Throughout history, there has been a pretty simple contract between the generations. Parents invest in their children, and they keep working until they die. The Baby Boomers have changed all that. The Boomers now expect their children to look after them while they enjoy thirty years of knitting or playing golf in genteel retirement.
This is a very good arrangement for the Boomers, not quite so good for Generation Y, who may increasingly be asking Y me?
Generation-Y-me has got seriously unlucky. Here are six of the worst for starters:
- Pensions: the Boomers are happily feathering their nests, and living longer. 80 years ago, retirement lasted for five years. Medical advances are making it an expensive 30 year burden. Pensions legislation means that pensioners get first call on the company’s resources, screwing the current workforce, thank you very much. Meanwhile Generation-Y-me can kiss goodbye to final salary pensions: they are being left to fend for themselves with defined contribution schemes.
- Fiscal policy: government debt is now the worst in history, even worse than after World War II. It is even worse than published, once you allow for the obligations of PFI and public sector pensions which the government keeps off balance sheet. The government has not just sold the family silver, it has mortgaged the house as well. Generation-Y-me has been left to pick up the tab.
- Inflation: this gave Boomers a huge one-off gain as property prices soared while the value of their mortgages was eroded by inflation through the 70s and 80s. In the low inflation world Generation-Y-me is faced with huge property costs and not much in the way of good saving or investment (anyone want a good interest rate from an Icelandic bank, AIG or Northern Rock?)
- Carbon: the Boomers happily used fossil fuels for their cars, flights and holiday jaunts. Fossil fuels are going, global warming is coming and Generation-Y-me can clean up the mess. Thanks.
- Political power: the Boomers are a huge generation. Do you really think they are going to vote for lower pensions, medical care or less free transport? Or will they let Generation-Y-me rack up debts at university (free for the boomers) and ask Generation-Y-me to produce the taxes to support Boomers’ retirements. So much for parents investing in their children.
- Globalisation has hit Generation Y-me hard: offshoring takes away many jobs. Immigration increases competition for jobs (lower wages) and for housing (higher prices). The smarter Y-me types will use globalisation to go where it suits them best, leaving the Boomers to fend for themselves. If that happens, the Boomers can rediscover the joys of stacking shelves at the supermarket. Many of us would prefer that to the horrors of golf for thirty years.
