Student Debt And Unaffordable Housing: Big-Picture Effects Of An Aging America?
Back in June, researcher Lyman Stone published a report at the American Enterprise Institute titled, “Red, White, and Grey: Population Aging, Deaths of Despair, and the Institutional Stagnation of America,” which, to be honest, didn’t seem to have generated particularly much attention at the time, and I had merely bookmarked it to re-read myself. But Stone has some ideas which, though I can’t necessarily say are right on the mark, are worth thinking about, as he asks the question: what happens to American society as our country, on average, becomes older? — because, not merely because the Baby Boomers are aging but because life expectancy has increased and birth rates decreased, America is aging, and the (possible) effects are significant.
So, readers, please bear with me on this, because I think his ideas are worth considering and understanding as at least a part of a bigger puzzle.
It starts like this: throughout our history as a country, we have been younger than the “Old World.” Stone provides data going back to the 1850s, when the average age in the United States was 22 vs. 25 in France and the United Kingdom. By the 1960s, the averages had increased to about 31 for the United States vs. 35, and in 2016, to about 38 vs. 41 — while the gap still remains, the increase over time in the United States has been substantial. What’s more, institutions have also aged alongside people.
Why does it matter? Here’s Stone’s bottom line contention:
It is not only our people who have been weighed down with time and hard experience; it is our institutions as well. Just as the baby-boomer generation rode a wave of life expectancy improvements that will not be shared by subsequent generations, so did they ride a wave of institutional flexibility that future generations will not enjoy while implementing a series of regulations for others coming behind. As a result of this wave, we have become a society of control, command, and regulation more than liberty, opportunity, and bold endeavors. We are 50 years beyond the moon landing, and we have not accomplished anything in that period of sufficient grandeur and boldness to replace “moonshot” or the “Apollo Program” as euphemisms for bold and grand designs.
The rise of a more rigid and regulated America is perhaps best exemplified in five key areas: housing regulation, occupational licensing, mass incarceration, the education-industrial complex, and public and private debt. Of course, these are not the only policy spaces in which the ossification of American society can be observed. Nonetheless, they are worth examining because these problems have had large, well-demonstrated effects on the economy and can be easily traced back to political choices previous generations made. But in each case, solutions are available to undo the damage caused and once again create a society that is more free and full of opportunity.
Specifically, Stone writes, America has gone from a land in which the federal government gave away land to homesteaders, to one in which cities and homeowner’s associations impose tight regulations, banning (or making exceptionally burdensome) “simple things such as expanding the garage, converting a patio to a bedroom, or adding a small accessory dwelling unit in the backyard” (not to mention restrictions around building apartment buildings that drive up the cost of housing). Why did this happen? Because, Stone says,
It may just be that America got old. The longer an institution exists, be it a country, a state, or a municipality, the more it tends to develop rules and norms. New organizations have short constitutions and simple rules; old organizations have convoluted bylaws spelling out every possible case, because in the long life of the organization, many unusual cases have required resolution. Those resolutions result in new rules, which constrain future choices as well, perhaps choices never envisioned by the initial rule makers. . . .
The generation now retiring, and their parents, created a massive wave of regulation in American housing, making it harder, more expensive, and more complicated to build houses. The result has been a disastrous dislocation of people over several decades, resulting in large-scale economic losses.
Likewise, occupational licensing has spread over the past several decades, from occupations where it’s clear that the practitioner must be regulated, to requirements to become an auctioneer (up to 50 hours of training required in 30 states) or to be a florist (in Louisiana). The growing number of occupations requiring licensing, and the growing demands for more and more hours of training for a license is especially burdensome for young people looking to establish themselves in a career. (Here in my home state of Illinois, a requirement for hair stylists to receive an hour of instruction in domestic violence recognition was added in 2017, a worthy goal, to be sure, but also another element in a continued increase in requirements. Separately, 13 states require women to have a cosmetology license in order to provide a hair-braiding service.) Stone again connects this to aging:
As the population ages, and as the institutions themselves age, the demand for new regulations to make sure nothing goes wrong increases.
Third, Stone observes that the murder rate tripled from 1900 to the 1930s, then halved to a relative low in the late 50s/early 60s, then more then doubled in the 1970s until a mid-90s drop to rates similar to the 50s/60s low. Stone writes that these trends are all related to lead poisoning, especially due to leaded gasoline, and its elimination (I am not aware of there being a consensus on this point.) Given this, the incarceration rate should have likewise dropped, but its decline has been much more recent and much smaller. Stone connects this:
As with occupational and land use regulations, with criminal justice, Americans in the latter half of the 20th century simply assumed that the path to a better society was making more rules and regulations, restricting individual freedom to an increasing degree, and handing the government more power to make decisions on individuals’ behalf.
Fourth, Stone addresses education: young adults are spending far more years in school than in the past, but that the “average years of education attainment” has essentially held steady since the 1980s, in part because people are not completing degrees or even spending time getting duplicative degrees, suggesting that the system is not providing the value it should have, the first time around. In addition, the benefit to the graduates (or to society) of their degrees is limited because is has become a “white-collar occupational license” as employers demand college or even master’s degrees for entry-level jobs. Of course, the perceived need for more education becomes a need to pay more tuition, and accrue more student loan debt.
And, finally, debt in general is growing, both among individuals and the government; especially with respect to state and local governments, the bill will come due and oblige taxpayers to pay, not for their own needs, but for the spending of the past, with the risk of more communities declaring Detroit-like bankruptcy.
What solutions does Stone offer? He proposes answers which, each in their own way, are proposals to address the specific symptoms of the underlying issue: remove strict zoning requirements, unnecessary occupational licenses or the more burdensome of their requirements, demands for university “seat time” to get a job, and overly-punitive sentencing requirements. With respect to government debt, he offers no particular solution but merely stresses the importance of no longer kicking the can down the road.
Is Stone right? Are all these issues connected up together, and the United States has lost its dynamism, resulting in all manner of consequences? Or has he found his hammer, that of changing demographics, and everything’s a nail?
After all, America is more than its demographic trends, and more has happened that may have contributed to a decline in dynamism than merely the aging population. Generations ago, at least some of our collective ancestors felt a true sense of possibility due to the open frontier and the subsequent tremendous leaps and bounds of technology in the twentieth century. At the same time, Europe, generally speaking, was profoundly affected in its culture and outlook by the devastation of two wars, which (in some explanations) triggering the dramatic shift to a secularist and nonreligious continent.
All of which means that there is no simple answer, whether our leaders and rule-makers simply keep in mind an evolving tendency to excess regulation to try to counter that, or whether we find some grander way to reinvent ourselves.
As always, you’re invited to tell me what you think at JaneTheActuary.com!