Have the Boomers Pinched Their Children's Futures? [video]

https://www.youtube.com/watch?v=ZuXzvjBYW8A

by ycombinete • 3 years ago

61 107 3 years ago

youtube.com

andyjohnson0• 3 years ago

PSA: In British English, "pinched" can mean "stolen". E.g. "he pinched my laptop"

kitten_mittens_• 3 years ago

From mid-14c. as "to pain, torment." Of tight shoes, from 1570s. Meaning "to steal" in English is from 1650s.

https://www.etymonline.com/word/pinch#etymonline_v_16335

ycombinete• 3 years ago

This talk by Lord David Willetts, at the Royal Institution, is more substantial than the title might suggest.

A miniature summary: the relative size of the Boomer cohort has created enough gravity to warp society around them as they have moved through it; changing society and policy to their advantage. This is the effect. No claims are made to intention.

It is focused on the United Kingdom.

It also contradicts that age old rule of the internet where the answer to the question in the title is always, "no".

rwmj• 3 years ago

The original book on which this is all based is also excellent reading.

roenxi6• 3 years ago

It doesn't make sense to say "pinched". Much like the debt isn't being "left to their children" - the children will likely choose not to pay it, it isn't written in stone. What they can be accused of is refusing to build a better future for their children.

They legislated and partially fossilised the state of society in the 1980s, redirected mush of the physical growth and development to China and set up a slowly declining society in a weird type of fast growing stasis. It is unarguable that the technical state of society in 2024 is better than in the 80s. But looking at Asia, the rate of growth outside of tech is not where it really should be for a healthy economy. Energy availability per capita is down however, and adjusted by the M2 a lot of the financial indicators haven't improved as much as people like to pretend. It is a politically stressed situation where a lot of people feel - justifiably in my view - like they are worse off.

It'd be fascinating to have a counterfactual where the boomers didn't get spooked and execute the nuclear industry. If energy prices had dropped by an order of magnitude, we'd probably be seeing a different world right now.

willcipriano2• 3 years ago

Leaving debt for your children but don't want the shame? I have a solution, leave so much debt that nobody could even imagine your children paying it all off, that way you can say condescending stuff like "will likely choose not to pay it, it isn't written in stone" while writing that they will service that debt forever in stone.

ta12432• 3 years ago

If you don't pay, who doesn't get what they are due? Who specifically is reliant on that repayment in the future? How will their life be worse if they don't get repaid? Does anyone actually know?

What most Americans want is a solid job, a house in a quiet area with a couple of kids and a dog, room to swing a cat, being able to get home for dinner at 6, the ability to get around and do a few things. Basically the Homer Simpson style life (without the wacky adventures)

That used to be achievable for most people. It's not now.

rsynnott2• 3 years ago

while writing that they will service that debt forever in stone.

Eh? In general, in most jurisdictions, debt essentially dies with the debtor; if it can't be paid from the proceeds of the estate, then that's the end of it.

Y_Y2• 3 years ago

I don't mean to offend the parent poster, but this post gives me strong Shaney[0] vibes.

[0] https://en.wikipedia.org/wiki/Mark_V._Shaney

roenxi6• 3 years ago

Is there an aspect of the comment you think is illogical, a non-sequitur or otherwise mildly objectionable?

michaelt• 3 years ago

Much like the debt isn't being "left to their children" - the children will likely choose not to pay it, it isn't written in stone.

What form do you think this debt takes, that the children can choose not to pay it?

A big part of this debt is a bunch of elderly people who feel they have paid into "the system" their whole working lives, and now they need their cancer treated, their hip replaced, their cataracts treated, their heart problems treated, their slips trips and falls treated, their strokes treated, their dementia treated, and so on.

And it turns out the system wasn't building up a balance all those years they were "paying in" - actually, the money was spent as soon as it came in.

Every one of these elderly people has a vote. And every single young person has elderly people as their parents.

To me it seems unlikely any politician would get elected with a policy of 'choosing not to pay' for healthcare for the elderly.

roenxi6• 3 years ago

If the elderly take on the entire productive economy, they will lose. The reserves aren't there to do that. There isn't an English speaking economy that can afford that level of debt, and the old can try to compel the young but they don't have the number of healthy bodies that would be needed to win.

We're dealing with law vs. reality on this one. Reality has a big edge. A broke millennial living in their rental apartment with a lousy job cannot cure their parents of cancer and doesn't have the time to look after them. It does not, physically, work. The boomers should have spent their efforts setting up a good medical system instead of trusting it all to their feelings and not investing anything.

Maybe it will all work out. That'd be nice. I assume a lot of people will have pretty miserable retirements and in hindsight they should have been a bit more fiscally responsible in their politics.

hirako2000• 3 years ago

Not sure what health care costs represent in a budget of elderlies, surely a lot. But not even a quarter of all this dept is to cover health care provided to retired contributors. Just look at the ratio the entire health sector represents.

Yes the system hasn't been balanced, but all that "money"- went into so many other things old generations have accumulated. Stock (at a decently valued purchased price, not the hyper bubbled dollar per share the stock markets trend at these days). Real Estate, and real estate and real estate.

A few % of the elderly sit on wealth worthy hundreds of millions, billions of dollars worth of property. Taking rents while workers indirectly pay that rent in everything they consume, not just to live somewhere.

Not paying the debt while still catering to eldery's health is an option. It would just deprive some of them from wealth they wouldn't even have time to spend in 100 life times in medical bills plus everything else.

The debt problem will likely be solved along with the property valuation non sense. Health care is, almost, a non issue in comparison.

bryanlarsen4• 2 years ago

Inflation is the mechanism by which wealth and power is transferred from the old to the young.

Now you understand why our recent bout of inflation has been weaponized to become enemy #1.

sirsinsalot• 3 years ago

Debt might not be passed to children, but when the parent's assets are liquidated and sold on death to settle high taxes on inheritance, it is clear that they effectively are even at a local scale.

Assets that would've been inherited by the children, as a form of generational wealth transfer, are cut off. High government debt means high taxes.

Those assets are liquidated and heavily taxed. Rent seeking behaviour then limits that generation's ability to grow their own asset base. A mortgage for a home, a person's main store of wealth, is now more about how much lifetime debt you can sustain rather than a reasonable price for a reasonable asset backed loan.

The whole thing is insane. Welcome to a world where you own nothing, die with nothing and pass nothing on. This prevents the accumulation of wealth (power) over generations, keeping the poor poor and helping the rich become richer.

candiddevmike• 3 years ago

End of life care is going to obliterate generational wealth long before taxes, it doesn't even get taxed until you're over 13 million in the US. IMO, generational wealth should be taxed more as it's a huge source of sustaining inequality and trivial to avoid/plan around if you're rich.

Havoc4• 3 years ago

Not sure it was done intentionally but generations following are pretty thoroughly fucked.

Eg average salary vs average house price charts

https://www.reddit.com/r/dataisbeautiful/comments/e1jrvw/oc_...

pydry2• 3 years ago

It was intentional but it was a small, very wealthy group that did it and is looking for a scapegoat for their sins in the form of your parents.

https://www.nakedcapitalism.com/2013/11/identity-politics-an...

dfxm12• 3 years ago

Your article and the video both seem to agree that the different economic outlooks of the generations were achieved through policy, and the video demonstrates a split in voting by age. In this case it certainly takes two to tango - the wealthy to buy these politicians/policies, but also a certain bloc of voters has to keep voting for them.

infecto2• 3 years ago

For my own curiosity it would be interesting to see housing prices bifurcated between London and not London. Other thoughts because the UK is a little bit special in the sense that most of the housing stock is quite old I believe...how do the prices look when comparing newer/older stock. I am wondering if new stock accounts for the price increases. Lastly, it would be interesting to see the role of the population, how much has the price changed per capita. Has there been a large influx of foreign money that has helped drive these prices higher and higher. Which could also be interesting to look at, perhaps you need to break the prices apart between luxury and non-luxury, maybe you get massive jumps in price with luxury properties.

Havoc4• 3 years ago

That chart is basically all of western world. Some countries more than others but the pattern is pretty universal

Unsure about east & developing countries

jen203• 3 years ago

London is the absolute extreme for house price, but the south west is often incredibly bad for house price to average income ratio.

Having said that there has been a definite case of “having cake and eating it too” from the boomer generation: when the retirement age was set it waa very close to life expectancy.

Now it’s 15-30 years behind, and the young are expected to fund those years of idleness from the elderly, often having enjoyed none of the state-supplied freebies the elderly got, while the elderly sit on the housing stock which should be used for young families.

This is nothing to do with luxury condos and foreign money (though those two are likely correlated in London) - it’s basic breakdown of social contract.

nightski5• 3 years ago

I think part of what we are seeing is a skills mismatch. It's not that the jobs aren't there imho, just that the population has not caught up. You'd think with the absurd amount being spent on college education this would not be the case, but alas it is.

Also we are seeing a lot of retiring trades workers and a shortage there. I have a feeling some of these professions are going to see a resurgence in wages relative to other areas of the economy.

wegfawefgawefg9• 3 years ago

I have been programming for 11 years but always have a hard time finding a job. My friends almost had no job through their entire 20's. They have degrees in stem, software, medicine, and chemical engineering.

Every field feels either dying or saturated. Every company gets hundreds to thousands of applicants per day online. If you walk in the building they tell you to apply online. It has been like this for as long as we have known.

piva003• 2 years ago

We are also seeing an immense mismatch between worker productivity vs salaries. Per worker productivity has increased a lot since the 80s but most of the value added hasn't been translated into wages but captured by the capital elite.

While this happens it doesn't matter so much that societies adapt their skillsets, workers will keep experiencing wages depressed relative to their productivity. At some point this will completely break the social contract.

ryandrake3• 2 years ago

I have a feeling some of these professions are going to see a resurgence in wages relative to other areas of the economy.

This is what should happen to wages in a competitive labor market where there is a legitimate shortage of a particular skill, but unfortunately companies will try to do pretty much anything except raising wages. So instead of paying plumbers $100/hr, the positions just go unfilled, and there's currently a multiple-month wait for any plumbing work where I live.

tennisflyi• 2 years ago

It's not that the jobs aren't there imho, just that the population has not caught up. You'd think with the absurd amount being spent on college education this would not be the case, but alas it is.

It's the opposite. Many companies are too picky with their coffers

Neil442• 3 years ago

Let's see a graph that goes back a few hundred years?

Havoc4• 2 years ago

If you have one feel free to share

quaffapint• 2 years ago

Linked from the reddit post, this article (though US specific) has much more data that uses median vs average and breaks down by region..

https://listwithclever.com/research/home-price-v-income-hist...

xnx2• 2 years ago

This means almost nothing without accounting for interest rates.

Havoc4• 2 years ago

Financing adds another complexity layer sure, but not sure how you conclude it means almost nothing

If you're trying to buy something super expensive with a salary that is small in comparison then you're going to have a bad time regardless of if it is outright or via financing.

findthewords• 3 years ago

Children can live with their parents or parents can live with their children.

No new wealth is created but the difference is stark for growth prospects.

freen2• 3 years ago

Yes.

Taxes are an investment by the old into the futures of their children.

Boomers grew up with a max personal income tax bracket of 90%, and an effective corporate income tax of 25-30% (it is 5% now).

Anyone who has studied macroeconomics 101 knows this.

The Chicago school bent over backwards trying to make the Laffer curve true, but it never was, nor will be. It doesn’t even pass the smell test: obviously any rational economic actor would maximize net profit regardless of the marginal tax.

Grocery stores make a 2% margin, yet are a thriving industry. That alone invalidates the Laffer curve.

gcanyon• 3 years ago

The Laffer curve almost must be true by definition:

   1. If the tax rate is 0%, you will get zero tax revenue, by definition.
   2. If the tax rate is 100%, presumably no one will generate (reportable) income, and you will again get 0% tax revenue.
   3. Somewhere between there (the current tax rates, for example) you get revenue.

The above equals "the Laffer Curve".

The thing people get wrong is assuming that they know where the shape of the Laffer Curve, or just where the maximum of it is. I am not an economist, but I'm going to guess that economists disagree about the above, so people arguing in bars (or online) are guaranteed to be wrong.

All of which to say that the Laffer Curve is a thing, but it doesn't prove that 90% is too high, or 5% too low without drawing conclusions about its shape.

freen2• 2 years ago

Correct: I should have been more precise.

The particular shape of the Laffer curve espoused by the Chicago school, so called classical economists, is incorrect.

Thank you.

cjs_ac• 3 years ago

Lord Willetts is now a Conservative peer, but was a demographer for the Conservative Party. The policies that have impoverished the young are all Conservative policies: allowing the cost of housing to grow faster than wages, privatisation, and deregulation.

In the eighteenth century, Edmund Burke argued that a conservative party must remain pragmatic, and until Thatcher, the Tories had the discipline to do so. For the past four decades, they have chained themselves to one ideology, and the fortunes of one generation. As that generation fades, so will the party.

In the coming general election, the question is not whether the Conservatives will hold power - that matter was settled long ago - but whether they will ever form government again.

Neil442• 3 years ago

I don't see any dips in those graphs from when Labour was in power?

distortionfield• 2 years ago

Because you can’t change housing policy from the past several decades in one term, no matter which government or party you’re referring to.

wegfawefgawefg9• 3 years ago

In my home city of Houston, Texas there are a lot of old "shotgun" houses from about 100 years ago which really are just a bedroom attached to a kitchen. The tiny box in the front would not really qualify as a living room in most places.

I wonder why we dont see new houses built at this size.

Its not a tiny house, and totally liveable. I feel like a new one should cost between 50-100k$. Why do we only see mega houses being built.

bryanlarsen4• 3 years ago

Those were built when land had little value. Today the land is worth far more than the house. Who would build a $50K house on $200K worth of land?

We need a lot more 50-100K living spaces, but they only way we're going to get them is through density so that $500K worth of land can be split between 20+ families.

wegfawefgawefg9• 3 years ago

Houston may be an anomoly but there are tons and tons of vacant lots everywhere. Many of them are only like 10-20k and 15-20 minutes from the city center. Usually in areas full of mexicans. But no houses on them!!

argiopetech• 2 years ago

This may be true in high density cities, but it's not reflected in my recent house purchase (~4 acres, 1650sq.ft. manufactured house).

I had always thought of the property as the valuable part, and I still value it more than the house (houses are replaceable), but,

a) the value of the property is less than 10% of total purchase price, b) The mortgage broker did not consider the value of the land AT ALL when writing the mortgage, c) I don't own the property, I rent it from the county.

martythemaniak• 3 years ago

Depends on local market, but housing material doesn't contribute much to house prices. Land, permits, development charges, fees, make up an enormous percentage. You don't have much on labor.

In other words, no one will buy a shack for $500k when a proper house would cost $600k

wegfawefgawefg9• 2 years ago

Then we just have to trim down the regulation. A society can only afford regulation when it is wealthy. If people start getting broke again you have to be adaptable and remove it so the price floor goes down. Laws cannot be ratchets.

teeray3• 3 years ago

Bedroom+Kitchen are relatively easy. The problem is bathrooms. If you have access to sewer, you’re in great shape—no problem. Otherwise, you need land for a septic system (tank and leach field). How much land you have, how well that land percs [0], underground obstacles, and regulations in your municipality all determine how expensive that system will be. They are usually in the 5 figure range, sometimes reaching the high end of that range if there’s limited space (requiring specialized equipment like a continuous air pump).

[0] Percolation Test - how permeable the soil is to water. Often abbreviated to “perc test”.

wegfawefgawefg9• 2 years ago

Well now we know the problem. Overregulation, and corruption. Id rather have a primitive toilet than be homeless.

nunez• 2 years ago

Also a Houstonian. Those are getting torn up and replaced with $1-$2M three story townhouses with the absolute quickness. But I agree with you. Those (relatively) tiny homes are cute.

thriftwy• 3 years ago

I'm not sure why a back redistribution of wealth between Boomers and their children does not happen.

In Russia you would be set for an absolute boomer domination, since they could privatize the apartments they rented from state after 1991 (virtually for free), and keep them, but their children would get nothing and will have to rent. But in fact that does not happen because as boomers die off, their grandchildren get apartments inherited by their parents. Not by any law but by intra-family wealth redistribution.

Maybe US & UK Boomers were the exception in that they lived in economic environment where they could earn such wealth from scratch, so they are just not ready to share?

supertimor• 2 years ago

Unfortunately a lot Millennial and Gen Z Americans are going to watch their inheritance redistributed to the healthcare industry, instead of themselves, as their parents continue to age.

camgunz• 3 years ago

It's wild to watch all of these takes as though the jury is still out, or it's gonna happen sometime in the future when the last boomer dies. It started happening before 2008, was accelerated by the financial collapse, and is affecting Gen Z as well as Millennials. Neoliberalism's failure caused the center to fall out of western politics. If you look at polling, only older, wealthier, or college educated people are really holding the middle together. They're a shrinking group. Our political future is populist, whether that's on the right in the form of fascism or on the left in the form of communism is up to those movements, but it's happening.

cjbgkagh• 2 years ago

The effects were only seen in 2008 because that's when the modern 'everything ponzi' first started to waver. But that die was already cast before 2008 and many people were already fucked but just didn't know it yet. I think one of the biggest differences between Millenials is that initial period of ignorance allowed Millennials to be optimistic and that optimism was good for their mental health. The poor mental health of Gen Z has made their bad situation worse. In general Millennials didn't expect social security to last until retirement, the Gen Z people I've met do not expect society to last. Like Gen Z, I do think there will be an economic implosion, possibly precipitated due to a lost war. The Suez Crisis of 1956 marked the end of the UK empire, history might repeat and the failure to rope in the Houthis might mark the start of the end of the US empire. I think Millennials, Gen X, Boomers, etc may end up finding out that their retirement investments are no longer valuable and which will really suck for everyone except Gen Z which didn't have any to begin with. But maybe the slow process of economic death drags on for many more decades and the Boomers get to die out in peace.

binary132• 2 years ago

Sometimes I forget that so much of this stuff is so inaccessible. Capitalist apologetics are really drilled into us (at least in the US) since day 1. I guess I'll just leave this here and move on:

http://www.vatican.va/content/leo-xiii/en/encyclicals/docume...

snapplebobapple• 2 years ago

He's missing the massive other piece of this puzzle where integrating the third world into the world labor market effectively wiped out a lot of entry level/mid level manufacturing and remote services jobs, which cut labor competition and effectively capped a whole bunch of salaries across multiple sectors, stopping the wage growth from productivity growth that usually happens. Integrating the third world is still an exceptionally good idea, as the massive wage growth happening there has lifted literally over a billion people out of abject poverty and suffering, it's just going to suck for another 5-10 decades as labor prices equalize and excess labor in the third world is used up by far more productive pursuits than subsistence farming.

As far as his solutions, they aren't very good. What we should be doing instead is crushing all the planning permission BS, rezoning to allow a lot higher density and fast tracking projects to build housing supply and push housing prices down via that method. If one could go from buying land to having a finished multi story residential with main floor shops/highrise/whatever built in a dramatically shorter time on a vastly larger swath of potential land more would get built and prices would fall.

On the subsidy side of things the floor and cap idea is ok, it should really just be applied specifically to health care and have tiers based on some combination of income and wealth that determines what your copay is and where your copay for health tops out. That would directly tax what is costing the system the most and directly target high wealth/income boomers who are disproportionately using healthcare mostly without raising taxes on the young who are struggling. If this was combined with the housing reform above it would also probably increase supply of land to build more density as boomers are forced to sell their secondary properties to cover healthcare copays (if they are house rich and cash poor as many are).

mihaic• 2 years ago

Every single time I see these statistics, I think that this modern form of capitalism can only exist with modern life expectancies.

Should human lives be shorter, we'd have real transfer of capital between generations. Should our lives be longer, we'd realize that 5% over 100 years (a multiplier of 130 times) is absurd to allow as passive income, and we'd most lively remove most options of passive investment.

RickJWagner• 2 years ago

I'm so very tired of this kind of nonsense.

Every generation has unique challenges and opportunities. Each will have economic winners and losers.

Have the Boomers Pinched Their Children's Futures? [video]

Related Stories