The impact of COVID measures on intergenerational fairness.

[DB]

House prices are also what they are because many people can afford to pay them. In the 1990s, when the rules were changed to allow mortgage lenders to take more than one salary into consideration, some people were able to buy much bigger/better houses, but soon house prices rose to take advantage of the money that was now available. The by product being that every couple now had to work!

Not sure that this was a byproduct - more an intended outcome!

 

[Yew]

Demand only outstrips supply because the state makes it so, so that house prices only ever rise, to the benefit of some demographics.

Those Tory MP's who bought tonnes of ex-council houses, say?

 

[DorkingMain]

Demand only outstrips supply because the state makes it so, so that house prices only ever rise, to the benefit of some demographics.

Indeed. The house price issue is very easily solved - it would not take much to suddenly take away all the value of trading in property and prices would plummet back down to a level where they matched demand. There's currently a lot of price inflation because private rental (including a mixture of students, desperate young people and housing benefit claimants) have made the market for being a landlord highly lucrative.

Of course you can guess who really benefits from investments in property and the like - quite a lot of them have names ending in "MP". There's no will amongst the political class to break open that situation.

Those Tory MP's who bought tonnes of ex-council houses, say?

Nail head successfully hit there

 

[Yew]

House prices are also what they are because many people can afford to pay them. In the 1990s, when the rules were changed to allow mortgage lenders to take more than one salary into consideration, some people were able to buy much bigger/better houses, but soon house prices rose to take advantage of the money that was now available. The by product being that every couple now had to work!

Don't forget that the number of local-authority built houses has never had the slack taken up by the private sector, as was forecast when Thatcher stopped LA's from building them.

 

[MikeWM]

But how do you reduce the cost of houses without damaging those of the younger generation who have already taken out mortgages and would immediately suffer from negative equity?

Indeed - once that genie is out of the bottle, it is very hard to get back in. I suppose the only clear solution is for house prices to flatline for some years and let inflation do the work, though that doesn't help the young much today and I've no idea how you try to do it in a free market.

Here's an article from 1997 where Gordon Brown vows to not let house prices get out of control. Worth looking at for a reminder how the internet looked in 1997, if nothing else. Have to say in many respects I think it was better...

http://www.bbc.co.uk/news/special/politics97/budget97/live/housing.shtml

 

[DB]

Indeed. The house price issue is very easily solved - it would not take much to suddenly take away all the value of trading in property and prices would plummet back down to a level where they matched demand. There's currently a lot of price inflation because private rental (including a mixture of students, desperate young people and housing benefit claimants) have made the market for being a landlord highly lucrative.

Of course you can guess who really benefits from investments in property and the like - quite a lot of them have names ending in "MP". There's no will amongst the political class to break open that situation.


Nail head successfully hit there

I have seen some stats on BTL ownership among MPs. Tories were highest as I recall, but Labour too were far higher than the national average among the whole population.

 

[bramling]

Indeed - once that genie is out of the bottle, it is very hard to get back in. I suppose the only clear solution is for house prices to flatline for some years and let inflation do the work, though that doesn't help the young much today and I've no idea how you try to do it in a free market.

Here's an article from 1997 where Gordon Brown vows to not let house prices get out of control. Worth looking at for a reminder how the internet looked in 1997, if nothing else. Have to say in many respects I think it was better...

http://www.bbc.co.uk/news/special/politics97/budget97/live/housing.shtml

Brown certainly failed on that - house prices did go well and truly out of control, along with the subsequent persistence of low interest rates, spending on credit, and general accumulation of debt.

Being cynical one could say this allowed a feel-good factor to develop which in turn allowed Labour to win two subsequent elections based on the votes of “Basildon Man”. Where this may have gone wrong in the long-term is that this was never fully sustainable without introducing new issues, like younger people unable to get on the housing ladder.

Another side-effect of all this has been the continued drift towards a service-sector based economy, which has screwed us up royally when Covid came along, or at least it has when coupled with the government’s chosen Covid response (I had to delete the word strategy there!).

Unfortunately Covid has simply amplified inter-generational tensions which were already simmering away. Looking at it from somewhere in the middle, I can well see why younger people are peeved.

 

[yorkie]

I've said it before and I'll say it again. I think the whole "war of the generations" thing is massively overdone. There are plenty of older people who have no intention of submitting to permanent lockdown or imposing it on every one else. This has more to do with a weak government being poorly advised and egged on by an hysterical media.

I agree. Although the benefits of lockdown are ostensibly for the benefit of older people (the risks to younger people are miniscule in comparison; if we are not accepting those level of risks then there are many other things we'd need to ban!) these draconian measures have not been universally supported by older people.

Indeed, many are just like the pragmatic Margaret from Barnsley

But a large number of boomers have died a number of years before their time. I cannot believe the hatred some show here for the older generation. Do they not have parents and grand parents of their own?

The average age of a death with Covid is around 82 and is older than the average age of all deaths.

Maybe I missed a post or two but I've not seen any "hatred" shown for the older generation?

My parents are not calling for lockdowns and are not asking for young people to give up their livelihoods and freedoms! As for my grandparents, my granddads both died before I was born. My grandmothers were kept alive for a long time purely for box ticking purposes; they had absolutely no dignity, no awareness, no quality of life whatsoever. I do not think the way our society treated them was humane, fair or reasonable.

Ultimately we have a big societal problem where we appear to be valuing quantity of life over quality of life; older people are not necessarily the ones pushing for this change of emphasis.

I don't think the "age-baiting" element of this lockdown discussion is particularly helpful, and I say this as a "millennial".

Yes, I agree.

One wonders if the Boomers may have shot themselves in the foot with all this, as money that might have more wisely gone to the NHS has now been busted on furlough. Don’t expect me (30s) to happily make up the shortfall in public spending that is now inevitable over the next few years. Perhaps a Boomer Tax is now something to consider?!

There is no getting away from the fact the younger generations will be paying for it; the only other alternative is hyperinflation.

I'm 'Generation X' (apparently - I think these divisions are a bit silly really), and I agree entirely. We shouldn't be going along with 'divide and rule' in any direction, we're doing the job of the bad guys for them if we misdirect our frustration and anger.
,,

I agree, and yes the divisions and the names for them are very silly!

 

[yorksrob]

I agree. Although the benefits of lockdown are ostensibly for the benefit of older people (the risks to younger people are miniscule in comparison; if we are not accepting those level of risks then there are many other things we'd need to ban!) these draconian measures have not been universally supported by older people.

Indeed, many are just like the pragmatic Margaret from Barnsley

There are pragmatic Margaret's all over the country !

 

[bramling]

I agree. Although the benefits of lockdown are ostensibly for the benefit of older people (the risks to younger people are miniscule in comparison; if we are not accepting those level of risks then there are many other things we'd need to ban!) these draconian measures have not been universally supported by older people.

Indeed, many are just like the pragmatic Margaret from Barnsley

It’s a bit like when there’s a train delay or something, you can bet some loud-mouth will start on the “this is terrible, I demand you sort this now, there’s a pregnant woman on here...” when in reality the pregnant woman - if she exists at all - is actually totally content and understanding of the situation, and is merely being used as a pawn.

There’s quite a lot of younger people using all this as an excuse to continue their current “neverending bank holiday” existence. This perhaps applies to some in the early stages of old age (who would of course be very much of the boomer generation). Whilst meanwhile the much older ones wish to make the most of the time they have left, like we saw with Tom Moore’s little holiday.

The inter-generational tensions I’d say are more to do with other issues and government policy choices going back over time, not specifically to do with Covid, though aspects of Covid have certainly amplified elements of them, and the fall-out will continue to do so for many years to come once the immediate Covid crisis is all over. Youngsters who have had their education interrupted, for example.

 

[HSTEd]

Those Tory MP's who bought tonnes of ex-council houses, say?

I doubt Tory MPs can meaningfully effect the outcome of the election, nor does it explain why the Labour Party spent Blair's era continuing to assist in driving prices as high as possible.

 

[DorkingMain]

I doubt Tory MPs can meaningfully effect the outcome of the election, nor does it explain why the Labour Party spent Blair's era continuing to assist in driving prices as high as possible.

Perhaps because the colour of the pig doesn't necessarily make a difference how much they stick their snout in the trough.

 

[bramling]

I doubt Tory MPs can meaningfully effect the outcome of the election, nor does it explain why the Labour Party spent Blair's era continuing to assist in driving prices as high as possible.

I don’t think the house price explosion can be blamed on the Conservatives. It wasn’t really there in the mid-1990s, and seemed to take root firmly during the Blair years. Nothing effective has been done to deal with it since, though.

 

[DB]

I don’t think the house price explosion can be blamed on the Conservatives. It wasn’t really there in the mid-1990s, and seemed to take root firmly during the Blair years. Nothing effective has been done to deal with it since, though.

Subsequent governments have made determined efforts to keep the price inflation going - e.g. help to buy.

 

[HSTEd]

I don’t think the house price explosion can be blamed on the Conservatives. It wasn’t really there in the mid-1990s, and seemed to take root firmly during the Blair years. Nothing effective has been done to deal with it since, though.

It hadn't truly set in the 1990s, but the policies that ultimately enabled it to exist had been put in place.

Council Housing construction output was crushed, but no relaxation of planning restrictions to allow greater private building took place.
This fundamentally reduced the output of new housing and led inevitably to a price spiral.

 

[ExRes]

One wonders if the Boomers may have shot themselves in the foot with all this, as money that might have more wisely gone to the NHS has now been busted on furlough. Don’t expect me (30s) to happily make up the shortfall in public spending that is now inevitable over the next few years. Perhaps a Boomer Tax is now something to consider?!

One thing I have to repeat yet again, the 'boomers' haven't shot themselves or anyone else in the foot over Covid, the 'boomers' don't make decisions on how the country is run, it's the Government, and do you really think that this or any other Government would have 'wisely' spent a single extra penny on the NHS than they could got away with? ask my daughter what her hourly pay is for keeping people alive

Why should you not pay for this, or any, unusual occurrence? who do you think paid for the first World War? the taxpayers of that period, who do you think paid for the Second World War? the taxpayers of that period and so it goes on, who paid for the foundation of the NHS which was very much at its beginnings for people who hadn't paid a penny towards it? I've never heard of any age group in this country complaining before now, I've paid tax since I was 16 years old and I'm still paying it now out of the pension I contributed toward, give me one good reason why I should pay your 'boomer' tax

Perhaps the biggest lie of all is the 'boomers had it easy' myth, double figure inflation, double figure unemployment, mortgage rates in excess of 16%, we didn't run our kids to school in the new BMW, we didn't have overseas holidays, we went to work and paid the mortgage

I only see the lack of 'intergenerational fairness' in this country coming from one direction, and that's from those that seem to think they have a divine right to have whatever they want, in most cases from those that have spent the majority of their lives in 'education', if that's what you can call modern schooling, and have yet to pay a penny towards themselves or anyone else

If we're going to get out of this mess we need all generations working together, something I see little chance of happening at this time, we also need a hell of a drop in self styled Coronavirus experts spouting off day after day with their scaremongering while they insult the 'real' experts for doing the same thing

 

[johnnychips]

I was making a ‘why do similar things cost different prices for my students today, and was rather shocked that a 3-bed house in Conisbrough is £119000 whereas a very similar one in Slough cost £550000!

An unintended consequence of the tightening up on Buy-to-Let landlords is, erm, a reduction in buy to let properties. There is just one three-bed house to let in Rossington, an ex pit-village for £650 a month.

 

[DB]

An unintended consequence of the tightening up on Buy-to-Let landlords is, erm, a reduction in buy to let properties. There is just one three-bed house to let in Rossington, an ex pit-village for £650 a month.

Think that's more to do with hardly anyone moving at the moment, hence very little is being advertised for sale or rent.

 

[takno]

One thing I have to repeat yet again, the 'boomers' haven't shot themselves or anyone else in the foot over Covid, the 'boomers' don't make decisions on how the country is run, it's the Government, and do you really think that this or any other Government would have 'wisely' spent a single extra penny on the NHS than they could got away with? ask my daughter what her hourly pay is for keeping people alive

Why should you not pay for this, or any, unusual occurrence? who do you think paid for the first World War? the taxpayers of that period, who do you think paid for the Second World War? the taxpayers of that period and so it goes on, who paid for the foundation of the NHS which was very much at its beginnings for people who hadn't paid a penny towards it? I've never heard of any age group in this country complaining before now, I've paid tax since I was 16 years old and I'm still paying it now out of the pension I contributed toward, give me one good reason why I should pay your 'boomer' tax

Perhaps the biggest lie of all is the 'boomers had it easy' myth, double figure inflation, double figure unemployment, mortgage rates in excess of 16%, we didn't run our kids to school in the new BMW, we didn't have overseas holidays, we went to work and paid the mortgage

I only see the lack of 'intergenerational fairness' in this country coming from one direction, and that's from those that seem to think they have a divine right to have whatever they want, in most cases from those that have spent the majority of their lives in 'education', if that's what you can call modern schooling, and have yet to pay a penny towards themselves or anyone else

If we're going to get out of this mess we need all generations working together, something I see little chance of happening at this time, we also need a hell of a drop in self styled Coronavirus experts spouting off day after day with their scaremongering while they insult the 'real' experts for doing the same thing

So without missing a beat you absolutely lay into the younger generation and belittle the education they were forced to pay so much for, whilst in the very same sentence saying that you can't see that very thing happening?

 

[ExRes]

So without missing a beat you absolutely lay into the younger generation and belittle the education they were forced to pay so much for, whilst in the very same sentence saying that you can't see that very thing happening?

I absolutely do belittle the standard of modern education, I'm astonished by the lack of basics that so many young people clearly demonstrate, if they've been forced to pay for such a substandard level of education then they should be demanding their money back, while saying that though I wonder why I've regularly seen groups of schoolchildren wandering the streets at all times of the day when they should actually be learning something

Why should I have any hope that the generations will work together? the myth has been firmly fed that previous generations have had it easy without putting in any effort at all, everything on a plate, which is total garbage, but that's what they've brainwashed the younger generations into believing so they see that they should have everything they want without any effort which, sadly, their parents seem to be going along with, people now may see it as old fashioned and outdated but mutual respect is vital, where has it gone though?

 

[duncanp]

So without missing a beat you absolutely lay into the younger generation and belittle the education they were forced to pay so much for, whilst in the very same sentence saying that you can't see that very thing happening?

I think it is quite right to point out that "boomers" haven't had it as easy as some people make out, but it is wrong to lay into the younger generation and claim that they "..seem to think they have a divine right to have whatever they want.."

Every generation has a different set of challenges as they move through different stages of life.

For example my father (born 1933) had his education severely disrupted by the Second World War and had to do National Service when he was 18. But he was perfectly placed to take advantage of the economic boom of the late 1950s/early 1960s.

Governments need to address the challenges that young people have today getting on the housing ladder. I hope that the economic after effects of COVID-19 cause a fall in house prices and rents which will make life easier for the younger generation.

I also know that some parents, who are todays "boomers", help their children to get a deposit on a house by taking out a equity release on their existing house, or by downsizing, or moving to a cheaper area, and giving their children the cash that they would have otherwise had to wait until their parents die before they inherited.

 

[HSTEd]

Well I would like to know where the enormous pile of capital that was bequeathed to the baby boomer generation by their parents has gone.

A lot of capital stock was liquidated in the 80s and early 90s and I want to know where the money went.
The entire electricity system, the entire gas system, the water system, large part of the railway system, the ferries, the royal ordnance system.

Hell even if you assign the likes of British Steel, Shipbuilding and British Airways zero book value - which is patently absurd, there is still huge amount of capital just missing.

Selling them is one thing, but I want to know where the money went.
It appears it went on unearned luxury through artificially high state spending and artificially low taxation in the late 80s and early 90s.

Someone ate the seedcorn.

 

[MikeWM]

Don't forget North Sea Oil! Norway's share of that windfall was put into a $1 trillion sovereign wealth fund. Anyone know where we stashed our share?

 

[RT4038]

The only thing I'd offer against that is that parents have been absolutely against the restrictions from day one, have been largely stuck indoors without work as a distraction, and continue to be horrified by what's being done to young people in their name.

This is just not true. Some parents have been absolutely against the restrictions. Many have not, from those who are not sure right down to those who are frightened out of their wits that their children are going to bring the virus home and infect themselves and all around them.

I was just painting what I see as the narrative that is spreading, in response to the bewilderment that some people are feeling victimised and confused. As a society we need to do better for and think better of our young people, and we need certain elements of the boomer generation (and my generation) to stop protecting their "hard" won house prices quite so determinedly

We also need people at the luckier end of the boomer spectrum in particular to accept that their house-price gains weren't "hard won" -

Perhaps you can tell us why baby boomers have this myth of 'hard won' house prices that need to be protected? Most baby boomers will have paid (or nearly paid) for their houses already. Reducing the value of houses (however you do it) will mainly affect younger people - the value of their inheritances from the baby boomers will reduce accordingly; and those who have bought houses already, still with large mortgages, will move into negative equity and be trapped in them for years to come.
I do not know what the answer is in how to make house prices more affordable, without causing anguish amongst some part of the younger generation. It seems that various policies in the past, introduced with good intentions, have had unintended consequences.

So without missing a beat you absolutely lay into the younger generation and belittle the education they were forced to pay so much for, whilst in the very same sentence saying that you can't see that very thing happening?

The younger generation need to be comparing where they are, and what they have already, with what the baby boomers had at their age. They have had some of their dividend already.

Don't forget North Sea Oil! Norway's share of that windfall was put into a $1 trillion sovereign wealth fund. Anyone know where we stashed our share?

The cost of economic structural adjustment in the 1980s?

 

[HSTEd]

The younger generation need to be comparing where they are, and what they have already, with what the baby boomers had at their age. They have had some of their dividend already.

Why?
So all benefit for improved technology should accumulate solely to the boomers?

The important question is how the younger generate fare vs the Baby Boomers, compared to how the Baby Boomers fared relative the previous generations when they were the younger generations age.

 

[RT4038]

Why?
So all benefit for improved technology should accumulate solely to the boomers?

The important question is how the younger generate fare vs the Baby Boomers, compared to how the Baby Boomers fared relative the previous generations when they were the younger generations age.

Would that be the technology developed by the boomers? In which case, presumably yes!

 

[david1212]

......

I also know that some parents, who are todays "boomers", help their children to get a deposit on a house by taking out a equity release on their existing house, or by downsizing, or moving to a cheaper area, and giving their children the cash that they would have otherwise had to wait until their parents die before they inherited.

A former manager at work while not AFAIK actually releasing equity on his house certainly supported his two sons by giving them up front some of the capital that would otherwise have been their inheritance as significant part of a deposit and being a guarantor to their mortgages as strictly over what they could replay based on the joint income of the son and wife / partner. He and his wife just could not stand back and see their money going on rent with no prospect of also building up a deposit.

Well I would like to know where the enormous pile of capital that was bequeathed to the baby boomer generation by their parents has gone.

A lot of capital stock was liquidated in the 80s and early 90s and I want to know where the money went.
The entire electricity system, the entire gas system, the water system, large part of the railway system, the ferries, the royal ordnance system.

Hell even if you assign the likes of British Steel, Shipbuilding and British Airways zero book value - which is patently absurd, there is still huge amount of capital just missing.

Selling them is one thing, but I want to know where the money went.
It appears it went on unearned luxury through artificially high state spending and artificially low taxation in the late 80s and early 90s.

Someone ate the seedcorn.

My father did buy shares in some of the privatisations but not a huge amount, he didn't have the capital. Most were sold at some point, the only ones left at his death were BT. OK my fault for not taking an interest but they are now worth a fraction of the value when I inherited them.

Any gain from the others is presumably part of the cash I inherited but certainly a world away from the enormous pile of capital that was bequeathed to the baby boomer generation by their parents. As I posted above the majority of the capital I have is my savings by choosing to save rather than spend on luxuries.

 

[HSTEd]

Would that be the technology developed by the boomers? In which case, presumably yes!

The boomers benefited from technology developed by their parents.

Why does this sharing stop immediately when it no longer benefits said boomers?

 

[yorksrob]

Don't forget North Sea Oil! Norway's share of that windfall was put into a $1 trillion sovereign wealth fund. Anyone know where we stashed our share?

As was suggested by the late Tony Benn for this country. The Thatcherites decided against.

 

[duncanp]

The boomers benefited from technology developed by their parents.

Why does this sharing stop immediately when it no longer benefits said boomers?

I think it is a bit of a generalisation to say that today's "boomers" are not sharing the wealth that they inherited from their parents, and that young people today are not benefiting from the advances in technology that are present today.

I know of several of these so called "boomers" who are using their wealth to help fund their children through university, or using the equity they have in their homes to help their children get on to the housing ladder.

And as for technology, what about the World Wide Web, invented by Sir Tim Berners - Lee who is a "boomer" by virtue of having been born in 1955? He could have made billions for himself by charging royalties for use of his patent, but instead he gave it as a free gift to the rest of the world. The internet has given today's young people opportunities for education and work that simply could not have been dreamed of 30 years ago.

I don't deny that today's young people face many challenges. But they are different to the challenges faced by previous generations. There is no generation in recent history that has had any easy ride.