Posted from a train between Aberdeen and Edinburgh, Scotland…ain’t modern life grand?!
There has been a lot of chatter about “intergenerational theft” in the past several years since we entered the period known as the Age of Obama. Brought about by massive spending, borrowing and budget deficits to support the overweening entitlement state, this is a term that was tied directly to and brought to prominence and common usage by the Tea Party protests. While this connotation is correct in this context, there is a broader context that we haven’t discussed.
Conservatives and classical liberals are opponents of big government and use many effective arguments to support their position – lower taxes spur growth, government needs to get out of areas that it was never intended to be in, big government is unresponsive government, etc. but there is another argument to be made about how intergenerational theft isn’t a recent bug in the operating system of government, it is a feature of it – intergenerational theft is the very mechanism by which government perpetuates itself and grows.
There is a new term that seems to be gaining credence in the lexicon of the institutional Left. Joining “social justice”, “economic equality” and the “1%” is “intergenerational fairness”.
Dennis Sewell, writing in the UK Spectator states:
‘Intergenerational fairness’ is a seductive piece of branding. Who would declare themselves against fairness? In theory, it should have a particular appeal for conservatives. The idea that each generation is both beneficiary and trustee, with a moral obligation to the future, is as old as the conservative disposition. Edmund Burke pictured society as ‘a partnership not only between those who are living, but between those who are living, those who are dead, and those who are to be born’. Successive generations of Conservative politicians have taken up this theme, culminating in David Willetts’s 2010 book The Pinch, a provocative and engaging account of how the selfish and irresponsible baby-boomers ate all the pies.
Rick Perry, Texas governor and current Republican candidate, was pilloried for using the term “Ponzi scheme” in reference to Social Security – he was right but didn’t go far enough. The entire “progressive” ethos of government is based on being a Ponzi scheme. Think about it – how do “progressive” programs work? Every single one of them starts life, as Social Security did, as a the solution to a problem, most even reasonable – but eventually the cost of the programs grow faster and the liabilities greater until the original scheme of funding is ludicrously short, thereby spending faster than the intake can keep up with them. Then the borrowing starts. This means that the recipients of the promised returns (benefits) get those returns directly from other investors (taxpayers) and not from the fruits of their investments (taxes). Ergo, a program that Charles Ponzi would be quite proud of.
Why is it that way?
It is this way because the “progressives” in both parties (yes, there are “progressive” Republicans) have to continue to make promises to the current generations to maintain power. This isn’t just welfare and 99 weeks of unemployment, it is a market basket of treats that are offered today on the government MasterCard with no payments due until next year – except each successive generation for the past 60 years has been told the same thing until now our economy is so burdened with government entitlements that it isn’t resilient enough to withstand economic shocks.
What we have experienced with the mortgage meltdown is bad but given the size of the economy at the time, the dotcom bust at the end of the Clinton Administration was almost as bad – combine that with the subsequent economic shutdown in the post 9/11 months and it was as bad…but the economy was free enough that it could recover.
One does not have to look too far to see where all this leads. Greece and Italy are about to bring the EU to the brink of dissolution, Greece has perhaps the most generous generational wealth transfer of any EU country. Many in the Greek workforce can retire at 50, a citizen starting work at 18 results in 32 years of work life. According to the World Bank, the average Greek life expectancy is 80.2 years, retiring at 50 yields 30 years on a pension in years where health costs are higher and inflation plays a significant role in cost escalation (we have to realize that the miracle of compounding works on the cost side as well as on the income side).
To wrap this up, Sewell cuts directly to the point:
Like its conceptual sibling ‘social justice’, ‘intergenerational fairness’ is best kept as a principle to be borne in mind when looking at the general thrust of public policy, rather than as a tool to design specific measures. It should not be allowed to become an ideological obsession, propagating social audits, impact assessments and the mean-spirited enumeration of each and every inequality of outcome between age groups. That way is sure to lead to the proliferation of injustices, not their remedy. Judging people by their group averages, instead of as individuals, always does. By all means, let this age-old precept spur us to do away with deficits. But we should not seek to divide our society along generational fault lines or, by relentlessly carping about the few consolatory advantages they enjoy, begin to demonise the elderly.
Old people tend to worry enough already about whether they are burden to their families or the wider society without organisations like the IF nudging them closer to euthanasia’s door. The invaluable contribution senior citizens make to economic, social and family life should be recognised with cheers and toasts. If some of them have managed over the years to establish a home and a cushion of cash to keep the fear of penury at bay, then good luck to them. We should be wishing them a long, happy and — yes — prosperous retirement.
The young may in future have to fund more of their university education (a privilege denied to all but a tiny minority of their elders) and pick up the tabs for PFI, unfunded pensions and Gordon Brown’s profligacy. But they should know by now precisely whom to blame for that — and it isn’t Grandma.
As in the UK, the spoiled brats of the #Occupy[yournamehere] protests in the good ole US of A need to be looking at President Goldman Sachs and his Band of Merry Men in DC and leave Granny and her mutual funds out of this.