Austerity political economy is a platform for justifying cuts in the social wage. Raising the social wage raises nonlabor income, living standards for working families, and makes retirement—and other forms of paid nonwork—possible. A higher social wage increases the relative bargaining power of workers in the labor market. It is not a surprise that advocates for cutting social spending expenditures attempt to divide the interests and political strength of working families. A particular form of the division is the false claim that spending for the old takes away from spending on youth. There is no evidence for the argument that in the light of shrinking federal spending, any dollar preserved for the old will be taken away from the young. This claim is fierce and wrong. The myth that we have arranged our society in a reptilian way—so that the old eat the young (as lizards and other reptiles do when food is scarce)—has been advanced for over three decades by conservative critics and business-aligned interests. The deprivation of American children is not caused by the existence of programs for the elderly; in fact, whenever support for old age programs increase, so does support for spending that helps children out of poverty. I argue that prominent “generational-divide” economists are mistaken because the economics of their narrative are wrong. The well-being of our children and grandchildren depends on political alliances and economic growth that distributes the productivity gains of workers to workers, retired workers, and children of workers, not cuts in Social Security and Medicare.


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