In this thought-provoking exploration, we delve into the concept of generational luck and the unique advantages that some individuals may have enjoyed due to their birth year. The question at hand: Am I, born in 1962, part of the luckiest generation alive? This article aims to dissect this intriguing claim and uncover the layers of privilege and disadvantage that exist within generations.
The Student Loan Dilemma
One of the most glaring examples of perceived generational unfairness is the English student loan system. Younger graduates, like Natalie Whittaker, are burdened with substantial debts, paying a 9% "tax" on their earnings. This stands in stark contrast to the author's experience, where the government provided maintenance grants and covered tuition fees. The argument here is that while today's students have more opportunities to attend university, the cost of that opportunity is significantly higher.
However, the issue is more complex than it seems. The state may be making a profit from graduates, but the real injustice lies in the lack of choice for those who were never offered the opportunity to borrow and study. The student loan system, designed to increase graduate numbers, inadvertently creates a sense of unfairness between generations, favoring those who could afford the initial investment.
Housing: A Tale of Two Markets
Housing is another area where luck plays a significant role. The author's experience of buying a flat in London in 1988 showcases the unearned advantage some baby boomers enjoyed. House prices rose relative to earnings, and those who bought before the mid-90s reaped substantial capital gains. Lauren Finch, a 29-year-old earning £24,000, struggles to afford a home, highlighting the disparity between generations.
Interest rates have complicated matters, with lower rates benefiting younger buyers, but the limited housing supply drives up prices. The timing of purchase, especially in London, has been crucial, with the city's resurgence post-2000 leading to significant property value increases. Thus, the housing market has not only favored certain generations but also created inequality within them.
Gold-Plated Pensions: A Generational Windfall
Pensions are where the baby boom generation has truly looked after itself. The state pension now pays out significantly more as a proportion of median earnings compared to previous generations. Additionally, the author's generation benefited from defined benefit pension schemes, which guaranteed a fixed proportion of salary as a pension. These schemes, now almost extinct in the private sector, were a substantial cost for employers and a significant advantage for those who had access to them.
The Luck of the Late Baby Boom
The author acknowledges their own luck, having attended university without paying, bought a flat in London, and worked for an employer offering a generous defined benefit pension. However, they caution against generalizing this luck to the entire late baby boom cohort. The decline in per capita economic growth post-2007/08 has impacted all generations, creating a shared sense of material deprivation.
A Call for Growth
To address intergenerational equity, the focus should shift to reigniting economic growth. The country's lack of growth has resulted in stagnant wages, higher taxes, and increased costs of living. A return to the 2% per capita growth rate of the 1980s and 90s would ensure that each cohort is richer than the one before. Thus, the solution lies in stimulating economic growth, benefiting all generations and narrowing the perceived luck gap.
In conclusion, while the late baby boom generation may have had its lucky moments, the overall economic landscape has shifted, impacting all age groups. The key to addressing intergenerational fairness lies in fostering an environment of sustained economic growth, ensuring that the country's wealth is shared equitably across all cohorts.
