Tuesday, April 8, 2014

Silence Over Sacrifice: Generational (In)Equity in American Politics

The ultimate test of man’s conscience may be his willingness to sacrifice something today for future generations whose words of thanks will not be heard.”

-- Gaylord Nelson, Senator from Wisconsin (1916-2005)

In February, BSB wrote that one of the “First Principles” of American Politics should be to assume that present sacrifice for future benefit is the appropriate path,” and that, “The burden of proof should be on those who would take today and pay tomorrow, not the other way around.”

All too often, however, whether the topic is wages, housing, pensions, or the fight to combat the catastrophic effects of climate change, we are quick to sell the next generation short to avoid sacrificing our own benefits/lifestyle.

As Joanna Weiss highlighted in the Boston Globe last week, 26 states currently provide a modified minimum wage for teens, ranging from offering teens 85 percent of the minimum wage and allowing substantially lower wages for short-term work to exempting students from the minimum wage altogether. Weiss concluded, “Who’s to say, based on age, that their work is less valuable than anybody else’s?”

In New York State, teens make the same minimum wage. However, the State recently enacted a tax credit that subsidizes the wages of 16-20 year olds, making the effective wage of a teenager lower (from the employer’s perspective).

As important as wages are to success in New York, perhaps nothing is more closely tied to opportunity than housing. The dreams of youth coming to Gotham—whether from small, rural towns in Massachusetts or metropolises from across the sea—invariably run into the reality of New York’s affordable housing crunch.

Last week, Harry Siegel of the New York Daily News once again noted what many economists across the political spectrum have said for years about New York’s housing market, “the more subsidized housing we have, the more outrageously expensive it gets for everyone not lucky enough to have it.”

And as you would expect given that housing, like wages, is a zero-sum game, older people are vastly overrepresented among subsidized housing units. As shown in the table below from the Furman Center’s 2012 Annual Report on the State of NYC’s Rent-Stabilized Housing, people over the age of 65 are much more likely to reside in rent-regulated, public, and other subsidized housing than the young.

Most acknowledge that the only way out of this conundrum—save for an unwinding of NYC’s rent-stabilized housing program (disclosure: I live in a rent-stabilized unit on Manhattan’s Upper East Side)—is to build more housing. And the only way to do that in New York City is to build up.

However, as Siegel adroitly points out, this solution once again pits the generations against one another, creating, “a fight between those of us already here, protecting what we have, and the needs of those who might join us — between the city’s present and its future.”

A third area where this type of generational clash frequently takes place is government pensions. In 2012, New York recently enacted Tier VI—a new benefit tier for employees entering City/State service after April 1, 2013. Tier VI asks future employees to pay more for fewer benefits than Tier V employees (disclosure: I am a “Tier IV” member), continuing a long tradition of “pension reform” that solves present problems by borrowing from future employees. As the Fiscal Policy Institute found, the average Tier VI employee will receive a pension with a value that is 39.8 percent lower than currently provided under Tier 5.

While some insist that “reliance” on benefits should prevent them from being impaired in any way, that ideological rigidity necessarily assumes that the benefits of future workers/veterans should be sacrificed to maintain the status quo.

Some interest groups have recognized the generational tension in politics and sought a path forward. Common Sense Action and the Bipartisan Policy Center have created an Agenda for Generational Equity (AGE), which seeks to protect today’s seniors and future generations through entitlement reform and investments in education and development that improve mobility and opportunity.

However, while AGE is an ambitious and well-meaning effort, it falls short by failing to use the language of sacrifice, of tradeoffs, in rendering its judgment. Indeed, the AGE appears to want readers to have their cake and eat it to—implying that there is a way forward in which all will be healthier, happier, wealthier, and without any additional burden (tax or otherwise).

It is yet another example of how sacrifice has become a verboten term in American politics. How this came to pass is something of a mystery, particularly given how we have historically revered sacrifice (whether of life, liberty, or treasure) as one of the pinnacles of a democratic society.

On the other hand, concerns about generational equity are nothing new. Nearly 30 years ago, Steven Greenhouse of the New York Times wrote that the very term “Generational equity” was slowly creeping into the political discourse as economists, “assert that the generation in power is blithely passing the bill to its successors.”

No one is blameless in this story—from the politicians who are too scared to level with constituents, to the constituents themselves, who allow politicians to infantilize them by reveling in the fiction that solving problems is painless and that merely saying that nothing is more important than our children is more important than actually backing up that sentiment through collective sacrifice.

In the end, sacrifice shouldn’t be a dirty word in American politics; it should be something to which we all aspire.

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