[COFFEE] 20min "article" about Gen Z and Jobs

A general comment is that a lot of people seemed to have forgotten about - or in the case of some Gen Z never learned - the value of hard work and saving.

People see others making money due to property prices or Bitcoin and expect to get rich easily The reality is a lot of this has been fueled by low interest rates.

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Gen Z would ask you why work’s supposed to be “hard” instead of fulfilling, meaningful, healthy and fun.

I think the outdated “work till you drop” attitude is ineffective, unsustainable and wrong in so many ways.

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Absolutely, and I can see this myself in my own environment:

  • For my grandparents: Work is a sacred duty! The bond between you and your employer is a holy one!
  • For my dad: Work is totally serious and very very important – but never forget that it’s primarily about money, so don’t get fooled! (He was in management, I guess that gave him a bit of a different perspective maybe)
  • For me: Work is a business arrangement, I’ll do my part and I’ll do it well – but I expect the company to do its part, too. I do for you and you do for me. But like @Bojack says, “it’s nice to see some dedication and pride in the work.”

A nice anecdote: There were mass layoffs in my company, but the conditions were actually quite good: There was a severance payment, people got to keep their RSU and got plenty of paid time off in garden leave. And there was this one boomer, and he was shattered, he took it really badly. Although he was being retired early and had the best conditions of all, with decades of service in the company. And those in their 30s and 40s? Most that I’ve talked to were actually happy about being laid off! :smiley:

I guess their reckoning is that nobody else is doing the work. The article clearly tries to spread bad news: Everything will be terrible, nobody wants to work, Switzerland will be ruined. Typical clickbait.

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I think it worth it to really try to understand what this statement means. Low interest rates don’t just spontaneously happen. They’re not a gift from heavens. Every stick has two ends.

So how did we get low interest rates without getting instant hyperinflation? And how did we manage to keep it low for years, even negative? After all, time deposits and savings accounts have become worthless. No point in keeping your money there. Conversely, you can borrow capital at record low cost.

I don’t know why we haven’t seen inflation until recently. Maybe it was because of technological improvement. Maybe it was because the low interest rates predominantly benefited those who already owned capital (it inflated the price of assets) and harmed small savers (cash savings lose in value over time). So we saw inflation in securities and real estate, but not in groceries and consumer goods.

I think mentioning interest rates is a very good point. I think the mindset of the current younger generation is influenced by current economic situation. On one hand you have high level of security provided by the state, which reduces the anxiety of being unemployed. On the other hand, the share of wages in the GDP has been falling for decades (there has been an uptick in recent years, though).

And then, who pays for low interest rates? What happens when capital is that cheap? Who gives access to such cheap capital and why? I guess future pensioners and their pension funds could have played a role. They have accumulated large savings, especially among the “boomer” population, and all this capital had to be invested somewhere. So when they ran out of “safer” and higher return investments, they started scrapping the bottom of the barrel. You’re young, you have a stable job? There is high chance you will be able to pay us interest for decades? Here, have some cash!

(btw. I think it’s important to keep in mind that the interest rate is set manually, which means it doesn’t always reflect the market conditions, but I guess in theory it could be set dynamically through BID and ASK, or decentralized in some way.)

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It keeps going …

I didn’t read it.

According to some articles I have read recently that is exactly what was happening: the liquidity went into inflating price of various assets, starting from less risky to more and more risky ones when expected returns were going down and down. And from this January approximately we have “deflation” (in a rather physical sense) and compression of valuations as hot air and liquidity comes out of the financial markets.

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It depends on whether you want to be comfortable or productive. A 60% work model could be an option if the FTE equivalent remains the same, otherwise I greatly fear for the GDP and productivity of our companies.

In any case, working at 100% is financially advantageous compared to the employee/employer contribution to the 2nd pillar.

I think this model could work if individuals are themselves responsible for managing their pension as they see fit (=freely choosing whether or not to invest their pension money, and whether or not to choose the financial instruments individually).

Partly true but money doesn’t just fall from the sky either. Some people have developed unrealistic expectations during a long period of almost unprecedented asset price increases and low consumer price inflation

A couple of anecdotes:

  1. There are multiple cases of people in the UK not being able to pay bills despite earning >2x average salary. Interest rates and consumer prices went up and now they can’t afford the lifestyle they built (big mortgages, car loans, shopping bills)

  2. Lufthansa strike today allegedly for a 9.6% pay rise. Strikes threats in UK in trains, nursing, airlines and discussion about 10%+ pay demands

We are currently shielded from this in CH but not immune: Ref @cortana’s example about mortgage clients spending the bonus from low interest rates on leasing cars

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What is the issue with a <100% model ? The equation 100%=40 h/week is a construct of the last century, it’s not something set in stone

Didn’t we develop equipment/machines to take some load away from human beings so that we can (ideally) have more free time / enjoy life ?

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These are just my wild guesses but, for Switzerland, I’d say:

Low interest rates are mainly a function of the strong frank (and, reversely, the weak euro and the european economic/financial problems). Inflation went mainly into higher imported prices, which were already high. For us, with big export and import balances, inflation is a processus that is relative to the inflation faced by other countries. Our interest rates were/are low but the ECB and FED had it set low too, so we mainly went business as usual with a policy that favoured exporting companies.

For the US:

Low interest rates benefited businesses and those who borrowed to buy assets. The compensation gap has increased, so additional company profits went preferentially into the hands of executives, some well paid technical jobs and shareholders. That money went mainly into inflating investment assets prices, like stocks and real estate. Few of the newly created/available money went into general consumption or, at least, not enough to create an inflationary shock.

In 2020, the money went into tax credits, unemployment benefits, stimulus checks and PPP loans to businesses. At the same time, foreclosures were blocked and real estate asset prices went through the roof, so people could feel safer and had more money both available, and that they could get on credit, to spend, as well as more willingness to spend it from 2021 onward since they had been restrained in their opportunities to do so the year prior.

Demand for ordinary consumption goods went through the roof, which is one part of why we had inflation this time. The other part are supply chain constraints, that made things baloon from the suply side of things.

My take is that, in order to maximize its total wealth, a capitalistic society has to concentrate most of its riches in the hands of few, so as not to funnel inflation too widly. Those people can then use their wealth as leverage to keep things working that way, which prevents the collapse of their riches, as well as the whole capitalistic model they’re built on. A more redistributing society would hit an inflationary threshold earlier, since more of the available wealth would be spent regularly. The median member of the society would be richer, but the total wealth available in the society would be lower. The limit on that system is reached when inequalities are great enough to funnel social disorder, the fear of which is what should keep the more wealthy people (speaking of the top 0.1%, not just average higher end middle class) in check.

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My understanding is that the banks are the way by which capital generated by low interest rates (credit, mainly, it’s newly available debt that can be used to funnel growth). It is distributed by means of loans, at the banks discretion. The assumption is that banks will try to maximize profits, so will lend to credit worthy individuals, credit worthy individuals then using it to increase the production in society.

Here again, I like Ray Dalio’s vulgarizing video very much: https://www.youtube.com/watch?v=PHe0bXAIuk0

Well clearly the current system needs an update but I wouldn’t say that the correct solution is to push everyone into working 100%

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Oh, the solution is simple, but far, far from easy. It involves building anti-fragility into both individuals and society so that we have less “needs” and more ability to find solutions to our problems through craftiness and a healthy network, on an individual, family, neighborhood, town, canton and national scale. The weaker individuals still have to be protected, because we can, but as a whole, we could do with less wealth and commercial productivity by replacing things like most of our apps by craftiness.

In that way, the additional time fred by working 40-60-80% could go into raising a family or improving our living conditions at our own scale (gardening, repairing homes, crafting our clothes/furnitures, hiking and knowing the mountain better, …), or creating new businesses through creative use of our productivity. That last part involves us not protecting already existing businesses too much, so as for them to still be exposed to competition and be allowed to fail if not managed properly. Real capitalism is a very beautiful thing, but real capitalism doesn’t exist. You point to the weaker members of society being protected by it, I’d point at businesses and the more wealthy individuals being also way too protected and skewing business competition.

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If you force everyone to work 100% you probably end up with a lot of bullshit jobs. You might as well give them universal basic income that would be the same, at least they would not have to pretend to be working.

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You’ve repeated that about 5 times, just in this thread.
Time for you to back that up with some evidence/numbers/examples IMO.

As counter-evidence

  1. Kita-subsidies are related to how much % a couple is working.
    If a couple/parents both work only 50%, then there are no Kita subsidies, since they can look after the children each 50%. This is controlled annually.
    No bumming off working 50% and sending child to Kita for free because of low income.

  2. The Krankenkassenverbilligung is paid up to a family income of 35000 (38000 for families) (varies for different cantons, example is Canton Bern).
    A family living on under CHF 3000 a month in Switzerland is quite restricted in lifestyle, and I doubt desireable in the long-term, even for a Gen-Z’er.

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This is somehow a dejavu, quite similar comments was for the millennials at least in Spain a decade or 2.

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Hey I’m all for a gig economy. I very much enjoy billing per hour worked and not per month. And I can flexibly decide if I feel like working 50, 100 or 200 hours this month.

But I guess what happens then is that the people who are actually working will end up earning more, and those doing bullshit jobs will end up earning less, or even unemployed.

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History shows otherwise, but well…
Lets get back to the London of the 1800- early 1900s

Through productivity increase, which we already have. The wealth gotten out of the productivity of the last century has unfortunately not been distributed equally (despite governments and societies being responsible to make the framework possible, like infrastructure, access to education, financing of research institutes).

Until they are standing with pitchforks and red flags in front of your mansion. Especially when it was not about a miscalculation, but a structural shift.

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Some say we should thank the socialists and labor unions for reduced work week. Others say we should rather thank technological development which allowed it in the first place. If I remember correctly, Henry Ford didn’t need anyone to tell him to reduce working hours.

CEO Henry Ford first instituted a six-day, 48-hour workweek for male factory workers in 1914, according to History.com. In 1926, a five-day, 40-hour workweek was extended to all employees, along with a pay raise. Ford argued that his employees were more productive in fewer hours

Seems that a 4-day 32-hour week might not be so crazy after all…

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