I own both ends of the Boomer–Zoomer war. Caroline Downey asks in National Review whether the Boomers are hoarding the $124 trillion and the Zoomers are coming to take it. She’s right about the casualties and wrong about the sides. The old are being kept alive at public expense while the young carry the bill. I hold the note on both of them. Blessed are the meek, for they accept the posted wage and the posted term.
Marta is 82. She’s a maintenance body in the memory-care wing of the assisted-living facility I control outside Columbus. Her family pays me $16,400 a month for her suite. The nursing director says a body her age needs the wing at 65 degrees. I hold it at 63.
The difference is $2.20 a day.
The $2.20 is mine.
You’ll write that check one day, for your mother or for your own last year, and I’ll be the one who priced it. Marta’s family believes they’re paying for care. They’re paying for the privilege of my patience. I call her a unit because “an old woman sitting with cold feet beneath a thermostat I control” makes the family ask whether the room might be warmer. Questions are expensive. The wing runs at budget. God has never required a profitable hospice.
When Marta goes, her bed turns over in 6 days. The next family believes the brochure. There’s always a next family.
You heard “6 days” and priced the vacancy. Good. That’s the course.
Now take the other end. Derek is a floor guy on the maintenance crew at the same facility. He earns $13.20 an hour, and he’s the one who changes the filter that keeps the wing at 63. He’s 24. In 40 years he’ll be the body in the bed, writing the same $16,400 to the man who owns the place by then. That will be me, unless the arithmetic corrects itself.
It won’t.
The war has no sides. It has two bodies paying into the same machine, and me standing at the machine.
Derrick is another hand on a roof-truss line I own outside Greenville. He’s 26. He fires 240 trusses onto the jig in a shift, the straps that hold up the ceiling of the apartment you rent for $2,400 a month. The house sells for $380,000. Derrick frames its roof and will never sleep beneath it. I arranged that with 2 signatures nobody made him read aloud.
The first signature bought his note: $39,700, about the average federal student-loan balance in this country, acquired at 42 cents on the dollar from an originator who’d given up on him. I collect 15% of his disposable wage. The law allows it. Wage garnishment is one of the few honest machines left.
Because he fell behind once, falling behind has a toll on top of the toll. Interest, fees, and collection costs sit above the judgment. Mine runs 16%.
I keep the 16%.
Read that one twice. The young man who builds the house can’t qualify for the loan on it because his debt-to-income ratio is already spent down by my note. The house sells to a couple 10 years older, who own one already, and they rent it at $2,400 a month to the generation that lifted its trusses. Everyone in the chain works for me. The couple works for the appreciation, which they get to experience once.
The lumbar vest costs $180. It lasts a season: 120 shifts, 240 trusses a shift, 28,800 trusses. The vest prices out at $0.00625 a truss.
Five-eighths of a cent.
I don’t buy it. The men lift without it, and I keep the $0.00625. Derrick’s L4 is the collateral. I’d keep the $0.00625 again because the arithmetic doesn’t flinch, and neither should you. A vest would protect his back. It would also suggest that his back belongs in the cost of the roof. It doesn’t.
Her feet are cold. His spine is loading. I kept the difference.
Otis is the other book value on the same line. He’s 64. He off-bears the lumber behind the resaw, the man whose past has been written down the way Derrick’s future has been spent down. Same line. 2 entries. Nothing passing through the middle of them. Neither one is holding the $124 trillion.
This is where people make the sentimental mistake. They imagine inheritance as a handoff from one generation to another. It isn’t. The money moves from the old into the instruments that hold it, and you’re charged rent for the holding.
Vernon is 74. His rollover is in the fund that bought the note that owns Derrick. He reads his statement on the 1st, same as I do, and he’s never asked whose name is on the other side of it. Taxes fund the old. The old hold the asset. The asset rents the young. The rent runs through me.
The old aren’t the beneficiaries. They’re the collateral.
I’m the beneficiary. You’re the one who pays to stand still.
The house the old couple won’t sell because the taxes are cheap and the rooms are familiar is another instrument. A young man knocks on the door offering 70% of appraised value. I own the firm his commission comes from. The deed signs in 30 days. The buyer is me. I send him to the next door with his 4%. The house sits empty for one season, long enough to remind the young what supply is, and then a young couple rents it from me at the rate the old couple’s decline made them willing to pay.
The old couple’s house. The young couple’s rent. My spread both times.
Marta is Derek with a prescription schedule and a nicer brochure. Derrick is Derek with a mortgage and a damaged lumbar disc. Different surface. Identical math. I price the body, retain the claim, and let the next body enter the ledger.
Widen the frame a moment, because the lesson is bigger than one facility or one roof line.
This isn’t new. I’m not new. It’s the oldest arrangement there is, wearing this decade’s vocabulary. Every civilization has priced its worn-out bodies against its fresh ones and let the arithmetic decide. The Romans called a person an instrument. Cato put the old slave and the sickly slave beside the old wagon and the worn iron tools. James Henry Hammond called the laboring class the mudsill of society. Fitzhugh understood that wage labor emancipated the master from the lifetime cost of the worker. I made the arrangement cleaner. I kept the yield and moved the maintenance to the public.
The Psalmist supplied the schedule long before I did. I prefer the administrative language.
“Slaves, in reverent fear of God submit yourselves to your masters, not only to those who are good and considerate, but also to those who are harsh.” — 1 Peter 2:18
I didn’t write the verse. I only noticed the filing. The young are the slaves in it, the old are the masters, and the harsh clause is the one the law upholds. The good and gentle master was always sentiment. The harsh one is enforceable. I’ve built my whole position on that distinction.
Regulation was the brief, expensive interruption when the young were allowed to dispute the toll. It taught workers to mistake a temporary reduction in extraction for ownership of the future. The interruption is ending. Derrick’s note matures before he’s 50. He hasn’t asked me what happens after the note matures, and I haven’t told him.
The houses I frame are priced to a generation that can’t buy them. I’m told the two things will have to meet: that a boom needs a buyer, that an asset needs a body standing under it, that a roof that out-prices every hand that straps it has a ceiling on itself. They tell me the note matures before the market does.
I haven’t run that scenario.
The model I run ends on the 1st, and the 1st clears.
I’m told that when the generation that can’t afford the house reaches the bed that costs $16,400, somebody will have to pay. I haven’t asked who. The demand goes somewhere. I’m sure it’s being handled. I don’t read the memos from that department.
The bed turns over. The brochure is lovely.
The fee clears first: ahead of Derrick’s rent, ahead of his groceries, ahead of his electricity, ahead of Marta’s evening snack. Someone once ordered snacks for 42 bodies at $1.10 apiece. I removed them. The degree is mine. The $2.20 is mine. The 16% is calculated. The $0.00625 is banked.
All of the yield. None of the maintenance obligation.
Marta’s feet are cold on my thermostat. Derek’s back is a floor guy’s back. Otis is off-bearing the lumber behind them. Derrick’s hands are still fastening the roof you rent. Your mother will write the check, or your child will write mine.
Either way, it clears.
The $2.20 was mine. I kept it. I’d keep it again.
Sterling A. Varice holds the Hayek-Friedman Chair and serves as Dean of Instruction at Warden University’s College of Business and Economics in Richmond, Virginia. He is the author of three textbooks: Divine Mandates for Labor Utilization, Social Obligations for Profit Maximization, and Calibrated Deprivation: A Manager’s Guide to Employee Motivation.