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Radio 4 Professor Of Economics


Redcellar
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Sadly doesn't look like it's going to be an iPlayer listen.

In summary, a professor of economics was briefly interviewed who said it is the same as the 80's. He seemed annoyed that people were overplaying it all, even when the interviewer mentioned the IMF says we are in for a decade of this. None of this is any different from the times before.

He was also annoyed at the inference the youth have it hard. Unemployment was the same or worse in the 80's. The youth have it better, was also what he said. Certainly didn't like the term 'baby boomers, baby busters'.

Unfortunately no phone in or input from the public. Otherwise I would like to hear his view how it was the same in the 80's.

I guess in the 80's there were house prices 6 - 10x average income, £50K student debts and youth unemployment of 1 in 5. Not to mention a huge public sector.

I feel incredibly lucky that for the short period I was a youth in the 90's I had little to no student debts (grants were given), a first house was a detached priced at £60,000 which was 3 x salary.

I am so lucky that for the ten years of my youth we had these things and that they clealry didn't exist in the 80's. That glorious ten year period of the 90's must truly have been exceptional. ;)

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I was a youth in the 80s. Getting a good job was hard but there were plenty of factory jobs where I lived. Those factories have all gone.

The Prof talks out of his ****.

The prof was probably talking about the tough life he has in academia. He's probably down to 4 months paid holiday a year, but he's a hardy soul and is going to stick it out just like he did in the 80s.

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Sadly doesn't look like it's going to be an iPlayer listen.

In summary, a professor of economics was briefly interviewed who said it is the same as the 80's. He seemed annoyed that people were overplaying it all, even when the interviewer mentioned the IMF says we are in for a decade of this. None of this is any different from the times before.

He was also annoyed at the inference the youth have it hard. Unemployment was the same or worse in the 80's. The youth have it better, was also what he said. Certainly didn't like the term 'baby boomers, baby busters'.

Unfortunately no phone in or input from the public. Otherwise I would like to hear his view how it was the same in the 80's.

I guess in the 80's there were house prices 6 - 10x average income, £50K student debts and youth unemployment of 1 in 5. Not to mention a huge public sector.

I feel incredibly lucky that for the short period I was a youth in the 90's I had little to no student debts (grants were given), a first house was a detached priced at £60,000 which was 3 x salary.

I am so lucky that for the ten years of my youth we had these things and that they clealry didn't exist in the 80's. That glorious ten year period of the 90's must truly have been exceptional. ;)

It was worse in the 80s.

Housing: much more unaffordable. If Shelter's recent report is anything to go by, today's private rented housing is not just far better quality but also one third of the price compared to my experience as a young graduate. Buying very clearly preferable for those who could afford it, even if what you bought was a slum.

Basics: food and clothing took a higher proportion of the income. Clothing was higher even in £ terms, let alone index-linked. Fuel much more in real terms too, though we made up for that by using much less.

Education? Yes, we had grants, though they were viciously means-tested. So does my nephew who's at Cambridge now! But the fees situation clearly makes it much worse for some unfortunate souls than it was.

On the other hand, the 80s weren't encumbered with today's zombie banks, ever more debased money supply, and zombie housing market. Inflation was higher but on a downward trend. Different time, different set of problems.

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My dad bought a 3-bed semi in London in the early 80s that would now be around 300K on a single salary as the assistant manager of a branch of the Abbey National.

Now he'd have to earn, what, 75Kpa?

The Prof is talking out of his 4rse.

300K mortgage is 2K a month repayments for a FTB with a 10% deposit. If you have a family and you are the sole earner (so get hammered on tax) then I'd suggest 75K is going to be tight with inflation heading up and up.

75K would put you in the top 5% of salaried earners in the country. The difference between then and now is insane.

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My dad bought a 3-bed semi in London in the early 80s that would now be around 300K on a single salary as the assistant manager of a branch of the Abbey National.

Now he'd have to earn, what, 75Kpa?

The Prof is talking out of his 4rse.

I tried hard to find a one-bed flat I could get a mortgage on, as a young maths graduate from Cambridge working in an IT job at above-average graduate pay.

I failed. The salary multiple was out of reach. And HPI meant it was getting no nearer, which is why I fled to Germany (in 1985).

That was 1983/4 when I was in London. Two years earlier a colleague in the same job had succeeded in getting his one-bed poorly-converted flat in Willesden: a dump, but a hugely profitable one as prices rose. A case of being there at the right time!

Funnily enough it seems to revolve around something pretty close to that magic birthday, April 1960. Born before that, graduate onto a housing ladder. Born after that, it's out of reach (unless you have BoMD). Oh, and you lose out on lots of other lifetime benefits, like older, much more generous pension rights.

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Sadly doesn't look like it's going to be an iPlayer listen.

In summary, a professor of economics was briefly interviewed who said it is the same as the 80's. He seemed annoyed that people were overplaying it all, even when the interviewer mentioned the IMF says we are in for a decade of this. None of this is any different from the times before.

He was also annoyed at the inference the youth have it hard. Unemployment was the same or worse in the 80's. The youth have it better, was also what he said. Certainly didn't like the term 'baby boomers, baby busters'.

Unfortunately no phone in or input from the public. Otherwise I would like to hear his view how it was the same in the 80's.

I guess in the 80's there were house prices 6 - 10x average income, £50K student debts and youth unemployment of 1 in 5. Not to mention a huge public sector.

I feel incredibly lucky that for the short period I was a youth in the 90's I had little to no student debts (grants were given), a first house was a detached priced at £60,000 which was 3 x salary.

I am so lucky that for the ten years of my youth we had these things and that they clealry didn't exist in the 80's. That glorious ten year period of the 90's must truly have been exceptional. ;)

There was very high youth unemployment in the early 1980s (1 million plus) which is why there were so many YOPS, YTS schemes at the time. It was also very high in the early 1990s recession so what we are seeing now is not unique. Even the TUC admit to that comparison

http://www.tuc.org.uk/economy/tuc-17353-f0.cfm

http://www.bbc.co.uk/news/magazine-12480633

That does not mean the 1980s figure is not going to be surpassed in the future

Where the esteemed professor is hopelessly wrong is in assuming that the issues behind it are the same as the 1980s. During that era the recession was caused by rising interest rates due to the Volcker squeeze on borrowing plus governments reigning in their own expenditure. The net effect was an almost catastrophic collapse in manufacturing industry particularly in many of the older rust belt regions of the western world such as the Midlands and North of England and the US mid west. It was part of the hollowing out process whereby genuine productive capacity was sacrificed to be replaced by an economy built on public sector jobs, ponzi finance and property speculation. The new model kept going for about 20-25 years pumped up by ever more debt ( the private debt growth vastly exceeding the growth in public borrowing despite what many believe). Then about the time of the dot com boom it all started to collapse and could only be kept going by ever more exotic financing, leverage and ponzi speculation in certain asset classes. At the same time what remaining productive capacity was shipped overseas as companies ruthlessly arbitraged wages lower. It is the final point along with a change in the demographic profiles of western nations which has essentially blown the system apart since the future earnings to pay down the existing debt no longer exist. For this reason alone banking collapse and eventual default was well nigh inevitable. The system is f*cked and neither the bankers , the politicians or any economics Professor has a clue how to fix it.

Certainly no good looking at Cameron and his boys for a solution as there only answer appears to try more of the same essentially proppping up the old model with more debt financing and a house building boom that is going to fall straight into an inevitable demographic hole which can only be plugged by ever more immigration. The latter solution itself depends on Britain being a magnet for those seeking a better economic way of life which is by no means a given factor going forward..

Edited by stormymonday_2011
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I tried hard to find a one-bed flat I could get a mortgage on, as a young maths graduate from Cambridge working in an IT job at above-average graduate pay.

I failed. The salary multiple was out of reach. And HPI meant it was getting no nearer, which is why I fled to Germany (in 1985).

That was 1983/4 when I was in London. Two years earlier a colleague in the same job had succeeded in getting his one-bed poorly-converted flat in Willesden: a dump, but a hugely profitable one as prices rose. A case of being there at the right time!

Funnily enough it seems to revolve around something pretty close to that magic birthday, April 1960. Born before that, graduate onto a housing ladder. Born after that, it's out of reach (unless you have BoMD). Oh, and you lose out on lots of other lifetime benefits, like older, much more generous pension rights.

Where exactly was this 1-bed flat?

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Where exactly was this 1-bed flat?

London. It had to be within cycling distance of work, so not more than about 10 miles from W1.

I tried many areas, including those where I rented places (Peckham SE15, Leyton E10 and Kilburn NW2) and others that I thought worth a look before switching my efforts to escaping London.

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More or less the start of the decline in real average wages relative to the elite, the greater return on capital relative to labour, the financialisation of the markets, the free flows of capital, the growth of the uncontrollable corporates, the demise of unionisation and the gap filled by increasing household and personal debt coupled with the rapid expansion of global supply due to Japan and then Russia/East Europe and subsequently China and India into world markets.

In essence, the rise of globalisation and the outcome of the Reagan/Thatcher policies (Blair was just more of the same and Bush threw in a couple of wars for good measure).

Everything else flows for the above.

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I was a youth in the 80s. Getting a good job was hard but there were plenty of factory jobs where I lived. Those factories have all gone.

The Prof talks out of his ****.

+1 in the 80`s there was not a great deal of work for the youth but one average job bought a average house now two good jobs are needed to buy a bottom off the line house

And from where I am sitting it look`s to only be getting worse on the jobs front ,but on the plus side the bottom end off the housing market is falling in price at a steady rate which I think will only accelerate when the new H/B changes come it play in the new year ( providing no U turns by the gov)

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Education? Yes, we had grants, though they were viciously means-tested. So does my nephew who's at Cambridge now! But the fees situation clearly makes it much worse for some unfortunate souls than it was.

Eh everyone I knew that went to Uni in the early/mid 80s got a non-means tested grant?

Did you pay for your tuition as well? No, thought not. :rolleyes:

Think I'll be taking the rest of your claims with a pinch of salt as well.

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London. It had to be within cycling distance of work, so not more than about 10 miles from W1.

I tried many areas, including those where I rented places (Peckham SE15, Leyton E10 and Kilburn NW2) and others that I thought worth a look before switching my efforts to escaping London.

I recall nice 1-bed flats in Leyton being < 60K in the late 80s.

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foodcost.jpg

Telegraph - On the 80s

t was a time when Don McClean's version of Roy Orbison's 'Crying' sat atop the singles chart, its glum chorus summing up a country struggling to emerge from the late-70s doldrums.

GDP had dropped by -1.8 per cent while unemployment, at 5.8 per cent or 1.56million, was still some 0.3 per cent or 360,000 short of today's more painful figure.

While Britons got by on an average wage of £6,000 (the equivalent of about £19,000 today), petrol cost 28p a litre (90p), a pint of beer was 35p (£1.10), a loaf of bread 33p (£1.10) and a pint of milk 17p (54p)

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I feel incredibly lucky that for the short period I was a youth in the 90's I had little to no student debts (grants were given), a first house was a detached priced at £60,000 which was 3 x salary.

I am so lucky that for the ten years of my youth we had these things and that they clealry didn't exist in the 80's. That glorious ten year period of the 90's must truly have been exceptional. ;)

unfortunately there are other factors to consider .

the mortgage payment as a percentage of income was:

1974 - 16.3 % of income

1985 – 19.2 %

1990 – 27%

today its under 20%, so in relative terms, i.e month by month affordability, due to interest rates being where they are, it is as affordable to people right now as they were in the 70's and 80's.

it is now harder to get a mortgage, but the actual mortgage cost today is still fairly low, because the BOE have dropped interest rates so much.

now obviously people werent so indebted in the 80's house prices were 3.5 times income vs 5-6 today. but the cost of repaying a mortgage at the moment is fairly low by historical standards.

Edited by mfp123
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He does seem to have missed the elephant in the room:

Courtesy of the FT:

6b6c1ac81f61161597c7bc4e7f93cfd8.gif

Who cares if bread, beer, petrol and milk were relatively more expensive? People probably ate less, drove less and consumed less. As a percentage of household spending that pales into insignificance against the cost of accommodation.

As others have pointed out, for affordability calculations going forward it will be necessary to factor in a drop of 10% from post tax earnings for student loan repayments. Not going to help real-world affordability.

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it is now harder to get a mortgage, but the actual mortgage cost today is still fairly low, because the BOE have dropped interest rates so much.

I would agree, except mortgage rates are still over 4% interest.. plus the repayment. It would be interesting to see a good affordability model, but I suspect it hasn't changed all that much since peak.

Seemingly confirmed by the record low number of mortgage approvals.

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I recall nice 1-bed flats in Leyton being < 60K in the late 80s.

60k?

Bottom-end flats in 1983 were about £21k. But on an income of £6660[1] and a max mortgage multiple of 2.5 times[2], that was out of reach. And at 20% HPI, I wasn't closing that gap.

[1] Compared to similar IT jobs with two other central London employers who interviewed me paying £6.2k, BBC paying £4.9k, and most solicitors and accountants paying about £5.2k to their new grads at the time.

[2] There were rumours around of 2.75 from specialist lenders extending the boundaries at a fearsome cost. Still leaving a gap.

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Sadly doesn't look like it's going to be an iPlayer listen.

In summary, a professor of economics was briefly interviewed who said it is the same as the 80's. He seemed annoyed that people were overplaying it all, even when the interviewer mentioned the IMF says we are in for a decade of this. None of this is any different from the times before.

He was also annoyed at the inference the youth have it hard. Unemployment was the same or worse in the 80's. The youth have it better, was also what he said. Certainly didn't like the term 'baby boomers, baby busters'.

Bullsh1t. Unemployment has been rising since the mid seventies, and never fell after that time. Before 1985, about 500k were on disability. Since then, its been steadily rising to 3 million. That one tranche alone is equivalent to the worst levels of unemployment in the 80s. Plus all the 16-24 years olds who would have got jobs are now in educayshun. Unemployment has risen since deindustrialisation, govts just hide it with fancy new names.

No wonder he's a professor with ignorance like that. A real job would kill him.

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