12 Aug 2010, 9:46pm
economy reflections:
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  • The Pinch – David Willetts says it’s the Baby Boomers Who are Wrecking the Economy

    David Willetts book The PinchDavid Willetts is clearly a very clever chap, and I learned a heck of a lot about the sociology and history of Britain from this book.

    I’m part of the Enemy cited by Willetts as the source of a lot of the financial ills present and upcoming, though I am not yet part of the 50+ set he defines as possessing most of the wealth in Britain.

    Reading the book was curiously frustrating and rewarding – Willetts is very intellectual, and his writing can be turgid.

    His book was fabulous at detail and insight, and yet poor at the helicopter overview of the situation, and he laboured his points. I came to understand how high house prices in London favoured the Polish immigrants labourers against Liverpool labourers (the Poles are ready to sleep many to a room reducing their costs because they will use the money to set themselves up in lower-cost Poland later, whereas the Liverpudlians haven’t got that advantage).

    It’s always going to be hard for me to accept that I am part of a sociopathic menace destroying the fabric of British society, but I just don’t feel Willetts carries his case well. For sure, the baby boomers have caused enough problems, however, I think he eggs his case far too much.

    Take the classic bugbear, housing. I bought my first house at 29, and it really wasn’t a good move at all. Look at my age – older than many Gen Yers are trying to get a house nowadays, it took me longer in my career to get there.  People now don’t seem to be prepared to live in crummy rented accommodation shared with others in their young adulthood – I shared rooms, then flats, then houses for the early part of my working life. It wasn’t until that first house that I had exclusive use of a toilet and bathroom, whereas now even student accommodation is ensuite.

    Some things have changed not for the better. I wish university were at the same penetration level as when I went there. Send only 7% of our young people to uni and we can afford to give the poorer ones grants. Send 50% to uni and we just can’t manage that. Are today’s students prepared to take the downside though – tougher exams that weed out the majority of applicants? It’s easy to point out the things that the boomers had going for them in their youth that people that same age don’t have now, but if you’re going to do that you have to also allow for the fact that some of these good things were nowhere near as widely spread as they are now!

    The world of work has got worse, because of globalization and technical advances, both of which favour capital over labour. It is possible that the baby boomers can be charged with not seizing the moment, and directing our societies towards using the increased wealth to shorten the working week and give us increased leisure. Other than that, I don’t feel that the change itself was a result or creation of the boomers, it was a result of accumulated knowledge, better communications and capitalism red in tooth and claw. It’s not as if other political systems weren’t tried in the 1960s onwards, but market capitalism seemed to give the least worst result.

    Other things, however, have changed and are better. The world is richer now, the anticipated loss of disposable income as we unwind the debt-fuelled party of 1997 to 2007 will still leave us with far more money, consumer trinkets and baubles than we had in 1987.

    Yes, the boomers should have saved more in their middle age rather than pumping up house prices on cheap debt then blowing it all on consumer goods without paying the capital down. This hopefully should unwind in the coming years, and those boomers that believed prices would always rise will get to eat the crow; they have less time to earn the difference needed to fill the hole.

    The boomer generation now holds most of the wealth in Britain because, well, after 40 years of working people get to accumulate some wealth. When I started work as a youth I also observed how it was always greybeards who owned everything – my landlords were greybeards, the bosses were, in those days bankers were. It didn’t seem fair to me then, either. Such is the human condition 🙂

    Willetts book is a fascinating though difficult read, but more for a take on the unusual sociology and history of Britain. He certainly does come up with a litany of the boomers’ failures, but doesn’t quite carry the argument that it is a premeditated land grab in my opinion.

    I do think there is some serious crap coming down the line, as a combined storm of resource crunch, growing population and energy shortages. Would it have happened if we had an even size of generations? Most likely.

    Our problem, Mr Willetts, isn’t the size of one particular generation relative to the others. It is the increasing size of humanity’s population in total compared to the rest of the biosphere, and its impact upon that. We can address some of the resulting issues, but it isn’t going to be easy.

    There’s an entertaining riposte to Willetts’ book from Boris Johnson on his blog, together with a response from Willetts and a comment that summarises Two-Brains Willetts writing style

    Perhaps you talk better than you write, otherwise quite why Boris Johnson would want you at a dinner party is unclear – perhaps your cooking skills are more advanced than your light-bulb changing abilities? The article drags on and on in the most soulless fashion when the same points could have been made in a quarter of the wordage.

    I’m going to have to read this book, I keep linking to it assuming I agree with what it says! 😉

    I think ‘fault’ is a difficult word. I don’t think the boomers have been particularly amoral, the world has just turned in a very fortunate way for them and they’ve seized it.

    I would say their parents scrimped and saved for them, but they’ve not done the same – then I read all these articles about The Bank Of Mum And Dad helping out first-time buyers. (Not me, I told my parents to spend the lot while they could!)

    Ultimately, a lot of problems in this country can be traced back to housing, and this is another.

    @Monevator, thatnks for your take on this, I know you’ve seen the housing issue up close and personal! The Pinch is definitely worth a read, I can recommend it for one’s general education and historical insights which make it worth putting up with the wonky writing style.

    I think you’ve put your finger on it – the boomers were lucky in the point of history they occupy as far as the world of work is concerned – companies were short of labour in the 1950s-1970s and I, for instance as a late boomer benefitted from this in terms of pension schemes and university. I would never go to university in today’s world, my parents wouldn’t have the money and I wouldn’t be prepared to take on the debt.

    Against that I had to pass an 11 plus and an entracne exam to get into grammar school and pass relative level A-level exams (ie A=top 10% etc) to get into uni. Failing these sorts of things is apparently damaging to the precious self-esteem of those unable to pass, hence the current flat grading schemes that are skewed to the A+***** etc, making it hard to discriminate ability but giving everybody a warm feeling about themselves.

    I’d much rather have the chance to get into uni without money and take a chance of a hit of self-esteem rather than protect my self-esteem and everyone elses and owe £30k on leaving uni but it seems most people felt differently 🙁

    Where Willetts failed, IMO, was to give the overview and backdrop of macro changes such as the increasing world population and improvements in communications, that gave rise to the multinational corporation ability to end-run the power of the nation-state. This is leading to wage arbitrage and the declining power of the West relative to the rest of the world to my eyes. While from the point of view of humanity that may be no bad thing it won’t be good for the living standard in the West.

    His explanation, that ‘it was the boomers wot are responsible for todays ills’, is therefore damaging, because it gives rise to a meme that disempowers Gen Y and the upcoming millenials to deal with the world as it is by giving them an easy scapegoat. That may be good for self-esteem, but not necessarily a good foundation for effective action.

    With housing, I was kicked out of London by high house prices twenty-two years ago. I had a decent job at the BBC, but rather than thrash myself I moved, though I still paid stupid money up here – about as stupid as buying now. It wasn’t boomers that stuffed me, it was competing against a concentration of the richest people in Britain.

    This housing issue is I believe more an issue of the increasing income inequality in Britain leading to winner-takes all. When the library gets The Spirit Level in for me that may become clearer. It will be interesting to read your take on The Pinch – it’s possible I mentally blocked Willetts’ sensible arguments because I didn’t want to be painted as the bad guy, but I really tried to get his angle 😉

    […] The Pinch reviewed – Simple in Suffolk […]

    I haven’t read Willetts’s book but the thesis sounds somewhat simplistic! Margaret Thatcher and her tribe promoted a “greed is good” style of capitalism which still holds sway today. The housing bubble was a manifestation of this where people were encouraged to see their home – and others’ homes as equity to be procured at all costs. In Europe renting is a far more common way of getting a roof over your head – and in France at least, mortgages are held at lowish rates of interest which are dependable. In the UK and the US it seems every necessity of life is fair game as part of the market – and (IMO) we pay a heavy price for the resulting obsession with profit!

    […] argue though that the boomers didn’t get an easy ride. They tend to be boomers, funnily […]

    […] modern equivalent of that is to get on pricedout and housepricecrash and blame the baby boomers for it all. Plus ça change, plus c’est la même chose. I felt just the same pain, but I couldn’t […]

    Retiring Baby Boomers need to develop a substitute community – one that substitutes our work colleagues. Consider getting another job, joining a health club or maybe get involved in a religious group We might want to consider volunteering at a local school or organization…;..’

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    […] baby boomers 3, and started from a higher datum, which you wouldn’t guess from some of the carping that goes on. It somewhat supports my observation that Britain is a rich country and that it’s richer in […]

     

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