Born in 1962, I find myself reflecting on the generational debate that has been simmering for years. The question of whether my generation, the late baby boomers, is particularly lucky or guilty is a complex one, and it's a topic that has been gaining traction, especially with the rise of generational identity politics. As I delve into this, I can't help but feel a sense of intrigue and a desire to explore the evidence and my personal perspective on this matter.
The Student Loan Conundrum
One of the most pressing issues is the English student loan system. The system, designed to subsidize higher education, has been criticized for its unfairness, especially for younger graduates. The extra 9% 'tax' on earnings is a stark contrast to my experience, where the government provided an annual maintenance grant and covered tuition fees. Natalie Whittaker, a recent graduate, highlights the stark difference in her debt burden, now standing at £75,500, a far cry from the 'price of a coffee' she was told to expect.
However, I argue that the system is designed to be fair between generations, not across them. The increase in participation in higher education, from 3.4% in 1950 to 49% by 2022/23, means that the 'victims' of injustice are not the students taking out loans but those who never had the opportunity to study at all. The system aims to cover the losses on lower-income graduates from the profits made from higher-income graduates, a personalized tax that many will never pay back.
Lucky London Buyers
Turning to housing, I must admit to a sense of embarrassment. Buying a flat in London in 1988 was a fortunate decision, despite the initial loss when I sold it in 1995. The subsequent rise in property values over two decades showcases the capital gains enjoyed by those who bought before the mid-90s. However, the London housing market has experienced a significant disparity, with a 29% growth in the adult population and only a 23% increase in homes, making it a challenging place to buy or rent.
Gold-Plated Pensions
Pensions are another area where my generation has been fortunate. The baby boomers benefited from generous defined benefit pension schemes, a luxury that many millennials and Gen Z employees now lack. Employers contributed a substantial 15-20% of salary to these schemes, a stark contrast to the 3% contribution to defined contribution pensions. While my generation may have worked hard, the real advantage lies in the timing of our careers and the economic growth trajectory of the 1980s and 90s.
The Economic Growth Conundrum
The grand disappointment, as I see it, is the decline in per capita economic growth post-2007/08. The country's lack of growth has led to a shared sense of material deprivation. The normal growth rate of 2% per year in the 80s and 90s meant that every 15 years, average incomes grew by a third. However, with a 1% growth rate, the increase is only 16%, not enough to ensure all age groups are richer than their predecessors.
In conclusion, while I acknowledge the luckiness of some within the late baby boom generation, I argue that it is the timing of our opportunities and the economic growth trajectory that has blessed us. The real challenge lies in restarting the growth engine and addressing the intergenerational equity debate.
