A recent viral essay by Johann Kurtz makes a case worth taking seriously: young adults look fine in the official statistics and are not fine in reality. I recently wrote something related but narrower myself. Real incomes are up, unemployment has been low, televisions and other consumer goods are nearly free. Yet the young are not marrying, not buying homes, not having children.
Kurtz’s explanation is that previous generations inherited an enormous stock of free social capital: trusted neighbors, functional public schools, safe streets, marriageable-by-default spouses; and that today’s young must buy all of it back, item by item, at retail. The cost of repurchasing a liquidated commons is invisible to standard economic statistics.
He is largely right but the essay fails to close the loop. Prices do not levitate. And the commons was never free. The mid-20th century civil rights revolution was a proud advance in justice, the shining moral achievement of a century with many shameful episodes. But it had a perverse side. Kurtz’s commons was enforced by segregation and discrimination. It was not liquidated. It was fenced and sold. And who pocketed the proceeds? The beneficiaries of the bad old ways.
The prices on Kurtz’s list: the good-school-district house, the credential, the childcare slot; is set at auction. Auctions have winners. In this case the winners are dual-professional-income households outbidding single-earner ones, a dynamic Elizabeth Warren and Amelia Tyagi identified two decades ago in “The Two-Income Trap”: once enough families sent a second earner into the market, the second income was capitalized straight into house prices in good school districts. Most one-income households had to choose among longer commutes, less space, worse schools or other trade-offs, or simply renting.
It’s not just the top decile of earners bidding for a fixed supply of positional goods. Increasingly, the winners are young buyers whose parents write the check. The National Association of Realtors’ 2025 profile found the first-time buyer share at a historic low of 21 percent and the median first-time buyer age at a record 40 — while roughly a quarter of the first-timers who do get through the door rely on gifts or loans from relatives for the down payment.
The sharpest economic divide in America today is not between boomers and millennials; it is within the millennial cohort, between those with access to the bank of mom and dad and those without. Kurtz’s piece was anchored by a vignette from an article in The Cut about Joe, a would-be landscaping entrepreneur. He is being held back by the variance in parental transfers — his father, sitting on private-equity proceeds, won’t write the $15,000 check that other fathers write routinely. “The young can’t afford houses” or children or business ventures, is more precisely rendered as “the young without family wealth are being outbid by the young with it, using equity their grandparents accumulated.”
Which raises the question of how those grandparents accumulated it. Kurtz writes, shrewdly, that expensive neighborhoods are desirable because pricing is “the only legal means of discrimination” left. Make the implication explicit. If price is the sorting mechanism that remains legal, then the golden-age commons ran on the mechanisms that are now illegal. The 1955 neighborhood was not a commons; it was a club. Restrictive covenants, redlining, FHA underwriting maps, and informal enforcement were the barriers to admission. The fee was paid in identity and behavior rather than dollars. The social capital was real: the shared norms, the free-range childhoods, the neighbors who could be relied upon. It was cheap for insiders because outsiders were subsidizing it involuntarily, locked out of the asset-building that today’s down payments are made of.
When exclusion is enforced by caste, insiders capture the benefit for free; outsiders pay the cost. When exclusion is enforced by behavior, insiders pay for the benefits, outsiders are not harmed. When caste and behavior enforcement are outlawed, price becomes the only screen. Exclusion does not disappear, but it is run as an auction. Auctions transfer the entire surplus to incumbent sellers.
The commons was not passively “liquidated,” as Kurtz has it. It was enclosed, priced, and sold, and the sellers were the generation that had received it as a birthright. The transition from a caste system to a price system generated enormous one-time rents, and they flowed to asset holders at the moment of conversion. Boomer housing wealth is, in meaningful part, the capitalized value of an exclusion their parents got for nothing.
The same accounting error hides in the cost side, in what looks like Baumol’s cost disease. Yes, labor-intensive services: teaching, childcare, nursing; get relatively more expensive as productivity rises elsewhere; that part is textbook, and no one gains from it. But the textbook assumes the starting wage reflected workers’ true opportunity cost, and for mid-century America it did not. The 1955 public school hired top-decile female talent at clerk’s wages because law, medicine, and finance were closed to women (Claudia Goldin documented this). Domestic and child care ran on Black women confined to those occupations by exclusion from nearly all others. Kurtz’s essay contains the purest specimen: he laments that the cheap Catholic school system collapsed “due to the dearth of nuns.” It was affordable because it ran on vowed women working for room and board.
When the exclusions ended, wages had to rise toward workers’ real alternatives. What registers in the data as cost disease is partly the invoice arriving for a subsidy the excluded had been paying all along. Notably, schools mostly refused to pay the invoice in cash: the Economic Policy Institute finds teachers now earn a record 26.9 percent less than comparably educated professionals. So the talent left, the price stayed down, and the quality took the hit. This is precisely the “decayed commons” now driving families to pay the private-school or good-catchment premium. Either way, you pay retail for what captive labor once provided.
So was the Civil Rights revolution a mistake that destroyed social capital? No, of course not. Invidious discrimination differs from benign sorting. The law gropes toward it: sorting on conduct and commitment (which anyone can adopt) rather than ascription (which no one can); exclusion by voluntary clubs rather than by the markets that control housing, credit, and work; boundaries that leave the excluded free to build their own institutions rather than interlocking into caste. Mid-century segregation failed every test. A Mennonite colony or a Hasidic neighborhood fails none, which is why such groups kept their social capital and are broadly tolerated.
The high-social-capital neighborhoods of the 1960s and 70s mixed both invidious and benign sorting. Schools became more integrated, but still enforced strict behavior standards. There was more ethnic and religious diversity, but you had to keep your grass cut in the suburbs and pass landlord inspection in the city.
The anti-discrimination momentum changed that. Soon all boundary-drawing became suspect and the legitimate sorting channel, conduct, became legally hazardous because behavior correlates statistically with protected categories. Schools grew reluctant to enforce discipline, landlords to screen on behavior, institutions to maintain standards, for fear of disparate-impact liability.
The demand for sorting did not disappear; it never does, because sorting is how social capital gets cheap. It funneled into price. And price is the worst screen of the three. It’s least correlated with the neighborly virtues people actually want, most correlated with inherited wealth. We banned sorting by caste, made sorting by conduct dangerous, left sorting by money untouched. Naturally housing became the mechanism for social sorting. The price rose accordingly.
The young really are buying back at retail what their grandparents received free. The buyback is an auction some of them are winning with inherited money, and “free” was never free: it was underwritten by the people locked out of the club and the people compelled to staff it cheaply, whose grandchildren now enter the auction with no inherited equity at all. The measurement failure is real, but it is not generational. It is what it looks like when a caste system is converted into a price system and the transition rents are booked as home equity.
One fix is re-legitimizing the conduct channel: schools that can enforce discipline, landlords who can screen on behavior rather than on wealth as a proxy for it, associations permitted real membership standards, policing that protects quality of life. Another is paying in cash for what we value and used to get via oppression: teachers who earn more than school administrators, essential workers brought in from the cold of the underground cash economy, sensible immigration rules we’re actually willing to enforce. The important human need for orderly neighbors should not be monetized as a six-figure school-district premium.
