a Republican. The leftward shift is striking even within the G.O.P. According to the Pew Research Center, young Republicans are much more moderate than older Republicans. Among millennials who lean Republican, only 31 percent have consistently conservative views. About 51 percent have a mixture of liberal and conservative views.

But philosophically millennials are harder to pin down. According to the Harvard Public Opinion Project, 37 percent of 18- to 29-year-olds identify as liberal and 35 percent identify as conservative.

If you look at how millennials actually live, you certainly don’t see a progressive counterculture. In fact, you see what you’d expect from a generation that lived through a financial crisis, family instability and political dysfunction. You see an abstract celebration of creative transformation but a concrete hunger for order, security and stability.

According to data from the Bureau of Labor Statistics, millennials change jobs less frequently than people in other generations. And a study of 25,000 millennials in 22 countries by Jennifer J. Deal and Alec Levenson found that at least 40 percent expect to stay with their current employer for at least nine years. Forty-four percent said they would be happy to spend the rest of their career at their current organization.

Millennials travel and move less than earlier generations. They are less likely to have cars, and their relative lack of driving time is not compensated for by the use of other modes of transportation.

Another glaring feature of millennial culture is they have been forced to be self-reliant and to take a loosely networked individualism as the normal order of the universe. Millennials have extremely low social trust. According to Pew Research, just 19 percent say most people can be trusted, compared with 40 percent of boomers.

This leads to detachment from large entities. Just 32 percent of millennialssay America is the greatest country on earth, compared with 50 percent of boomers. Millennials are very suspicious of organized religion. Thirty-five percent say they are unaffiliated with any religious group, compared with 23 percent of Generation X (born between 1965 and 1980).

Just 26 percent of millennials are married, compared with 48 percent of boomers at that age. Only 42 percent plan to have kids. They are also having less sex. A study in the Archives of Sexual Behavior projected that millennials would have eight sexual partners by middle age while boomers had 10 or 11. According to a survey from the online dating service Match, 49 percent of people in their 20s have not had sex in the past year.

The general impression one gets is of a generation that is stressed, energetic, creative, skeptical and in the middle of redefining, and thinning out, the nature of affiliation. Its members have been thrust into a harsher world where it is necessary to be guarded, and sensitive to risk. They want systemic change but there is no compelling form of collective action available. Their only alternative, which is their genius, is to try to fix their lives themselves, through technology and new forms of social interaction, rather than mass movements.

Their attitudes toward Social Security perfectly reflect this stance. Most millennials expect to see no Social Security benefits by the time they retire. But they oppose reforms to take money away from older workers to distribute it downward. They just figure they’ll take care of retirement individually, often using algorithm-based investment vehicles like Wealthfront.

Politically, this means that millennials may lean Democratic, but unless Barack Obama (or Bernie Sanders) is on the ticket, they don’t strongly attach to the party and it is not clear that they will vote. They didn’t in the 2014 midterm elections. It could be they are more interested in improving their lives by having richer experiences, and not through the sort of income transfers that come out of Washington.

My own guess is that millennials will be a muted political force, at least in 2016. But there will be some giant cultural explosion down the road. You just can’t be as detached from solid supporting structures as millennials now are and lead a happy middle-aged life. Something is going to change.

Now here’s Prof. Krugman:

So, will China’s problems cause a global crisis? The good news is that the numbers, as I read them, don’t seem big enough. The bad news is that I could be wrong, because global contagion often seems to end up being worse than hard numbers say it should. And the worse news is that if China does deliver a bad shock to the rest of the world, we are remarkably unready to deal with the consequences.

For those just starting to pay attention: It has been obvious for a while that China’s economy is in big trouble. How big is hard to say, because nobody believes official Chinese statistics.

The basic problem is that China’s economic model, which involves very high saving and very low consumption, was only sustainable as long as the country could grow extremely fast, justifying high investment. This in turn was possible when China had vast reserves of underemployed rural labor. But that’s no longer true, and China now faces the tricky task of transitioning to much lower growth without stumbling into recession.

A reasonable strategy would have been to buy time with credit expansion and infrastructure spending while reforming the economy in ways that put more purchasing power into families’ hands. Unfortunately, China pursued only the first half of that strategy, buying time and then squandering it. The result has been rapidly rising debt, much of it owed to poorly regulated “shadow banks,” and a threat of financial meltdown.

So the Chinese situation looks fairly grim — and new numbers have reinforced fears of a hard landing, leading not just to a plunge in Chinese stocks but to sharp declines in stock prices worldwide.

O.K., so far so bad. And some smart people think that the global implications are really scary; George Soros is comparing it to 2008.

As I suggested above, however, I have a hard time making the numbers for that kind of catastrophe work. Yes, China is a big economy, accounting in particular for about a quarter of world manufacturing, so what happens there has implications for all of us. And China buys more than $2 trillion worth of goods and services from the rest of the world each year. But it’s a big world, with a total gross domestic product excluding China of more than $60 trillion. Even a drastic fall in Chinese imports would be only a modest hit to world spending.

What about financial linkages? One reason America’s subprime crisis turned global in 2008 was that foreigners in general, and European banks in particular, turned out to be badly exposed to losses on U.S. securities. But China has capital controls — that is, it isn’t very open to foreign investors — so there’s very little direct spillover from plunging stocks or even domestic debt defaults.

All of this says that while China itself is in big trouble, the consequences for the rest of us should be manageable. But I have to admit that I’m not as relaxed about this as the above analysis says I should be. If you like, I lack the courage of my complacency. Why?

Part of the answer is that business cycles across nations often seem to be more synchronized than they “should” be. For example, Europe and the United States export to each other only a small fraction of what they produce, yet they often have recessions and recoveries at the same time. Financial linkages may be part of the story, but one also suspects that there is psychological contagion: Good or bad news in one major economy affects animal spirits in others.

So I worry that China may export its woes in ways back-of-the-envelope calculations miss, that the Middle Kingdom’s troubles will one way or another have the effect of depressing investment spending in America and Europe as well as in other emerging markets. And if my worries come true, we are woefully unready to deal with the shock.

After all, who would respond to a China shock, and how? Monetary policy would probably be of little help. With interest rates still close to zero and inflation still below target, the Fed would have limited ability to fight an economic downdraft in any case, and it has probably reduced its effectiveness further by signaling its eagerness to raise rates at the first excuse. Meanwhile, the European Central Bank is already pushing to the limits of its political mandate in its own so far unsuccessful effort to raise inflation.

And while fiscal policy — essentially, spending more to offset the effects of China spending less — would surely work, how many people believe that Republicans would be receptive to a new Obama stimulus plan, or that German politicians would look kindly on a proposal for bigger deficits in Europe?

Now, my best guess is still that things won’t be that bad — nasty in China, but just a bit of turbulence elsewhere. And I really, really hope that guess is right, because we don’t seem to have a plan B anywhere in sight.

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