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Getting to the bottom of Generation Z insecurities about markets
FREE MARKET
WORKSHOP
Adam Ševčík, 9th Feb 2022
Disclaimer: the opinions of our writers do not reflect the opinions of the conference as a whole.
Adam Ševčík, one of our Panels and Workshops Executives, investigates the anxieties young people face in their economies, and provides insight into how such anxieties can be countered.
The ongoing pandemic has made younger generations anxious about their future more than ever. Even prior to covid-19, fresh graduates found it increasingly difficult to find preferable jobs as they experienced a phenomenon called “degree inflation”. In addition to this, house prices are becoming out of reach for most young adults. The whole of Central Europe has been hit by high inflation. And with the full impacts of the pandemic on the economy yet unknown, the free market appears to be promising little they can look forward to. Most perceive current economic conditions as threatening. Although scary, they should rather be viewed as challenges and opportunities.
Looking at the current inflation rates through the eyes of high school or university students, we can understand why it scares most of them. Hitting all-time highs after more than a decade, youngsters of the CE region were too immature to comprehend inflation the last time it soared to more than 5%. Therefore, seeing prices grow for the first-time so fast, at rates anywhere between 5-9%, can be indeed daunting. Perhaps the most debated and discouraging price increases are those of house prices that were rising even before the pandemic and still have not stopped to this day. Additionally, most young adults probably noticed the rising prices of cars and computers. And lastly, those who throughout 2021 looked at the prices of primary materials such as oil, gas, lumber, or steel, could see their prices spike sometimes even three-fold in comparison to the pre-pandemic levels. It is crucial for younger generations to understand why this is happening so they will be able to do something about it in the future.
Throughout the entire CE region house prices generally increased because of the accessibility to mortgages and low interest rates. However, local differences come into play. For example, in the Czech Republic, house prices grew the fastest. This can be explained by the terribly slow construction approval processes. As a result, not enough new houses are being built. Thus, unsatisfied demand keeps on pushing prices up.
Additionally, throughout 2021, newspapers often reported the increasing prices of cars and computers as a result of major disruptions to the supply chains of micro-chips. These disruptions consisted of a surge in demand for electronics as a consequence of the sudden shift to remote work. Moreover, they were further exacerbated by the extreme weather in Texas and Taiwan as well as chip-making factory fires.
Lastly, regarding the price increases of primary materials, most of them were caused by the surge in demand after restrictions were lifted. This trend was also complemented with an insufficient supply, that was caused by covid related disruptions, some harsh weather conditions, as well as geopolitical factors.
Many people are too quick to blame governments and central banks for the current levels of inflation. Usually, they say inflation is caused by excessive government spending or that central banks print too much new money. There is a certain element of truth to the first statement since government stimuli did put more money into people’s pockets to spend after the restrictions were lifted. However, it was certainly not enough to account for the whole inflation. With regards to the argument about printing money it should be said that it is based on a myth about how money in the economy is created. Most of the money in circulation is overwhelmingly created by commercial banks when they give out loans. (see Keen, 2012) Therefore, the fears of hyperinflation caused by excessive “money printing” are fairly unfunded and potentially harmful, as they cause general panic and confusion.
Going into the future, young adults should seek to understand the causes and mechanisms behind current economic conditions such as high inflation. Not only is it going to help them deal with the anxiety they might cause, but it will enable them to start to perceive the current state of economy as full of challenges rather than threats. They should also start to see the opportunities to shape the future of their generation. For example, their energy, unique insights, and desire for change could all be utilized in providing companies with solutions for preventing such supply chain disruptions in the future or designing new and better ways of supplying.
The ongoing pandemic has made younger generations anxious about their future more than ever. Even prior to covid-19, fresh graduates found it increasingly difficult to find preferable jobs as they experienced a phenomenon called “degree inflation”. In addition to this, house prices are becoming out of reach for most young adults. The whole of Central Europe has been hit by high inflation. And with the full impacts of the pandemic on the economy yet unknown, the free market appears to be promising little they can look forward to. Most perceive current economic conditions as threatening. Although scary, they should rather be viewed as challenges and opportunities.
Looking at the current inflation rates through the eyes of high school or university students, we can understand why it scares most of them. Hitting all-time highs after more than a decade, youngsters of the CE region were too immature to comprehend inflation the last time it soared to more than 5%. Therefore, seeing prices grow for the first-time so fast, at rates anywhere between 5-9%, can be indeed daunting. Perhaps the most debated and discouraging price increases are those of house prices that were rising even before the pandemic and still have not stopped to this day. Additionally, most young adults probably noticed the rising prices of cars and computers. And lastly, those who throughout 2021 looked at the prices of primary materials such as oil, gas, lumber, or steel, could see their prices spike sometimes even three-fold in comparison to the pre-pandemic levels. It is crucial for younger generations to understand why this is happening so they will be able to do something about it in the future.
Throughout the entire CE region house prices generally increased because of the accessibility to mortgages and low interest rates. However, local differences come into play. For example, in the Czech Republic, house prices grew the fastest. This can be explained by the terribly slow construction approval processes. As a result, not enough new houses are being built. Thus, unsatisfied demand keeps on pushing prices up.
Additionally, throughout 2021, newspapers often reported the increasing prices of cars and computers as a result of major disruptions to the supply chains of micro-chips. These disruptions consisted of a surge in demand for electronics as a consequence of the sudden shift to remote work. Moreover, they were further exacerbated by the extreme weather in Texas and Taiwan as well as chip-making factory fires.
Lastly, regarding the price increases of primary materials, most of them were caused by the surge in demand after restrictions were lifted. This trend was also complemented with an insufficient supply, that was caused by covid related disruptions, some harsh weather conditions, as well as geopolitical factors.
Many people are too quick to blame governments and central banks for the current levels of inflation. Usually, they say inflation is caused by excessive government spending or that central banks print too much new money. There is a certain element of truth to the first statement since government stimuli did put more money into people’s pockets to spend after the restrictions were lifted. However, it was certainly not enough to account for the whole inflation. With regards to the argument about printing money it should be said that it is based on a myth about how money in the economy is created. Most of the money in circulation is overwhelmingly created by commercial banks when they give out loans. (see Keen, 2012) Therefore, the fears of hyperinflation caused by excessive “money printing” are fairly unfunded and potentially harmful, as they cause general panic and confusion.
Going into the future, young adults should seek to understand the causes and mechanisms behind current economic conditions such as high inflation. Not only is it going to help them deal with the anxiety they might cause, but it will enable them to start to perceive the current state of economy as full of challenges rather than threats. They should also start to see the opportunities to shape the future of their generation. For example, their energy, unique insights, and desire for change could all be utilized in providing companies with solutions for preventing such supply chain disruptions in the future or designing new and better ways of supplying.
