BAD LUCK, NOT POLICY, IS THE SCOURGE OF THE YOUNG / THE FINANCIAL TIMES COMMENT & ANALYSIS

January 6, 2014 5:23 pm

Bad luck, not policy, is the scourge of the young

By Janan Ganesh

Baby boomers enjoyed almost miraculously benign circumstances that will not be repeated

©Corbis

Anyone who believes Britain is a uniquely class-bound society should try France, India or, if it comes to that, the east coast of America. Nor is race quite so incendiary a subject here as in many other parts of the world; after all, it is the arrival of other white Europeans that has upset the natives over the past decade. As for religion, there is a limit as to how rancorously it can divide a people whose faith is tepid or non-existent.

The real faultline in Britain is, increasingly, generational. The old are seen to have done well from the economy and the state during their lives; the young are perceived victims. And this inequity is aggravated by the fiscal consolidation of recent years, with its exemptions for the elderly. On Sunday, Prime Minister David Cameron said the state pension would continue to rise by at least 2.5 per cent a year until 2020 and boasted that perks such as winter-fuel payments remain untouched. The next day George Osborne, his chancellor, identified housing benefit for people under 25 as a good place to begin the next round of spending cuts. The contrast was not lost on the young.

If they resent the baby boomers, it is with some reason. A typical person born in 1950 will have little memory of postwar austerity. They grew up under a newly minted welfare state. If they were of an academic bent, a free university education beckoned. If not, gainful employment in industry was there for the taking. 

Either way, their working life was a story of gradually improving living standards. Perhaps they bought their first home in their 20s; if it was in the southeast of England, the subsequent capital gain may have been enough to live off in retirement, even before their “triple locked” pensions kicked in. Their sheer number and propensity to vote encourage politicians to crawl to them. The silver-tongued chase the grey-haired.

The problem is that we have come to regard the baby-boomer experience as somehow the natural way of things, a kind of British birthright that must be passed on to the next generation as a matter of “fairness”. All we want – say the young, or at least their champions – is the lifestyle our parents had.

But that lifestyle was actually a historical aberration, the product of almost miraculously benign circumstances that are not going to repeat themselves. During the cold war, Britain was in economic competition with North America, western Europe, bits of east Asia and not much else. China, India, Russia, eastern Europe and much of Latin America were locked out by their own communism or national protectionism. It is no trick to deliver steadily rising wages to the average British worker when the world’s most populous nations are not part of the global labour supply.

The favourable circumstances did not stop there. Automation was yet to diminish the human element in the manufacturing process. And the baby boomers did not have a teeming cohort of elders to pamper with lavish pensions.

They are a generation of unique good fortune, preceded by parents who never knew Keynesian full employment and followed by heirs who have not been cocooned from global wage competition. To think of their experience as something replicable with the right mix of government policies and good intentions is a superbly efficient way of bankrupting a country.

Surveys of social attitudes suggest that the young know this better than those who simper and protest on their behalf. People born after 1979 are more hostile to higher taxes to pay for welfare benefits than the baby-boomers or the generation before them. They are also more supportive of fiscal deficit-reduction, less enamoured of the National Health Service and generally questioning of the state – as you would be if you were about to spend your working life paying down a public debt accrued by other people.

The government can soften the predicament of youth, of course. A looser planning policy would, in time, turn home-ownership into an attainable prospect for people who are presently resigned to a life as tenants. A different distributional profile for austerity could make a marginal difference too: less money for pensioners and more for education and investment.

But no serious person can believe the mid-20th century good life will come back if only young people vote in sufficient numbers and “get organised”. The structural conditions that gave rise to postwar prosperity across the west are not in any government’s gift to recreate.

There is no law of the universe that says each generation must be more prosperous than the last. History is about shocks, reversals and declines as much as about metronomic progress. The present generation’s hardship is not exceptional; the previous generation’s comfort was. Politicians’ duty to the young is to be candid about this, help them where possible and chip away at old debts that will hang over them for as long as they live.


Copyright The Financial Times Limited 2014.