UK
Seven years ago, a new set of contour lines emerged in our understanding of inequality in Britain. The publication of The Pinch by David Willetts has shaped the way we map, measure and articulate inequality: not just in terms of the gap between the rich and the poor, but in terms of the divide between the young and the old.
Lord Willetts’ arguments have since become well rehearsed. The baby
boomer generation have collectively done much better financially than
the generations that came before them. They will have drawn more out of
the welfare state than they paid in as a generation; have done
exceedingly well out of accelerating house-price growth; and can look
forward to a comfortable retirement on generous defined-benefit
pensions. But this has come at the expense of the younger generation,
which finds itself struggling to even get on the housing ladder, and
financially propping up both the welfare state and pensions schemes that
the older generation are drawing down on.
If anything, things
have got worse since The Pinch was published. The younger
generation now looks set to collectively own less wealth at each life
stage than earlier generations, and the proportion of 25- to
34-year-olds owning their own homes has fallen by a third in just 10
years. Young people have seen their earnings drop the most as a result
of the recession, and typical pensioner household income is for the
first time now higher than that of the average working-age household.
Too many young people face a bleak lifetime of economic realities: a
poorly paid job offering few progression prospects, little hope of
getting on the housing ladder, decades of paying off their student loan,
and an utterly inadequate pension when they hit retirement.
This powerful narrative – of a growing gap between the generations – is an incomplete story in two important respects. First, huge inequality exists within the current generation of retirees: the poorest fifth are almost entirely reliant on benefit income. While pensioner cash benefits remain relatively generous, the erosion of a decent social care safety net could leave some baby boomers facing a miserable end to their lives.
Second, one of the most important effects of intergenerational inequality is the way it sharpens the impact of class. Young people from the most affluent backgrounds will continue to enjoy the same opportunities as ever: grandparents and parents will stump up the deposit for their first home, get them that critical internship, and help defray or pay off their student loans. Young people without family wealth will suffer. Intergenerational inequality means that who your parents are is more, not less, important. Social mobility will decline as a result.
Topically, older people also remain far more likely to vote than younger people. But it’s far too simplistic to see this as a problem that can be resolved simply by pitting one generation’s votes against the other at the ballot box. No voter, young or old, thinks in such terms. On the contrary, change will only happen when political leaders are brave enough to challenge the cognitive dissonance that characterises our thinking: we want house prices to continue rising at the same time as we want young people to get a foot on the housing ladder. Britain needs to be told in no uncertain terms, especially at election time, that we can’t have our cake and eat it.
Editorial
The Guardian
23 April 2017