These days, inter-generational war seems to be all the rage. ‘It’s all the fault of the baby boomers’—those born in the decade after the war—is the new conservative rallying cry.
The Pinch
Not that the cry is new. In France before the last presidential election, politicians pinned our troubled times on the lax moral standards and antipatriotic slogans of ‘les soixante huitards’. Before the German elections last year, the Finance Minister Peer Steinbrueck railed against raising Keynesian-style public borrowing on the grounds that it would saddle the our children and grandchildren with a mountain of debt for which they would never forgive us.
The same theme is being peddled strongly in Britain where conservatives argue that the profligacy of the baby boomers has robbed the current generation of 30 years olds of decent jobs and pensions. David Willetts, the Conservative Shadow Secretary of State for Universities, has written a book called The Pinch arguing that the baby boomers took the money and ran, leaving the younger generation with nothing.
High-on-the hog
As the journalist Richard Lander recently put it on CityWire: ‘the baby boomers lived high on the hog enjoying decades of sex, drugs and a huge increase in higher education all paid for by the taxpayer. They bought massive houses for next to nothing and watched their value soar; they retire on gold-plated index linked final salary pensions and enjoy free travel and other perks. …all this has contributed to a massive increase in corporate and national debt which today’s young generation has to pay for with university fees and higher taxes, particularly as a smaller workforce will be supporting a growing cohort of retirees.’
The Daly Mail columnist, Melanie Phillips, goes even further:
“It is a general source of bewilderment that so many socially destructive, even nihilistic attitudes—the onslaught on the family, the dismantling of national identity, the promotion of ‘victim culture’ and the way punishment has been turned into a dirty word—have been promoted by judges, police officers, civil servants and others at the heart of the establishment. The reason is simply that the baby-boomers are now in control.”
Melanie Phillips can easily be dismissed as a ranting right-winger. What is true, of course, is that the baby boomers’ kids are having a bad time, and things are unlikely to improve much in the next few years. But is the real argument about inter-generational equity?
The true conflict
Clearly not. The right peddles inter-generational conflict as a way of diverting attention from the gross inequalities which have plagued Anglo-Saxon countries—and to a lesser extent other advanced economies— in the past 30 years. If boomers in Britain went to university in the 1960s at taxpayers’ expense, it was because only 4% of the cohort attended university; today’s figure is 40%.
If houses could be bought relatively cheaply, it was in part because local authorities provided ‘social housing’, the supply of which is now drying up, and mainly because the deregulated banking system helped fuel a massive house-price boom which has now collapsed.
Final salary-linked pensions have virtually disappeared in the UK because Mrs Thatcher handed pensions to the City where fund managers made millions from investing them in stocks and shares. When the market collapsed, so did ‘funded pensions’. Yes of course there is a demographic problem, but most other EU countries have made reasonable provision for topping up their pay-as-you-go schemes.
Wild-west capitalism
Despite much boasting to the contrary—by Gordon Brown amongst others—-the Anglo-Saxon countries (ie, Britain and the US) provide a poor development model, a model of unregulated wild-west capitalism with the least equal distribution of income and wealth in the OECD. Much of Britain’s welfare state has been dismantled and privatised. Britain’s over-reliance on its large financial services sector has made it particularly vulnerable to the current recession.
The Unequal Generation
A privileged minority may have lived high-on-the-hog and owned nice houses, but most workers in Britain have experienced 30 years of stagnating real wages. With real wages lagging labour productivity, much of Britain’s increased national income over this same period has been absorbed by the top 10%. Even today, the median yearly income is £22,000 (€25,000)—half the population lives on less than this, including most pensioners of the boomer generation!
Governments throughout the EU are calling for spending cuts in order to maintain budget balance. In truth, cutting public spending at this stage in the downturn will make things worse, and Europe’s rich—whether individuals or member-states—will ensure that the burden of these cuts falls on those who can least afford lower wages. To be sure there are exceptions like Finance Minister Christiane Largarde in France. But in truth, spending cutswill lead to higher unemployment, particularly amongst youth. Oddly, the same people who blame the boomers are those calling most ardently for cuts.
Above all, we must stop playing this silly game of inter-generational finger-pointing. Most boomers have never belonged to the class of rich and privileged.
#1 by huskylover on March 9, 2010 - 5:28 am
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#2 by Slim K on March 9, 2010 - 6:37 am
Well I DO blame the boomers. The capitalists you try to shift the blame on are boomers (too). US has over a million millionaires, 99% of whome are boomers. etc etc
This attempt to muddy the water is really disingenuous. For sure, the capital wages share has risen dramatically. For sure one-average-salary families can no more afford a house. Under whose rule this all happened? The boomers!
#3 by Jean-Baptiste Perrin on March 9, 2010 - 10:30 am
I think George Irvin meant that it is silly to blame ALL the boomers. It is not a generation issue, but a class issue and an ideological issue. Just like capitalism completely discredited socialism in 1989-1990, democratic welfare systems have proven in 2009-2010 that anglo-saxon style unregulated free-market is a doomed ideology. Because yes, unregulated free-market without social security is more dynamic (has more potential for economic growth) than welfare systems. But it’s a growth which is far more unbalanced, unequal and fragile, leaving way too many citizens behind and ulitmately hitting the wall a lot harder when crisis occur.
#4 by Anonymous on March 9, 2010 - 2:07 pm
@ #2 Jean-Baptiste Perrin
While your reasoning may be correct in theory, practice overrules it.
The US and Japan are set to achieve higher growth rates than continental Europe in 2010 and the years to come after the crises. Their unemployment rates are much smaller compared to continental Europe. Furthermore, unemployment is expected to fall much faster in US and Japan once the recession is fully overcome.
I hate to admit it, but our economic partners are more competitive and economically fitter than us mostly due to the highly protected labour in Europe. Protecting unproductive jobs simply isn’t going to do the trick for us
#5 by Jean-Baptiste Perrin on March 10, 2010 - 11:05 am
Dear Anonymous,
No offence, but you seem to be confusing practice and the perception of it. In my humble opinion, it is flawed to consider only growth and gross employment figures as key success indicators. My whole point (and I suspect Mister Irvin’s one as well) is that average growth doesn’t reflect progress for a whole society, even from a purely economic point of view. I am not fighting your figures, if you prefer, only the way you interpret them.
If GDP growth is concentrated in the hands of only a few individuals, while most of the population’s situation stagnates or deteriorates, it is not economic growth of the country but of said individuals that we are perceiving. To take an extreme example, a feudal society, and emirate or a dictature can apparently grow tremendously, while its population lives in abject poverty. I am of course not saying it is the case for the USA or Japan, but the problem in measuring growth is similar.
As for employment, figures can be extremely misleading too. The USA has no significant minimum wage. In such a system, employment figures cover jobs which are simply unable to sustain a decent way of life, underpaid part time jobs and so on. Also, because the US system is what it is, even people with jobs will be unable to cover themselves for health risks, retirement insurance and so on. This means that although they may appear to have a higher living standard than someone with an equivalent gross revenue in a welfare system (or even an unemployed person in Europe), they actually are much more vulnerable to simple risks.
My conclusion is thus that the economic theory here is well in phase with what we see in practice.
#6 by Slim K on March 10, 2010 - 4:09 pm
In addition to what JBP said, I would like to ask: growth to what purpose? Compaetition for what?
Living in Germany, I soon got fed up with the constant whinging about low growth.
Yes, it is low, but you already have a house, a summer house, two cars and two long foreign holidays a year plus free everything from the state. What else do you want? More wealth accumulation to your ruling class?
#7 by Anonymous on March 10, 2010 - 10:16 pm
If the majority of Europeans feel like JBP and Slim K, all I can do is rest my case.
I do think though, that I should mention a few more facts before that. Since I am so much in love with numbers I’ll stick to them.
You don’t fancy GDP growth and unemployment rates? Fine. Lets move on to R&D figures. A key cornerstone of both Lisbon2010 and the new 2020 economic prospect. Again, Europe trails behind US and Japan.
Why? Because the house and the car and the two paid holidays ought to be taken away from the unproductive worker and given to the talented researcher if we are to catch up with our competition. Otherwise, the talent wouldn’t be motivated to work at all. Or run away to a place where their skills are appreciated (which is by the way already happening big time). And then we can kiss good bye our long term economic goals.
The choice is, as always, with the European folk.
#8 by droom on March 11, 2010 - 7:00 am
I agree with J-B P and Slim K. However Anonymous makes a point about the low R&D expenditure in Europe.
When even a country like China is very concerned that their forthright expansion of capitalism does not leave poor groups behind and tries t odo everything for not creating “social problems”, i consider China to have adopted a very similar welfare policy like in European countries. But at a lower level, of course.
Uncontrolled capitalism like in the US van be a monster which is hurting many people and even economies in other parts of the world. And benefiting a very limited group of people. Europeans should, however, keep a keen eye on the positive things in USA, or otehr countries, which they hardly do, as they are indulging in luxury and see themselves as powerless in teh global world.
#9 by Joe Noory on March 11, 2010 - 7:55 pm
@Jean-Baptiste Perrin
“As for employment, figures can be extremely misleading too. The USA has no significant minimum wage. In such a system, employment figures cover jobs which are simply unable to sustain a decent way of life, underpaid part time jobs and so on. Also, because the US system is what it is, even people with jobs will be unable to cover themselves for health risks, retirement insurance and so on. This means that although they may appear to have a higher living standard than someone with an equivalent gross revenue in a welfare system (or even an unemployed person in Europe), they actually are much more vulnerable to simple risks. ”
That’s an extreme stretch of interpretation. Unemployment data alone says NOTHING about the type and wage distribution of work, neither in Europe, or the US, or anywhere else.
While people can torture data in all manner of ways to construct an America which makes any and all comparisons they would like to see look good, it’s underlied by a 20% difference in taxation in the populous member states of the EU, and a 15-20% difference in purchasing power parity.
Basically, it isn’t as bad to have a low income in the US as one would wish for the purposes of rhetoric, and I certainly doubt that the idea that the smaller percentage of employed people are magically making more is specious.
You realize also that the studies interested in distribution within the society don’t apply very well to populations dominated by a large bubble in teh middle of middle income earners. Theoretically, you can improve the “huge, inequtable differences” by, say, impoverishing the middle class altogether as this would bring the average and mean income closer to the bottom: which based on the political disposition of those rather obsessed with the idea of sameness in income, seems to be what they are really after: applied Communism that dare not speak its’ name.
Been there, done that, lived under it, and I don’t want to again, thank you very much. It’s a social compact founded on the need for tyranny to maintain its’ founding principles.
Besides: free markets bring people OUT of poverty far more efficiently and quickly, and do a better job of redistributing wealth than any awkward form of social engineering ever has.
#10 by Joe Noory on March 11, 2010 - 8:01 pm
@droom
American society is FAR less burdened by class and is certainly NOT feudal. You don’t need a straw man to demonstrate the European world view to oneself, one need merely accept that it is a choice some societies make.
This never-ending European tugging and pulling to verbally prove something to itself, and especially the absurd obsession with the US, gets dull after 3 decades.
#11 by Jean-Baptiste Perrin on March 12, 2010 - 10:40 am
Well, while I disagree about the rest of the comment, I have to say I am fundamentally agreeing with Anonymous on the R&D question. The EU’s R&D budget, be it public or private are not comparable to what the USA and Japan do. I would like to add a nuance, though. In Europe, a lot less stuff can be legally patented, and notably software can’t (which is a major part of the US and Japan ones). I know it is not enough to explain the difference, but I thought it was important to point it out.
#12 by Paweł Krawczyk on March 12, 2010 - 5:03 pm
I wonder which EU countries really “made reasonable provision for topping up their pay-as-you-go schemes”?
Polish ZUS published 2010-2050 prognoses predict 60% debt in worst period (2020-2030), which means every 60 out of 100 PLN needs to be subsidised by budget, and 40 will come from pensions tax. I can’t imagine how this can continue to work, taking into account where do the budget money come from.
Situation seems to be similiar in other EU countries, judging from recently published materials from ISSA conference held in Poland last week (http://www.zus.pl/default.asp?p=8&id=3044). But at least now most people seem to realize it.
#13 by Marcel on March 14, 2010 - 3:10 pm
George Irvin can easily be dismissed as a ranting left-winger. He probably still dreams of communism… enough said
#14 by Jean-Baptiste Perrin on March 15, 2010 - 11:44 am
While of course, your resume and qualifications are self speaking, Marcel. Let’s have a good laugh.
#15 by Marcel on March 15, 2010 - 4:24 pm
I only used (in the first sentence) the exact same phrasing mr Irvin used against Melanie Phillips (except the part where I replaced right with left). In other words, what goes around, comes around.
At least, JBP, I can recognize the total undemocraticness of the EU and at least I am not fooled by the faux-parliament. I can see that the elected national parliaments (where the democracy really is) are being increasingly sidelined whilst unelected and unaccountable elites seize more and more power in Brussels.
Anyway, one cannot take seriously the comments of someone who thinks the EU ‘parliament’ is a real parliament. It has no more powers than the former Soviet duma had. And strangely enough (or perhaps not), the Soviet Union also had a council of ministers… just like the EU… eerie similarities.
#16 by Mark on December 11, 2010 - 2:20 pm
What a farce. The facts are that Baby Boomers have been in charge for 20-30 years now and they are to blame for today’s problems. Throughout the 80′s, 90′s and 00′s the Baby Boomers managed to eliminate all good judgement, principles, values and morals in our society that was set by our grandparents.