Boomers and Millennials - Two Sides of the Same Dark Mirror?

So this is a bit more of an opinion piece than a firm historical summary, but I've recently seen an increasing number of social media posts that summarize the current situation in the United States under the heading "The Baby Boomers had the best most amazing economy and society EVER and they destroyed it an orgy of greed and stupidity."  This is usually combined with a idealized vision of the post-World War II economy of the United States, with descriptors like "Virtuous Cycle" when describing that economic period of time in the United States.

I would like to posit though that Baby Boomers and Millennials share a more in common than many of them realize and the reaction of the Baby Boomers in shifting to support Ronald Reagan in the early 1980s is not that far off from the election of Donald Trump.  Strap in and let us see where this crazy line of thought takes us.

The cornerstone of my theory rests on what I define as the "grit years" - specifically when individuals are between 16 to 28 years of age.  From my reading of history that seems to be the period when people have the most energy to protest, challenge the status quo, and extend demands upon their government in the United States.  Post those ages people seem to calm down, settle into raising families and building a wealth position, and shift more center in their politics.  (Usually center-left or center-right depending on their younger leanings.)  General trends though, there are plenty of examples of those who keep their fire up throughout their life.

So based on that Baby Boomers are, most broadly, defined as the generation born between 1943 to 1964.  The birth rate exploded between 1948 to 1958 so that ten year clump is peak "Boomer Time".

That would put our first edge of Boomers reaching the "grit age" around 1959 and the last of the reaching that "grit age" around 1980.  The biggest clump though got to the "grit age" between 1964 to 1974.  If you look at the demographic curve this huge clump of people got into their late teens and early twenties in the 1960s, which makes sense if you think about it, we've all seen the huge number of protests and outrage over the Vietnam War and Civil Rights.  Two defining moments when the young citizens of the United States, combined with older supporters from the Greatest Generation (TM), rose up and demanded significant progress from their nation.

That is an image from 1968, the My Lai Massacre, a horrific wartime atrocity committed by the United States where a village of Vietnamese civilians were slaughtered.  The story came out in 1969 and resulted in wide-spread outrage, not only that this had happened but that the United States government and military had first attempted to conceal it and then blamed it on combat officers violating their orders.  Soldiers pointing out this sort of incident happened often, and was at the implied or verbal orders of their superiors, was ignored.  Combine that with the continued horror show domestically around civil rights, and you have a combined effort of the citizens attempting to change the direction of their government and being ignored.

The Vietnam War didn't end for the United States until 1973 and the period from 1969 to 1973, under Richard Nixon, involved a crappy peace deal, a temporary expansion of the war into Laos and Cambodia, and more heavy bombing.  Nixon also refused to really engage with those who were outraged at these events and instead pushed hard to follow his own course politically.  Which meant if you were a Baby Boomer entering your "grit years" in the early 1970s you got watch all of the efforts at protest and anger seem to do little to nothing to really impact change.  Combine that with the Watergate investigation and you can imagine youth confidence in government, and its handling of any aspects of the nation's direction, was badly shattered.

So what about the magical economy that Baby Boomers inherited, the one that now Millennials envy and blame Baby Boomers for destroying?  Well the 1970s was dominated by a serious economic crisis, a combination of economic stagnation and inflation termed "stagflation" that impacted the entire globe.  There are several factors and, honestly, no one even today quite knows for sure what caused it, but several factors combined to make the 1970s an economically difficult time.  Government policy at the time didn't really seem to address the issue either and the economic crisis of the 1970s just dragged on, with inflation and rising interest rates combining to slam people in their twenties and thirties into the economic dirt.

Unemployment rates from 1974 through 1979 were not that far off from unemployment rates between 2008 - 2013.  Inflation rates in that period were insanely high compared to the modern era, ranging from 6% at the bottom to over 13% in 1979.  GDP growth in that same period was also sluggish as well.  For those checking the late teens and early twenties would cover those Baby Boomers born between 1953 to 1959 roughly.  Too young to engage in the protests of the 1960s (but old enough to remember them), to have grown up during the final booming years of the 1960s, and coming into their own when the economy tanked and their forebears seemed to have ruined everything before them.

I'd even this group of Baby Boomers and current Millenials get to share a general disbelief at the federal government's seeming inability to come up with a solid plan to address these economic issues.  People in their early twenties through their early thirties in the 1970s wanted jobs, a growing economy, security in the face of foreign competition, and an end to economic uncertainty.  What they got was the WIN campaign with signs like this (Gerald Ford) and depressing speeches about how everyone would need to cut their energy consumption (Jimmy Carter).

(Give one of Carter's energy reports a listen, it is about five minutes in length and remember, this is Carter trying to cheer the nation up about the energy crisis.)

I encourage any Millenials and Generation X readers to have a chat with your parents/grandparents about the 1970s and what the economy felt like for them.  Ask about how it felt politically, you will probably be surprised to see pursued lips and a furrowed brows.  People generally don't like to dwell on this period in the 1970s, it was too damn depressing.  I imagine many Millenials will have the same reaction when asked about the late 2000s.

So how does this end up?  Well...

I would argue with an upscale 1980s version of Donald Trump, specifically Ronald Reagan.  Now Reagan has a lot to latch onto to argue he was a better President than Donald Trump, he had actual public office experience for one thing.  But there are some eerie similarities:

• Reagan went into office with promises to reform Washington and end its current systems of welfare and social support
• Reagan planned to reduce the scope of government and end its comfortable bureaucratic structures that he claimed were throttling innovation in the United States
• He staffed his cabinet with anti-government officers bent on reducing regulation and redefining how the United States federal government operated
• Reagan had a serious love of tax cuts, although he did roll them back
• Reagan also had a serious love of military spending and expanded it greatly
• He was a foreign affairs maverick whose efforts in dealing with the Soviet Union really shifted the stance of the United States
• He was a "Big Picture, Few Details" kind of President
• Delegate, delegate, delegate
• An administration plagued with regular scandals

Hell he even had his own equivalent to the current Donald Trump Russia debacle, the Iran-Contra affair.  (There were even rumors of a foreign power meddling indirectly in the 1980 election, Iran, in holding back the release of the hostages on Carter.)

So why did Boomers vote for Reagan in such droves, shifting the political coalition of the time and sweeping former Democratic strongholds to support Reagan?  The same reasons you'd probably find for the support for Trump among that group - issues about social stability, feelings of insecurity in the future, and the promise of economic reform.

Overall I'd say this for people reading this long opinion piece - I would recommend against accepting the idea that Baby Boomers had a paradise and ruined it.  Instead I would offer that Baby Boomers ended up inheriting a United States undergoing a series of interlinked and seemingly intractable problems in the 1970s combined with a government that seemed out-of-touch and unwilling to adjust to the demands of the era.  They demanded change, swinging to a Right wing candidate who promised common sense solutions to the problems facing the United States.  Millenials and Baby Boomers - stop chopping into each other, to my eye you both have more in common than you might want to admit.

Sources:  Wikipedia articles on Ronald Reagan, US economic history in the 1970s, My Lai Massacre, Vietnam War, Baby Boomers, TheBalance on US unemployment rates/inflation/growth,

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Why Comparing Cost of Living is Hard - 1978 Edition

Right - this is the sort of thing that makes me irritable when people talk about history.  I decided to being with the truck.  I used a base of a Ford F-150 as the model remains in production and dug up, through the NADA guides, a Ford F-150 model in 1978 that came as close as I could to $6800 in 1978 bucks.

It is a base model price of $5,300 (high retail) and comes with 4 wheel drive, a 460 V8 engine (man grunting noises can be inserted here), and factory installed air conditioning.  It looks like this:

Now, I had to dig a bit to find a Ford F-150 today that actually cost $40,000 MSRP but I did find one, and it comes with some interesting features that probably aren't in the F-150 above, including:  power windows, brake assist, power door mirrors, front fog lights, a low tire pressure warning system, a security system, 6 disc CD player, remote keyless entry, speed-sensing steering, a front anti-roll bar, electronic stability control, power steering, traction control, and enough airbags to snuggle you on all sides if you hit something.

Now if we use the Consumer Price Index Inflation calculator the buying power of $6800 in 1978 translates into about $25,326.77.

For pretty close to that price you CAN get the truck pictured above, sans the boat - a base model Ford F-150 which only comes with a single-row cab, rear wheel drive, an aluminum body, and a base 2.7 liter EcoBoost V6.  If you are willing to go up to $29,000 roughly, you can get the man-grunting V8.  So comparing the man-grunting V8s you find that in reality the price difference is the man-grunting V8 costs about 14% more today than it did in 1978.  (But I'd add you still get a lot of nice features for that markup, including the snuggle-bundle of airbags.)

But, I can hear you saying, gasoline is pretty consistent and look at how much THAT has gone up in price since 1978.  Well, again gasoline is no longer gasoline, thanks to the additions of scrubbing detergents, more precision blending, and synthetics but we'll go along and say "gas is gas."  The 1978 base price per gallon:  $0.60.  Translated into today's dollars per gallon: $2.23.  (Again, Consumer Price Index Inflation calculator.)

Per CNN Money and its gas price index there are spots in the U.S. were the average price for standard octane gasoline per gallon is above $2.23 - California ($2.47), Alaska ($2.34), and Hawaii ($2.63).  Congratulations, if you live in those three states you can bitch that the price of gasoline is above inflation from 1978!  For everyone else in the United States guess what, gas is cheaper in 2017 per gallon, adjusted, than it was in 1978.  (For the record according to the Bureau of Labor Statistics the actual average price of unleaded gasoline in 1978 in the U.S. ranged from $0.65 to $0.71 per gallon, which translated to modern dollars means only Hawaii can still complain.)

Yeah but the wage gap, now that is valid, he made $10 per hour in 1978 and now he makes $17 an hour, that is hardly fair.  In that our meme is correct, in 2017 dollars a wage of $10 per hour would translate to an inflation adjusted wage of $37.25.  You'd see a worker with that wage making $74,500 per year (2000 hour work year) against $34,000 at $17 per hour.  But comparing those wages isn't quite fair, so lets do minimum wage.

1978 minimum wage, per the U.S. Department of Labor (covered professions) - $2.65 per hour.  In modern buying power:  $9.87 per hour.  Current U.S. federal minimum wage:  $7.25 per hour.  (About 36% below where it should be if the minimum wage had kept up with inflation.)

But the wage he mentioned above is almost half the modern wage, so what happened?

To really understand we need a product that is not limited by shipping/spoilage issues, that requires relatively low-skill to assemble, is non-capital equipment heavy to produce, and has remained relatively consistent in design since 1978.  Meet Wrangler Jeans, made by the same company, to roughly the same quality specifications, since 1978.

Price of one pair of Men's Wrangler Jeans circa 1978:  $5.98 per pair
Price of one pair of Men's Wrangler Jeans circa 2017 adjusting 1978 bucks for inflation:  $22.27
Actual price per Walmart 2017:  $16.77

The difference is about 33% and that difference covers several sins:  higher corporate profits, transportation for foreign assembly, and cheaper labor.

See since the 1980s onward the United States has pretty much embraced the idea that consumers don't want to pay the level of costs for goods necessary to ensure that low-skill factory workers could afford nice three bedroom homes and shiny new Ford F-150 trucks.

You may not agree with it, you may not like it, and I've been reading up recently on why it has happened in several different books, but that cornerstone lesson seems in place.  If you want a United States where a guy who sews jeans can afford a 3 bedroom house and a nice truck, you are going to be spending about 32% per unit for that pair of lovely jeans you see above you.

Sources:  Consumer Price Index inflation adjuster (US Department of Labor), NADA guides entry on 1978 Ford F-150, 2013 TED Economics presentation on gasoline prices, U.S. Department of Labor table of minimum wage rates, 1978 guide to prices by the Morris County library, Wikipedia entry on Wrangler Jeans (timeline of corporate events)

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The Great Stagflation and Modern America

The United States has faced a series of major economic issues in its history, the two most commonly discussed are the Great Depression (1929 to 1942 arguably) and the Great Recession (2008 – 2009 officially) but between those two is a lumpy, difficult to fathom, general economic decline that ran from 1971 until roughly 1982 which could be considered the Great Stagflation.  It was the hallmark of the 1970s United States economy, with a solid impact on the British economy as well.  Within the United States it was caused by an intersection of several different policy issues, economic impacts, and major events, such as the two oil shocks that took place in that decade as OPEC reduced oil production in response to the United States’ position towards Israel.

Nixon, who had a very loose concern for domestic economic issues, made the problems worse when facing the gold crisis of 1971.  Briefly the United States pegged the dollar to a fixed conversion rate and other currencies were fixed to the United States dollar.  During the early 1970s the dollar ended up being worth less in actual goods and services than its fixed gold value, leading to other nations beginning to convert their dollar holdings into gold.  Nixon nipped that problem by simply ending the gold conversion of dollars “temporarily” and then imposing price controls to take the sting out of the sudden devaluing of the United States dollar as foreign governments dumped their now non-convertible dollars.  This was fine for Nixon, he was facing re-election in 1972 and he simply wanted domestic voters to feel that their paychecks remained the same, it didn’t matter to him what happened to the economy post-1972 as much, he simply planed to fix it then.

One of the impacts of this, and other factors such as rising foreign competition that cut the United States share of global trade, spiked inflation rates.  This combined though with an unusual factor, as rising inflation eroded the buying power of domestic wages in the United States, organized labor was powerful enough to demand wage increases from companies to offset the inflation.  This reduced the amount of capital available for investment and the economic instability and uncertainty that rising inflation caused discouraged many businesses from entering into any major investments.  This led to economic stagnation, the production of goods and services simply didn’t expand to meet the growing money supply, which caused shocking inflation rates.  (During the height of the crisis inflation rates of 10% were not uncommon in a single year.)

Normally economic cycles tweak the system, but the events of the 1970s reshaped the United States economic and political landscape.  First, rising inflation pushed up the tax brackets which working and middle class employees were taxed at, as the brackets were not indexed in the 1970s to inflation.  So although the relative buying power of a paycheck remained the same, the bite taken out by state and local taxes went up for many workers, reducing their overall net pay.  This combined with many states reporting record surpluses due to the revenues taken in, and a resistance by those state governments to return the surpluses to the voters.  (California was notorious for this, socking away much of the surplus for future anticipated shortfalls or new programs once the economy settled down.)  Property taxes shot up as well, as the paper value of homes skyrocketed due to inflation and people saw their property tax bills rocket upwards, further reducing their buying power.

The result was a general tax revolt across the United States as citizens, in state elections and in 1980 with the election of Ronald Reagan and a Republican Congress, demanded their tax burden be lowered.  What made this shift particularly unique though was that prior to the late 1970s and early 1980s the United States populous had been less leery of inflation, and higher taxes, and more leery of the government reducing its safety nets.  By the height of this crisis the United States citizenry had changed their demands, inflation control and lower taxes were more critical to them than safety nets, especially safety nets that seemed to re-route funds from middle class pockets to the poor, minorities, and immigrants.

Which state governments, and the federal government, responded to with great gusto.  The federal government, and state governments, slashed social welfare programs aggressively and changed the regulatory client to make the government more pro-business.  This combined with a focused effort to reduce the power of organized labor and allowing unemployment to spike, and a sharp early 1980s recession, to crush inflation.  In many ways since then the United States as a nation has not looked back, and other nations have followed its model, focusing on tight government services, reduced social support for the lowest portions of society, and keeping the tax burden controlled.

Sources:  Wikipedia articles on stagflation, the Nixon Shock, and the 1973-1975 recession, Investopedia article on the Great Inflation of the 1970s, Dollars and Sense article on the 1970s economic crisis, and chapters from The Seventies:  The Great Shift in American Culture, Society, and Politics by Bruce J. Schulman

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A New Apron Pattern

This really isn't my new pattern, but my sister's. I talked her into letting my borrow it to share here. I love version A. Can't you envision it in a colorful floral? Or even a gingham?

I had to share the envelope back too. Some of the details are hard to catch. Did you notice the straps button on top of the shoulder?

Copyright 1971. McCall's is always so helpful about putting the copyright on their patterns.

I can't wait to try this pattern out! But I don't know when it will happen....... I have a one track mind right now..........House!!

 

P.S. I apologize for last week's lack of posts, very busy week at work.

 

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