Boomer life according to the economist

[Steve H]

mwstewart said:

It seems to me the easier we have it the more some sections of society will whinge.

This seems like a pretty good summary.

I’m early genX so certainly had some advantages but I (a non-graduate) have had to run my own business through four recessions, the first two when work was far less plentiful, and the first time any help was offered was during covid. Now those that have bothered to become plumbers, builders and trades are beating work off with a stick while earning more than teachers and some doctors.

My first house seemed laughably cheap looking back at it now but it certainly didn’t then. My second house is now pretty valuable but I bought it derelict and fixed a lot of it up myself; for years I kept meeting people that considered bidding on it when I did but it was too expensive/too much work etc.

Now there is virtually 100% employment rates, minimum wages and welfare that makes not working a much more palatable option than it used to be. People can afford new cars, the latest tech and regular eating out, these things were considered luxuries not so long ago.

Obviously everyone needs somewhere to live and the ability to buy has been a great creator of wealth but the idea that opportunities and overall living standards are lower than they were 30-40 years ago is plainly silly.

[turbobloke]

NickZ24 said:

turbobloke said:

Easily? You missed the bit about wanting to be close to family and friends. In addition, it's not always that "easy" to move nearby and be in a house significantly smaller with money from the difference in their account. Houses tend to be in groups of about the same size and value. There's also the emotional attachment that people in families have for the family home regardless of having friends and family nearby.

Life is not easy?
How do you compare the EU lifestyle with say African in the woods kind of lifestyles?

?

I don't and nor do I think about the future with colonies on the Moon, I stay closer to the context of the post I was replying to.

NickZ24 said:

The hardship of moving away from loved ones is not really harsh when seeing the distances of the US.

The discussion in question wasn't about the US.

NickZ24 said:

Depending on the year you wish to sell your houses most people have not sold anything.

?

Boomers didn't do anything to create the conditions they experienced, given political policies in place before and just after they were born. Making the most of what poliiticians do or don't mess up isn't a fault thing, it's what people should do. It's still relevant today.

[Vanden Saab]

ucb said:

40+ yr old child of 2 boomer generations
This year will be the first that I might out earn my father who is 78yrs old.

At what age was your father earning the most?

[Shnozz]

Vanden Saab said:

ucb said:

40+ yr old child of 2 boomer generations
This year will be the first that I might out earn my father who is 78yrs old.

At what age was your father earning the most?

The generosity of my Dad’s pension scheme and the annuity rates he secured means I barely out earn him working 70 hours a week

[ucb]

Vanden Saab said:

At what age was your father earning the most?

Probably in his late 40s too, 30 years ago. His pension is roughly equal to my pre tax income for the past 3 years

[brickwall]

The Economist is right.

Each individual’s case will of course be different, and there will always be exceptions that prove the rule.

But at the macro level - essentially all the economic trends have really played into the hands of the boomer generation (especially in comparison to the generations that followed).

- Pensions: DB pensions were far more widely available (and more generous) working in the 80s and 90s, compared to 2010s/2020s. Enormous real growth in the value of the state pension over the last 20 years.
- Housing: Massive real growth in the cost of housing from c1990-2022; that was fine if you owned a property during that period (because the growing value of your asset perfectly compensated)
- Taxes: Creeping ever higher tax rates, driven both by fiscal drift and stealth taxes. 40%+ income tax rates hit 3x as many people now as they did in 1991. Boomers that went to uni largely did so for free, where today A large proportion of those <30 will be paying an extra 9% income tax until retirement.

Each of these shifts is worth a material proportion of an individual’s entire expected lifetime earnings. Together - it amounts to a totemic (negative) change in living standards.

[Simpo Two]

NickZ24 said:

I think the economist forgot about some classes, i.e. working class.
Or is the UK mainstream really like that???

Quite a lot of them did rather well from buying their council houses for buttons. Anyone whose current wealth is largely dependent on inheriting an ex-council house should really vote Conservative to say thanks... but the media only spout about the miner's strike.

[asfault]

Simpo Two said:

NickZ24 said:

I think the economist forgot about some classes, i.e. working class.
Or is the UK mainstream really like that???

Quite a lot of them did rather well from buying their council houses for buttons. Anyone whose current wealth is largely dependent on inheriting an ex-council house should really vote Conservative to say thanks... but the media only spout about the miner's strike.

There are toher ways to look at that.
If they had a mortgage from it people tend to become more likely to keep working and or look to move up the ladder and become productive.


Id have the government do some sort of long term cross party agreement on council houses. Buy literally A huge ammount on a building site for a good discount for bulk purchase, 10 year lease with option to buy at 20% below market value after the end of paying 10 years of rent to the governement (not too much should need replacing in 10 years) and then rince and repeat with that rent money as well as capital from the sale.

[Steve H]

brickwall said:

The Economist is right.

Each individual’s case will of course be different, and there will always be exceptions that prove the rule.

But at the macro level - essentially all the economic trends have really played into the hands of the boomer generation (especially in comparison to the generations that followed).

- Pensions: DB pensions were far more widely available (and more generous) working in the 80s and 90s, compared to 2010s/2020s. Enormous real growth in the value of the state pension over the last 20 years.
- Housing: Massive real growth in the cost of housing from c1990-2022; that was fine if you owned a property during that period (because the growing value of your asset perfectly compensated)
- Taxes: Creeping ever higher tax rates, driven both by fiscal drift and stealth taxes. 40%+ income tax rates hit 3x as many people now as they did in 1991. Boomers that went to uni largely did so for free, where today A large proportion of those <30 will be paying an extra 9% income tax until retirement.

Each of these shifts is worth a material proportion of an individual’s entire expected lifetime earnings. Together - it amounts to a totemic (negative) change in living standards.

Pensions may have been more generous but they were not more widely available than they are now where workplace pensions are the norm. A large proportion of boomers were not well educated professionals with DB pensions, a lot have no pension at all.

For sure housing costs have increased enormously but food prices have shrunk. According to the ONS, from 1957 to 2016 the proportion of a household’s income that went on housing has gone from 9% up to 18% but the spend on food has gone down from 33% to 16%.

By 1980 the basic rate of income tax had dropped, yes, dropped, to 30%. The basic rate in the early 70s was around the same as our higher rate now and highest rate in 1980 was 60%, down from 83% in 1974.

Only about 15% of boomers went to uni, now the higher education rate is more like 50%. I do get the idea that free education at all levels should benefit the country as a whole but that only works if it leads them to something useful. If a large proportion of graduates will be paying back the cost of their education till retirement then many of them should probably have learned an actual skill or trade instead of following the mantra that you need a degree no matter what bullst subject it is in.


For sure there will be individual examples at all extremes but one of those extremes is the where people have become millionaires by sitting in a little semi detached in the London burbs, it’s not the norm even if it seems it to the journo at the Economist who lives in that bubble.

Edited by Steve H on Saturday 30th March 08:56

[brickwall]

Steve H said:

brickwall said:

The Economist is right.

Each individual’s case will of course be different, and there will always be exceptions that prove the rule.

But at the macro level - essentially all the economic trends have really played into the hands of the boomer generation (especially in comparison to the generations that followed).

- Pensions: DB pensions were far more widely available (and more generous) working in the 80s and 90s, compared to 2010s/2020s. Enormous real growth in the value of the state pension over the last 20 years.
- Housing: Massive real growth in the cost of housing from c1990-2022; that was fine if you owned a property during that period (because the growing value of your asset perfectly compensated)
- Taxes: Creeping ever higher tax rates, driven both by fiscal drift and stealth taxes. 40%+ income tax rates hit 3x as many people now as they did in 1991. Boomers that went to uni largely did so for free, where today A large proportion of those <30 will be paying an extra 9% income tax until retirement.

Each of these shifts is worth a material proportion of an individual’s entire expected lifetime earnings. Together - it amounts to a totemic (negative) change in living standards.

Pensions may have been more generous but they were not more widely available than they are now where workplace pensions are the norm. A large proportion of boomers were not well educated professionals with DB pensions, a lot have no pension at all.

For sure housing costs have increased enormously but food prices have shrunk. According to the ONS, from 1957 to 2016 the proportion of a household’s income that went on housing has gone from 9% up to 18% but the spend on food has gone down from 33% to 16%.

By 1980 the basic rate of income tax had dropped, yes, dropped, to 30%. The basic rate in the early 70s was around the same as our higher rate now and highest rate in 1980 was 60%, down from 83% in 1974.

Only about 15% of boomers went to uni, now the higher education rate is more like 50%. I do get the idea that free education at all levels should benefit the country as a whole but that only works if it leads them to something useful. If a large proportion of graduates will be paying back the cost of their education till retirement then many of them should probably have learned an actual skill or trade instead of following the mantra that you need a degree no matter what bullst subject it is in.


For sure there will be individual examples at all extremes but one of those extremes is the where people have become millionaires by sitting in a little semi detached in the London burbs, it’s not the norm even if it seems it to the journo at the Economist who lives in that bubble.

Edited by Steve H on Saturday 30th March 08:56

There are some decent points in here. The one about pensions is particularly worth exploring - what’s happened over time is that
- Many more people are now saving towards a workplace pension. That’s largely thanks to more women entering the workplace (through the 80s and 90s), and auto-enrolment (since 2010).
- However, workplace schemes have got substantially less generous. The NPV of a typical final salary DB schemes available in the 70s-2000s was >30% of salary (in some cases far more). The typical employer DC contribution these days is 5-10%.

So what we’ll likely see in due course is fewer people solely reliant on the state pension, but equally a lot of people with workplace pensions that provide anaemic incomes compared to their working salary.
(And it’s also why the millennial generation is so sceptical that a universal triple-locked state pension will exist by the time they retire).

The big flaw is in using “% of income spent on X”. This doesn’t tell us much because
- The number will always add up to 100%
- It tells us nothing about the distribution of spending patterns between different groups
- Perhaps most significantly, it tells us nothing about what people are getting for their money.

So - on housing: people are spending more on housing, but they are also getting less. 1/3rd of all 25-34 year olds are still living with their parents - up about 50% since 1999.

AND - the average has gone up despite there being a large swathe of the population (the older age groups) for whom housing costs as a % of income have gone down (as their housing costs remained relatively constant, and incomes rose). That increased % is being driven almost exclusively by younger generations, who have to spend mega proportions of their income to afford higher housing prices or associated rents, without having had the fortune to ride the increase and accumulate the equity/wealth to pay for it.

Equally on tax - it’s not enough to look at just the headline rates, you have to look at how many people are paying them (if the top rate was 85% but only applied to incomes over £5m, it’s not relevant to many people).
The threshold for 40%+ tax has essentially halved in real terms since the early 1990s, and so it’s catching a lot more people.
- In 1991, 3.5% of adults paid 40% income tax. Essentially no nurses and 1 in 16 teachers paid higher-rate tax
- In 2027/28, about 14% will pay 40%+, with 1 in 8 nurses and 1 in 4 teachers getting caught by it.

For almost every generation since the Industrial Revolution, the children’s generation has been richer than their parents. Economic growth has done its thing. This will be the first time for 200+ years where we have a generation that will be poorer than their parents - that’s one hell of a trend to reverse.

[Steve H]

brickwall said:

There are some decent points in here. The one about pensions is particularly worth exploring - what’s happened over time is that
- Many more people are now saving towards a workplace pension. That’s largely thanks to more women entering the workplace (through the 80s and 90s), and auto-enrolment (since 2010).
- However, workplace schemes have got substantially less generous. The NPV of a typical final salary DB schemes available in the 70s-2000s was >30% of salary (in some cases far more). The typical employer DC contribution these days is 5-10%.

So what we’ll likely see in due course is fewer people solely reliant on the state pension, but equally a lot of people with workplace pensions that provide anaemic incomes compared to their working salary.
(And it’s also why the millennial generation is so sceptical that a universal triple-locked state pension will exist by the time they retire).

The big flaw is in using “% of income spent on X”. This doesn’t tell us much because
- The number will always add up to 100%
- It tells us nothing about the distribution of spending patterns between different groups
- Perhaps most significantly, it tells us nothing about what people are getting for their money.

So - on housing: people are spending more on housing, but they are also getting less. 1/3rd of all 25-34 year olds are still living with their parents - up about 50% since 1999.

AND - the average has gone up despite there being a large swathe of the population (the older age groups) for whom housing costs as a % of income have gone down (as their housing costs remained relatively constant, and incomes rose). That increased % is being driven almost exclusively by younger generations, who have to spend mega proportions of their income to afford higher housing prices or associated rents, without having had the fortune to ride the increase and accumulate the equity/wealth to pay for it.

Equally on tax - it’s not enough to look at just the headline rates, you have to look at how many people are paying them (if the top rate was 85% but only applied to incomes over £5m, it’s not relevant to many people).
The threshold for 40%+ tax has essentially halved in real terms since the early 1990s, and so it’s catching a lot more people.
- In 1991, 3.5% of adults paid 40% income tax. Essentially no nurses and 1 in 16 teachers paid higher-rate tax
- In 2027/28, about 14% will pay 40%+, with 1 in 8 nurses and 1 in 4 teachers getting caught by it.

For almost every generation since the Industrial Revolution, the children’s generation has been richer than their parents. Economic growth has done its thing. This will be the first time for 200+ years where we have a generation that will be poorer than their parents - that’s one hell of a trend to reverse.

Single quoting to avoid melting the hamsters with a record breaking post length

Yep, I can see a lot of truth in all that.

Some, a few, boomers had gold plated pensions and it has given them an advantage. You may say it is an unfair one, I would just say it was unsustainable. They were paying in at a time where life expectancy was ten years shorter than it is today meaning a pension was likely to have to pay out for half as long and the financial geniuses of the time didn’t see it coming. One way or another, if we want to have a retirement that is around 50% of the length of our working lives we need to keep paying in more.

The higher tax rate now is still only the same as the standard one when a lot of the boomers were starting out so everyone was paying 40%. Tax is not higher today and probably should be higher than it is (different argument for a different day ).

The % of income is relevant if only because it gets so regularly used to show how expensive housing now is with no comment on how other things are significantly cheaper on the same measure.

You are probably right in your last paragraph though and it probably does speak to the idea that boomers, and genX/Y may be a relative peak. But "poorer" does depend on how you define it. Living standards for someone on benefits now are higher than they were for someone in a reasonable job in the 70s; medical care, education, travel, economic mobility are all improved and a 25 year old now will probably have his life saved one day with a condition that will be incurable if I get it in the meantime.

But anyway, isn’t the slowdown in relative income in the first world a global economic inevitability? Since WW2 we have been living off the resources, labour and production of other much poorer countries. They were doing it because they want what we have and region by region they are getting it. Maybe this does prove that article was right but if so lets not blame the boomers for something that was always going to happen from before they were out of short trousers.

[Mad Maximus]

NickZ24 said:

I wonder if life was like that for Boomers in the UK:

[quote]The 1950s were a good decade to be born in Britain. A newly minted welfare state ensured that your early years were free from squalor. For the lucky few who made it there, university cost nothing. During your peak earning years, taxes plunged thanks to Margaret Thatcher, oil gushing from the North Sea and the restorative effect of the EU’s single market on the sick man of Europe. Rocketing house prices more than compensated for a few years of high interest rates. Defined-benefit pension schemes, then still the norm, ensured that retirement would be prosperous.
Whatever this generation wanted, this generation nearly always got. ........

source: the economist over https://archive.is/aWdik#selection-1079.0-1093.67

I think the economist forgot about some classes, i.e. working class.
Or is the UK mainstream really like that???

Yes they were very good times and the only reason it’s a conversation is not because of that eras success or wins but because that era of people are hurting the housing market and have made it go crackers. Not the only reason mind but one of them. Not a lot to be done about it either until 30 years or so time when the problem shouldn’t exist anymore.

[brickwall]

Steve H said:

Single quoting to avoid melting the hamsters with a record breaking post length

Yep, I can see a lot of truth in all that.

Some, a few, boomers had gold plated pensions and it has given them an advantage. You may say it is an unfair one, I would just say it was unsustainable. They were paying in at a time where life expectancy was ten years shorter than it is today meaning a pension was likely to have to pay out for half as long and the financial geniuses of the time didn’t see it coming. One way or another, if we want to have a retirement that is around 50% of the length of our working lives we need to keep paying in more.

The higher tax rate now is still only the same as the standard one when a lot of the boomers were starting out so everyone was paying 40%. Tax is not higher today and probably should be higher than it is (different argument for a different day ).

The % of income is relevant if only because it gets so regularly used to show how expensive housing now is with no comment on how other things are significantly cheaper on the same measure.

You are probably right in your last paragraph though and it probably does speak to the idea that boomers, and genX/Y may be a relative peak. But "poorer" does depend on how you define it. Living standards for someone on benefits now are higher than they were for someone in a reasonable job in the 70s; medical care, education, travel, economic mobility are all improved and a 25 year old now will probably have his life saved one day with a condition that will be incurable if I get it in the meantime.

But anyway, isn’t the slowdown in relative income in the first world a global economic inevitability? Since WW2 we have been living off the resources, labour and production of other much poorer countries. They were doing it because they want what we have and region by region they are getting it. Maybe this does prove that article was right but if so lets not blame the boomers for something that was always going to happen from before they were out of short trousers.

My bolding.

I think these points actually make it pretty clearly; somehow we’ve found ourselves in a situation where broadly one generation has had their lifetime economic fortunes supported by unsustainable transfers of income/wealth. Examples include:
- Unsustainable pensions where the aggregate amount ‘taken out’ is an order of magnitude larger than the contributions to support it; unless you continue the Ponzi scheme the current working generation will end up with the reverse
- A one-off increase in housing asset prices, benefiting a generation owned that asset class at a specific point in time and insulating them from the resulting increased housing costs
- Paying for (previously unavailable) healthcare costs through tax revenues raised on younger workers

To be clear - as you say, this doesn’t apportion ‘blame’, it is just way things are.

I guess where differ is on two fronts:
1. I don’t believe this slowdown in economic fortunes was or is inevitable. Look at the different economic trajectories of the UK and the US over the past 15 years; through the mid-2000s there wasn’t much between the two. Since then the UK in real terms has barely grown (per capita), where on the same measure the U.S. has grown c50%. Every generation has thought they’ve ’maxed out’ their possibilities, but the source of growth over hundreds of years has been subsequent generations innovating to find yet more opportunities that no-one thought of before.

2. I do think it’s fair to point out the nature of the unsustainable transfers such as those above and their intergenerational impact, and I do think it’s legitimate to question or change policy that perpetuates the situation. One might argue for:
- Significant planning policy reform, with the explicit aim of massively increasing housing supply and bringing down prices/costs
- Shifting the emphasis on benefits spending (e.g., ending the triple lock and channelling the funds towards childcare, making it easier for parents to go back to work)
- Tilting the taxation burden more towards wealth rather than income, increasing the economic return from work (for instance moving towards a US-style system of property taxation)

It’s good that there is now broader recognition and discussion about this (as the Economist article demonstrates) - helped in part by a recognition that pandering to the demands of the older voter bloc is no longer enough to secure victory in a general election. But seeing and diagnosing the problem is just the beginning - the real step is to actually do something about it.

[Steve H]

brickwall said:

My bolding.

I think these points actually make it pretty clearly; somehow we’ve found ourselves in a situation where broadly one generation has had their lifetime economic fortunes supported by unsustainable transfers of income/wealth. Examples include:
- Unsustainable pensions where the aggregate amount ‘taken out’ is an order of magnitude larger than the contributions to support it; unless you continue the Ponzi scheme the current working generation will end up with the reverse

That Ponzi scheme is pretty much the basis of government finance in the western world!

It paid for the 08 bailout without which we would have seen a depression that would have made the 1930s look small; it paid for covid which allowed a huge proportion of businesses to exist until they could see their customers again; it covers the health, welfare and pensions that your average 30 year old has very little use for but pays into anyway knowing that one day someone will have to do the same when they do need it. For sure the maths is flawed, populations grow unevenly, some got the benefits of free health care without paying in, economies grow and contract and the distribution of benefits are often less than fair, but what’s the alternative?

brickwall said:

- A one-off increase in housing asset prices, benefiting a generation owned that asset class at a specific point in time and insulating them from the resulting increased housing costs

Who says it’s one off? Every time we think houses can’t get more expensive, they do. And what happens to those assets? Boomers are the next generation that is due to die, the ones that have not already used some of their wealth as BOMAD will inevitably do so when they pass it on. The issue there isn’t generational, it’s the ever increasing wealth gap which exists across all age groups.

brickwall said:

- Paying for (previously unavailable) healthcare costs through tax revenues raised on younger workers

Which the next generation will do for them, Ponzi in action again.

brickwall said:

To be clear - as you say, this doesn’t apportion ‘blame’, it is just way things are.

I guess where differ is on two fronts:
1. I don’t believe this slowdown in economic fortunes was or is inevitable. Look at the different economic trajectories of the UK and the US over the past 15 years; through the mid-2000s there wasn’t much between the two. Since then the UK in real terms has barely grown (per capita), where on the same measure the U.S. has grown c50%. Every generation has thought they’ve ’maxed out’ their possibilities, but the source of growth over hundreds of years has been subsequent generations innovating to find yet more opportunities that no-one thought of before.

Growth varies globally, the US is an example of that for sure but their growth is a fraction of that in China over the same period, it’s a fraction of that in Japan in the 60s/70s. Look at Japan now, we are no longer buying cheap goods from them, they have hit our level and any other poorer country that is currently sustaining our lifestyle is aiming to do the same. We are running out of places that we can take advantage of, millennials have done ok on this but it will be the biggest threat to the living standards of the next generation (do we have a name for them yet?) when 1.5bn people in China expect all the same stuff we have.

brickwall said:

2. I do think it’s fair to point out the nature of the unsustainable transfers such as those above and their intergenerational impact, and I do think it’s legitimate to question or change policy that perpetuates the situation. One might argue for:
- Significant planning policy reform, with the explicit aim of massively increasing housing supply and bringing down prices/costs
- Shifting the emphasis on benefits spending (e.g., ending the triple lock and channelling the funds towards childcare, making it easier for parents to go back to work)
- Tilting the taxation burden more towards wealth rather than income, increasing the economic return from work (for instance moving towards a US-style system of property taxation)

Planning reform sounds lovely but doesn’t work. If you allow an extra 1m homes to be built tomorrow three things will happen -

1. The rich will get richer. People who own the land will get the money, not the people who end up in the houses.
2. 50,000 homes will get built, not 1m. There are undeveloped sites with permission granted available right now, builders only build when the economics work for them and if there is a predicted flood of new homes coming to market they will not be in a hurry to join that race to the bottom.
3. If more houses are to be built, there’s nobody here to build them! All the soft skinned millennials with degrees in horology and the psychology of fashion will have to learn to lay bricks and we will never hear the last of how much their student loans are costing them while they do it.

Property tax is a terrible way of dealing with the situation of house prices going up. Take someone who did what the government told them to and bought a home in their late 20s, then when they are in their late 60s punish them for living in the same place by taking money that they don’t have off them. You don’t seriously think that’s a good idea do you?

brickwall said:

It’s good that there is now broader recognition and discussion about this (as the Economist article demonstrates) - helped in part by a recognition that pandering to the demands of the older voter bloc is no longer enough to secure victory in a general election. But seeing and diagnosing the problem is just the beginning - the real step is to actually do something about it.

The discussion is always good, although it does take me back to where I came in on this thread -

mwstewart said:

It seems to me the easier we have it the more some sections of society will whinge.

Millennials have all the opportunities that boomers had and a load more besides. And if that isn’t enough for them, wealth will ultimately get passed on and any "problems" will sort themselves out that way well before any social engineering manages to.

[Mr Whippy]

Yet wealth inequality at all time highs.

And yay, big inheritance, great, when your life is over. How terribly useful.

Comparing apples and oranges is silly really.

It’s clear society is a bit screwed despite the apparent ‘betterness’

We should expect a lot more from our progress as a society and civilisation, but it seems like we’re walking closer and closer to the precipice.

[markiii]

which means that generations kids will see the benefit instead

[turbobloke]

Steve H said:

brickwall said:

My bolding.

I think these points actually make it pretty clearly; somehow we’ve found ourselves in a situation where broadly one generation has had their lifetime economic fortunes supported by unsustainable transfers of income/wealth. Examples include:
- Unsustainable pensions where the aggregate amount ‘taken out’ is an order of magnitude larger than the contributions to support it; unless you continue the Ponzi scheme the current working generation will end up with the reverse

That Ponzi scheme is pretty much the basis of government finance in the western world!

It paid for the 08 bailout without which we would have seen a depression that would have made the 1930s look small; it paid for covid which allowed a huge proportion of businesses to exist until they could see their customers again; it covers the health, welfare and pensions that your average 30 year old has very little use for but pays into anyway knowing that one day someone will have to do the same when they do need it. For sure the maths is flawed, populations grow unevenly, some got the benefits of free health care without paying in, economies grow and contract and the distribution of benefits are often less than fair, but what’s the alternative?

brickwall said:

- A one-off increase in housing asset prices, benefiting a generation owned that asset class at a specific point in time and insulating them from the resulting increased housing costs

Who says it’s one off? Every time we think houses can’t get more expensive, they do. And what happens to those assets? Boomers are the next generation that is due to die, the ones that have not already used some of their wealth as BOMAD will inevitably do so when they pass it on. The issue there isn’t generational, it’s the ever increasing wealth gap which exists across all age groups.

brickwall said:

- Paying for (previously unavailable) healthcare costs through tax revenues raised on younger workers

Which the next generation will do for them, Ponzi in action again.

brickwall said:

To be clear - as you say, this doesn’t apportion ‘blame’, it is just way things are.

I guess where differ is on two fronts:
1. I don’t believe this slowdown in economic fortunes was or is inevitable. Look at the different economic trajectories of the UK and the US over the past 15 years; through the mid-2000s there wasn’t much between the two. Since then the UK in real terms has barely grown (per capita), where on the same measure the U.S. has grown c50%. Every generation has thought they’ve ’maxed out’ their possibilities, but the source of growth over hundreds of years has been subsequent generations innovating to find yet more opportunities that no-one thought of before.

Growth varies globally, the US is an example of that for sure but their growth is a fraction of that in China over the same period, it’s a fraction of that in Japan in the 60s/70s. Look at Japan now, we are no longer buying cheap goods from them, they have hit our level and any other poorer country that is currently sustaining our lifestyle is aiming to do the same. We are running out of places that we can take advantage of, millennials have done ok on this but it will be the biggest threat to the living standards of the next generation (do we have a name for them yet?) when 1.5bn people in China expect all the same stuff we have.

brickwall said:

2. I do think it’s fair to point out the nature of the unsustainable transfers such as those above and their intergenerational impact, and I do think it’s legitimate to question or change policy that perpetuates the situation. One might argue for:
- Significant planning policy reform, with the explicit aim of massively increasing housing supply and bringing down prices/costs
- Shifting the emphasis on benefits spending (e.g., ending the triple lock and channelling the funds towards childcare, making it easier for parents to go back to work)
- Tilting the taxation burden more towards wealth rather than income, increasing the economic return from work (for instance moving towards a US-style system of property taxation)

Planning reform sounds lovely but doesn’t work. If you allow an extra 1m homes to be built tomorrow three things will happen -

1. The rich will get richer. People who own the land will get the money, not the people who end up in the houses.
2. 50,000 homes will get built, not 1m. There are undeveloped sites with permission granted available right now, builders only build when the economics work for them and if there is a predicted flood of new homes coming to market they will not be in a hurry to join that race to the bottom.
3. If more houses are to be built, there’s nobody here to build them! All the soft skinned millennials with degrees in horology and the psychology of fashion will have to learn to lay bricks and we will never hear the last of how much their student loans are costing them while they do it.

Property tax is a terrible way of dealing with the situation of house prices going up. Take someone who did what the government told them to and bought a home in their late 20s, then when they are in their late 60s punish them for living in the same place by taking money that they don’t have off them. You don’t seriously think that’s a good idea do you?

brickwall said:

It’s good that there is now broader recognition and discussion about this (as the Economist article demonstrates) - helped in part by a recognition that pandering to the demands of the older voter bloc is no longer enough to secure victory in a general election. But seeing and diagnosing the problem is just the beginning - the real step is to actually do something about it.

The discussion is always good, although it does take me back to where I came in on this thread -

mwstewart said:

It seems to me the easier we have it the more some sections of society will whinge.

Millennials have all the opportunities that boomers had and a load more besides. And if that isn’t enough for them, wealth will ultimately get passed on and any "problems" will sort themselves out that way well before any social engineering manages to.

Not much to add, except that the older voters - if they actually vote - will hold sway whatever happens, including giving the vote to 16+. Given demographics / turnout / dilution of new voters across constituencies, little is going to change. Plenty of room exists for ageism, not much will change there either.

[Mr Whippy]

How do millennials have all the opportunities and more?

The first step in living your life, moving out and having a family, are clearly difficult as fewer people are doing it.

And it correlates with house price vs earnings and wealth inequality.


So yes lots of “opportunity”

But opportunity of either increasing cost or decreasing efficacy, or both.

Ie, university education increasingly costly but also ubiquitous.

[Steve H]

Earnings and opportunity are available to the young if they either

1. Get the right university education not just a random unusable degree in something that qualifies them to do absolutely nothing.

Or

2. Avoid the fixation on university education and pick one of the many trades that lead to well above average pay anyway.



Wealth inequality is a different issue, its increase is across the generations and as big for boomers as millennials.

[markiii]

Mr Whippy said:

How do millennials have all the opportunities and more?

The first step in living your life, moving out and having a family, are clearly difficult as fewer people are doing it.

And it correlates with house price vs earnings and wealth inequality.


So yes lots of “opportunity”

But opportunity of either increasing cost or decreasing efficacy, or both.

Ie, university education increasingly costly but also ubiquitous.

all the ones I know have no getup and go no enthusiasm no plan and want to spend most of the day in thei parents spare bedroom on the xbox or socials