Why the well-off should be thankful for good fortune

One of the hardest things to get my head around this Thanksgiving is how we, along with millions of other Americans, seem to have only gotten richer in a terrible year.

Led by the booming Nasdaq, the stock market is up strongly for the year. That's even though it's been a century since the world has experienced a deadly infectious disease pandemic like the coronavirus, disrupting daily life and now claiming the lives of dozens of Minnesotans a day as our state's world-class health care system sags under the weight of serious COVID-19 cases.

Housing values have increased, too, even though it has been half a century since our country has seen anything like the eruption of righteous anger in the streets that followed the killing in May of George Floyd in Minneapolis.

Even used cars have jumped in value.

One of the 2020 observations that flew by on a podcast one day this fall is how when the hard year has you feeling down, being reminded that many others have it much worse rarely makes you feel any better.

Here's an important corollary — to remind yourself that you once had it worse doesn't help much, either.

It's important not to rewrite personal history into a bootstrap story, but I was once much worse off financially. We were mostly just young, starting out as adults with so much college and graduate school debt that for years we had no net worth.

And family wealth obviously is a great thing to have, the financial cushion that will keep the bills paid in times of job loss, illness and later in retirement.

As for who owns America's wealth, in the past 30 years the share of wealth held by the bottom half of American households has been cut in half to less than 2%.

The other end, though, the top 1%, has done really well for the past three decades. The share owned by that tiny slice of Americans has grown from less than a quarter of wealth to more than 30%.

This is the context for a report that just came from the research arm of Deutsche Bank AG, as research analysts looked into what would be required to rebuild an economic future for those people who have suffered the most in the pandemic. It touches on everything from making it far easier for people to get fast internet service to revamping urban and regional planning.

By now it's pretty common to read analysts looking at how the economic pie is split up by country or ethnic group within a country. One key section of this report, though, focused on generations. The authors framed one problem as a really unfair split of wealth between older and younger people in the U.S. and other industrialized economies.

But before figuring out what "wealth should be redistributed," the authors wrote, "we must first identify where the older generation has made gains through mere luck of timing and forces outside their control or expectations."

Mere luck of timing. That phrase isn't going to sit well with baby boomers convinced it was just their hard work and discipline that allowed them to finally get ahead.

Let's look at what was beyond their control. Start with low interest rates. One reason we have such low interest rates now is because the Federal Reserve and other government institutions had to jump in a dozen years ago to save the financial system from itself.

Low interest rates have in turn boosted the value of financial assets that older people are far more likely to own. The Dow Jones industrial average stood about 8,500 in late 2008 when the Federal Reserve announced the first of its big bond-buying programs meant to drive interest rates into the floor.

On Tuesday, the Dow broke through 30,000.

All of this worked out great for those old enough to have bought their houses back when houses were cheaper.

As you might expect, the Deutsche Bank researchers also mentioned soaring education costs, largely paid for with borrowed money. A year at American private colleges costs about three times what it did in the 1980s, after adjusting for inflation. As well, more careers today require an advanced degree.

The research team had a lot of ideas for what governments could do, too, everything from new capital gains taxes on the sale of primary residences and stock investments to one-time grants to propel people through the first few years of their working life.

It's hard to imagine any of their ideas proving particularly popular among older Americans these days, but the point they made is that the older generations might want to embrace some of them out of enlightened self-interest.

To do nothing could lead to political volatility or adoption of measures baby boomers might hate just when they will want to be securely retired, collecting Social Security and relying on Medicare for their health care.