Back when I was in high school (see bad 80’s hair above) I did the sort of work around the neighborhood that’s typical of teenagers. I mowed lawns, cleaned rain gutters, washed windows, and did a lot of general housekeeping for folks. I earned a bit of money and learned some important lessons that have served me very well in life.
As I went about my chores for various families I noticed that each generation had a radically different way of thinking about things – particularly money. The retirees from the Great Depression and World War II era were frugal as a result of their early years of deprivation and sacrifice. They paid cash for everything. They drove older less expensive cars – and had few of them. They lived in modest well maintained homes and kept everything simple. Several of them had raised five or six kids with only one bathroom in the house. When new children came along or other relatives came to live with them they put the girls in bunk beds and moved the boys down to the rumpus room in the basement. They kept abundantly stocked pantries. They salted away money for a rainy day. They were pragmatic and stoic about everything in life.
I loved these old couples and spent as much time with them as I could when I was young. It says a lot that we kept in touch for years after I left for the west coast. We continued to visit each other until, sadly, they gradually passed away. I miss them.
Baby Boomers were the second big group in the neighborhood who, at that time, were in their 30’s and 40’s. They were at a different stage of life busy building their careers and raising children. I liked them all well enough, but I never bonded with them as a young person the way I did with the older folks. They were just too busy.
They would often talk about their financial strategy. “We have a big mortgage and all that interest is deductible from our taxes. It’s like giving yourself a raise.” “Never spend your own money on big purchases. You don’t want to tie up your cash when it could be working for you in other investments.” Boomers lived in much larger homes than the older generation and they were always improving them. I watched as one young family after another put on a master bedroom suite, a family room, a home office, a guest wing, a two car garage with bonus room, an in-ground swimming pool… They always bought new cars. They took expensive vacations. And all of this was acquired on credit – often by tapping the equity in their homes.
Then, in October of 1987 the market crashed. Stock values dropped by half, real estate values sank significantly, unemployment spiked, and many of the highly leveraged Boomer families were thrown into financial turmoil. More than one of these families lost their homes to foreclosure and disappeared – moving out of state to start over again.
As I went through life I watched as another boom and bust cycle played out with the crash of October 1997 and then again in the crash of September 2008. The interesting thing to me is the way different generations interpreted these events. The older folks never adjusted their penny pinching when times were good. They reflexively saved against lean times regardless of the current abundance. Boomers never learned to restrain their enthusiasm no matter how often they screwed up. They held firm to their buy-now-pay-later ethos decade after decade. A dog doesn’t change its spots.
I’m quite certain that there are readers of this blog who remember friends and relatives of the WWII generation who were gamblers, drinkers, and spendthrifts. And I have no doubt that many Boomers have always been careful savers and planners who cut coupons and squirreled away cash for college and retirement. But the overall verdict is best viewed from a national perspective.
When older folks were in control of the levers of power they left behind a solvent country. There may well have been all sorts of festering unresolved problems, but money wasn’t one of them. The moment Boomers seized power and asserted their priorities on the nation they began to dismantle the institutions and procedures of their elders. The result is massive debt and a looming economic crisis that they, as a generation, are uniquely unqualified to resolve.
As a member of Gen X (the smallest and least influential generation in American history) I’m waiting for the Millennials to take over. They’ll pick up the broken pieces and build up new institutions that will reinvigorate the country and return America to solvency. I see in them the best qualities of pragmatism, reasonable compromise, and resourcefulness reminiscent of a bygone era. They are sorely needed today. But we’ll have to wait another twenty years for them to mature and arm wrestle control from the Boomers who show no sign of wanting to let go of the reins as they squabble and flail about. It’s going to be a bumpy ride.