The story is very familiar: millennials are struggling, and it is the fault of the Baby Boomers. As Yvonne Roberts put it in The Guardian,
“The post-war generation, now retiring in luxury, stands accused of a wilful failure to safeguard young people’s interests…’baby boomer’ is a toxic phrase, shorthand for greed and selfishness, for denying the benefits we took for granted to subsequent generations, notably beleaguered millennials, who reached adulthood in the early years of this century.”
Of course, it is true that the deal on offer to millennials is far worse than the deal on offer to Boomers when they were in their 20s. Millennials emerge from university with a heavy burden of debt, to a world in which good jobs are scarce and housing unaffordable. Almost 30% of employed graduates are in non-graduate roles, and almost 40% are not in permanent, full-time jobs. And an increasing number find themselves on zero-hours contracts.
But, the idea of Boomers as a group retiring in luxury is not supported by the evidence. In fact, the UK has a fast-growing problem of pensioner poverty.
When things go wrong, it is a natural human impulse to blame. And we are not always very scientific in the way that we apportion blame. So it is worth asking the question: how far should we blame the boomers?
Not very far, is the answer. Millennials are genuinely getting a rough deal, but it does not follow that Boomers, as a cohort, are to blame. On Page 220, 99% contains a simple thought-experiment which makes this clear.
“Imagine two neighbouring countries, Democracia and Plutocracia. At the beginning of our experiment, both countries are in the same situation: the average income is $32,000: for members of the bottom 80% of the population, income is $20,000; and for members of the top 20%, income is $80,000. Both rich and poor save 5% of their income and earn 5% per annum on their savings. After 35 years, the savings of the bottom 80% average just over $90,000 while those of the top 20% average just over $360,000.
In the second 35-year period, policies in the two countries diverge. Although, in both countries, average income rises by 50% to $48,000, the gains are distributed very differently: in Democracia, they are shared equally – the bottom 80% now earn $30,000 while the top 20% now earn $120,000; in Plutocracia, slightly more than 100% of the gains go to the top 20% who now earn $168,000 while the bottom 80% now earn only $18,000.
At the end of the second 35-year period in Democracia, the average savings of the bottom 80% amount to over $135,000 – 50% more than the previous generation. At the end of the second 35-year period in Plutocracia, however, the savings of the young amount to only $81,000 – they are poorer than the previous generation. Although to an outsider, it is clear that the problem was caused by rising inequality, the politicians of Plutocracia, in the interests of ‘intergenerational fairness’, decide that it is time to reduce the benefits paid to the older generation.
In other words, the answer is to level down within the bottom 80%, not to seek to level up towards the rewards received by the top 20%.”
As Torsten Bell of the Resolution Foundation put it, “When an entire cohort is not succeeding, everyone understandably feels a real need to fight tooth and nail to keep what they’ve got. The rich are much better-suited to win that war…That’s a real challenge for social mobility, and a disaster for politics.”