The Pinch: a review

The Pinch is one of the most interesting - and therefore best - books written by a sitting MP for years. Its central idea is that baby-boomers - those born between about 1945 and 1965 - “have been guilty of a monumental failure to protect the interests of future generations.” They “have been pinching too big a share of the wealth we are generating now and hope to generate in the future.” 
Take for example, house prices. Many boomers - such as me - benefited from rises in these. But high prices are, in effect, a transfer of wealth from the young to the old, as youngsters must take out big mortgages (if they can get them at all) to buy older folks' houses.
Also, the boomers have benefited from generous pensions which are increasingly denied to the young. And it’s the young who bear most of the burden of the national debt and of paying for the boomers’ pensions and healthcare in coming years.
The robbery doesn’t end there. Willetts complains:

Total physical investment in Britain is low compared with other countries. We are not endowing future generations with the transport or energy infrastructure they need to be prosperous.

But it’s not just in these financial ways that we are letting down future generations. Willetts argues that the breakdown of trust  between adults and both other adults and children has led to a deterioration in social capital. One of the many interesting facts he relates is that, thanks to the decline of adult volunteers, poorer teenage boys are playing less sport than they used to. This does more than jeopardise England’s World Cup prospects. It also reduces poorer kids’ soft skills formation, which in turn reduces their future earnings and social mobility. And the general disengagement of adults from youngsters means the latter get less advice than they used to on making the move from school to work - at a time when this move is more difficult than in the past.
Youngsters, he says, can be forgiven for thinking that economic and social policy is “a conspiracy  by the middle-aged against the young.”
In short, Willetts is appealing for us to think more clearly about intergenerational justice - an issue which is not obviously party political and which is being almost entirely neglected during this election campaign. The issue, and Willetts’ book, deserves more attention than it’s getting.
There are, however, some issues which I fear he underplays.
First, there’s the question: why aren’t the young more angry about all this? Is it because they are irrationally passive? Or is it because they are in other ways a more fortunate generation than us? They have much easier access to music than we did; mobile phones and Facebook allow them to stay in touch with friends more easily; and - thanks in part to increasing numbers of women at university - the sexes are much better integrated than in my day. Maybe their quietness is a sign that we haven’t left them so badly off.
Secondly, he suggests that politics can tackle this problem of intergenerational justice. On page 262 he writes:

Good politics is about a contract between the generations in which the interests of the present generation should not automatically come first.

But his preceding 261 pages have described how politicians have placed the interests of the present generation first. And there’s a trivial reason for this; baby boomers are not only more numerous than succeeding generations, but more likely to vote too.
Which raises the question. Isn’t there an unavoidable tension between intergenerational justice and democratic politics? Willetts, understandably, shies away from this question. But that doesn’t make it any less pressing.

Comments

[Econoclast]

I think Mr Willetts raises some important issues that require deeep thought. Unfortunately, most politicians don't seem to care and aren't willing to think deeply. Witness the Labour government announcing free home care for elderly people, so that they don't have to sell their homes, paid for with a levy on younger working people (the same people most likely to be saddled with mortgage debt and post-education debt). This is setting up disturbing social dynamics. When is a politician from either side going to stand up and say that capital should be taxed alongside income? Any politician who was that brave would get my vote.

[John Terry's Mum]

This blog is great, but I wonder at the value of thinking rationally about UK politics where stupidity and irationally always seems to win the day.

Anyway, the pinch.
My parents (in their late 50's are feckless, boozy and lazy) they have amassed a healthy fortune simply by having luckily bought a cheap house on land that later became coveted.

Now they walk around pontificating as if great financial geniuses.

[charlieman]

Chris Dillow: "It also reduces poorer kids’ soft skills formation, which in turn reduces their future earnings and social mobility. And the general disengagement of adults from youngsters means the latter get less advice than they used to on making the move from school to work - at a time when this move is more difficult than in the past."

I am unconvinced that there are fewer sports or youth group activities for kids. Any numbers, Chris?

One of the manifesto ideas from the Conservatives is a youth service scheme. The Conservative author seems to have missed the fact that youth voluntary service is already common and is almost a mandatory attribute for those who seek a university place at many institutions. (Gap year frottage doesn't count as voluntary service.) Voluntary service obviously helps to clear the generational communications gap for some people.

Government regulation (in some cases, rightly) limits the opportunities for kids to get a Saturday or holiday job. But most post-18 students work, and we can assume that most post-15 year olds have some workplace experience before they try to get a job on which they financially depend. Holding a paper round job for a couple of years is a reasonable qualification: it demonstrates reliability, personal responsibility and customer relation skills.

[Laban]

Two points, tangentially related. I bet you can guess what they are :

baby-boomers - those born between about 1945 and 1965 - “have been guilty of a monumental failure to protect the interests of future generations.”

1) Surely one of their greatest failures is not producing those future generations. Fertility (TFR) drops by about 40% between 1957 and 1977. Six million-odd abortions have probably helped, too. (see the linked graph

http://ukcommentators.blogspot.com/2006/12/naught-for-your-comfort.html

2) talk of 'inter-generational justice' implies that we're talking about generations of the same people. The mass immigration which has kept the population increasing despite point 1) has created a situation where 23% of primary school children in England are classified as 'ethnic minority', whereas the overwhelming majority of elderly boomers are hideously white. How much solidarity are we expecting between those young people when they start earning, and the old boomers who will need expensive medical care ? And is it 'just' even to expect them to pay ? What if the youth don't want to be taxed to pay for parents and grandparents - indeed, given the coming numbers of childless geriatrics, to pay for people who are nobody's parents or grandparents ?

(I expand on this theme here :

http://ukcommentators.blogspot.com/2009/04/selfish-blind-or-both.html

[Brendan]

The Boomers will always vote their interests. As they are a population bulge which can vote, they will always get their way.

I don't object to this, I always think people should vote their class interests.

However, as a 37 year old, I realise that I'll be supporting them.

As the old buggers will likely hang on past 100, given medical science, and cost more and more as they shuffle their semi decaying bodies around year after year, I don't see how we can afford them.

I'm just off to watch Logan's Run now...

[vimothy]

Not to go all chartalist, but I think a lot of this does have to do with our rather backwards attitudes to fiat currency. It's a failure of imagination more than anything else.

[Robert]

The vetting and barring scheme will tend to lead to fewer sports or youth group activities for kids. It seems most unlikely that this was properly thought through.

[Tom Addison]

Surprised there's no mention of fossil fuels in that, not only were they so cheap in the couple of decades after WW2, but people consumed them as if they'd never run out. Wealth founded on a treasure chest of oil, coal and gas.

But yeah, being 23 the mortgage malarky is driving me mad. Haven't tried seriously looking for one yet, but to save up the deposit! Jesus, I won't be able to drink for a year. And then the only way I'd be able to afford a mortgage is if I had a couple of tenants.

[Adam]

Why aren't the young more angry? Because they're not allowed to be.

If they demonstrate they get kettled and arrested.
If they get arrested they get a police record.
If they get a police record they can't get a job.

There's CCTV, ASBOs, and a tightly controlled, interlinked system of exam results, references from schools and employers, annual appraisals and credit scores, repayment of student debt. Any deviation from 'the path' and you risk your chances of a decent standard of living.

The young can't even enjoy themselves unmolested - curbs on binge drinking, jail sentences for recreational drug consumption, rigid enforcement of copyright, strict licencing restrictions on clubs, gigs and events...

Willetts is right, although he shamefully backs away from doing anything about it, let alone suggesting that his generation of self-serving, avaricious planet-destroyers should be actually trying to make amends.

[Marbury]

Your first sentence is a masterpiece of faint praise.

[Ironman]

It's a bit tongue in cheek regarding the effect of baby boomers on economic affairs, but this analysis suggests there may be more to Willetts' observations than one might think, at least from a U.S. perspective.

[Ironman]

The link to the analysis mentioned in my comment above is here:

http://tinyurl.com/y2pajj3

[Boursin]

There was a book with the same thesis published here in Finland a few years ago, Ahne sukupolvi ('The greedy generation') by Osku Pajamäki, a Social Democratic city councillor in Helsinki. It received quite a bit of publicity, but sadly it was kind of shouted down in the end, due to its not being as good on the empirical side as it could easily have been.

[chris y]

It seems to me that the only reason there is even a debate about the underlying thesis here is that if anybody ever tried to advance it in a substantial forum their voice would be drowned by the chorus of boomer going "La la la, can't hear you..."

I was born in 1951.

[Innocent Abroad]

Well, I'm one of them. And yes, the socio-sexual reforms of the 1960s (both the legalisation of abortion and homosexuality, and the availability of effective contraception) might have been designed to reduce the birth rate. We will have to legalise euthanasia in the next decade to compensate.