Everything Was Looking Up With the Baby Boomers

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Our old friend John Mauldin answered last week’s note. Our point was that our children face a different world than we did. From what we can make out, it will be a tougher world. Everything was looking up with the baby boomers. Especially in the lives of the luckiest of them – your editor and John included. Is everything still going up? The US economy? The power and wealth of the US empire? And how about our children? John and I started out with nothing to lose. Our children can slip down as well as slide up. John has today’s Daily Endnote for us. Please enjoy…

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It’s More Than Half Full.

Ok, Bill, let’s review those wonderful days from whence we sprang, so fraught with the advantages of having nothing. So potent with opportunity. It was the middle of the ’70s when we started our careers. Inflation was high and rising. The Soviets were seen as a major threat. Japan was beating our brains out and buying everything, even if nailed down (like Pebble Beach and New York skyscrapers). I had to borrow money at 15% (or more) to buy paper in order to meet customer demands for printing. And guess what? The banks got into trouble and called loans willy-nilly. (My bank even called my mother and threatened her to pay my loan – against written agreements – and she did. Evil sons of bitches. The more things change… And they delightedly did fail! Not that I hold a grudge.)

There were multiple successive and deeper recessions. Gold was rising as the dollar was seen as a joke. Howard Ruff (a good friend to both of us when we were starting out!) and almost every newsletter writer were telling people to buy gold and freeze-dried food to protect themselves against a near certain economic, if not apocalyptic, catastrophe. Unemployment was high and rising for a decade.

The correct answer to the question, “Where will the jobs come from?” back then was “I don’t know, but they will.” And it is the correct answer today.

In 20 years, no one will want to come back to the halcyon days of 2005. Our kids (all 13 of them) are getting ready to live through what will be the most exciting period in human history. There will be a century’s worth of change, measured by the standard of the 20th century, just in the next ten years, and then we will double that pace in the next ten after that. Medical miracles that will mean our kids and grandkids will live a lot longer than their dads, although I intend to be writing well into my 80s, like our mutual hero Richard Russell.

There will be whole new industries developed in the US. How do I know that? Follow the money. The rest of the world spends a fraction on research and development that we do. Where do you go if you are looking for venture capital?

Do I care if the Chinese and the “developing” worlds are far better off, relatively speaking, than the US in 20 years? Not a whit. Good on them. I hope they make discoveries and inventions and new businesses that benefit us all. But we are not going into some long dark night. We, and our kids, get to choose how we respond to what is the reality of the day.

Our nation had to almost hit the wall in 1980 before a Volker could come along and force us to take the pain of recessions to beat back inflation. And we will have to come perilously close to the wall this time before we take action as a nation. Way to close for comfort. Maybe you are right, and we have a soft depression. I hope not, but even so, the world will be better, far better, in 20 years, with far more opportunities than today.

It was not fun starting new businesses in the ’70s and early ’80s. But we did. I remember coming to Baltimore and being (literally) afraid to get out of the car to visit your offices in the slums. But that was what you could afford. A far cry from the chateau in Ouzilly.

I lived in a small mobile home. Tiffani was born there, and we converted part of the kitchen to be her bedroom. (Yes, I was white “trailer trash.”) But I got up every morning just like you did and killed as many alligators as I could. The rest had to wait till the next day.

And that is the legacy our kids have. They know what it is to wade into the swamp every morning. Never quitting. In thinking about this, you may be the father I respect the most. You have raised your kids to be multi-lingual children of the world. What a work ethic. How did you get them to scrape window shutters at your chateaus? (I actually saw this, and my kids marveled.

Thereafter I threatened to make them go live with you when they did not act right!)

You have given your kids the opportunity to follow their dreams, even demanded that they do so. And such dreams they (and mine) have. Will they succeed? Who knows? But they will go at it with gusto, in a world with more opportunities than you and I ever imagined 40 years ago. And, oh boy, were we optimists back then. How else could we have done what we did? If we believed the rhetoric that the world was coming to an end, would we have dared to venture out?

You cannot have raised your kids to be such bold adventurers without instilling in them a certain high level of optimism. I am going to out you, Mr. Bonner. You present yourself to your readers as a bona fide end of the world pessimist. But you are a really and truly a closet optimist. Your whole business empire (and what an empire it has become!) is based on finding people who are optimists, in the sense that they think they can actually get people to send them money for what they write. Which they do! Even if it is to read why the world will come to an end, which it thankfully never does.

You are right in this: it is personal gumption that makes or breaks us. There are those who started out with less than we did (hard to imagine but true) and made a lot more. And there are those who started out with far more and made less. But there are very few who are happier than either of us. Or luckier.

Our kids? It is not the times which dictate the man (or daughter!), but the response of the man which dictates his own time. Today has a brighter future for someone young than any other time in history, whether they are in the US or Brazil or China. They just have to seize it.

And as our kids do just that, and as the millions of kids of those who read us do so, and the billions of kids who are just now getting ready to bust loose all work to achieve their dreams, the world is going to be a far more fantastic place. Smooth ride? Not a chance. We didn’t get one, and in thinking through history, there have not been many smooth rides. Why should we think we will get any better? Our kids will just have to live with our generational (and individual) iniquities, government debt and all, and figure out how to master their own fates. But if I had a choice to take the ’70s or today? In less than a heart’s beat I choose today. And I bet you would too!

Regards,

Bill Bonner and John Mauldin
for The Daily Reckoning Australia

Bill Bonner

Bill Bonner

Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.
Bill Bonner

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Comments

  1. An interesting read.

    And typical boomer stuff unfortunately from my perspective. Whilst I agree with a lot of it, I don’t agree that “everything will be okay, because it was in the 70’s”.

    Was everything okay in 1935?

    Yes, things will be okay in the future. One day. Assuming we don’t have wars that obliterate us all that is. Or energy wars. Or global military dictatorships. Etc.

    So who is going to lead us forward? Gen X? Gen Y? Gen C (the gen after Y)? The latter Gen’s have no idea what it is like to work hard. Call them the digital Generations or the “Allowance” Generations. What will they do when they realise the world is no longer frothy and creamy?

    Surely they will learn the hard way. Maybe we all will, again. But that takes time.

    Youtube and Facebook won’t save us from financial ruin.

    Reply
  2. I don’t think that health break-throughs are a given. Medical research ain’t what it used to be (although it’s still absolutely massive in scale). Intellectual fraud is increasing. We are even more hopelessly far away from eradicating malaria, tuberculosis and AIDS. And as Peter says, history repeats itself – it’s just a question of which history it’s going to be.

    I think the big difference with the past is the sheer size of populations, the increasing prevalence of massively destructive weapons and the insane idea held by some that a population 10% the size of what it is now is desirable, by any means.

    Reply
  3. Pete,

    What a ridiculous comment.

    Way to offend a whole generation who are smarter, more capable and work harder than those lazy boomers.

    “The latter Gen’s have no idea what it is like to work hard.”

    From my experience it is the Baby Boomers and early Gen X who are lazy and expect everything on a plate.

    Without fail throughout my career, I and others of my age and younger (born in the 70’s and 80’s so a bit Gen X and Y) have worked harder and achieved more than every baby bomer and early gen X that I have come across….

    Decrepit old boomers fail to understand how the latter generations are capable of embracing technology and utilising this to challenge the old.

    Ask anyone who knows what they are talking about or do some research instead of showing your ignorance.

    Baby boomers and gen x just accept the work and muddle on with it… is this what you call working hard?

    Gen y challenge the old ways and ask Why?

    Of course many anachronistic boomers cannot accept or understand the question…. but they are soon shifted somewhere out of harms way.

    Redundancy and retirement beckons…. enjoy it while you can.

    Reply
  4. prozak, in Pete’s defence, history is longer than your short lifespan. Your lack of respect and self restraint show that it’s you who lacks insight … a scoffer is what you are, and it does no credit to your arguments.

    Reply
  5. prozak:

    As technology progresses, each generation becomes more detached from reality. I have heard of children in some countries who didn’t know where carrots came from (they said they came from the tin/packet). Steak comes from the supermarket. Etc.

    When generalising about generations, of course there are exceptions. There are plenty of people from each generation who buck the trend. 90 year olds who can use the internet, 20 year old entrepreneurs, boomers who care about climate change. But the generations still typically have their traits. Those traits are born from the environment (political, economic, moral, intellectual) they were raised in, and what they were taught by the generation that bore them.

    You say “Baby boomers and gen x just accept the work and muddle on with it… is this what you call working hard?”.

    Clearly you have your own perspective on how each generation behaves.

    If I favour any generation, it is the “Silent” generation that suffered the Great Depression. Ask any of them what having it tough is all about.

    Whilst it is a nice idea, I still disagree with the article, because it seems that John Mauldin is suggesting that because things got better after the 70’s, that things will more or less follow the same trend in the near future. Well, to quote you prozak, most of the “muddle through” Gen X’s were young adults at the start of the 80’s. Do Gen Y have so much more to offer than they do?

    Regardless, I think Gen Y and Gen C have typically adopted lifestyles that involve much less activity and much more digital entertainment (playstations, facebook, email, chat, mobile phones). This further detaches then from the real world. What proportion of Gen Y’s or Gen C’s could survive in the bush? (please don’t use that Brit backpacker as an example).

    Anyway, I don’t necessarily expect people to agree with me (I was surprised you did Dan, but thank you).

    Reply
  6. Dan,
    and history is longer than your lifespan also.

    and throughout history it is the new generation that takes civilisation further….

    boomers have ruined the world and left it to gen y to fix.

    It is the boomers laziness and not wishing to sacrifice their own comfort that has us today in a mess in many many aspects of our civilisation.

    it is up to gen y to roll up their sleeves, make the hard decisions do the hard work that boomers were incapable of …. and they will…

    Pete – your narrow boomer view of the latter generations is wrong and no offence intended but it is a damning insight into your own failings as a parent and/or grandparent

    What the hell has surviving in the bush got to do with a generation?

    May as well ask what proportion of Boomers have rowed across the atlantic or sailed single-handed around the world or run 100m under 10 seconds…..

    Reply
  7. prozak:

    I’m just saying that I think there is a disconnect with recent generations such as Y and C, although maybe including X and even some boomers, whereby they rely too much on technology and an ‘expected’ standard of living.

    Without electricity our lives would be turned upside-down and inside-out.

    Without the internet business would grind to a snails pace.

    Without petrol, we wouldn’t be so free to travel as we please.

    Without a properly functioning money system we’d be forced out of the cities back into the countryside again. But how many people in Australia know how to farm? 0.5%?

    There is so much taken for granted, and we are so disconnected from being the community based animals that we are.

    I’m not advocating the hippie lifestyle at all, I am just trying to say that the last generation to do it real tough was at least 5 generations ago. And those lessons have been lost and may need to be re-learned in the future. If Gen Y and Gen C have to do it, it won’t be smooth sailing.

    Reply
  8. Pete,
    you’ve been watching mad max recently haven’t you?

    Gen Y is the smartest and most adaptable generation yet…. surpassed most likely only by those coming next….. it’s a funny thing called evolution…. and the pace of change that man-kind is experiencing means that the evolutionary leaps are happening faster…. I am sure that my grand kids will be mind bogglingly brilliant compared to me and will be doing quadratic equations in pre-school…. they’ll laugh at poor old grandad for being so slow…… There is a show in the UK called “are you smarter than a 10 year old”….. and although it is only entertainment so cannot be used scientifically…..the answer for almost all of contestants is a emphatic.. NO.

    I have no doubt that if the world collapses it is the Gen Y that will dig in and kick start everything again.

    Every Gen Y-er I know is a capable, adaptable, resilient and resourceful human being…..

    Reply
  9. Let’s be honest. The generations are different. So be it. The boomers have past experiences and the X and Y’s are growing up in an entirely new era. I’m a boomer and was downsized twice in a five year span. I chose to allow my experience to assist me while embracing the evolving technology and other knowledge, putting those to my advantage and created a wonderful business for myself and family. If you’re searching for an earning vehicle visit http://www.LikeSoup.com and see if it’s something you’d like to consider.

    Reply
  10. Prozak, I think you’re right about Gen-Y being capable, resourceful and all that, in so far as he/she is a human being. People are capable, resourceful and resilient no matter what you do. But quantifying it is another matter. You can’t compare a ten year old with an eighty year old. One has a good calculator but no memory, and the other has all memory and no calculator. Both are good.

    Evolution is extremely slow. Yes, people are taller than several generations ago (that’s not really evolution but changed diet and disease prevention), but they sure as anything aren’t any more intelligent. If anything, being less smart is being given evolutionary advantage right now (family support payments) over being a hard working professional. Education has been replaced with training. Big difference.

    Being bush capable gives very important life skills and gives an appreciation of what luxury really is, and how to have contingencies if/when that luxury is removed – the belt and braces approach.

    And you speak of the baby boomers ruining the planet. But most of them had no real say in the matter – like the Aborigines and alcohol, western society was just not ready for the poisons that come with television and its consumerism, moral relativism and materialism – I blame Hollywood and Wall Street. That nobody stopped them is where the scandal lies. Are the Gen Y’s (who are no more likely to become leaders through merit than the current crop) going to do the complete opposite and not make self serving decisions, lining their pockets and not giving a damn about the future or the foreigners across the sea?

    Just today I was walking down the street, thinking about your comments, prozak. One tradesman in his 20’s was talking to his friend “what’s goin on?” .. “got a new game..” .. “what kind of game” … and so it turns out both of their spare time is spent on computer games – not a good book, or their family, or chess, or sport, or up a mountain. How is that any better than the past, where it was once television, and before that whatever else? They still take just as long to build an extension, and it still leaks like a sieve when it rains. They’re just the same as before.

    It’s also typical of _every_ older generation to pan the younger up-and-comings, and for the younger generations to look in disbelief at how old the elderly are. But you must first walk a mile in their shoes before you judge them. Our world is currently driven by waves of hysteria, blatant propaganda and lies. Critical thinking is frowned upon in schools, possibly more than in the past, and the resurgence of socialist ideologies will do nothing to help. This is why I think Pete is more likely to be right.

    Reply
  11. Dan:
    “If anything, being less smart is being given evolutionary advantage right now (family support payments) over being a hard working professional.”

    Totally agree.

    Which families are having the most children? It seems the poorer, uneducated ones. Generally the career types aren’t having as many children. The baby-bonus also means a lot to those on low wages. That concerns me a bit for the future. Ever seen the movie “Idiocracy”?

    http://www.imdb.com/title/tt0387808/

    It’s not the best movie i’ve ever seen, but it makes some interesting points.

    “…and the resurgence of socialist ideologies will do nothing to help”

    Yes, definitely agree here. Gen Y and C are typically pro-socialists. “Help the needy. Help everyone.” I have heard many of them talk about the $900 hand-out as the best thing to ever come from Government. They don’t realise where that money is coming from, nor do they care. Many that I know think that politics and economics are for “old people” and that there is more to life, like enjoying yourself (which is somewhat true, but if you don’t have a grip on politics or economics, they will control you, you won’t control them).

    Reply
  12. John Mauldin desperately reaches for fix winners by citing Volcker. Optimism is a cultural narrative in the US that serves individual enterprise well but makes them lousy economic forecasters and managers. The Volcker fix was … buttress the insolvent banks with spreads, kill the brown belt and replace it with consumerism & services, spend the public tit off on defence, and use debt stimulus to refloat the economy. Bush Sr had to pay Volcker’s price. Bodgy fix after bodgy fix after bodgy fix since Burns.

    Interesting conversation above gens. In Australia I see the 70’s as linked to the Korean War boom young adults. Remember the Poseidon boom? Their expectations were sky high, as children things had been tough and they were seeing wins from WWII fought by older brothers and sisters. Pete should acknowledge the boomer role in not educating their kids on the basics, not taking them camping, not reconnecting with family in the country, taking soft sport & games options for boys rather than ruggedising them in the Australian tradition, with smaller families not giving girls the exposure to mothering joys and challenges which sees so many of them on prozak later when the shock of putting yourself aside for children hits them. I agree with prozak that the can-do attitude on technology is a joy to see, but I see kids forming pragmatic views knocking the can-do out of them in terms of enterprise based on their inability to politically navigate an attack upon the entry level asset price hiking greed of the earlier generations (even a possibility of inherited wealth for the lucky is delayed and frittered away) and their inability to jump on the elevator and jump the income disparity chasm in their businesses and workplaces.

    Reply
  13. Good points Ross.

    Incidentally I did allude to (but did not elaborate on) the boomers role in raising Gen Y when I said “and what they were taught by the generation that bore them.”

    The Generation that bore the boomers were probably just happy to be alive and that the war(s) were over (generally…the world is never entirely at peace). When you look at the chain of parenting you can understand how each generation has become the way they are (there is more to it than parenting though as I mentioned earlier).

    Reply
  14. this discussion is going nowhere.
    Pete/Dan – you are both so wrong about GenY it is bordering on age-ist bigotry.

    I am just happy the world is being handed to the GenY and the boomers are slowly but surely losing their grip….

    Reply
  15. The problem is the differentiation of people into age groups and assuming there is a difference between them, apart from a biological one. In my situation we are encouraging cooperation between the generations and it’s working well – much easier than we thought it would be (whoever thought of labelling generations by letters – how is that for subversion!). The issue is not about Gen Y, but whether the new adults have taken on an attitude that is appropriate for their stage in history – will they do a better job at finding the truth? Or will they choose the mental junk-food from the smorgasbord of information that is presented to them? That’s what generations before have done.

    In my time I haven’t witnessed any turnaround in the general standard of education – perhaps IT education is becoming more formalized, but other basic areas are falling behind in Australia (but I am happy that a multi-tiered / streamed secondary education system is being reconsidered in some states). I haven’t witnessed any amazing turnaround in accountability and transparency in government or company management. Still as opaque as ever – except the science of hiding your financial tracks is a big ‘advance’. Also the science of public relations and marketing has gone forward in leaps and bounds. We have a slick prime minister – whatever he stands for.

    So, Gen Y’s are entering a world where the tools of statecraft are sharper and more highly refined than ever. That’s going to be a big challenge, plus the debt levels are just ridiculous (yes, the baby boomers have been financial drunkards). It would have been nice to witness a return to some kind of positive idealism that must have existed in the 20’s – the ‘over my dead body’ mentality when something unacceptable comes along. But you might be right, prozak. They could be more subtle and clever than that. Do enough of them read things like the ADR?

    Reply
  16. Dan,
    no. ADR is too basic for those that I know. I only come here because of the australian spin.

    Perhaps the issue is one of proximity. I am surrounded by exceptional GenYers. Perhaps you are not. Perhaps it is because I am not in Australia?

    I also have a theory about australian intelligence.

    When reading this remember I am also australian.

    I think that Australia is actually one of the most intellectually inept countries in the developed world. I wish it wasn’t. I wish it was a world leader in science, technology, culture, philosophy.. etc etc.

    The reason ?

    We have a long history of immigration that accepted criminals and those looking for… nay… NEEDING a new start.

    It is an unfortunate aspect of our society that the poor are also less intellectually capable, which was even more pronounced when a lot of the immigration to australia occured. Those poor that do rise to succeed are of course no longer poor…. and probably didn’t need a new start in Australia.

    So when we accepted the £10 pom in droves – for example. We simultaneously lowered the IQ of the Australian gene pool and raised the IQ of the british one.

    Yes. This is not a nice comfy theory. But it is the best theory I can come up with to explain why australian’s (in general) appear to have lower intelligence than the rest of the world.

    And before the abuse…. I am first generation Australian. My mother came over as a child in the £10 pom scheme and my father as a child from the Netherlands about 10 years after WW2. So I refer to my own family as well here.

    Reply
  17. So prozak you’re admitting that you have a lower IQ because you came from immigrant (therefore according to your theory less intelligent) parents. I was enjoying the argy-bargy discussion up until your classist crap about the poor automatically having lower IQs and breeding too much. Typical bloody Gen-Y.

    Reply
  18. The intelligence argument doesn’t really apply, prozak – it’s not as simple as that. Migrants to Australia, including refugees, have come from a whole range of social backgrounds, including the intelligentsia of their respective countries.

    Ange, I agree with you re: the poor do not automatically have lower IQ’s. But in Australia the brightest (who before pay-as-you-go uni degrees came from all over society) get caught up in lengthy education pathways (university) with lengthy post-graduate education pathways and are having children too late and too few. That doesn’t seem right to me.

    Reply
  19. I remember when we use to talk about the economy, stocks and argue about gold prices :)

    Greg Atkinson
    October 29, 2009
    Reply
  20. Great post Dan – I think you say it better than I do.

    “So, Gen Y’s are entering a world where the tools of statecraft are sharper and more highly refined than ever.”

    And that is a particular issue. The people who created and understand these tools / mechanics are retiring and the newer generations won’t understand how they work. Most won’t realise that things can be any different than they are…because they weren’t alive before these things existed.

    We’ll certainly see anyway. People still being people regardless of their generation. Though there are certainly differences – compare boomers to the silent generation for example.

    Reply
  21. Pete regarding Australia I think you hit the nail on the head a while back when you mentioned the “Resource Curse” (either here or over at shareswatch) I think we can over complicate things at times, isn’t it simply a case of when things get easier we just get softer or are less eager to push ahead and make sacrifices?

    Greg Atkinson
    October 30, 2009
    Reply
  22. Ange,

    My statement is not about class. It is about 17,000 years of evolution.

    Did i mention anything about breeding? Lets hear about your own classest crap that is evident in you assuming I said that.

    And yes. The poor have less chance of having a high enough IQ and the opportunities to change their life.

    Reply
  23. Greg I confess that I didn’t discover the ‘resource curse’ and ‘dutch disease’ all on my lonesome. A commenter on a blog mentioned it here:

    http://petermartin.blogspot.com/2009/10/who-admires-their-country-most.html

    Still, they’re pretty interesting to read about on wikipedia – and astoundingly applicable to us here in Australia.

    Reply
  24. Pete thanks for the link again. Yes they are very applicable to Oz..it’s scary actually!

    Greg Atkinson
    October 30, 2009
    Reply
  25. The boomers do the great train robbery and Gen Y does this: http://www.smh.com.au/world/robbers-caught-using-the-worst-disguise-ever-20091030-hobx.html?autostart=1
    But also, I have heard of a boomer safe cracker who used so much explosive the paper money atomized whilst coins were embedded in the bank’s brick walls.

    Reply
  26. Here is an article about Generation Z (I referred to them as C):
    http://www.dailytelegraph.com.au/property/gen-y-hold-tight-to-money/story-e6frezt0-1225792920010

    According to that article, Generation Z are actually saving money.

    On the other hand, Gen Y:
    “…Gen Y, who, now aged 19 to 30 years, are responsible for more than one third of Australia’s total consumer credit defaults, despite only constituting one fifth of the entire credit card holding population.”

    No surprise given the marketing and financial packages pushed at them.

    I just found it interesting that Gen Z might actually buck the trend a bit. But, the article did quote one of them as saying they were still looking to buy a house in the future…which goes to show they don’t look at the trend too much.

    It’ll be interesting to see how it all plays out – I still stand by what I have said, but I am very interested in this supposed turn-about.

    Reply
  27. Love the generational in fighting!! Generation Y people are the children of the baby boomers and the generation Z people are the children of the X generation. The X generation lived through the great 80’s recession and are known as the ‘latch key generation’. You could almost liken the X’ers as having similar challenges as the silent generation. So, it appears that the Z generation who are savers in economic terms will save the day. Makes sense to me – I am an X’er and have Z children – they are very tight with their money and very clever with the decisions that make. Encourage your children to have children and teach them not to live beyond their means. Some wisdom for the path of prosperity!!

    Reply

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