Money tips: Saving The Millenials


Luckily governments, particularly in the west, have social transfers to help the unemployed, low-skilled or low wage earners, but given that their tax income has decreased, even those governments are looking at ‘optimizing’ their social transfers, to keep them only for those who are really in need. That deals another blow to the income and wealth of the young generation compared to their parents.

money tipsThe solutions to the problem are not that difficult to find and many of them are known. The issue is that things have moved so fast on company cost reduction, the disintermediation pressure of global digitalization, capital and labour mobility, the tax competition between countries to attract investments and the economic rise of China and the other BRICS countries. Governments at all levels have been overtaken by the speed of these five waves –because they all are happening at the same time, it amplifies into one giant tsunami rolling ashore.

Much faster action is needed on the level of making sure that countries raise ‘enough’ taxes from individuals and companies. If the income and wealth of the young generation is the top priority, then that should be reflected in the labour and tax laws worldwide. Probably by higher taxation of company income and of financial and wealth income of individuals, but lower taxation on labour And also more support for entrepreneurs and innovation, fully-funded state pension schemes supplemented by large private schemes and lower pay for risk-free employment.

One should not underestimate the auto corrective capabilities of free capital markets, but with a little help from governments this should happen much more easily and quicker, and without giant crashes to the economic system such as the one we have seen after 2007.

I remember a great cartoon that speaks more than a thousand words on this matter. A father sits with his young son in a cave by a fireside with his children. The father says: “Yes, the planet got destroyed. But for a beautiful moment in time we created a lot of value for shareholders.”

Life and structural advances of mankind should not be left to the capital markets alone. Some clever coordinated global government coaching is needed. We should stop complaining about taxation, labour protection or minimum wages. The extremes should be taken out of the tax and legal systems. To move too far away from the centre in either direction should be discouraged.

Don’t (only) ask what the ‘young generation’ can do for you, but (also) what you can do for the ‘young generation’.