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Why Generational Inequality Matters

On how the moral system of intergenerational fairness has broken down.

Photo: Nate Davis

Nouriel Roubini recently highlighted key trends imperilling our future in his excellent, albeit somewhat depressing book, Megathreats. Some of these trends are economic in nature, Roubini writes, including the dual spectre of inflation and recession and the mother-of-all debt crises emerging as a result of private and public debt ratios hitting historic highs. Other threats are rooted in demographics but will have economic and societal consequences as well, he explains, like an aging population that risks crashing our pension and healthcare systems.

Roubini also outlines broader geopolitical megathreats, including the backlash against liberal democracy and the rise of radical political parties. Here, he identifies the sharp rise of income and wealth inequality as a root cause.

Underneath the overt issues highlighted by Roubini is a relatively covert one that has until recently remained partially hidden. That issue has to do with growing tension between generations stemming from the fact that the living standards of young people in, for instance, many European countries is lower – and expected to stay lower for the foreseeable future – than those of their parents. It’s a case of a gerontocracy having loaded the odds time and time again in favour of themselves rather than the young.

Yet it’s not ‘all’ older people that are to blame, but the luckiest generation of all, the baby boomers. Commonly defined as people born between 1946 and 1964, this generation has been the beneficiary of a growing economy with plenty of safe and well-paying jobs, a soaring rise in the stock market, and an exponential growth in the value of their homes. Across society, the boomers have largely benefitted from power structures and economic forces acting on their behalf.

Their good fortune is an unusual twist of fate, as being a ‘lucky generation’ has historically entailed being a small cohort, whilst being part of a big one was generally bad for your economic success, given the competition for education, resources and jobs. But globalisation has changed the calculation entirely, notes Professor Bobby Duffy, Director of The Policy Institute at King’s College London, in his book Generations. In it, Duffy highlights how analysis across Europe, North America, and parts of Asia shows that in most developed countries, the young are much more likely than others to have experienced a relative drop in income when compared to their parents.

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Meanwhile, the annual Global Wealth Report from Credit Suisse describes how the wealth of baby boomers has been boosted by a range of factors including large windfalls due to property, pension, and share price increases. In comparison, the savings potential of younger generations, especially in richer countries, was impacted negatively by the Great Recession and subsequent higher levels of unemployment and lower wage growth. Additionally, stagnating incomes, high house prices, and government action in many countries have supported existing homeowners through interest rate cuts and pumping money into the system. The IMF are now forecasting recessionary impacts in at least a third of the world’s economies in 2023, as the three biggest ones, the US, EU and China, all slow down simultaneously.

The framing of societal challenges as being intergenerational isn’t new of course, indeed far from it. The ‘father of generational analysis’ Karl Manheim outlined in his famous treatise The Problem of Generations a belief that generations and the tension between them provide us with a framework for understanding society and social change. That approach links to the ‘Good Ancestor’ ethos put forward by philosopher Roman Krznaric who believes that we need to see ourselves as part of a societal chain of generations, with inherent obligations and considerations.

But a point frequently made regarding millennials and members of Gen Z is that a moral system of intergenerational fairness appears in its current state to be broken. One explanation as to how and why that has happened was given by Joseph Steinberg in his book The Theft of a Decade, where he explains how the social contract, in this generational context, came to an end with the crash of 2008. The reaction to it was that politicians and policymakers in many countries made deliberate decisions that favoured the interests of the older generation over their heirs. “For the first time in recent history,” Steinberg writes, “policy makers gave up on investing for the future and instead mortgaged that future to pay for the ugly economic sins of the present.”

Hence a desire from today’s youth that older citizens stop to consider their good fortune and do something meaningful and constructive to enable a fairer outcome for all. This, in a time when, on a state level, older citizens often benefit from generous government resources that could have been spent on youth services or family support.

So, for young people, the issue is real, live, and raw, when the once accepted notion that their hard work would automatically lead to the reasonable aspirational outcome of, for instance, homeownership, appears to be completely out of reach for the majority of their peer group. Their economic problems have been compounded by increasing rises in home rentals, ongoing student debt, and flatlining incomes, the impacts of which make saving a sizeable deposit a nearimpossible task. All this while global house prices, according to The Guardian, have been rising at their fastest since 2006, whilst The Wall Street Journal notes that “pension funds are snapping up single-family homes, and institutional landlords are impacting the single-family rental market.” Meanwhile “the most pernicious thing about late-stage capitalism is the way it tries to convince millennials & Gen Zers that not owning anything, not having any long-term security, is somehow liberating.”

An intriguing issue relating to intergenerational links has been noted by sociologists, including Jean Twenge, author of iGen and Generation Me. Twenge describes how much closer today’s parents are to their children in terms of cultural bonding and the attention given to parenting styles. The result has been the erosion of a decades-old generational schism to the point of invisibility. In today’s world, parents and their children increasingly listen to the same music and watch the same Netflix shows, Twenge explains. Yet this positive development has appeared at the same time as a deeply negative one, where the lack of economic (and other) opportunities directly links back to that very same generational group of parents, who may be excellent parents, but are perhaps less than excellent citizens. The key point here being that while the attitudinal gap between the generations may be narrow, the economic one is vast.

That issue was illuminated by the thinker David Willetts in his book The Pinch which relates to his notion that the Boomers (in the UK for instance) have effectively been ‘pinching’ from younger generations, mainly due to their luck in being born both at the ‘right’ time, but also to the fact that their large generational cohort effectively acted as a giant voting block and commercial powerhouse that could not be ignored. The result was obsessive attention given to them by politicians and businesses alike. Meanwhile, the idea of a ‘pinch’ also relates to the accepted notion of fair distribution that’s been such a key element in society in the half century following the Second World War. But what was once a reasonably ‘fair deal’ has become deeply unfair, with the idea of reciprocity and thus mutual benefit (an essential foundation for bonding) being undermined by the lived experience of the young.

Today’s young people were obviously once ‘future people’ in their own parents’ early days, so what about today’s unborn future generations? What do we owe them, and how much of a concern should we show them relating to the world in which they, not we, will live?

That idea, that ‘future people count’, is a core tenant of the ‘longtermism’ philosophy outlined by philosopher William MacAskill in his book What We Owe the Future. MacAskill suggests that we should aim not for some vague sense of utopia (which in etymological terms means ‘no place’) but instead have as our target the more realistic achievement of a ‘eutopia’ as in ‘good place’.

MacAskill proposes that we abandon our selfish and pathological obsession with short-termism, expand our horizons, and make deliberate and profound moral decisions that bring about lasting positive change. Doing so, in whichever way such efforts manifest practically, would signify that the concept of an even-handed approach to current and future generations matters. The ‘current future’ for millennials and Gen Z has been, is now, and will be, badly affected by the impact of those who came before them. To continue perpetuating inequalities that largely come down to luck would be unethical.

As a slight aside, politicians could do well to note that the classic right-left wing voting pattern linked to home ownership vs renting (often based on the assumption that voters become more conservative as they age) now seems to be stalling. Bluntly put, all those ‘politically ignored’ millennials appear to be sticking with their left-leaning politics, which may have more than a little to do with their lifestyle expectations. Meanwhile, their electoral power is increasing.

Noting the time that the ‘great pause’ of Covid-19 gave us to consider our current situation and future plans, the documentary filmmaker Adam Curtis said that “Covid was like lightning on a dark night – suddenly you could see what’s been there the whole time.” And one of the things illuminated was a deep misalignment of intergenerational fairness.

For young people who’ve seen many of their reasonable expectations evaporate, the time for their elders to take ‘fair action’ is now. Either that, or perhaps take a lead from The New York Times, whom one assumes were joking when they published an article stating that “the only way to save America’s youth is to lock up the baby boomers for robbing their future.”

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