Friday, April 28, 2006

An Impressive Effort

Yesterday's mail included an impressive looking envelope:

An impressive marketing effort on the part of The Economist. So impressive I'm forced to wonder if their habit of consulting the evidence only after staking out their position is hurting the bottom line. One can only hope.

Having recently canceled my subscription the envelope did cause me to briefly reconsider subscribing. Until I noticed my name is beneath Stephen Harper's. Who the hell is that guy?

What? I'm in line behind the Prime Minister of Canada. Nevermind.

Wednesday, April 26, 2006

an elaborate procession led by elephants

That's how the Kothapalli sisters will enter their joint Sweet 16/ High School Graduation party. Just wanted to offer this little reminder of how the other half-- of the income/ wealth distribution, NOT the people distribution-- lives.

I must admit to being fascinated. Not by the lives and plots of the overprivileged children one can meet on MTV's Super Sweet 16, but rather by the level of interest evidenced by ratings and buzz. A few years ago, I thought this interest was limited to the stratopherically wealthy- Tommy Hilfiger's kid, Paris Hilton, etc.

I was naive. The gap between the masses and the stratospherically loaded is wide enough that it is difficult to tell the difference between the stratospherically wealthy and those who fall just short of that level of oppulence. Since there's a buck to made there, we can count on being fed the lives of the nearly stratospheric as if they were truly stratospheric. Somehow, this is not a comforting realization.

The Bank is Open. But Why?

The Bank in question is the New York Times' aptly named Bank of Mom and Dad. Combining anecdotal evidence with pop books and scholarly findings, the Times reports young adults- say 18 to 34 year olds- increasingly are receiving, if not relying upon, support from their parents.

But how novel is this development? What constitutes parental support? There are a lot of tangled ideas included in this piece which are not effectively identified. For instance, time. Pulling from results generated at the University of Michigan's respected Institute of Social Research we are told half of 18-34 year olds receive time donations from their parents (and significant chunks- nine full time equivalent weeks of work). To the extent that this is watching the grandkids or driving a kid back and forth from college, consider me underwhelmed. Setting aside the increased health of older Americans (Mom and Dad are now more likely to be well enough to babysit) and the long arc increase in college attendance (which increases the number of kids needing a ride home at semester's end), this is not new. But let's not totally dismiss these data points. Similarly, let's consider paying for college. Michigan's ISR finds that parents around the 70th percentile of income can expect to spend over $40,000 on their children between the ages of 18 and 34 (precisely what this means is unclear- are the 'in-kind' donations of continuing to use your bedroom rent free included in this figure in any way?). This figure, however, includes college education expenses, taking away some of the bite of this number (particularly since it's for a top 30% family and the family monetary contribution shows a distribution similarly skewed to that of income itself).

The role of sustaining cash does seem novel and new. Particularly its scale. In fact, I suspect what is new and novel about most forms of parental assistance is their extensiveness not their mere existence. Parents have been paying down payments, handing down cars, and watching the grandkids for as long as those things have existed. To what extent are those gifts now necessary? To what degree is this a reflection on broader economic conditions? Or are these trends more a reflection on the generation, affectionately, 'on the dole'?

I'd place myself firmly in the middle. Books such as Generation Debt and Strapped finger the overall economic situation and the unresponsiveness of the generation in power. They are not wrong. At the same time, as some famous economist once noted- you must bear some responsibility for your preferences- the fact that 20 somethings want is not instant validation. Take Anya Kamenetz, the author of Generation Debt. 25 or so years old, a recent graduate of Yale University. Sure, the bills might be piling up, the cost of being adult high, and the salary not much north of entry level. But her profile is hardly bleak. Among the best educated the world has ever seen and in possession of a publishing contract before her car insurance becomes reasonably priced. Which is not meant to pick on Anya. But it is meant to hold her personal and social expectations up for examination. Particularly for children of upper middle class families. They (we) are used to having their (our) wants met (so conditioned that we may be guilty of confusing wants for needs). Along comes adulthood with a harsh adjustment. The wants don't instantly change, the ability to satisfy them slams into a hard budget constraint. Instead of adjusting- or more accurately bearing the entire adjustment on still shaky shoulders- make application at the Bank of Mom and Dad. If the Bank of Mom and Dad isn't open enough, there's always the all too easy credit card offer and its income sucking debt service charges.

That said, there is something brewing here. Take a look at the categories swallowing the meager incomes of new adults: health care, education, housing, and to an extent child care. It is no accident that young adults are among the most uninsured segments of the population. They tend to be the healthiest and the least able to afford coverage. Remember, the single mid-career professional and the single 24 year old entry level staffer pay the same insurance premium under the company plan, making health insurance (though not necessarily health care) proportionately more expensive for the young. Higher education- in the form of increasing tuition costs, thus more debt, and increasing years of schooling- is taking a double bite out of incomes. Costs for housing and child care- similar to medical care and education- are increasing faster than the general level of price increases. Or, in simpler terms- these services are eating a bigger chunk of paychecks than they used to. At the same time, these are abstractly inelastic purchases (you need a place to live, education is the surest way to an adequate income, eventually health problems must be addressed, etc). Smush it all together and you've got an income crunch which hits the young hard and for the first time.

After all these words, you're probably wondering what it all means. Sorry to leave you unresolved, but I don't know. There is a problem here. Turning to Mom and Dad for cash and support cushions the blow of growing up (my couch and first car, not to mention tuition, etc during college, eased my transition from dependent child to self-supporting adult). But it doesn't solve the problem, it merely shifts it onto those with better resources. However, Mom and Dad are facing the same general crunches as well as retirement planning. It's not enough to expect personal responsibility to carry the day. At the same time, personal responsibility is more than, to borrow the Vice President's phrase, a sign of "mere personal virtue." It's the building block on which structural change is anchored.

Tuesday, April 11, 2006

Dear Abby, If You Didn't Exist, We'd Have to Invent You

Or maybe that's exactly what happened. Is Dear Abby yet another enterprise run on the Dread Pirate Roberts model? But I digress. It doesn't really matter who is responsible for this, it just has to be corrected.

DEAR ABBY: I was engaged three years ago, and shortly before the wedding my fiance called it off. My bridesmaids had all purchased their dresses.

I plan to be married this year and will use the same bridesmaid dresses. However, I am no longer as close to a couple of the bridesmaids as I was then. Since they have already purchased the dresses, am I obligated to ask them to be in this wedding? What would be proper? -- MAKING MY PLANS IN NORTH CAROLINA

DEAR MAKING PLANS: The proper thing to do would be to ask the women who bought the dresses to be in the wedding, or offer to buy the dresses from them, and select bridesmaids who wear their size. (Hint: You'll make fewer enemies if you use the original cast.)

Really, I should be applauding the bride-to-be. Normally you'd expect a certain level of superstition after a dropped near the altar situation. New ring, new church, new wedding dress, and new bridesmaid dresses. But not Making Plans. Admittedly I'm a bit out of my depth here- having never been a bridesmaid (barring a massive change in heart, a newfound love for taking hormones and undergoing surgeries, and finding an open-minded female friend who'd ask the new me to stand with her, that opportunity will never present itself). But had I shelled out money for a bridesmaid's dress for a wedding that never happened, I'm not sure I would still own that dress three years later. Heck, I'm not sure I'd still own the dress if the wedding actually happened. So her concerns may be premature.

On to Abby. Invite people who used to be friends rather than actual friends? Seriously? Make "Your Day" less than what you'd desire to placate friends with whom you are no longer close? Seriously? Find friends who are the same size? Seriously? I'm not advocating Bridezilla behavior, but three years have passed. It's a new wedding, treat it as such. That's what an Abby who wasn't new to the job would say.