The assassination of Charlie Kirk has awakened Americans to the challenges facing younger generations. Throughout our history each new generation could expect to improve their income and wealth compared to older generations. But today younger generations are burdened by unprecedented levels of debt, many of them no longer share the American Dream of prosperity, and some of them now face a future of penury.
The average private debt for citizens today is close to $100,000 significantly above that of older generations. A major source of that private debt for younger generations is student debt. Younger citizens use credit to finance a wide range of consumption spending, including groceries, medical expenses, etc. As inflation boosts the prices of consumer goods the private debt burden of younger generations grows.
Younger generations also face a hidden debt burden imposed on them by the federal government. The total federal debt has increased to $37 trillion, the highest level in our history. Most of the burden of the federal debt will fall on younger generation who must pay the taxes to service that debt over their lifetime. Younger generations also inherited the debt burden from failed entitlement programs, the trust funds for Social Security and Medicare will be exhausted within the next decade.
Thomas Jefferson argued that it is immoral for one generation of citizens to pass public debt to the next generation. He set a precedent for reducing and eliminating public debt. The federal government may incur debt to finance a war, but it should run a surplus in peacetime to pay down that debt. This ‘Old Time Religion’ of balanced budgets and elimination of public debt was practiced well into the 20th century. But we have abandoned this ‘Old Time Religion’, the federal government continues to incur deficits and accumulate debt at an unsustainable rate. Younger generations are well aware of these fiscal policy failures and the burden of public debt they have inherited. Like Jefferson, they perceive this intergenerational transfer of debt to be immoral.
Younger generations are justifiably critical of a government that has saddled them with this debt burden, and many of them have lost faith in the capitalist system. A recent survey by the CATO institute found that two-thirds of younger citizens now support socialism. The disillusionment of younger generations with the capitalist system is not unique to the U.S., as younger citizens across the globe are protesting what they perceive to be failures of their governments and of the capitalist system.
There is an important exception to this ubiquitous rejection of capitalism by younger generations. This year a group of young Swiss citizens has formed a coalition to amend their constitution. Next year they will launch an initiative to incorporate a bureaucracy brake in the constitution that will cap the rate of growth in federal administrative expenditures at the rate of growth in the median wage. Young Swiss citizens claim that the administrative bureaucracy has grown too rapidly. They claim that there has been a brain drain from the private sector to the public sector, and as the government attracts the brightest and most-educated citizens, this constrains the growth of the private sector. Further, they maintain that unconstrained growth in the administrative bureaucracy has burdened the private sector with excessive regulations, slowing the rate of growth in productivity and incomes.
The bureaucracy brake introduced by young Swiss citizens is the most recent reform proposed through the initiative and referendum process. It follows from the successful debt brake enacted two decades ago. With the debt brake in place, the Swiss have balanced their budget and reduced debt in the long term. The Swiss have a long history of using the initiative and referendum process to amend their constitution and to reform public policy. By imposing guardrails on the growth in federal spending and the federal bureaucracy, young Swiss citizens hope to improve their prospects in the private economy.
The puzzle is to explain why younger citizens in Switzerland are attempting to strengthen their capitalist system, while younger citizens in other countries, including the U.S., want to tear down capitalist institutions and replace them with socialism or some alternative form of government. The answer to this puzzle is the evolution of the institutions of direct democracy in Switzerland. The initiative and referendum were incorporated in the Swiss Constitution in 1891. The Swiss have used these institutions of direct democracy many times over the years to amendment their constitution and reform public policy. The institutions of direct democracy give Swiss citizens, including younger generations, a voice in public policy that has allowed them to address problems such as unconstrained growth in government.
Over the years, Swiss citizens have gained greater trust in their governmental institutions. The Swiss refer to this as growing dynamic credence capital. Growing trust in their political institutions is the basis for the success of the Swiss in pursuing prudent fiscal plies. The Swiss have achieved rapid economic growth and economic stability by stabilizing prices and maintaining sustainable debt levels. The Swiss have not saddled younger generations with growing debt burdens. Young Swiss citizens perceive that they not only have a voice in public policy, but they can also use the initiative and referendum to enact constitutional amendments that impose guardrails keeping government at all levels on track.
Barry W. Poulson is professor emeritus at the University of Colorado, Boulder Colorado, and on the Board of the Prosperity for US Foundation
Editor’s Note: The Schumer Shutdown is here. Rather than put the American people first, Chuck Schumer and the radical Democrats forced a government shutdown for healthcare for illegals. They own this.
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