Skiffle, & intergenerational justice

Tim Harford is sceptical of the arguments for giving pensioners tax breaks. There is, however, an argument for them. It lies in skiffle music.

A distinctive element of skiffle was its use of home-made instruments such as the washboard and tea-chest bass; aficionados argued over the merits of Ceylon and Assam tea.  There was a reason for this; in the 50s, conventional instruments were too expensive. For example, John Lennon’s first guitar, bought in 1956, cost £5’10. That was almost two-thirds of a week’s pay for a skilled manual worker; today, you could probably buy a better instrument for one-third of a week’s pay.

Anyone wanting to listen to music faced a similar problem; records too were expensive. Until Woolworths started a price war, single records cost nine shillings in 1954 - a third of a day’s pay. And that was if you could find them; fans of the American folk music which inspired skiffle had to schlep forlornly around expensive record shops. Today, we can download it easily for nowt.

Today’s pensioners - yesterday’s young people - faced much narrower horizons and opportunities because real wages and technological opportunities were both low. This is true even if their income today is relatively high. In this important sense, they have suffered disadvantages relative to today’s youngsters through the unavoidable bad luck of being born early. You can interpret redistribution towards pensioners as compensation for these disadvantages - just as we support children born into poor families who suffer similar bad luck.

But is this a sufficient argument? There are two, separate, lines of thought which suggest not.

One is the standard libertarian claim that differences in luck are not sufficient justification for redistribution.

The more interesting arguments, though, are utilitarian ones. One of these says that the bad luck of living at a time of low wages and lack of technology did not make people unhappy. Nobody in the 50s or 60s cried themselves to sleep because they didn’t have internet access.

The other lies in the marginal utility of income. It’s possible (pdf) that older people have a lower marginal utility of income than younger ones - in the sense that if their income rises by a given amount, their happiness would rise by less. If this is the case, then taxing the young to give pensioners higher incomes decreases happiness.

My point here is not so much to take sides, as to suggest that, from an egalitarian point of view, there might be a case for generous support for pensioners, to compensate for a relative disadvantage.

Comments

[Scratch]

One is the standard libertarian claim that differences in luck are not sufficient justification for redistribution.

Intriguing. I had wondered if rightists actually had some sort of vaguely coherent justification for hereditary privilege.

[escort ilanları]

I would gladly follow

[Jon]

It's also possible that the older generation didn't have it particularly worse overall - many may have had free education, reasonable terms of unemployment benefit, social mobility, etc

I think you could take that further and question the validity of intergenerational analysis in its entirety - many individuals in the older generation may well have it better than individuals in the younger generation, even if the aggregate is favorable to the younger generation.

[Andrew]

Hmmm, broadband and mp3s versus the ability to buy a house, adequate pension or future healthcare.

Not convinced.

How about the fact that pensioners lifetime wealth is pretty much in the bag, whereas youngsters' is a matter of conjecture (and thus must be discounted to take into account this uncertainty).

[Account Deleted]

The whole intergenerational theft trope depends on property. Without 30 years of council house sales, inadequate replacement of social housing, and mortgage tax relief, there wouldn't be the same level of resentment. This is what makes the whittling away of other (more egalitarian and justifiable) OAP perks and benefits tolerable to the young.

For non-property owners, the idea that the older generation are living the life of Riley is absurd. It is these less well-off OAPs who will suffer most.

To treat pensioners as a single class is, unfortunately, to succumb to the ideology. There is a reason why intergenerational theft has been a favourite theme amongst the right, like David Willetts. Back in the 50s, not everyone was reduced to a washboard or a tea-chest. Some could afford a Gretsch or a Steinway. They still can.

[Andrew]

Hugely agree that targeting "generations"for distinct treatment rather than individual circumstances seems unfair.

[Bill le Breton]

A couple of things disturb me about the quality of arguments about this particular intergenerational relationship:

First, it is frequently trotted out that ‘this generation will be the first which is less well-off than its parents’. How do we know this?

Entering the employment market and finding accommodation wasn’t much different in 1973, for example: an oil crisis, bubbling inflation, and house prices that seemed at the time completely out of reach and very little security of tenure.

Secondly, three generations are involved – simplistically labelled - the grandparents exiting the jobs market (or not given the present pressures) who did all they could in the Seventies, Eighties & Nineties to defend the post-war consensus and resist Thatcherism, rampant individualism and the private good/public bad mentality; the grandchildren entering higher education and the jobs market today, and their parents who have accepted the neo-liberal world view, drawn up the ladder behind them and are busy a) rolling back the State and b) trying to blame the grandparents for the mess their own politics has caused.

If I had been born in 1966 (Cameron), 1967 (Clegg) or 1969 (Miliband) I think I’d be ashamed of my generation.

Actually, born 1950, I’m proud of mine. I am also proud of my children (born 1991 and 1993) and more confident of them and their future than that new parental generation who have the power but not the quality to govern well.

My guess is that this attempt to set grandparent and grandchild against one another will backfire.

These young people don’t trust the leaders from their parents’ generation and I think they’re right not to do so.

[Duncan Stott]

The changing relative price of a guitar should be compared to *disposable* income, not income itself. Yes, this generation is paid more than any generation that came before it, but if more of that money is being taken by rising cost of essentials (food, housing, energy, transport...) then it isn't improving this generation's lot.

[Boursin]

Whatever price war Woolworths had re: records was limited to their own record label, Embassy - which offered hastily recorded, more or less dodgy cover versions of most of the hits of the day. Records were in fact subject to resale price maintenance in the UK until 1969; they even got a five-year exemption when it was abolished for most consumer goods in 1964.