Episode Transcript
[00:00:04] James Keys: According to a study that Consumer affairs did, Gen Z members in their 20s have 86% less purchasing power than baby boomers had in their 20s, which is, I mean, that's a shocking number, you know, 86% less. So what stands out to you most about the statistics that show how much more spending power baby boomers had in their twenties relative to the Gen Z does?
[00:00:26] Tunde Ogunlana: Right now, Gen Z is paying about 100% more for homes.
The average house in Recent stats is $309,400 in the United States, adjusted for inflation. In the 1970s, it was 185,000.
Rent is also higher.
Today. The average is 2,000amonth. And in the 70s, adjusted for inflation, it was equal to 800amonth in today's dollars.
[00:00:53] James Keys: And the key piece is that is inflation. Well, let me say this. That's inflation adjusted, meaning fair at dollar for dollar, what you could buy then versus what you could buy now. All stated in terms of dollars today. So that's not correct. That is adjusting for the change in money value.
[00:01:09] Tunde Ogunlana: And that's why I wanted to say. And then the last two, which I won't read the stats, but just to finish off is college costs and include, I'll include that also K through 12.
And then the energy prices, gas prices adjusted for inflation, are about 5, 50, 60% higher. So if you take all that into account, that's when I started saying, okay, there is a difference here. I can see why. I think you and I, honestly, James, as you know, we're in our late 40s.
We are probably the last group that escaped what the younger people are feeling, people under 40 now that are having a much tougher time than we did.
[00:01:42] James Keys: And I feel like the tail end of Gen X. Correct. And so the millennials coming after us and then Gen Z.
[00:01:49] Tunde Ogunlana: Exactly. And I feel like I at first would hear some of those people in the recent years, younger people, complaining, and I would feel like, hey, you know, just shut up, you're young. I was being an older person. Now reading these stats, I can appreciate that they do have a much different experience than baby boomers or like you said, even us on the tail end of Gen X did.
[00:02:06] James Keys: What really stands out to me about this actually is the, the way that baby boomers were set up by the generations prior to them, like baby boomers basically hit this sweet spot where post Depression time, post New Deal, and you had the greatest generation created this world for them where they didn't have to pay for college, where there's a housing boom, there's Plentiful housing, there's plentiful jobs, there's union jobs where one earner can. So they were set up on third base, basically, and by the efforts of the previous generation to resist being selfish, to resist the idea of making sacrifice and stuff like that. So a previous generation set the baby boomers up. And what it seems like to me is that just those efforts stopped with the greatest generation. Like, the idea of setting up the next generation to succeed, you know, just ended, you know, when the baby boomers got in control, basically, free college gone. Hey, we're going to stop building houses so our housing prices can go up. Like, we're going to create all these factors so we can benefit the most. And I'm saying generationally, again, not individuals, but we're going to try to benefit the most. And whatever happens to, you know, the people coming after us, you know, so be it. You know, we'll just live with that. Like, when you break down all those individual things, the, you know, whether it be housing prices, gas prices, education costs, all that, those things weren't like that just because those things didn't just come down from heaven. Gas prices were low, just coming down from heaven. Those were efforts that were made by the prior generation to really set their kids up. And somewhere along the line, the idea of setting up your kids to succeed in the world just kind of lost its footing in American culture.
[00:03:50] Tunde Ogunlana: Yeah, that's a very good kind of way you put that. Because I think that last piece you said, I think comes down to what happened maybe in the civil rights era, the 1960s, and the cultural fracturing we saw after that politically, where a lot of Americans got into the mindset of individualism that we saw by the 1980s, and I would say, personified by Gordon Gekko's character in the movie Wall street, the whole quote of greed is good, and this idea that. And with Ronald Reagan in the early 80s, when he was campaigning, saying, government is the problem.
And so one of the things you said, James, which I think is very important for us to tie some of this together, is you mentioned fiscal and monetary policy. And I think there's a lot going on in what we're talking about culturally and all that, when we talk about the 60s, and we're not gonna be able to get into all of this in this discussion, but by the 1980, with maybe things that happened in the prior decade or so, a lot of Americans were then ready for what was presented in the early 80s that kind of became policy. And a lot of that, to the Point you made about fiscal and monetary policy came under the Reagan administration, the early 80s, from 81 to about 86 with tax reform. And it's hard to imagine today these numbers, but if you think about it, in the early 80s, the top tax rate was 73% for personal taxes and the top corporate tax rate was 46%.
[00:05:19] James Keys: Yeah.
[00:05:19] Tunde Ogunlana: I'm not here in this discussion to advocate whether that was good or bad. That's a whole separate discussion. But what I'm going to say is what the greatest generation, what they set up and basically the New Deal that paid for the life that you described that the baby movers grew up in, which is a GI bill for their parents. So their parents, 10 million Americans, 10 that fought into World War II, were educated in college. So those were the parents of the baby boomers. Then you had things like constructions of the highways, all these projects. Right. That gave people jobs, that allowed you to have the one parent household in the 50s and early 60s and which created things like cheap and free colleges around the country. Right. And so I'll finish here, James, which
[00:06:06] James Keys: says that these were efforts that were made on the great.
[00:06:10] Tunde Ogunlana: The New Deal created, these realities were free.
[00:06:13] James Keys: You know, it wasn't that they were like this just happened, the greatest generation.
[00:06:18] Tunde Ogunlana: That's what I'm saying.
Let me just finish this point because I don't want to hand it back with you because I was done there, which is. So my point was just saying that the New Deal created all this wind at the back of that generation.
But that's what I'm saying, James. Somewhere in the 1980s, that generation decided we're not going to pay for this anymore. Because that's what I was getting at, James. That's not free to do a GI Bill. It's not free. That meaning to the society that people can, kids can go to college at a low or no cost. Those are investments made through the tax code. And so when you lower taxes, you're not paying for that. And it's no surprise that we've had a dismantling of the New Deal and massive debt since the early to mid-80s.
[00:07:00] James Keys: It's worse than what you're saying because actually the baby boomers did still want to spend, use the government to spend. It just wasn't on things that were for the collective good. It was on things that would enrich their friends or themselves.
Remember with Reagan, they didn't stop the spending, they just cut the taxes. Reagan is what would set off the unending borrowing. So not only will they not set up the world so that their kids can thrive and do better than them. They're actually going to borrow a bunch of money on their kid's name to then continue to use the government to spend for this and that, not collective good stuff, so that they can continue to live, to use the government to live this kind of lifestyle that they want to live. You know, so then we have corporate subsidies instead of university subsidies. So it's. It. I think that there's something going on here, and it might be because, like you said, there's something maybe generationally going because they were handed so much. There may have been a psychology that developed that they were entitled to so much.
