A venture capitalist on how boomers wrecked America
Macleans.ca – culture/books – Bruce Cannon Gibney on how U.S. boomers—raised amid postwar plenty, with Trump as their ‘id’—developed excessive self-interest
March 9, 2017. Mike Doherty
When the Donald Trump administration announced that its first budget won’t cut entitlements, no one was less surprised than Bruce Cannon Gibney. In the venture capitalist’s new book, A Generation of Sociopaths, he argues that since the 1970s, U.S. politicians have been essentially currying favour with baby boomers—and now, their entitlements (Social Security, Medicare) must be safeguarded. What’s more, says Gibney, “Trump, in a way, is the boomer id.”
On the phone from his home in New York City, Gibney, an early investor in PayPal and Facebook and a former partner in Peter Thiel’s Founders Fund, diverges from Thiel’s pro-Trump stumping and calls the 45th president “reckless, entitled, anti-empirical, and hostile. He does not appear to have empathy. I think right there, we’ve more or less ticked off all the boxes on the DSM.” Gibney refers to the Diagnostic and Statistical Manual of Mental Disorders to “diagnose” Trump, not as a mentally unstable renegade, but rather as a viciously representative member of his generation—or at least the white, comfortably well-off subset thereof. Gibney posits that, raised in a postwar land of American plenty by the sort of permissive parenting advocated by Dr. Spock, boomers developed a more-than-healthy degree of self-interest, and even their theoretically progressive politics (e.g., widespread opposition to the Vietnam War) arose and then waned directly in relation to how they’d be affected.
Gibney figures the U.S. is headed for a financial and environmental reckoning around the 2030s, when the median boomer will have died, having successfully “deferred” paying off his or her debts to society so that younger generations will have to take them up. He spoke with Maclean’s about how he believes boomers are “The Other,” and the rest of the U.S. must act now to take back the economy and the environment—before it’s loo late.
Q: Your book takes Trump to task, but also, to an extent, Hillary Clinton, and Bill too, whom you have suggested shares some of the same traits. Clinton, too, was determined to protect entitlements. So, have boomers managed to take control of the discussions and debates about American politics, forcing out the possibility of meaningful change?
A: The boomer-dominated machine simply produced [candidates] that they felt they could rely on for the only issue that mattered to boomers, and that was senior entitlement. Once the two candidates stipulated that senior entitlements wouldn’t be touched, it devolved into this weird reality show about basement email servers and toupées or whether or not there was a pedophile sex ring in a pizza parlour.
Distractions help facilitate the agenda. If people weren’t so entranced by the peddling of Ivanka’s shoes in front of a Whitehouse backdrop, or the Clintons’ numerous foibles, they would be absolutely astounded at how badly off Social Security, Medicare, debt and the climate have gotten over the past 30-odd years. To take a personal example, when I was born, in 1976, the gross debt-to-GDP ratio in the U.S. was under 34 per cent, and that was down from a peak of around 120 per cent in World War II. Boomers were an absolute majority of the voting-eligible population in 1982, and even though they began dying, their power consolidated through higher rates of voting participation, the influence of corporate money, the ascension to high office and so on. The debt-to-GDP ratio is now around 105 per cent and on track by the end of the median boomer’s lifetime to be higher than where we were in World War II. So they have completely undone all of the work of the Greatest Generation without having managed to defeat Hitler.
And the national debt is the most explicit debt, but there are all these embedded debts that people don’t discuss—there’s the “deferred” maintenance of U.S. infrastructure, on the order of $4 trillion. There’s the deferred liability of dealing with climate change, which affects not just the U.S. but the world. Systematically, they’ve failed to address any long-term issues, focusing only on present consumption, and that has degraded the foundations of prosperity. I actually think things are going to get a lot worse, but if you’re 65, which is roughly where the median boomer is right now, you’re collecting full social security, and you really don’t care.
Q: In your view, if present rates of change continue, what is America facing overall in the 2030s?
A: There will be an entitlement crisis. What happens automatically in Social Security is that once the trust funds are exhausted, the benefits will be cut to match whatever the current income is, based on the taxes that are allocated towards supporting Social Security. That implies benefit cuts of more than a fifth. And the debt will become a serious problem; interest rates will go up, and an ever-larger fraction of the budget will go to pay for entitlements [to be dished out] at a lower rate for the young and at full-rack rates for the old, and for servicing the debt. Ever less will go to climate remediation, to infrastructure, to research and development, which has been in decline, too, and that will translate to lower incomes. To be highly reductive, that will translate into the impoverishment of people who are presently young.
Q: To what extent are boomers responsible for this?
A: They are substantially responsible. They were in full power in the U.S. no later than January 1995, when our legislature and the executive were in boomer control. And they’ve been influential as members of the electorate since the late 1970s. Sometimes you just reach for the easiest explanation, and the easiest is not that the 1 per cent or Bilderberg or Davos are somehow perverting the American democracy; it’s that is there is a large group of people who just simply chose these policies and elected other boomers to pursue the same set of policies.
The 2008 crash was within their control; the boomers ran all the big banks. The boomers had made the economy less resilient through relentless deregulation and reduction of capital cushions and so on. The budget has slipped even further into deficit; the response was tax cuts, and so on down the line, and this endless cycle of tragedy for which the tempo has been accelerating.
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Q: All of this illustrates correlation, but what about causation? How can you prove the boomers are responsible?
A: I think the correlation is abundantly clear. Causation is a trickier question, because you would have to prove intent. Almost all the benefits [of policy changes] have flowed towards the boomers. The boomers have been in control the entire time, so unless the past 30 years have been some accident that just happened to enrich the most politically powerful group at the expense of marginal political groups—I don’t know that Occam’s razor has dulled over the past three decades. I think if you take a huge swipe, you do end up at a causal link between the boomers and American declension.
Q: What about the rest of the world—do you see other countries experiencing their own versions of boomer sociopathy?
A: Well, there is a secular problem in the developed world, but it’s most pronounced in the anglophone world, and the closer people are culturally and demographically to the United States boomers, the more the problem is manifest. So Canada—I mean no offence—is in geographic, cultural and other terms the most proximate. The boom was much smaller, though, and so therefore it’s less distorting, but there have been problems. The social contract did fray during the Harper tenure. The U.K. is fairly similar to the U.S., and you have bizarre, self-defeating things like Brexit pushed by their boomers—again, it’s the older people who yearn for John Bull, or whatever it was they were excited about with Brexit, assuming it couldn’t have been the numbers.
Q: Well, they were promised £350 million for the NHS every week.
A: OK, so let me qualify that—it wasn’t the real numbers. And then the further you get away from the set of cultural experiences in the anglophone world, the less pronounced these problems are. It’s difficult to include Australia and New Zealand, because they’re fairly small countries, their economies are deeply linked to China, and they’re commodity-driven to a degree that Texas and Alberta are not. The countries on the [European] continent that are roughly as rich as the U.S. is now have fewer of the sociopathic problems I’ve identified—places like Germany, which has had a radically different history. No child in 1955 in Germany had the same assumptions about prosperity, life, absence of guilt, low debt, security and so on that a child in Des Moines, Iowa had, and you do see a radically different cultural approach. That’s not to say they haven’t experienced some version of the problem, but it’s been much less severe.
COUNTERPOINT: Debunking what you think you know about boomers
Q: The greatest problem you identify in the book is taxation, and you argue in the book that the U.S. needs higher rates of income tax, almost across the board. Is this the biggest hurdle that America has to overcome—how George H.W. Bush’s “Read my lips: no new taxes” has evolved into dogma?
A: It’s not that boomers have been against taxes; it’s that they’ve been against taxes on them, and that goes back to your causation point. One of the paradoxes I identify is, Reagan raised capital gains tax rates and lowered income tax rates; Clinton lowered capital gains tax rates and gains on houses; [there was] a sudden urgency of [lowering] the estate tax around the 2000s, just conveniently as the boomers’ parents are about to die; and [there were] top-up exemptions on retirement-account contributions when the median boomer was approaching retirement age. The government’s actual tax take has remained relatively constant as a share of GDP, but given that the tax code is rejiggered every year, that suggests that what’s really happening is some form of reallocation. If you follow the tax code around, it’s been reallocated from the boomers to everyone else. Whatever they couldn’t reallocate, they simply borrowed, which is why the debt has exploded.
Q: Trump at least gestures towards some of the problems you mention in the book, such as infrastructure and jobs.
A: Well, a man who gestures at everything eventually gestures towards something that’s important and probably correct. I think he’s fundamentally unserious. On infrastructure, he’s proposing $1 trillion, but there have been no definite plans as to what that infrastructure will entail, beyond the $30 billion useless fiasco at the Mexican border, and that’s not a real infrastructure plan. Also $1 trillion is not nearly enough: The last time the American Society of Civil Engineers did its review, in 2013, it thought that we needed to spend $3.6 trillion between 2013 and 2020; it’s actually gotten worse since then, with the dam situation in California. Also, Trump wants to make [infrastructure] a public-private partnership, of the kind we’ve seen in Chicago when they tried privatizing some of the turnpikes and parking meters, and that turned out to be a fiasco. It’s not clear that it will be classic policy-funded public goods. The entire structuring mechanism is this neoliberal fantasia about how the government is going to provide 3 cents and private enterprise is going to provide 97 cents, as long as the tax incentives are nifty enough. We’ve run that experiment, and it doesn’t work.
And then he clearly has no interest in the climate, or another social good, voting rights. The general trend in the United States has been for greater and greater enfranchisement, so when we passed the Voting Rights Act in 1965, we were still trying to undo the legacy that we began with in 1776. That whole trend has been reversed over the past decade or so by boomer courts and boomer legislature. On the rule of law, which is a social asset, we’re having confrontations with “so-called” judges. That’s maybe the primary social asset that’s eroding.
Also he’s not really seriously addressing the jobs issue. You have to think carefully about automation, about education and retraining, and investment in research and development, and none of these issues have been addressed by this administration at all. They weren’t really addressed by the “Bush II” administration; they were barely addressed by the Clinton administration; and the Obama administration was hobbled by the boomers in Congress, so these issues have been burning simply because the boomers have not paid attention to them. The radical solutions now proposed, to the extent they have any substance at all, are probably counter-productive. Also, it doesn’t matter to the boomers. They’re on the dole.
Q: In the book, you’ve cast the boomers as “The Other,” against which society as a whole must contend. Given that so many younger people, such as yourself, have a boomer parent or two, or maybe boomer grandparents, how realistic is it to get them to view their own families, and perhaps friends, as “The Other”?
A: You know, that’s difficult [laughs]. Millennial children will return from Williamsburg or Oakland or Toronto to their suburban childhood homes for some gluttonous Christmas or Thanksgiving, and they’ll be confronted with “Make America Great” hats sitting in the corner next to the Social Security cheque envelope, and they’re going to get upset. And they’re going to be upset when their friends in graduate school have been detained at airports, and when they grumble about this at the dinner table, and their parents say, “Well, you know, that’s what they deserve, and we have the right to control our borders.” And I don’t think it’s going to take very much to persuade younger people that the boomers have a certain Other quality. The harder question is whether you can persuade the good boomers—and there are a lot of good boomers—that they need to sacrifice some of the gains that they shouldn’t have gotten in the first place.
Q: It would require a degree of self-reflection that you argue is not generally present among members of that generation.
A: There is a large quantum of people in the U.S. who think that everything that’s happened since the election has been terrific, who believe that there’s a massacre at Bowling Green and that Sweden is filled with Syrian terrorists, and that there are racists pouring over the border, and that Justin Trudeau is running a $500-trillion trade surplus with the U.S., and so on down the line. And I’m not sure there’s anything you can do about that.
Q: And I take it that you believe this is less the fault of Facebook-driven fake news than just people believing what they want to believe.
A: Yeah, this has been a longstanding trend. These “alternative facts” are not new. Boomers haven’t been enthusiastic about science or facts for a long time. They were much keener on feelings, and they’re probably more prey to confirmation bias than most generations, so they see what they want to see, and it’s very difficult to persuade them otherwise, so you can present the facts, and the facts will simply be dismissed as, “Well, that’s just what the liberal elites say,” or “That’s just what CNN is saying.” People will just choose to believe what they want to believe, and this has been a longstanding phenomenon for the boomers. And I don’t know if that’s fixable. I think the problem is, you can either age like wine or you can age like fruit, and they’re aging like fruit.
If you can have a 5- or 10-per-cent swing on the boomers, and a little bit more unity among Gen X and the millennials, then I think you can pretty drastically change political outcomes, because the U.S. is fairly evenly divided in most places, even with the anachronisms of our electoral college in play. I think the hardest generation to persuade, ultimately, will be my own, because we’re middle-aged; we’re in our peak earning years and we’re going to have to pay for it. And even though I think Gen X is actually a pretty good set of people, they’re the hardest sell.
Q: Kirkus Reviews wrote of your book, “Having made a fortune…venture capitalist Gibney is now ticked at having to shoulder the debt of that vast population, the boomers.” I take it you’d argue that you’re looking to squeeze yourself in order to help?
A: [Laughs] no one would suffer more, on a percentage basis. Let’s not pretend that I’m a struggling author. I’m a venture capitalist who happens to write books. No doubt that I’ve been very lucky, and I’m grateful for that, but I’m sort of the exception. To get where I’ve been able to go requires luck in any society, no matter how functional and affluent it may be, but I do think [the chance] for people to get roughly where I and my peers have gotten to should be higher, and if that requires additional taxes, and the wealthier members of my generation to contribute more, then that’s what needs to be done. And to the extent that people just say that I’m just an affluent, angry person, maybe that’s true, but at least my motivations are good. I don’t plan to have children. I’m not doing this for me. I just think it’s the right thing to do.
Q: Some have argued that “The Other” is in fact represented by the 1 per cent, and by the kinds of disruptive corporations in which you have invested, which are seen to entrench income inequality because they concentrate wealth in the hands of very few people—Mark Zuckerberg, for example.
A: As an initial matter, income inequality doesn’t bother me. It’s final economic inequality that I think is the problem. If it is in fact most efficient in the abstract for there to be 10,000 Mark Zuckerbergs, and everyone else in America makes $40,000 a year, and if that actually produces an increase in GDP overnight, then clearly that’s the sort of trade that you make—if two conditions are met. The first is that there’s an adequate redistribution of wealth via taxation. The second condition is, you have to find something that provides everyone else with work that they perceive as valuable. Even if we were in a position to provide everyone with $150,000 basic income, no strings attached, it doesn’t do society any good unless those people have an opportunity to do something they perceive, and the rest of society more or less agrees is, socially productive. People need to derive some sense of self-worth; otherwise, their perspective on society begins to sour, and the whole project becomes self-defeating.
You have to redistribute, but you can’t redistribute in a way where it’s merely giving someone money. It can’t be your rich relative who comes over and you’ve gotten your MFA and you’re $100,000 in debt; he’s like, “Oh, your jalopy’s broken down. Go and buy a Civic.” That doesn’t do anything for anyone’s self-worth. That makes him feel entitled to do whatever he wants, and you just become a serf on his estate. And that’s not a helpful recipe for family harmony or social harmony.
Q: Targeted redistribution, with the aim of building self-worth, seems anathema to the way boomers prefer to manage funds. Are boomers the reason redistribution, such as guaranteed annual incomes, hasn’t been looked at in serious terms in the U.S.?
A: In a sense. They’ve had plenty of time to think about this. But these trends have gone on for so long, and there’s so little room left in the budget that any serious discussion would risk both political and financial capital that they’d rather just keep diverting to Social Security, and so they’ve chosen Social Security. They’ve chosen Medicare.
The only thing I’d emphasize is, I don’t believe that all boomers are sociopaths. I’m not even sure the majority of boomers are sociopaths. Maybe only 15 per cent are clinically sociopaths, and another 20 per cent lean in that direction, but the tilt is meaningful in a generation that large. I’m certainly not arguing that our position is hopeless, but I do think that we’re running out of time for a relatively inexpensive solution.