Niall Ferguson, the impossibly handsome economics history professor linked to Harvard and Oxford Universities and author of Empire, Colossus, Civilisation etc, is in the news at the moment for his 2012 Reith lectures on how the old are impoverishing the young.
The main thrust of his argument is that those who are retired or are about to retire are imposing a huge financial burden on the younger working aged population in the form of medical, social security and pension benefits.
People used to retire and drop dead a few years later. Today retirement can last a lifetime: twenty to forty years of retirement is not uncommon.
Once upon a time people would retire from work and would be expected to drop dead a few years later. In doing so they would have remained productive, tax paying, members of society almost to the end, with a few short years of well deserved rest before they permanently rested.
Today retirement is a very long period: twenty to forty years of retirement is not at all uncommon. Not only are these retirement years not adding much tax income to the general government coffers but they are tended by increasingly expensive health costs and decades worth of pension benefits.
From a historical perspective this is unprecedented. Never before in history have so many people lived for so long and in such comfort. Those who are retiring or are retired are historically blessed and should count themselves lucky as this unprecedented historical experiment cannot last: there are simply not enough young people to pay for all of this.
Young people collude with the old in supporting measures that benefit retirees.
What is curious is that it is not just older people who are voting for policies that benefit them and are paid for by the young. Ferguson notes that young people collude with the old in supporting measures that benefit retirees, presumably in the mistaken belief that they too will benefit from these policies when they retire themselves.
Looking forward to the future we know that this cannot last. The gap in pension liabilities and expected revenues is measured in trillions of dollars in the US alone. So what cannot last will naturally come to an end. The question is when will this end be and how will it unfold?
David Cameron is about to introduce policies that strip away housing support to people under 25 in order to save £10bn in welfare support, forcing young people back to living with their parents. This is controversial and adds additional burdens to young people who have higher levels of unemployment than the rest of the population and are finding it increasingly difficult to get onto the housing ladder.
The government has realised that one way to slash welfare costs is to force intergenerational co-habitation: retirees may be forced to live with their children.
It also sets an interesting precedent: the government has clearly realised that one way to slash welfare costs is to force intergenerational co-habitation. Retirees may be forced to live with their children. Economically it would not be a bad partnership: retirees and their children could sell their respective houses, buy a more appropriate home and then all would live off the incomes of those in work. Grandchildren could be looked after by grandparents.
So for those readers who don’t get along with their family members some words of wisdom: either learn to get on with your immediate family or be prepared to rough it!