Angus Hanton asks if the baby boomers owe their success more to fortune than design – and if their prosperity has created an intergenerational deficit.
Many people say the baby boomers are the “lucky generation”: lucky because they have had no world wars, enjoyed longer life expectancies, and experienced huge technological developments. Put together, these advances have given them enormous material advantages over previous generations, but at what cost?
Problems arise if these advantages were not simply down to luck, but are actually the result of baby boomers borrowing from future generations.
Living standards have risen partly as a result of increased productivity. However, levels of debt have been allowed to rise enormously, while the natural environment has been degraded. Viewed in this light, the “luck” of the baby boomers may be bad luck for the next generation.
The next generation was always going to have a large debt to clear up, but the lucky generation’s longer life expectancies have made their challenges even greater.
Whilst longer life expectancies are always welcomed by individuals, they represent a significant burden for society. Supporting the older, “lucky” generation will impose spiralling costs in three separate areas: paying for their pensions, expenditure on health services and long-term social care. The average length of retirement in Europe has increased by over a decade during the last 30 years, threatening to tear the pensions system apart at the seams.
Did they make their own luck?
It’s easy to argue the baby boomers in the UK were not simply “lucky” after all. These are just some of the ways in which they contributed to their own good fortune:
- they have constrained building permissions for housing, which has driven up the value of their main asset – housing;
- they have set up their pensions, with final salary schemes, in such a way that all the costs of this extra life expectancy fall upon younger workers and taxpayers;
- they have demanded that government borrowing be driven up to record levels to finance social services and support for the financial sector;
- they have sold off government assets – particularly North Sea oil, nationalised industries and social housing – moves which created a one-off profit but won’t contribute to the success of future generations.-
But the lucky generation are still very much dependent on intergenerational goodwill. If this goodwill runs out, the baby boomers’ generation may turn out to be less lucky than they thought.