Thursday, February 20, 2014

The natural evolution of de-growth

I read an excellent story today, which as some of the commenters pointed out probably suffers from confirmation bias, but I don't really care. What's important is it's becoming a trend, a (seemingly) voluntary one, and one I've been talking about ever since I began blogging on my previous blog Hellberta.

Gen Y is redefining home ownership - and the B.C. real estate market

Now the whole thing is very interesting, and we'll get to some larger deriving trends that come from the economic trends described within the article but there's one line that really spoke to me, perhaps because I feel the same way.
They might have grown up in a bedroom community, such as the west side, or a suburb. But they are a more urban group, no longer dependent on a car, partly because of cost, and partly because they genuinely care about sustainability. They don’t see the cachet of owning a car, as did their parents’ generation.

“They didn’t get their driver’s licence the day they turned 16,” says Ms. Reuter.

“For the younger generation, it’s almost a badge of pride they wear, not needing a vehicle.”
Now, for a guy like me in Edmonton to accomplish it's a little bit harder. Transit infrastructure here doesn't even come close to that within Vancouver, the weather is a factor, and we're just generally more sprawled. If it wasn't for my job in software I probably would have to drive simply due to the nature of business in Alberta and the favoritism shown towards automobiles. But it does exist here, and I imagine much more so in Vancouver and similar locations.

So why is this degrowth? and why is it seemingly voluntary?

You can pretty well sum it up with a comment one interviewee stated.
Jens Ourom can divide his demographic into three categories. There is the group that sees home ownership has an “unrealistic sacrifice from both a financial and lifestyle perspective.” There is the group that is “raging mad, resistant to retiring as renters – a potential powder keg whenever affordability, housing prices, mortgages, and anything related to the white picket fence … are broached as conversation topics.” And then there is the “What’s the big deal about affordability?” group. Members of that group are counting on a trust fund or big inheritance to get them into the homeowner income bracket.

Mr. Ourom, 27, says he belongs in the first camp, that Millennial who sees pricey property as just too big a sacrifice when there’s so much else that the world has to offer. He is debt free because he worked hard to get scholarships to pay for his degree. He lives car-free and pays a premium in rent to live centrally.

“I really think the concept of saving for a home is maybe overblown and what you should be doing is saving for a future,” says Mr. Ourom. “If your goal is to have a home and work on a home and invest in that, then great, but this generation is already finding different ways they want to save for the future, whether it’s investing in education, or starting a business. I think people are getting more creative with it.”
The future. Likely without a family, children, population growth. The insecurity and fear this generation faces on top of being priced out of traditional living is causing a natural adjustment to their expectations, their goals, their survival. Insecurity for yourself means insecurity for your children. This isn't to say Gen-Y isn't having children, but it is to say that for most it is such a financially daunting reality when faced with the uncertainty of renting, or dealing with mortgage payments, student loans, or whatever other bullshit the previous generation has decided was a good idea to put on the shoulders of their children that the very thought of bringing more children is simply seemingly ridiculous.

The influences shaping this thought and adaptation is instinctive to survival. To a generation that sees OAS simply raised on them to 67 there is little faith in retirement and I'm sure the "it takes effect in the future" spin really comforts those who realize that it doesn't matter when it takes effect what matters is whether its in effect when you turn 65. To a generation seeing that today the uncertainty of what new changes await them in the future as cost cutting and austerity are exchanged for production growth, fear is prevelant.

The results of this aren't going to be pretty for the growth economy, but being that Gen-Y is largely priced out of the growth economy and it's very likely we're going to see a depopulation trend where fewer and fewer Gen-Y and millennial are even having children due to their new status as subprime debt slaves one then has to ask what's the point of having a growth economy? The natural response to our condition, those already feeling our condition that is, is becoming de-growth.

This generation alone already can't afford to support the baby boomers rapid growth record where now as the article describes most Gen-Y's to even consider home ownership must get their baby boomer parents to sign, and people are questioning whether this housing bubble is going to pop? Seriously? But it doesn't stop there as the pride of not using cars eats into large portions of automotive profit. I wonder if the Chrysler CEO Sergio Marchionne is considering that in his growth projections while he begs the Canadian people for more government backed loans to support their growth. Yep, the "job creators" just can't seem to "create jobs" without the employee's paying them for the job in the first place. That's a sure path to wealth right?

De-Growth is already happening, and it's going to happen naturally. What's worrying is a system that doesn't want it to happen, a system that understands that this de-growth will lead to a severe and much needed change to the status quo. It's going to happen in many ways, some good, as in this example of Gen-Y taking an involuntary situation and turning it into an involuntary opportunity, and also the many bad examples which is going to lead to decaying infrastructure, a loss of productive jobs, and ultimately a loss of lives.

De-growth is here, it's how we handle it that is the question. We can kick and scream and light our country on fire as you see happening all around the world on an ever more frequent basis; you think that's coincidence? or we can smile, square our shoulders for the task ahead, and take it in stride.



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Richard Fantin is a self-taught software developer who has mostly throughout his career focused on financial applications and high frequency trading. He currently works for eQube gaming systems.

Nazayh Zanidean is a Project Coordinator for a mid-sized construction contractor in Calgary, Alberta. He enjoys writing as a hobby on topics that include foreign policy, international human rights, security and systemic media bias.

1 comment:

  1. My own kids certainly bear this out, Richard. My eldest and her beau are savers but they're not inclined to leave the city and move an hour's commute out of town for the sake of a miniscule condo. It looks like they'll save their loot and invest it and then, from what they'll inherit from my estate and their mother's, buy a home where they would prefer to live. I think that's as sensible an approach as any.

    In my previous life as a lawyer I dealt with many young couples who had dutifully scrimped and saved and then assumed massive debt to leverage themselves into home ownership only to see everything they had sacrificed to achieve wiped out by the vagaries of the real estate market.

    Until some significant change is enacted to restore the middle class and salvage it from it's decline into the 'precariat', carrying debt is a risky proposition.

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