David Willetts – “The Pinch: How the baby boomers took their children’s future – and why they should give it back.”
In a 44 year period in the town of Leighton Buzzard 900 properties changed hands, but only a third of these were between people in the same family. The rest were bought by purchasers from further afield – evidence surely of the vibrant home owning society we all live in.
When was this? Oh, between 1464 and 1508! Britain has, apparently, always been a home owning society of smaller nuclear families.
This is just one of the highly satisfying little nuggets of information in this beautifully researched account by Tory MP David Willetts on how those born between 1945 and 1965 have got a pretty generous slice of the financial, cultural and political pie at the expense of those born afterwards, and why.
Willetts is a rare public intellectual who consistently stands apart from his coalition colleagues by virtue of his obvious probity and analytical prowess. In this book he postulates that the baby boomer generation owes a debt of reparation to the young, likening them to a hunter-gatherer tribe with an acute demographic problem.
Imagine Homo-erectus living in an earlier tribal community. There are the elderly and the young who need taking care of and then the fit adults who provide for them. If, by some freak event such as a series of mild winters or an increase in food stocks, the providers have a slightly better time of it and the population of the young spikes upwards, what happens?
Well, when the abundant young turn into providers they will comfortably be able to support their elderly but what if the number of new tribe members being born falls again? Who will provide for abundant adults in old age when there are suddenly more elderly mouths to feed and fewer replacement adults to feed them?
This is Willetts’ central argument, and it is so well made that you feel inclined not to quarrel with it. He suggests that, on average, every baby boomer will have taken out from society about 118% of what he or she has put in, and that such a boom trails an inevitable bust.
He recreates the “tribe” scenario today – imagining a household where there are husband and wife, two children and an elderly mother all living under one roof. The husband is in well-paid full-time employment; the wife works part time and looks after the children and the elderly mother.
This household is, he argues, akin to the welfare state. The man’s earnings pass to four dependants across three generations and even if he is quite well off he will not feel affluent.
Willetts weaves it all seamlessly into his central narrative that fortune has tracked the boomer generation like a stratified sample fund. When they were of school age, spending on schools went up; when they bought their houses, mortgages had tax relief and property rapidly increased in value; when they hit their peak earnings years tax rates fell, and the coffers bulged so much that many employers bestowed generous final salary pensions on everyone, sweetened further by contribution holidays and index linking. How much of that was true for the generation that followed?
BY 2050 over 50% of the UK will be over 50. The same over 50’s already own 4/5ths of the country’s wealth. There is a flash point here. The boomers will be so abundant they will have real power at the ballot box – tempting politicians to pander to them further. This creates horizontal cultural links, between members of the same generation, rather than vertical ones across generations. That will leave a disaffected youth, over taxed and under rewarded. It is a cocktail for catastrophe.
The conclusions David Willetts reaches are not 100% water tight, but the journey to get there is a hugely enjoyable one. He is, after all, a right of centre minister and I felt justified being a little sceptical of any politician’s motives writing a book proposing large scale social change!
Yet for all that this book is very informative, concise and well written. Economics students will relish the sections on Keynes, Schumpeter and Marx whilst sociologists will salivate at all the well-organised data.
It’s a book I can recommend highly.
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