Paying for it all....

In another blog, I note that my niece's generation will be expected to pay for the Boomers' Social Security needs. The problem with this is that this generation is being expected to pay for the sins of their parents and grandparents. Is this fair? To the young adults now graduating from college, the social contract is a rip off. Many of these adults are crippled with student debt, and there are few jobs available for them to earn the money to pay off this debt. Couple this with increasing Social Security taxes (which will shift wealth from the relatively frugal young to the wasteful older generations) and you may see major (but passive) social disruption.

What will happen if the younger generation decides not to work as hard as their forbears, as they will not get their full rewards for working hard or for taking risks? If they decide to live on lower salaries (because good jobs are no longer available) and within their means (because cheap credit is no longer available), what will happen to the Ponzi scheme (read: Social Security) that the older generations now depend?

We know that most of the low income jobs out there do not provide medical benefits. Would it make sense for young Americans to consider leaving the United States for opportunities in better managed countries (with better social safety nets)? I'm beginning to think that it no longer makes sense for the average young American to limit his/her horizons to the United States. But what does this mean?

Let's say that someone of my niece's age decides to move to Canada. The Loonie (read: Canadian Dollar) has traded at near parity with the American Dollar during the past year, and is likely to do it again. Since nominal Canadian salaries are in the same dollar range as American salaries, it might make sense for a person who wants greater stability to leave the USA for the land of Tim Horton's Donuts and Coffee. Let's now say that the person wants to take greater risks for greater rewards. American ex-pats are doing very well in many places across the globe - as long as they are knowledge workers whose trades follow them around.

Right now, I don't think the United States will self destruct. But I think we must address these important issues:

1. How do we pay off our debts without bankrupting our younger, and soon to be child-bearing generation?
   
2. How do we provide this generation with enough opportunities, so that they can afford to have children (and reproduce above ZPG)?
3. How do we provide this and future generations with the confidence they will need to prosper, whatever the world hands to them?

I don't have any easy answers. But I think it is the responsibility of the Boomers to see that their needs do not take priority over the needs of their children. The Boomers must also make it possible for their children to afford to have children of their own - lest we solely depend on immigration to have a growing work force. And lastly, the Boomers should make quiet sacrifices for their offspring, so that their offspring will know challenges - and have the confidence to overcome those challenges.