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net.wars: Mind the gap

"Everyone in my office is either 50 or 25," said my neighbour, who is clearly not 25. "We call them 'knowledge-free'. I blame the Internet."

Well, the Internet is a handy thing to blame; it's there and today's generation of 20-somethings grew up with the Web – if you're 25 today you were 12 when Netscape went public. My parents, who were born in 1906 and 1913, would have blamed comic books; my older siblings, born between 1938 and 1943, might blame TV.

What are they "knowledge-free" about? The way she tells it, pretty much everything. They have grown up in a world where indoor temperature is the same year-round. Where bananas and peaches are native, year-round fruit that grows on supermarket shelves. Where World War II might as well be World of Warcraft II. Where dryers know when the clothes are dry, and anything worth seeing on TV will show up as a handily edited clip on YouTube. And where probably the biggest association with books is waiting for JK Rowling's next installment of Harry Potter.

Of course, every 50-something generation is always convinced that the day's 20-somethings are inadequate; it's a way of denying you were ever that empty-headed yourself. My generation – today's 50-somethings – and the decade or so ahead of us absolutely terrified our parents: let those dope-smoking, draft-dodging, "Never trust anyone over 30", free-lovers run things?

It's also true that she seems to know a different class of 20-somethings than I do; my 20-plus friends are all smart, funny, thoughtful, well educated, and interested in everything, even if they are curiously lacking in detailed knowledge of early 1970s movies. They read history books. They study science. They worry about the economy. They think about their carbon production and how much fossil fuels they consume. Whereas, the 20-odds in her office write and think about climate change and energy use apparently without ever connecting those global topics with the actual individual fact that they personally expect to wear the same clothes year-round in an indoor environment controlled to a constant temperature.

Just as computers helped facilitate but didn't cause the current financial crisis, the Internet has not caused the problem – if anything it ought to be the antidote. What leads to this kind of disconnect is simply what happens when you grow up in a certain way; you think the conditions you grew up with are normal. When you're 25, 50 years is an impossibly long time to think about. When you're 55, centuries become graspable notions. All of which has something to do with the way the current economic crisis has developed.

If you compare – as the Washington Post and the Financial Times have – the current mess to the Great Depression, there's a certain logic to thinking that 80 years is just about exactly the right length of time for a given culture to recreate its past mistakes. That's four generations. The first lived through the original crisis; the second heard their parents talk about it; the third heard their grandparents talk about it; the fourth has no memory and hubris sets in.

In this case, part of the hubris that set in was the idea that the Glass-Steagall Act, enacted in 1933 to control the banks after the Great Depression, was no longer needed. The banking industry had of course been trying to get rid of the separation of deposit-taking banks and investment banks for years, and they finally succeeded in 1999. Clinton had no choice but to sign it into law in 1999; the margin by which it passed both Houses was too large. There is no point in blaming only him, as Republicans trying to get McCain into office seem bent on doing.

That year was of course the year of maximum hubris anyway. The Internet bubble was at its height and so was the level of denial in the financial markets that it was a bubble. You can go on to blame the housing bubble brought about by easier access to mortgage money, cheap credit, credit default swaps, and all the other hideous weapons of financial mass destruction, but for me the repeal of Glass-Steagall is where it started. It was a clear sign that the foxes had won the chance to wreck the henhouse again. And fox – or human – or scorpion – nature being what it is, it was quite right to think that they would take it. As Benjamin Graham observed many years ago in The Intelligent Investor, bright young men have offered to work miracles – usually with other people's money – since time immemorial.

At that, maybe we're lucky if the 20-somethings in my neighbour's office are unconscious. Imagine if they were conscious. They would look at today's 50- and 60-somethings and say: "you wrecked the environment, you will leave me no energy sources, social security, or health insurance in my old age, you have bankrupted the economy so I will never be able to own a house, and you got to have sex without worrying about dying from it."

They'd be like the baby boomers were in the 1960s: mad as hell