How rich are the baby boomers and how poor are their children?

okay good evening ladies and gentlemen my name is Alison McGuire I'm the chair of the Department of Social Policy who have with great pleasure invited David Willetts to give us a talk on one of these many publications the most recent one I think his book the pinch which I'll just borrow for a moment which is on sale house aid in the foyer if his talk stimulates you enough to purchase it then you can vote with your feet and I don't think David needs much introduction shadow secretary for universities and learning the MP for haven't been described as many things including a public intellectual of which we're going to get some reaps on benefits tonight David will talk until about 7:45 which should leave more than enough time for questions up until about eight o'clock and I think David on that is my pleasure to introduce you to the audience great well thank you very much for the opportunity of coming here to speak to this suitably generationally mixed audience about my my book which is about fairness between the generations but as would only be right for an LSE audience I'm particularly going to take you through the hard figures about what I believe to be the distribution of income and wealth between the ages that's the different age groups in our society that's the sort of central part of the talk today and as you can see from the title of this talking of my book my central argument is very simple that a group currently in the middle of society the baby boomers to which I belong people born between 1945 and 1965 roughly have ended up with owning a large amount of the assets and property in our society and also doing well out of the labor market as well let's just get some of the demographics right because there's the famous remark demography is destiny there's a belief that demographics can tell us a lot about the future simply by drawing on the past and a lot of the great demographers attached particular importance to the cycle of large and then small generations Thomas Malthus who thought that large generations would be so impoverished that it'd be followed by small generations the same was the argument of probably the first great sociologist Auguste Comte and most recently one of the first demographers to consider the impact of the baby-boom Richard Easterlin argued that the large generation of baby boomers would have a very tough time and the cut one kind of question we might think about this evening and perhaps come back to in discussions is would you rather be born in a large cohort or a small cohort well the conventional answer of all these experts was better to be born in a small cohort the first reversal of that conventional wisdom came from Cannes and Keynes who has got very interested in demography at the same time as he was right in the general theory for Keynes it was the other way around and growing populations large cohorts that were borrowing and spending were good for growth and shrinking populations with smoke small cohorts were bad for growth and one of the reasons for the concerns the underlying some of the economics behind general fear and some the demography behind the theory was a worry about what he saw as Britain's demographic trends of a shrinking population because of the low birth rate and he made a his quotation here is a suitably salutary note of caution for anyone who wishes to talk confidently about demographic Trains he said in 1937 that he that we know much more securely than we know almost anything else that we should be faced in a very short time with a stationary or a declining now let's see what actually happened he said that at that point when the blue graph was just heading below 700,000 he said that just before probably the bit the biggest baby boom that 20th century britain saw now I don't think we've got a pointer but let me this chart which is essentially the number of babies born in Britain from 1930 to the present day I think this tells us more information about post-war Britain I don't think the mouse is like this damn it I think this tells us more about post-war Britain than any other single chart that you can imagine first of all tells us on the left hand side how grim things were in the 1930s very low birth rates now those below birth rates and 9 30s we're then followed by a baby boom which had two peaks and different countries have date baby booms in different shapes but for my purposes and there's no kind of right answer but for my purposes the baby boom comprises the peak of the in 1947 it then Falls a bit but it's it's low point in the middle of the baby boom eight hundred thousand births was still higher than it managed in the subsequent peak of the next cycle reaching a second peak in 1964 so my working definition of the baby boomers is born between 1945 and 65 those youngsters born in 1947 are the ones who walk down Carnaby Street in their bell-bottoms and bought Beatles CDs the ones of the second peak are the ones who bought punk music and rioted against the pole and after the second peak you then had a dramatic fall in the birthrate down to a low point in 1976 now for those of you who think that by and large these economic and demographic explanations are being carrying too much weight you might just know the peaks in 1947 and 64 followed very cold winters and below point in 90 seventy-six followed a very hot summer that would be the other explanation of these trends but we should note that and parcel now this tells me this I think also tells us about how Margot Thatcher controlled public spending and it tells us how mild Atlantic control public spending because what it tells us is that when she was in office than an amendment so this was the 1980s and 90s you had got very few pensioners coming through you've got a very low interwar birthrate so there's virtually no increase in pension expenditure because the number of pensioners was very low and at the same time because you'd had this big decline in the birth rate in the 70s you've got relatively modest pressures on education spending for kids as well so this was a this was a time when the you've got a surge of the population in the middle of the of the their working lives you've got it's that second peak of the baby boom where the people the young people went into jobs mark in the 1980s and drove the structure of changing the British economy with very few pensioners behind them and very few children coming after very favourable circumstances for the control of public spending and we then had this those and that low birthrate in the late 70s that low peak in 1976 meant and if you think of employers being used to a particular level of labour coming through 25 30 years on that was the gap in the in the number of young workers which relates to the immigration surge in the beginning of the 21st century you've then got what I call Generation Y and we then got this latest and new and unexpected surge in the birthrate roughly since 2001 the Millennials now as I say this is not this is just a set of categories other people couldn't come up with different countries one of the main reason these categories is just so that you can hold me to account and we can be able to and this is an attempt if you're trying to attempt an explanation you have to be precise about your terms some people think that boomers are just that first little surge in the birthrate but I don't that captures the full economic significance of what's going on so that is the that is the background to what we're talking about and you can see how large the baby boom was the increase in the total number of people as a result of the baby boom compared with the underlying trend of 800,000 is far in excess for example of the total British dead during the second world war of about 400,000 now as the baby boom has worked their way through the stages of the life cycle you have changes in the median age of the population and we're in 2010 at a rather unusual neat point one of the things that prompts my book now we've got a median age of 40 and average life expectancy of 80 so the middle person in Britain is halfway through their life in other words if we talk about things happening up to 2050 we're talking about events which will probably be experienced barring extraordinary developments by the majority of the British population and because of my definition the baby boom 1945 to 1965 we're also at the this is the year when the the first male baby boomers reach pension age of 65 so it's a good moment to take stock and to consider the balance between the generations which is really the theme of my book the intergenerational contract and my argument is that what families do and what nation-states do and what holds a society together are exchanges between the generations and in any one moment it looks as if one group are sustaining another group to put it in a very simple model of three generations the hunters in the middle the hunter-gatherers in the middle if you imagine a very primitive society by sustaining very old people who aren't able any longer to collect food for themselves and very young children and and I argue that that's what families do and it's what governments do they've even studied this again I'm trying to look behind governments to the most natural and primitive way you can imagine it they even studied surviving hunter-gatherer tribes in Latin America and Africa and measured their calorie intake the calorie production and consumption how many calories they consume per year compared with the amount of calories they generate by hunting or gathering and you might just and what happens is of course young children are very heavy net consumers of calories consuming many more calories and they generate any parent here could tell you that but because in because in human beings go for particularly high-value food that requires quite a lot of skill and training to get to that food the they carry on consuming more calories in their generating phone rather longer they then become net contributors of calories if you like hunting and gathering more galleries than they're consuming until as they get older their hunting efficiency declines and they start once more being net recipients of calories from others and it's quite interesting what the anthropologists have calculated the the key ages is being and you may recognize them from our modern welfare state the point at which you become a net contributor of calories they reckon is about eighteen and the point at which you go into net deficit on calories once more become a net consumer is when you're about 65 even in relatively primitive tribes and although that is what is generations exchanging with each other as Paul Samuelson says in his classic article in 1958 you can equally think of it as exchanges that net out for any one individual over his or her life cycle what you're doing is using the family or the tribe to transfer your own consumption to spread it out more evenly now I try an amateurish way and there are people who thought about this much more rigorous and now I have to try to describe what some of these exchanges are between the generations and I summarize some of here the kind of exchanges we all recognize from families and they're both direct exchanges like the first one we care for our children when they're young in the hope they'll care for us when they're old but there are other patterns like the replication of behavior trying to pass on benefits from children two grandchildren exchanges of care those are the kind that's the kind of cat's cradle of mutual obligations which I think lies at the heart of a family lies at that but it also lies at the heart of a society indeed I think it lies at the heart of what governments do as well and it's quite interesting one of the great conservative thinkers Edmund Burke when trying to define in his reflections on the revolution in France what governments do he didn't come up with a definition of the Nightwatchman state and protecting security important though those functions are his account of the of the function of government is that it's a contract between the generations a partnership not only between those living but between those who are living those who are dead and owes her to be born his account of what government did as well was maintained an intergenerational contract now so far I've offered you a kind of stable static model of exchanges between different cohorts which net out to an equilibrium over the entire lifecycle which are partly delivered within families within tribes of under gatherers and by governments but I also showed you at the beginning that extraordinary surge in the birth rate in Britain post or other countries had their birth rates at different times and the challenge in my book is well does being a great big cohort the disruptive effect of being a bit great big cohort think of you like a river river bursting its banks with a storm surge going through it does that share fact of being a very big cohort cause risk the fracturing of the social contract and I'll give you a very simple example of that imagine your government with a rule that you balance the budget over the economic cycle and imagine that you have stable public expenditure commitments so you have a stable commitment to the amount of education a child should get the amount of pension an old person should get so far so good and then imagine that you have a very large cohort that works its way through the cycle like in one of the classic images like a Python swallowing a pig so what happens with your balanced budget when all these youngsters when this large cohort appears there are extra pressures on education because there's more youngsters going through education and perhaps more child benefit or whatever so public expenditure on young people Rises because you've got a balanced budget rule and because you've got stable public spending commitments taxes have to rise in order to ensure that you can meet these obligations then your very large cohort are in the middle of the lifecycle when they're all at work they're all working generating output there are smaller cohorts on either side of them so there's low you can your education bill falls because there aren't so many kids your pension bill hasn't yet increased and you've got an increase in tax revenues because you've got more producers in the middle so consistent with your balanced budget rule you can bring down tax per person and then they retire when you have a surge in the number of pensioners the number of workers Falls again because the large cohort is working its way through the system the number of workers Falls and then the expenditure on pensions Rises it's the same expenditure on pensions per person but there's more individuals reach that stage of a life cycle so tax on the working population has to rise so in this very simple thought experiment a rule of balancing the budget across the economic cycle plus stable public expenditure policies if you follow the effect of a large cohort through it seems to have lots of spending on its education when they're young and no taxes when they're working and lots of spending on their pensions when they're older so it's those type of simple models that I think we have to we have to have at the back of our mind as we try to work out what the consequences of being a large cohort might be do I see a laser pen that Lee brilliant that'd be great and in fact you just at the right moment thanks very much now I'm going to look in turn and this is this is coming exactly right now because I'm a now going to get into the sort of the heavier evidence from the welfare state from the labor market from the property from property ownership of what I think has been happening for the laid for the baby boomers and the this evidence comes from a variety of sources but I should pay a particular tribute to academics at the LSE from whom I've drawn people like John Hills and Nick Barr and researchers who helped me with it people like Chris Cook who is here in the front row now with the Financial Times and Ryan Jensen who's at the LSE so this comes from a lot of support from others this is a John Hill's table where he tried to calculate four different cohorts how you would do from the welfare state and again you have to make heroic assumptions about public expenditure commitments in the future what will happen to taxes and what you see is the cohort at beginning of the century do incredibly well because they are around and benefit from big growth of welfare state and a lloyd-george then underactive out and to pay fully for it but then the baby boomer cohorts through here they do pretty well people might accept generation 56 61 118 percent receipts Quebec tax but then what he showed in his calculations is for the generations coming on afterwards the amount of tax they pay exceeds the amount they receive from the welfare state on is on his assumptions so we can see how it may a welfare stay if you feed through that some of these assumptions might benefit some cohorts at the expense of others you can also see how as the baby boomers worked their way through the lifecycle they may drive up expenditure on public expensive programs just keep again to keep the commitments constant but just factor in changes in the demographics this is the latest set of figures from the Treasury 2008 tracking long-term fiscal trends and they show all these different age related items of expenditure growing an interesting they've got some education growth because of their assumptions about the increase in birth rate and higher rates of immigration if you put all that together then doing nothing simply allowing public expenditure commitments to flow through the system these main classic programs of the welfare state which are consuming about 20% of GDP and public expenditure roughly now in 50 years time around in more than 6% of GDP to public spending now the Treasury for reasons which I do not understand at which they have not divulged to me when our table parliamentary questions assume that what they call non age-related public spending Falls to miraculously offset most of this increase which seems to involve assumptions like for example benefits for working age people grow by prices even while benefits for future older people grow by earnings but that is a very simple measure of what happens to public spending in on the Treasury's own figures as a result of generational change so I've talked about some of the figures for the jobs but for the welfare state let's now look about how different cohorts are affected in the jobs market I have in the book some new calculations we've gone back to the raw data from successive earnings surveys on what happened to the ratio of earnings in 1970 for fear someone in their 50s and 4% more than someone in their 20s late 20s now it's 35% more and one might speculate that that's the effect of globalization dry down relative wages of younger workers we've also got in this recession something I'll show you a chart of in a moment a very dramatic it's pushed forward a very dramatic shift in the composition of employment employment amongst the over 50s has continued to rise during this recession whilst unemployment amongst the under 25s has continued to fall and let me go straight on actually to this chart which is really without my phone so here is taking 1992 as a base basing it as 100 here are changes in employment for different ages so this this increase in employment amongst the over 50s that's the that's the overall picture for employment slight fall for 25 to 49 s and the 24 and unders falling a lot now there's a little as proportions of total employment now there's lots of stories behind this changes in the size of demographics changes in participation in workforce change in participation in education but never less I think it's a striking example of a of a change in the labour market as well so I've shown you a couple of tables with the welfare state effects of this showing you a couple of tables with labor market effects now let's turn to wealth and the distribution of assets and very roughly there's about six point seven trillion of potential of wealth in the country divided you between liquid financial assets owner-occupied housing some by delet physical assets like that pensions here are now I'm now going to give you a variety of snapshots they are not all consistent with each other because they come from different databases some have different age groups and others summoned at different times there are measured at different times there are different treatments of second homes and buy-to-let properties and all that but here are some new figures which don't actually appear in the book which the pensions Policy Institute is prepared for me and showing housing wealth and you can see in this rather small cohort this is not quite the same as my definition of the baby boomers this is women aged 50 to 60 and men aged 50 to 65 so rather smaller than my than my definition of the baby boomers but an extraordinary concentration of net housing wealth so they own almost a half of housing wealth on this particular set of measures I've also got here some new estimates of pension wealth now I should explain these include publics all public sector pensions including unfunded public sector pensions so it's not quite consistent with some of the other measures of pensions excludes state benefits but as it's got public sector pensions which is one of the few areas where generous final sandwich schemes survive for younger workers you might expect this if anything to flatten out the effect and what have you got there you've got more than half of all pension wealth belonging 58% belonging to my definitions of baby boomers so a concentration of pensions wealth in the hands of the baby boomers as well you've got from John Hill's recent excellent report on equality a different measure he's got a different measure well that he and it includes literal physical property we've got on our houses furniture and everything but again a very very interesting concentration with some quite dramatic figures for wealth per person amongst the baby boomers and I try as a layman and there are people in this whole today who be able to do it much better than me I tried it as a layman just trying to work through to achieve some kind of consistent measure of assets and this is what I came up with as my estimates of the distribution of wealth in different forms I should explain different from the previous pension measures for example because it's only funded pensions in the private sector it's not public sector pension so as I say they're not all to go away they're not all that as I using date different databases there's slightly different calculations but that's what I reckon that they that again the baby boomers looked during about half of all the wealth now why has this happened and they've been a range of explanations we can offer inflation came at the right time for the baby boomers first of all the baby boomers borrow to buy their houses get on the housing market many inflation comes along to wipe out the cost of their mortgages rather conveniently so that the mortgage falls in real terms and the house Rises the value of the house Rises so inflation came at the right time improvements in life expectancy came the right time as well because if you think if you've got a pension promise denominated by a chronological age it's not unlikely effects and then think through the effects of a change in life expectancy it's not unlike the effects of inflation when you have prices denominated in nominal terms if you've got a promise to pay somebody money after the age of 60 or 65 and you've then got big improvements in life expectancy or for people aged over 60 or 65 that is a big shift in the value of that promise so the improvements in life expectancy amongst older people came with the right time for them to we've had regulation of pensions to protect then the pension rights that baby boomers and all the workers have built up but at the same time probably with the offsetting effect of deterring companies from offering pension promises like that for younger workers better that's happened as well and even for the bank bailout you could argue that the costs are going to be borne by future tax payers younger workers but the beneficiaries are the people whose savings pensions depended on the the debt and other assets that they held through the banking system so you can explain you can draw on a range of sort of almost random economic events between you between them to explain why this is what I've been showing you is not simply the normal pattern of a buy it's not simply the normal pattern of the life cycle with in which you might expect perhaps wealth to grow and then shrink there may be particular reasons why this cohort has done very well now let's get to the really emotive stuff though which is why has it worked so well for the Bengals well perhaps they're just lucky and some of these effects are not ones which you can claim the baby boomers take responsibility globalization the opening up of the word labor market driving down the wages of younger workers and the relative to older workers in the past 10 or 20 years that wasn't a plot by the baby boomers what are they selfish well I'm not sort of trying to attribute motives to the baby boomers we've got there are interesting debates in the media about why this has happened I'm really trying to establish the facts that something has happened so that we can then think about what the consequences are there is a rational argument that what the baby boomers have been doing is redistributing resources in a world where GDP per head grows young the younger generation the future going to be better off so they're being nice and egalitarian and taking from the rich future and giving it to the poor present or perhaps that they're simply unaware that we are so sensitive in Britain to analyses of income and wealth by social class within assuming a kind of shared chronological position we're so and there's so many analyses of on that dimension that we just don't think of things on a generational dimension and I would argue that one of the reasons why it seems to be very possible that we are unaware of what's going on is that we live in a society which is more segregated by age this is what Karl Mannheim predicted is what would happen in a in the modern world and we're more segregated in the labor market we're quite likely to work in workplaces with people the same age as ourselves we're increasing the age segregated by where we live you're most likely to live in housing alongside people the geordie people of your same age and in Britain in particular it looks as if we are when you ask people about intergenerational mixing there's quite a lot of feeling that there aren't enough opportunities for older people and younger people to get together we've got here seventy-six percent of adults in the UK agreeing either strongly or somewhat that there aren't enough opportunities for people from different ages to be together and that I think increases distrust and disengagement between the generations where in us by engage older generations of younger generations and vice versa I think this is a slightly depressing slide from a survey asking government as I say adults if they would intervene if they saw 14 year olds vandalizing a bus shelter British adults much more wary of that that on the continent so my argument and the reason why I've written the book is that it's partly that we are a nation where links between the generations are weaker that they appear to be weakening more than in some other European countries and a greater and there is a failure to understand the position of different generations and this is the kind of optimism so I think this is partly just and exercising kind of raising people's awareness of the different lives and different life chances of successive generations and I believe that the baby boomers are susceptible to these appeals some people say to me well why should the baby boomers do anything about younger generation why should they care about the younger generation well I believe that the baby boomers are susceptible to these appeals we clearly care about our own kids but I think we are also open to appeals to the interests of the future generation as a whole and there's been some very interesting empirical research on this in which people are invited to imagine that there the board of directors of a forestry company and you've got a patch of woodland and the question is whether to cut down the trees and you're given three reasons for not cutting down the trees the first reason for not cutting down the trees is because if you delay cutting down the trees you save them up for the future you will increase the total long-term profitability of the business and appeal to rational self-interest well that has some influence on people but not massive then secondly you say okay you're the board of directors we're going to ask you not to cut down the trees so the neighboring community can enjoy the amenity of this patch of woodland it's a kind of horizontal altruism allow people to enjoy the woodland that has some effect but not a massive effect on behavior then the third argument you deploy is you say the only reason why you've got this woodland is because previous generations left this wood land for you and you have a similar obligation to pass it on to future generations so that they can enjoy it that's the argument which affects behavior that scores much more highly as a behavior influencer than either the other two types of argument and this is where and it's a chapter in the book and it's great to see professor bin Moore here because it's his thinking that is above all influenced me in that chapter this is where I think that what we understand about reciprocal altruism and the emergence of and let that as being at the at the heart of our understanding of morality and ethics the argue in the book is that the form of reciprocal altruism which matters most a social cohesion is exchanges between the generations and I believe that that's a appeal to which people respond and if you do an opinion poll asking people indeed and I'm after all a member of parliament I'm a politician asking people about what kind of policies that they care for they care about policies for the long term much more than they care about parties based on ideology so that is a very quick run-through of some of the some of the arguments in my book with extra data for on particularly on the distribution of income and wealth between the generations thank you very much indeed thank you David questions from the floor I think we have some roving mics of you for your hand up I'm sure David would be happy there's a question over here about five rows back yeah I solved from I hope he does sort of inflation and possibly death panels what what what is the what are the public policy something like that whenever public policy responses you know to to to this to this issue how we kind of I guess redistribute walk back well I deliberately wrote the book as an exercise in I mean I wanted a narrative and an explanation of what was happening I didn't want to get myself trapped in a ten-point plan I've written enough ten-point plans in my time and but I do think some consequences doing do you follow clearly the burden of the budget deficit and I think it's it's this is kind of the argument the logic behind my party's poster last year with the baby with the debt round its neck only in the last week the government issued government bonds with a maturity date of 2030 for so that's you know the interest on that day is going to be borne by the younger generation I think that's one area I think it shows the importance of raising the pension age and of course we've proposed going further and faster on that in the town last body conference I think something else that shows I don't discuss didn't discuss this in the presentation was does a chapter in the book is one of the other anxieties about younger generation is whether they'll have this enjoy the same kind of opportunities the same kind of social mobility that my generation enjoyed and creating a more mobile society which is education policies and beyond but that is I think a legitimate area of public policy you can go further into trying to make it easier for younger people to get start on the housing ladder but I think I hope will now get a debate about what the policy mutations are but that my view is that there are some something like that do emerge pretty clearly from this sort of announce get in them person behind in your kitty clz in your in your talk you you sort of counterpose I suppose this sort of analysis saying that where there's a lot of analysis done on redistribution of queen social classes between higher income and lower income groups this is something we've missed but aren't those two things related and is it isn't it very important that you look within yes we you say the baby boomer generation have done very well clearly there are huge inequalities within that generation and they're going to be able to when we talk about social mobility that's going to affect social mobility because they're going to be able to pass this wealth on to their children whereas the children who of the parents the parents who haven't done so well won't be able to so you say education might be one of the ways but surely also redistributed wealth within that generation is very important and policies like inheritance tax higher rates of inheritance tax might also be considered the yeah it's certainly true that you can do you can analyze this in other dimensions and then of course for a connections between intra generational unfairness ease and the intergenerational transmission of advantage and disadvantage I think but for me is a conservative I think it be bound to get into the mindset that families doing their best for their kids is a kind of part of the problem I think families trying to do their best for their kids helps make the world go round and but what I do think is that there is a role for government as well in maintained fair deal between the generations and I think governments should consider our governments have a responsibility not to shift around the burden of shift around fiscal burdens between generations in ways that are unfair I think they have a responsibility on overall energy policy I rather suspect that my generation will have ended up consuming more energy and with a bigger impact on the environment around us than either generations before or after so I think it's better if government's trying to do their fair share by discharging areas where they clearly have a responsibility rather than trying to and of course education should be the third thing and the potential for I call the education to offset some of the advantages that that families may transmit I think it's better that government's tried to do their bit than devote their energies try to stop families doing families bit I'd love to focus on the word in the air on the slide there why they should give it back I think if you work from the premise that people are selfish then nobody really likes giving anything back and so wouldn't it be more maybe productive or or the chances of it working women to be higher if you found a way if you found a way of persuading a lot of people forgiving other people good arguments to use against other people to say that we've been screwed so therefore you're going to help me out and one of you 19 years old says that my generation has ruined the planet and he's going to have to cope with the costs of that what kind of arguments should we be giving young guy equal sort of and they can support their case well it's it's these kind of exchanges that I try to capture but there's a was this I do think that people have a genuine interest in their kids and grandchildren but if that isn't enough there is you can there's also the great American bumper sticker which which says be nice to your kids they choose your nursing hat and part of the argument is that the baby boomers we've done well so far but it doesn't follow that we will carry on doing well there is I tell him stay in the introduction of the book describe the story of the Athenian lawmaker Solon who called a visited Croesus king of Lydia then the richest man of his age and Croesus was surprised that Solon was not more impressed by Chris's extraordinary good fortune and wealth and running the monarch of this extraordinary country and Solon said I call no man lucky until he is dead and subsequently creases they was country was invaded by the Persians he was taken to captivity his family were all taken into captivity he lost everything so part of this even on your very narrow terms of what about self-interest my view is that there will come a point when we baby boomers are frail when in reality the real resource transfer is with young generation whose work and resource that they're generating is going to be transferred to us as our pensions and our healthcare and we should honor them now because that increases the chance that they will honor us when we need that one of the greater getting close to quoting one of the 10 commandments but that's the thought there's something on our left too if I could ask your views on funding of infrastructure particularly infrastructure that would be was necessary to save energy to keep us warm than the energy supplies run out and the potential for tapping into the wealth of those over the age of 65 not just to keep themselves warm but to keep the rest of the community warm I'm thinking of infrastructure bonds and trying to compensate for the decline in resources for investment yeah I think that's a very good examples where like one could have added that to the list on the book I think it is worthwhile endow future generations with with kit and I think that's one of the great reputations of the argument that future generations will be richer than us the Victorians didn't build their sewage systems out of papier-mache in cheap plaster saying well their last 25 years and by then people be richer than us and there we have to do something different and Meggie you across them did not build cathedrals saying well their last fifty or hundred years but then people be richer and they'll have concrete and so you don't need to worry about it standing up very long we are the beneficiaries of a large amount of physical capital with which we have been endowed by people who did not sit around saying well we won't bother giving this to future generations because they'll be richer and so because we are the beneficiaries of capital bequeathed to us by people with less income than we have now I think we have a similar obligation even if and I don't silly kids the kind of engine of Western capitalist growth is not going to be completely turned off even if it doesn't do quite so well the next few years or decades but I think simply we have an obligation to pass on to future generations kit infrastructure just as we've benefited from infrastructure and the fact that we hope that future generation to be richer does not escape that obligation and although I could have done more on this in the book I do have a brief discussion if you know a caddis ab britain's very low levels of saving and physically investment which i think suggests that we are not any discharging that obligation there were two on the far end and then we'll come back thank you that was a really interesting talk thank you very much I really I really enjoyed it and I think basically I think your arguments completely right um but I think there's I'd like to see your response to saying that I think it's a bit partial and I'm very glad you've got that screen up at the moment because I think the thing you've forgotten about is care and the resources you're talking about our entirely physical and monetary ones but they have also been huge changes over the period you're talking about in how people are cared for and their needs for that and you could talk about the baby boomers actually being poorer in terms of the care the claims that they have on the care on care from younger generations than previous generations had because those younger generations are now all the work the women in those generations are now working it's the baby boomers who set the practice one of the reasons that they are so much richer is that women going to work raise house prices and therefore their accumulated wealth is so much greater and their pension wealth for the for the same reason I think there is a little bit missing without a gender story in that and I think it also effects what when you talk about the effects on public spending you have to recognize what that in different generations different thing public expenditure need is needed for different things and that has to go into that story too because if the baby boomers are going to need vast spending on Social Care because their children are out in the labor force earning money that's a different type of greater demand on public expenditure then if they need it simply because they're living longer so I just would be interested to know what you look like those things yes and I do have in the book a brief reference to your point but there and I do in the context of these contracts because a feminist would say this list of contracts is one which of historically more the burden has more been borne by women than men an evolutionary biologist might then say it's because women have tended to live longer than men and so are likely to be recipients of more care towards the end of their lives but these are you could argue that these exchanges are ones which of which women are more likely to be the custodians the man once you as I do in here call them call it care rather than pay for or finance yes so just as an answer to a previous question you can sort of slice and dice this in terms of inequalities within a generation so you can write a gender account of some of this but again that isin why I wrote the book was I there are gender accounts of this that have already been written and there may be someone in this hall is very welcome to correct me but I'm not aware of a book about post-war Britain that approaches it through this perspective there are lots of there is an American astrology but I'm not aware of a British book that just tries to do it on a Kowal basis and I think that should be put up there alongside inequality within generations and alongside the gender now to a couple of points one of them is that perhaps you've overlooked some of the disadvantages faced by people of the baby boom generation for example the fact that they often entered careers with people just a few years older than and born in what I describe as the golden generation in the early nineteen forty so we're going to occupy those positions you know for the next twenty thirty years and and that will reduce a promotion prospect also of course I entered adulthood in the period of economic difficulties in the 1970s etc so that's one point that the some of the disadvantage is that the baby boomers faced you know I would say that they're the best that there was fortunate generation where basically the Beatles and Bob Dylan generation that's the golden generation really just the one born at the trough of the cycle in the early 1940s I think that you will find that they both made an immense cultural contribution and were the beneficiaries of all kinds of things the second point I wonder how far what you've described will be self-correcting for example through declining house prices over the next generation or two as more houses come onto the market and declining equity values which will devalue the shares that have been built up by the baby boomers well there is a bit of a literature about I mean when you get into its early which is quite sophisticated whether it's better to be a cutting-edge boomer a rather than a late boomer or rather than a trailing boomer and is there a conflict between those boomers in born in the mid forties and those boomers born in the mid 60s yes and I realized that and there is an argument that this was a was particularly their generation of how from the mid forties they had that extraordinary sort of flowering of as you say Beatles and Bob Dylan in the 1960s though it's interesting doing some media on this in the last few days so on the Jamie vine program on radio - there were people phoning in who were in that generation who felt has it been very tough for them and of course within any care water can be to individual film it can be tough but you you're right but I'm just trying to measure a group that's sufficiently substantial to be a coherent economic unit and defined as I say I think by the fact that even at the low point in this boom we didn't really get below 800,000 babies born now on your second point yeah this goes back to the one of the only questions I quite agree I think it is fact the baby boomers have had a good deal so far doesn't follow that they will have a good deal for the rest of their lives and there are indeed scenarios which it could all turn sour for the baby boomers but to my mind the most important single reason why it could turn safe the baby boomers is if the kids at the baby boomers come along behind do not feel any obligations and if I were amiable as abatement that seems to me to be the biggest single issue if the young generation feels somehow they've been let down by the bedrooms so why exactly should we pay higher taxes for all their pensions and their health care that's what I would that's what I would most worry about that's where there's an appeal to prudence even if not to highest ethics because you're right the the the oldest baby boomers on my account a 65 so they got they probably got 15 years at least on average of life expectancy has them build two or three questions in the middle could we start at the front and walk back that's probably good looking at this interesting graph I was wondering if the little boom in the 1970s corresponds to IVF and Louise Brown but that's not really the question I had in terms of cohort effects is some not very substantial but it's quite interesting research by Englehart on value change in post-world War two Europe and I was just wondering if I I can't really quite remember when the post materialists as he called them appear but I think that might just be that your first peak are the materialists and the second peak around that time of the post materialist I mean Englehart drew this distinction as if people were all or none but other theorists have pointed out that you know the German wants to drive a green Mercedes at 200 kilometers an hour down a Autobahn so it's that sort of mixture but I think there might be from that analysis some interesting overlays to this this particular cohort effect yeah I do I do think there's there's something in what you said I'm trying to find the evidence I have a chapter on it in the in the book and it's it's called ages and in stages and I do think that the you can have a kind of account in which there are several different factors at work and you could argue that that if you think of in terms of this these the baby boomers who had a kind of easier nobody about the 1960s who knew particularly enjoyed extraordinary surges of personal freedom these the ones of whom life has been toughest there's no I mean and that this is way beyond my complet some people say that Generation Y have values that are more like the baby boomers and so he tells of absolutely fabulous kind of this is Patsey and this is her daughter much more Stern let's not pass his daughter is the the deal of it so you could argue that and and I have a discussion where I say look there's three different effects in one is a lifecycle effect I values changed we go to the lifecycle one is a period affect our values a shape by the peer to which we live regardless of whether we're twenty or fifty or eighty and the third is a cohort effect a kind of imprinting from experiences to formative age and all three are linked together but I certainly I said it you can you could argue that the value that and they have got in the book some evidence the values of these so excessive cohorts do do differ hello I don't the audience raised a lot of interesting points on regards to a class and remote health cancel and gentleman pointed out and mention on my second point and the factor of education is one that should come into it because men would say that the body beings had a superior education to maybe what the Generation Y which I am one of them have now and he mentioned about post-materialism and I wanted to address at Sarah because now I think maybe my generation of generation just before it's more and maybe the paper boom as I had never even live in low means so obviously don't have more savings compared to maybe what Generation Y by X would have long so that's a few points I want to bring up yeah what I like about your intervention I like about these kind of exchanges when it starts getting a bit like Alcoholics Anonymous if you have to start by confessing which age cohort they belong to and they identify at themselves I would say on education and of course there's a great debate about educational standards and what's happen to education I would I would like to I would focus on something so different which is the character of Education so so sometimes one is told well you know nowadays many more young people go to university which is true and I think is a very good thing that many more have that opportunity but when and when the baby boomers were young very many few of them went to university but the ones who didn't go to university would have been going into apprenticeships and in apprenticeships an apprenticeship is an incredibly powerful form of intergenerational exchange there is the that of the old silverback guy who passes on it would normally those days of any man who passes on what he knows to the next generation what we've now got is forms of Education where people may go to college even at university we're much more of a week is spent with your own age group so my view is that the kind of pattern the type of experience that you have is one where we've shifted from quite a strong intergenerational exchange an intergenerational connection to one where if you visit an Fe College or even University people spend most of their time in quite a narrow age cohort and relatively little with an older generation directly transmitting knowledge or experience onto them so I think that's where I think education has changed most dramatically a decline in the amount of direct intergenerational exchange compared with some model of vocational training that we used to have I'd you want to come back down well could we there are some people waiting to be there's one person who's been quite patient up the back here and somebody else in front of like the baby boomers I'm thinking particularly of three bus passes for swimming yeah just the two that gave me so I'm going to whiz through there was a chart there was a slide to save time that I didn't give you before and let's see if I can find it so it's going to take a little mo but yeah I agree with you fundamentally that it would be a good thing if we had increased voting by younger generation and the my view is that we into a vicious circle where the younger generation think politicians don't do enough for us so we lie bother to vote when they it's absolutely reason why they where they should vote and now we're nearly there you're being very patient I'm about to show you the slide yet here we are this is one I skimmed through before there's a very interesting question from a DWP research report when you to ask people the cost of state pen she is going to rise what what should we do about it and responses by age and you can see here allow the pension to fall in value 22 percent of young people are willing to let falling value 13 percent of 50 to 69 dollars when they fall in value well adjust the age of pension younger people much more willing to contemplate that they're further away from it they want the and older generations much more reluctant raising tax to pay for the cost of a higher pension fifty to sixty nine year olds fifty two percent of them are in favor of that only 31 percent so this is I I think an example where as I say in the context of an excuse to pensions where we can see a clue to sort of voting behavior attitudes by age cohort but yeah I think that that in a healthy democracy people of whatever age bomb would encourage them to vote and shifts in in voting participation and what you've got a moment the baby boomers is we're a very large voting group and we have a high propensity to vote within that group so that that kind of magnifies the electoral power to baby boomers yep there was somebody behind the pillar and then I'll drift this way I'm not sure about the age distribution with in the room you see every starts getting sensitive today we've moved this way I think after that you'll have to grab David individually Cheers thank you very much for your talk this evening and the question I had is how useful is immigration in bringing in an increased number of contributors to compensate as the baby boomers move into retirement well in the short run it may help but of course the immigrants themselves in turn grow old so it is not a long-term solution to kind of demographic challenge but in the in the short run you can see and I have a brief discussion of this in a in a chapter to which Chris Cook contributed a lot and you can you can at the end of the war there was a deliberate Pro program of recruiting people from continent of Europe to plug what was seen as a problem of a shrinking working population because of those low birth rates in the 1930s so you can it can help for a time but it can't in the long run change the ratios and I do think and as I said also you could argue that that dramatic fall in the late 70s early 80s created the environment for the extraordinary flow of people from Eastern Europe twenty-five years later but I don't think it's a sort of sustainable long term solution but it clearly can help if they're a particular sort of trops in the sious in the in the age distribution there were a few questions over on this side you spoke earlier not having a 10-point plan as such but presumably do have a notion if you like a tendency what would that be in these circumstances well as I said I did try to give some examples from education pension age budget deficit but underneath that I do the origins of my book lie in my wife saying to me how on earth are our kids going to get start on the housing ladder and having be my party spokesman on pensions so many years how are the younger generation ever going to build up the kind of funded pensions we've certainly I have as a member of parliament and that many people in my age group have so when you just look at the for me as a conservative that believes in spreading opportunity and spreading property ownership I think that one of the most important ways of spreading opportunity and property ownership is across the generations and when I look at the most important forms of property ownership in Britain today there's a real problem about ensuring that the younger generation have access to them so I care about that and I do think it's the gentleman laws about education I do think it reminds us of the importance of of providing alongside the sort of the physical capital of only ownership as well opportunities in the education system for the younger generation yeah and I I feel that for in my constituency surgery I have a stream of young people coming through who are trying to do the right thing but just finding a decent place or even a house can be a flat or whatever finding a decent place for them and their kids is incredibly difficult in the southeast and I think we in the I think we in sometimes not sufficiently sensitive to the type of pressures that the younger generation are under yeah so I I'm an unlikely shocked steward for the interests of the younger generation but I do think that they that they are they are in danger of having a raw deal and the paradox really interconnections if they have a raw deal then the point is that boomers ourselves as we go or grow older may find in term we have a raw deal as well the thing there was one last question over here that will take an end you want to grab David individually yeah I'm inclined to believe that baby boomers are sort of selfish more than lucky and I don't think they will do the right thing so given that they do have this outsize political power how are we going to stop them systematically looting their children and grandchildren I mean I think they're like you've made no point of recommendation because you realize it would be political suicide to take them on well I as I say I think that there are some policies that follow on from that but I'm more optimistic than you are I'm more missing you because I this is where the perhaps the moat the perhaps the most philosophical chapter which tries to explain how cooperation involves how reciprocal obligations is well we just it does seem to me that the that for me as a conservative the most powerful form of the social contract is a contract two generations and it is in each generations interest to maintain it and I do think that that is an appeal and I then have the evidence as I said that was my forestry example that is appeal to which people emotionally respond so I don't think we're at the stage of direct action by younger people whose interests are systematically ignored by baby boomers I think we must well I'm what I'm trying to do in the book is just get some do some consciousness-raising and I'm very grateful to the people in this in this hall for the interest you've taken in it and the people in this hall in particular who helped assemble the data which I do think makes out a pretty compelling case that that generation for whatever reason that generation to which I belong does seem to have done particularly well that comes both to property and the jobs market and the welfare state okay I think we'll draw it to close now there are some books for sale outside I'm sure David will be milling around if you do want to grab them for some one-to-one it's just my pleasure to thank you very much for a very stimulating and thoughtful talk and as we age hopefully we'll do gracefully

Channel: LSE

Views: 27,915

Rating: 4.7438426 out of 5

Keywords: LSE, London School of Economics, Public, Lecture, Event, Seminar, David Willetts, MP, The Pinch, baby boomer, generation y, generation, generational, inequality, income, wealth, housing

Id: 6v6mlh0Tlpo

Length: 68min 33sec (4113 seconds)

Published: Fri Dec 17 2010