The Millennial Economic Tailwind/Dividend

I write a lot about millennials and Reddit is because this is a demographic, and ignoring or dismissing them could be counterproductive by alienating a potentially very large audience. There is also a trend of journalists spreading doom and gloom about millennials – doom and gloom and generalizations about student loan debt, college being a waste of time and money, and about millennials being poor. Reality paints a different picture than the one by illustrated the left: contrary to the myth that all millennials are poor, many millennials have substantial savings. Although studies show millennials have less money than older age brackets, these studies are like comparing apples and oranges. It’s not surprising that a 60-year-old who has been working for 40 years has more money than a 22-year-old out of college, but how about that 60-year-old when he was 20? This inattentiveness to detail and tendency to overgeneralize is what passes for journalism these days.

Contrary to the myth all millennials indebted with student loans they will never pay off, there are many millennials who have paid their loans quickly after getting a good job, usually in STEM. Here is one example. There are many more. College is still a good deal if you major in a high-ROI field like STEM, but the left, in throwing out the baby with the bathwater, says college is a scam because they are among the majority who majored in a low-ROI subject. According to the left, if stupid people (including themselves) fail for making stupid decisions, then the system must be broken and rigged, and everyone has to suffer for the mistakes of some. The left is always looking for someone else to blame (colleges, loan companies, corporations, rich people, the fed, the government) instead of taking personal responsibility.

The media also overgeneralizes millennials as being semi-literate and narcissistic. A teacher who, unlike the media, actually grades papers counters:

If you read more than a couple of online pieces about the state of writing today, you’re likely to come upon the charge that smiley faces, “LOL”-style abbreviations, and slang terms are rampant in young people’s prose. I think this is whack. In fact, I don’t remember a single example in all my years of grading papers, except for a handful of ironic parries. Students realize that this kind of thing is in the wrong register for a college assignment.

This agrees with Wired journalist Clive Thompson in a video where he refutes the leftist charge that texting is making millennials illiterate, arguing that millennials are fully cognizant about when to switch between internet slang and conventional, serious prose. He argues that technology, especially texting and social media, is good for literacy, since millennials are writing and reading more than any prior generation, the difference being the text is shorter and online. Penelope Trunk agrees, presenting research that counters the the common misconception that the internet is making kids dumber:

And now, for all you doubters, I present the research to end all research. It comes from Andrea Lunsford, a professor of writing and rhetoric at Stanford University. She has conducted the Stanford Study of Writing, which includes about 15,000 writing samples from students from 2001 — 2006. The always-interesting Clive Thompson reported her findings in Wired magazine:

First, only 38 percent of the writing young people do takes place in the classroom. Prior to the Internet, almost all writing people did was for the classroom. The increased amount of writing that young people do outside the classroom these days is so significant that Lumsford calls it a paradigm shift.

The war on texting is just another example of the anti-technology left blaming technology for a problem that doesn’t actually exist. Reality and the media often diverge.

Which begins me to a second part: The millennial economic tailwind/dividend

Although I know the millennials on Reddit and 4chan, who make up the majority of the user base of those sites, are not representative of all millennials, it’s still a sufficiently large sample. As I’ve written about numerous times, millennials (or at least those on Reddit and 4chan) seem to be very perceptive and discerning, with a broad repertoire of knowledge, good critical thinking skills, and are inoculated from the humanistic, sentimental platitudes that you find in the political and media establishment, instead arriving at their own conclusions based on the preponderance of the empirical evidence, even if such conclusions are not politically correct, as I describe in an earlier post Why Personal Finance Has Become So Important To Millennials:

Your typical 20-something Reddit/4chan user is a veritable expert in finance, history, syllogistic reasoning/rhetoric, theoretical physics, political science, sociology, and economics. Compare that to many generations ago when a typical 20-something was mostly well-versed in the latest happenings in sports and entertainment and not much else, and typically didn’t hold strong opinions about much of anything outside of the purview of popular culture and possibly some politics, and such opinions when they seldom were expressed tended to be blunt and unsophisticated. Fifty years ago, to be an exert in economics or finance meant you had to study it college; nowadays, it seems everyone is an expert. These smart people, many of whom more fit the ideological mold of a pragmatist or utilitarian than a welfare liberal, can carry on an intelligent discussion about efficient markets, the merits of free markets, or the workings of the US economy – all without having studied it in college. You have a story on Reddit about a dart-throwing chimp beating fund mangers, and in the comments everyone is suddenly an expert in finance – but not faking it – but citing real jargon, studies, and statistics. Then you have the unending online debate between millennials about Automation, Jobs, Wealth Inequality, Basic Income, and Post-Scarcity.

Without fail, whenever a story by a ‘reputable’ journalist is posted on Reddit that tries to advance a SJW talking point, the millennials on Reddit deftly dispel it using facts and logic, not even partisanship. For example, a smear job from the left about Rick Perry not paying the National Guard was summarily debunked in the comments section of Reddit. The comments is where the truth lies, which is why the SJWs are waging a war on them.

Although many of these millennials are jaded or indifferent to cooperate life, these are the traits that would, in fact, be the most invaluable for upper-management or any high-stakes job. Corporations need to get these millennials into management.

When Mark Zuckerberg, then in his early 30′s, infamously donned a hoodie during the Facebook IPO, the liberal media scoffed, implying such ‘immaturity’ would bode poorly for the future of Facebook, and then Facebook stock falling 20% in the weeks that followed the IPO further compounded this doubt. Mark would have the final laugh as his acquisition of Instagram for $1 billion (it’s now easily worth $30 billion) would prove prescient and brilliant, and Facebook stock surged from the $20′s in 2012 to over $100 today. The liberal media also downplayed Tesla and Google, both have which since appreciated substantially since their IPOs. All these young founders in Silicon Valley – startups-up like Pinterest, Snapchat, Dropbox …many more all have crushed their doubters as valuations keep rising. Again and again, stodgy liberals in the media who call company ‘XYZ’ a bubble, who downplay youth, end up being wrong about 95% of the time, but they will go to great lengths to remind everyone of the 5% of the time they were right. So as we can see right now in Silicon Valley, young people have proven themselves competent and able to lead.

From USA Today Does age matter when you’re CEO?:

The median age for an S&P 500 CEO in 2007 was 55, according to executive search firm Spencer Stuart. If anything, companies are gravitating more toward the sweet-spot age. Since 2000, the percentage of S&P 500 CEOs 50 to 59 has increased to 58% from 53%, Spencer Stuart says. Among today’s S&P 500 CEOs, 27 (5.4%) are 47 and younger, and six (1.2%) are 72 and older, according to Spencer Stuart and USA TODAY research.

Upper-management tends to be middle-aged, which it not surprising since management typically requires seniority and experience.

But more interesting, which is somewhat related to my analysis of millennials, is that companies run by young CEOs outperform companies run by older CEOs:

However, as a group, the S&P 500 companies run by the youngest CEOs have been outperforming those run by the oldest. Of the 27 CEOs of S&P 500 who are 47 and younger, 23 have been CEO since the start of 2007. Those 23 stocks are down an average 2.8% over 19 months vs. a 9% decline in the S&P 500 index. The six companies with CEOs who are 72 and older are down an average of 21%.

Conclusions are all but impossible to draw from the portfolios of 23 and six companies, but winners are few among the older CEOs. Nabors Industries, with 78-year-old Eugene Isenberg as CEO, is up 10%, but the other five are down substantially over 19 months. Amazon, (AMZN) with 44-year-old Jeff Bezos at the helm, is the runaway leader among both age groups: up 121%.

This was in 2008; Amazon stock is up 900% since then. Facebook up 200% since 2012; Google up 1,000% since 2004.

But why reason why I’m optimistic about the US economy is because with a couple decades, today’s upper-management of boomers and gen-xers will retire, and millennials, who will be in their late 40′s, will fill those leadership spots, applying their superior critical thinking skills where it’s needed most, possibly creating an economic tailwind as these companies realize their full potential. Instead of having one Zuck or one Musk, imagine every company in the Fortune 500 run by ‘Spock’s’ and ‘Datas’ and the good it would do for the economy. Of course, this requires that the ‘good’ millennials take these leadership roles, not the SJW or drug-addled ones. When you consider, for example, how the bad actors of the 2008 financial problem were mostly baby boomers, maybe there is reason for hope when they finally retire.