‘Blessed are the young, for they shall inherit the National Debt.’ Herbert Hoover
There has been much talk lately about the supposedly privileged position of our older people, who it is often said are mortgaging the lives and prospects of their juniors. Particular concern has been expressed about the series of high budget deficits and the consequent increase in national debt, all to be paid off by younger people after their seniors have left this plane. Troubled authorities decided that such a Gordian knot needed the attention of a modern Alexander the Great. It can hardly surprise anyone that they turned to that incomparable unknotter, Sir Bertram Utterside, former professor of social studies at one of our leading universities. He applied his usual intense concentration to the problem and reported as follows:
I was pleased to receive the buck in this matter, as I am tired of hearing ill-informed references to it. Let me start by saying that those now well into their seventies lived through a world war and its aftermath, enduring severe deprivations of many kinds, including rationing of food, clothing, fuel, etc. They also had to contend with frequent power cuts, water obtained from standpipes, and other miseries which need not be mentioned here. Notwithstanding all that, they toiled on, building up most of the wealth we all now enjoy. They had to adapt to a bewildering variety of social changes, not all for the better from their point of view. In millions of cases, they inherited little or nothing of material value from their forebears. I will not say any more about this.
With regard to budget deficits, I agree that we could have avoided them by living within our means. I also grasp that the shortfall between government spending and income is currently something like £150billion a year and that this adds to the national debt, thus placing a burden on future taxpayers. However, that is not the main point. What we have to consider is that those paying whatever is required to clear the overall debt, which I understand is about £900billion, include the older people who are still paying taxes. It is also noteworthy that most of the debt we have as a nation is owed to ourselves, because our institutions, among them pension funds, buy government securities on behalf of many of us.
Now to the postulation that younger people will have to pick up the total bill for our national profligacy. I have just indicated that they will not do so, as their seniors will pay some of it. As we are dealing with a gradual process and cannot establish a clear dividing line in terms of age, nobody can say who will pay what proportion. I have consulted a prominent actuary who is also distinguished in the field of financial analysis. He estimates that people now under fifty will probably pick up about two thirds of the current bill, meaning that they will fork out £600billion or so. Even if he is wrong and the whole burden falls upon the rising generations, what would their net position be after everything else is taken into account?
These younger people will inherit bank balances and other monies to a vastly greater extent than their older compatriots do or did. That is only a start. What about dwellings? Our housing stock is close to 70% owner-occupied, which means there are roughly 17million units in this category. Taking the average price as £150,000 or so, this sector currently has a value of £2.55trillion. Nearly all of this housing wealth will in due course be inherited by the now allegedly disadvantaged young people. In most cases, the properties will be wholly or largely free from mortgage debt and the recipients of this bounty will, generally speaking, have done little or nothing to earn it. They will therefore receive several times more than whatever they pay to help clear the national debt, and should think themselves fortunate in getting such a high return on so modest an investment.
It is significant that the high deficits which led to the national debt have done something to alleviate unemployment, so if we had not overspent as we have, many people, especially younger ones, would be in a worse position than they are. In making these observations, I am not favouring one age group relative to others, but in terms of simple logic, the figures speak for themselves.
Though it is not strictly within my remit, I would like to mention that our financial position has to some extent been created by what is often referred to as reckless lending by various bodies. This would not have been possible without equally irresponsible borrowing by members of the public. It takes two to tango.
It is high time for us to stop bickering about generational matters and deal with the question of egress from our plight. Therefore, I say we should put our backs to the wall, best feet forward, shoulders to the wheel and noses to the grindstone. If enough of us can still move after performing these contortions, we shall go forward and get out of the mess the same way we got into it – together!
I have no more to say on the subject addressed here, but will take this opportunity to respond publicly to a vicious letter I received last week from a man who accuses me of speaking from an ivory tower, and states that I must have been born with the proverbial silver spoon in my mouth. As this fellow is well known, I will not name and shame him, but would ask him to note that my parents spent their lives first in private rented accommodation, then in a council house, and that thirty years ago I was the sole heir to a fortune of £620. Humble enough, I think.
Note. In order to achieve the widest possible understanding of the above, I have used the words billion and trillion in their currently debased sense. The sooner we stop devaluing these terms and get back to correct usage, the better. There has long been a perfectly satisfactory word – milliard – for one thousand million. A true billion is a million million, and a true trillion is a million million million. If we had not trivialised our terminology in this respect, we might still have proper regard for large numbers.
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