More Nonsense from the Resolution Foundation

Most people in Britain haven’t yet heard of the Resolution Foundation, a think-tank busying itself writing reports for the public media on what it calls the generational divide in Britain.

This really boils down to the fact that the proportion of so called “millennials” (those born between 1981 and 2000, i.e. aged 18-34) who own their own house at age 30, is about half the proportion born between 1946 and 1965 (the so-called “baby-boomers”) owning their own house at age 30.

To counter this intergenerational “injustice” as the report describes it, the authors, right-on PC liberals, propose that every 25-year-old should receive £10,000 citizen’s inheritance to spend as they see fit. The cost would be around £8 billion per year.

The report suggests 25-year-olds might spend it on a deposit for a house, setting up a business or on a training or education course. Many of our readers will doubtless have their own suggestions as to where the £10,000 might go – on two to three year around-the-world holidays, drugs, wedding receptions, cars and motorbikes for example – mostly things to do with having a good time in the present, not on an investment for the future.

Rachel Sylvester, Times columnist (May 8th) could well have been one of the report’s authors judging by her past comments on the mythical generational divide. In ten years’ time half of the “millennials” will be mid-lifers, paying taxes to pay for the £10,000 handouts. Ten years further on some will start receiving heavily taxed bequests from the “baby boomers”. According to Sylvester the report suggests “taxing the pension income of wealthy older people”. Maybe it’s news to her that everyone’s pension income is taxed, along with any earned income and investment income. Again it may be news to the report writers that a huge number of pensioners – probably 8 to 10 million (half the number of millennials) have seen their incomes in the last 10 years following the financial crisis decrease not by 15%[1], but by 50%, or more, as interest rates on deposits have fallen from typically 5% in 2007 to 0.5% in 2017, and annuity rates at age 65 have been slashed by over 50%.

Comparisons of the generations always leave out the huge reduction of consumer product prices in the last 30 years

Being for the most part social liberals who have spent their lives with words in newspapers and reports, the report’s authors and Miss Sylvester, make no allowance for the huge increase in availability and performance of every type of manufactured good – cars, textiles, air travel, furniture, clothes, food and above all IT (information technology). All of these items, which social liberals simply take for granted, have been made and delivered to millennials (especially) at decreasing real prices – in the case of IT outstandingly a reduction of 10,000 times per Megabyte stored or processed per second. Many inland telephone services are free. Or take pharmaceuticals and diagnostics like MRI scanners – perhaps ten times the range of types provided free or below costs to all generations.

Instead of these massive considerations, the Resolution report focusses on the fact that only half as many millennials own their own home by age 30, as did baby boomers at a similar age (1976-95). There are at least a dozen reasons for this difference, the three chief ones being:

  • Fifty percent of the age group is at university today – not earning up to the age of 22-23, when in the early 1960s, only 4% went to university, of whom almost 100% left after 3 years to start earning, and the other 96% started earning at 16 or 18.
  • Young people move jobs and locations – often abroad – much more than they did in the 1960s – helped by real travel costs (particularly air travel) having dropped by a factor of 5-10 since then.
  • The nature of jobs has also massively changed. Young people switch jobs much more than their parents did, even 30 years ago, let along 50, so that renting is much more convenient than owning – a pattern clearly seen in the USA, Canada and Australia.

Voluntary Donations from old to young

Finally, this writer would like to say that every single person over 65 he knows is making generous provision through current gifts to their own children and grand-children, and in effect, to other people’s children through bequests and donations to educational institutions and other charities. Donations to universities, for instance, are in fact at an all time high, as can be seen from published accounts.

Talk of “intergenerational divides” is mischievous and distracts from the three real issues:

  1. Continued net immigration at 250-300,000 per year – a rate comparable with the natural increase (270,000 per year) is putting intolerable pressure on land for houses and space for roads, hospitals and schools as immigrants have children and they themselves get sick and grow old.
  2. Dealing with the inevitable increase in the 65+ population will be much harder if the millennials don’t marry and continue to break up relationships after 2-3 years, so that a huge (>50%) of children don’t grow up in stable families, forming attachments which last into their and their parents’ old age.
  3. Young people, including millennials, are exposing themselves in unprecedented numbers to serious long-term diseases like diabetes 2 through poor life style choices, e.g. 25% under 18s are overweight.

Calling all social liberals

Instead of making house ownership at age 30 a totem of fairness (most people in Germany, Holland, France, never own their own flats or houses), the above three real problems in the UK are to do with individual people’s choices (2) and (3) or collectively (1). The consequences of any policy for society depend on numbers. What may be possible or tolerable for 1,000 people, becomes impossible or intolerable for a million.

There are in fact no social principles which can be practically implemented which are independent of the numbers involved.


[1] The figure quoted in the report is the difference in spending by the millennials today compared with the “boomers” approaching retirement, which is in fact a meaningless comparison.

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