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Wild-West Capitalism (Don't Blame The Baby Boomers)

Despite much boasting to the contrary—by Gordon Brown amongst others—-the Anglo-Saxon countries like Britain and The U.S. – provide a poor development model, a model of unregulated wild-west capitalism with the least equal distribution of income and wealth in the OECD, professor George Irvin writes in a new blog post.

“Above all, we must stop playing this silly game of inter-generational finger-pointing.”

George Irvin

These days, inter-generational war seems to be all the rage. “It’s all the fault of the baby boomers” —those born in the decade after the war—is the new conservative rallying cry, professor George Irvin writes.

Not that the cry is new. In France before the last presidential election, politicians pinned our troubled times on the lax moral standards and anti-patriotic slogans of “les soixante huitards”. Before the German elections last year, the Finance

Minister Peer Steinbrueck railed against raising Keynesian-style public borrowing on the grounds that it would saddle the our children and grandchildren with a mountain of debt for which they would never forgive us.

The same theme is being peddled strongly in Britain where conservatives argue that the profligacy of the baby boomers has robbed the current generation of 30 years olds of decent jobs and pensions.

David Willetts, the Conservative Shadow Secretary of State for Universities, has written a book called The Pinch arguing that the baby boomers took the money and ran, leaving the younger generation with nothing.

High-on-the Hog

As the journalist Richard Lander recently put it on CityWire; “the baby boomers lived high on the hog enjoying decades of sex, drugs and a huge increase in higher education all paid for by the taxpayer. They bought massive houses for next to nothing and watched their value soar; they retire on gold-plated index linked final salary pensions and enjoy free travel and other perks. …all this has contributed to a massive increase in corporate and national debt which today’s young generation has to pay for with university fees and higher taxes, particularly as a smaller workforce will be supporting a growing cohort of retirees.”

The Daly Mail columnist, Melanie Phillips, goes even further:

“It is a general source of bewilderment that so many socially destructive, even nihilistic attitudes—the onslaught on the family, the dismantling of national identity, the promotion of ‘victim culture’ and the way punishment has been turned into a dirty word—have been promoted by judges, police officers, civil servants and others at the heart of the establishment. The reason is simply that the baby-boomers are now in control.”

Melanie Phillips can easily be dismissed as a ranting right-winger. What is true, of course, is that the baby boomers’ kids are having a bad time, and things are unlikely to improve much in the next few years.

But is the real argument about inter-generational equity?

The True Conflict

Clearly not. The right peddles inter-generational conflict as a way of diverting attention from the gross inequalities which have plagued Anglo-Saxon countries—and to a lesser extent other advanced economies— in the past 30 years. If boomers in Britain went to university in the 1960’s at taxpayers’ expense, it was because only 4% of the cohort attended university; today’s figure is 40%.

If houses could be bought relatively cheaply, it was in part because local authorities provided “social housing”, the supply of which is now drying up, and mainly because the deregulated banking system helped fuel a massive house-price boom which has now collapsed.

Final salary-linked pensions have virtually disappeared in the UK because Mrs Thatcher handed pensions to the City where fund managers made millions from investing them in stocks and shares.

When the market collapsed, so did “funded pensions”.

Yes of course there is a demographic problem, but most other EU countries have made reasonable provision for topping up their pay-as-you-go schemes.

Wild-West Capitalism

Despite much boasting to the contrary—by Gordon Brown amongst others—-the Anglo-Saxon countries (ie, Britain and the US) provide a poor development model, a model of unregulated wild-west capitalism with the least equal distribution of income and wealth in the OECD.

Much of Britain’s welfare state has been dismantled and privatised. Britain’s over-reliance on its large financial services sector has made it particularly vulnerable to the current recession.

The Unequal Generation

George Irvin is a retired professor of economics and for many years was at ISS in The Hague. He is now honorary Professorial Research Fellow in Development Studies at the University of London, SOAS.

A privileged minority may have lived high-on-the-hog and owned nice houses, but most workers in Britain have experienced 30 years of stagnating real wages. With real wages lagging labour productivity, much of Britain’s increased national income over this same period has been absorbed by the top 10%.

Even today, the median yearly income is £22,000 (€25,000)—half the population lives on less than this, including most pensioners of the boomer generation!

Governments throughout the EU are calling for spending cuts in order to maintain budget balance. In truth, cutting public spending at this stage in the downturn will make things worse, and Europe’s rich—whether individuals or member-states—will ensure that the burden of these cuts falls on those who can least afford lower wages.

To be sure there are exceptions like Finance Minister Christiane Largarde in France. But in truth, spending cutswill lead to higher unemployment, particularly amongst youth.

Oddly, the same people who blame the boomers are those calling most ardently for cuts.

Above all, we must stop playing this silly game of inter-generational finger-pointing. Most boomers have never belonged to the class of rich and privileged.

By George Irvin

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Socialism For The Rich – Capitalism For The Poor?

E.U. To Reform Economic Policy

Beginning Of The End For The European Union?

European Commission Warns Of “Lost Decade”

Ukraine Dropping E.U. Membership?

Wave Of Protests To Hit Troubled E.U. States

E.U. Parliament Spending Out Of Control?

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