Boomer Socialism Led to Bernie Sanders

Government policies limit millennials’ prosperity, Harvard economist Edward Glaeser argues. Will they realize more of the same isn’t the answer?

WSJ interview with Edward Glaeser. Excerpts: 

"The shift of income toward those Mr. Glaeser calls the “entrenched” is most explicit in entitlement programs. “The original Medicare design is relatively mild,” he says. A comparatively young age distribution and a limited range of treatments made the plan feasible when it began in 1966. “But basically the system is set up so that no matter what medical treatment can be created, they pretty much all get to be paid for.” The program now exceeds 3% of gross domestic product. Young people “see many of these benefits, including Social Security” as “going to older rich people.” They’re funded by payroll taxes, which snag a disproportionate share of low-earners’ paychecks.

Taxpayers also pony up ever more to fund the retirements of government employees. “Some of the most egregious things at the urban level are the public pension plans,” Mr. Glaeser says. “This is a system that stacks compensation very strongly toward the end of life with very long, very generous pensions.” Public liabilities have swelled since 1960 as government hiring outpaced population growth, and state and local pensions now claim about 1.5% of GDP each year. Each payment to a former bus driver or teacher might come at the expense of a young family’s savings or a small-business owner’s investment in new jobs.

How did the land of opportunity become overgrown with policies that keep newcomers from moving up? Mr. Glaeser cites a theory developed by the economist Mancur Olson, author of “The Rise and Decline of Nations” (1982). “Olson had this vision of how economies rise and fall,” Mr. Glaeser says. “A successful, stable economy acquires these interest groups, which essentially block change, which protect their interests, and which make it impossible to do anything new.”

Olson demonstrated this trend with case studies of advanced societies in varied regions and eras. For example, “Japan under the Tokugawa shogunate, where all of these local guilds had conspired to reduce trade. Or ungovernable England during the 1970s before Thatcher, when labor unions made it impossible to change anything.”

America isn’t like that—or so Mr. Glaeser thought: “I remember reading Olson in either the late 1980s or early 1990s and thinking, ‘Well, that’s interesting, but it doesn’t sound like America. We’re a vibrant, open society.’ ” But Mr. Glaeser’s later research changed his mind: “When I came back to thinking about this 30 years later, Olson seemed more like a visionary.” As America and its population have aged, voters have gradually embraced policies that benefit the relatively well-off while sapping overall growth.

The young, being both poor and inexperienced, have always been fonder than their elders of overt redistribution. But in the baby boomers’ youth during the Cold War, “socialism was off the table, because it was associated with an evil empire that we opposed.” The poverty and brutality of Soviet Russia also proved the system impractical. “For those with no memory of the Cold War,” Mr. Glaeser says, “the stigma is absent.” That now includes everyone under 30."

"In some places, he says, “if you want to start a grocery store that sells milk products in an inner-city neighborhood, you have 15 permits to get through."

"“There is a lot to be admired about a middle-income person who lives his or her life with dignity, and takes care of his or her family,” he says. As young baristas, students, sales clerks and drivers lose confidence in their ability to become providers, “we need to keep emphasizing that those attributes are actually the heroic ones.”"