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The Independence Myth

posted by Viviana Zelizer

Financial aid from parents to children hardly seems to be a political issue, unless you happen to be running for governor of New York. Eliot Spitzer, currently New York attorney general, got into serious trouble during his 1998 campaign for accepting millions of dollars from his wealthy father to repay a bank loan for money he used to run his earlier 1994 campaign. Bernard Spitzer, his father, was stunned at the criticism: "I couldn't believe that there was any objection, to a father lending money to a son who wants to enter the political world" (The New York Times, October 12, 2006). Bernard Spitzer is not the only one helping his children out.

As Tamar Lewin reported last year in the New York Times (July 14), increasingly long-lived and prosperous American grandparents are providing financial aid to their children and grandchildren as never before, including tuition costs and real estate down payments. Yet they often conceal their help in fear of damaging their children's reputations for independence (In fact many of the grandparents interviewed by Lewin requested anonymity for fear of embarrassing their children). The longevity and prosperity are new, but aid across generations is old. The aid has always included money, but it has also included a wide variety of other help, including personal care.

The distinctive American myth that upright individuals and households take care of themselves economically has long hidden extensive exchanges across generations. It has also hindered clear-sighted public policy for dealing with economic emergencies, dependency, and personal care. Critiques of Social Security and Medicare that treat their financing as intergenerational warfare, for example, ignore the frequency with which government aid reduces the financial strain on children of aging parents.

When Americans lived shorter lives and older people had neither investment income nor government benefits to support them, it is true, more financial aid flowed from younger to older generations. But even then grandparents often took care of children, helped with household chores, provided contacts for job finding, and offered gifts that made a difference. For most American families, a house or apartment is their largest single chunk of wealth. Parents regularly either pass on their own homes or make substantial contributions to the financing of their children's first homes.

A surprising parallel appears among America's low-wage immigrants. Migrants from Mexico, Central America, and the Caribbean send back huge amounts of remittances each year. To Mexico alone, US immigrants sent about $17 billion in 2004. Often the money sent back home supports grandparents who are taking care of the migrants' children while the migrants work in American cities. It also helps buy houses. Some of the migrants will return to live in those houses after their stints in the American labor force. Others will use their savings to bring their elderly parents and their children to live in the United States. Here again inter-generational transfers belong to webs of mutual aid.

That mutual aid does good and bad. On the positive side, it maintains solidarity and security within families across generations. Ironically, it even supports the myth of independence in that way.

On the negative side, it reinforces inequality as whites much more frequently pass on property while blacks and Hispanics less often have substantial property - including houses - to pass on. Elimination of inheritance taxes aggravates the difference between haves and have-nots. It also means that a death, divorce, or loss of job can devastate not just one household but a whole connected group of kin.

Here smarter public policy could take advantage of people's readiness to help each other in reducing inequality and reinforcing the safety nets that people build for themselves. For example, something so simple as paying grandparents for care of their grandchildren (which has worked well in some experiments) could make a big difference to low-income households.

Yes, changing demographics are strongly affecting the place of American grandparents in the lives of their children and grandchildren. For all the bickering, uncertainty, reluctance, grudges, and myth making that accompany mutual aid, the extent of help, financial and practical, remains striking. Generations help each other, parents care about their kids, and kids continue to do what they can for aging parents.

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