Friday, February 18, 2011

Baby boomers pay price for their seduction

Reality prepares to bite the baby boomers

A Whitehall document has raised the spectre of lowering the means testing threshold for care home charges, implying that as baby boomers age, many will be forced to sell their home to fund the dotage years of their life. It’s scandal, cry the media, who funnily enough are read most religiously by the baby boomers themselves. But if you look at this problem from an economic perspective, it seems that the baby boomers are paying the price for an all-too-easy seduction which began many years ago in the summer of love,1967. The seducer had two heads: Inflation and exceptional economic growth. The seduction was given irresistible allure by the emergence of a new metaphor: the housing ladder, and higher interest rates and inflation will be the price that we will all pay.

Posted by mike @ 10:15 AM (2812 views)
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25 thoughts on “Baby boomers pay price for their seduction

  • Baby boomers were simply the beneficiaries of two bull runs the likes of which we won’t see again for some time – !950s and ’60s (post-war reconstruction, entry into the workforce of the boomers – favourable demographics) and most of the ’80s and ’90s (real tech advance and capital formation). Now we have, er, facebook and twitter, debt and investment in assets already in place.

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  • Squeal piggies, squeal, is all I can say.

    In the absence of the house price bubble (which is a relatively recent phenomenom), clearly most people would qualify for “free” care. So working age people would have to pay for it via their taxes but working age people would save a much larger amount of money because they’d pay less for a house.

    But Home-Owner-Ist logic is this: I don’t want to pay for anybody else, especially not scroungers or young people, but I don’t mind if they pay for me.

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  • I’ve always thought of the housing ladder to be a baby-boomer fictional construct, just like the protection of the ‘hard-working family’ is a construct to defend policies which allow boomers to ream the young, single and elderly.

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  • @MW

    So you’re happy to pay scroungers?

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  • If we are not careful, baiting of home owners and baby boomers could become a blood sport on this site.

    http://www.chrismartenson.com has a useful Crash Course on the world’s current predicament. It links Energy, Debt and Environment. Needless to say, housing bubbles, oil and commodities feature strongly. Its true that the age group known as “boomers” often had the benefits of cheap oil, a thrifty lifestyle, and so on.

    Demonising folk because they’re aged around 58 or 59 or bought a house to live in 20 years ago seems a little bit unfair. If folks want a group of people to demonise, try some of our politicians, EAs or landlords!

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  • @Alan

    Good to see that there are some other rational, even handed, contributors to HPC.

    @MW (Again)

    Mark, I should have qualified my question by saying that one person’s scrounger is seen by another person as a victim.

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  • did anyone watch the spice trail last night, very interesting in the boom and bust eras of spices

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  • @Mark

    Perhaps spices are the next bubble.

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  • the Zynga bubble

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  • Mr G, when you say “scrounger” I take it you are using the Daily Mail definition?

    Now, precisely why there are five million of such people is down to a combination of stupid welfare system, innate laziness, poor education system, disastrous tax and regulatory policies, political correctness and de-industrialisation etc etc.

    But I’d cast the net wider and include other categories of “scroungers” who cost the country far, far more than 5 million on the dole, i.e.
    politicians
    six million quangocrats
    bankers
    Home-Owner-Ist elite generally
    private landlords who receive Housing Benefit (especially if they are renting back a council house they bought for very cheap)
    NIMBYs
    corporatist private sector leeches
    most lawyers, auditors and accountants
    pensioners generally (who get twice as much from the taxpayer as working age welfare claimants and children)
    fakecharities
    the green insustry lobby
    and so on.

    Faced with the choice between

    a) Giving somebody on the dole £70 a week/a pensioner £140 a week or
    b) giving a ‘private landlord’ £1,000 a week or a Council Chief Executive £3,000 a week or an agricultural landowner like Prince Charles £100,000 a week or a banker £1m a week, I know which is the best value 🙂

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  • Aren’t you an accountant Mark?

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  • NAC, yes I very much am, what I do has huge value to my clients, is enormously good fun and interesting, reasonably well paid and has no social value whatsoever.

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  • this has just been emailed to me

    David Cameron has announced that he intends to make it more difficult
    to claim benefits. From next week all the forms will be printed in
    English.

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  • mark w @10

    Don’t forget ad-men (spit on floor). That just about takes care of everyone – useless to the core.
    [Present company accepted of course]

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  • @MW

    No, I use my own definition of a scrounger not the Mail’s or indeed any other form of journalism.

    I agree with your list and could add to that but would be accused of various “isms” if I did. However, I do not include pensioners (and I’m not in receipt of a state pension as yet incidentally).

    If you have paid 44 years of NI contributions as was the case until April 2010 most people will have have paid in sufficient to produce the basic pension, what you should be complaining about is the reduction to 30 years NI contributions to qualify for the basic pension.

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  • crash bandicoot says:

    Mark, while I’m not sure that I should be giving you any more encouragement or amunition, I think that you will find that there are people employed at benefit offices to fill in the forms of those who cannot read or speak English.

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  • @Crash bandicoot

    Agree 100%, this is the sort of thing that needs rooting out.

    I hope you don’t get accused of “a nasty little racist comment” as I did from one of HPC’s more sensitive contributors for a similar comment.

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  • @MW

    Re. NI contributions, I omitted to say:

    I assume that you will pay at least 40 years and probably more, contributions through your working life, can you honestly say that it is fair that someone paying 30 years gets the same pension as your goodself?

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  • mark wadsworth says:

    Mr G, what’s the big deal with National Insurance? It’s just an extra layer of income tax on employees/employers (and hence the second worst tax after VAT).

    As to pensions, we have this madness of having a contributory system overlayered with a means-tested system – if you think about it, they are opposite to each other and cancel each other out (the means-tested Pensions Credit level is HIGHER than the normal full basic state pension). I would gain under contributory but lose under means-tested, so what’s wrong with splitting the difference and having a flat rate Citizen’s Pension?

    Then we have the madness that women contribute less so get less BSP but they gain on the Pensions Credit what they lose on the BSP; they retire younger then men but live longer. What’s wrong with a flat rate Citizen’s Pension for all at the same age?

    And as a final insult, tax breaks for pensions saving, which unduly benefit higher earners who are paying too much tax in the first place and clobber lower earners who can’t afford to contribute? In any event, the bulk of the value of these is soaked up by the pensions companies as fees commissions and charges.

    So to answer your question, no it does not bother me in the slightest.

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  • @MW. Grrr. The very mention of the ‘Means testing’ makes my blood boil. The only thing which should be means tested is whether you are/have been unable to make provision for yourself due to being disabled or an unpaid carer or some such.

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  • @MW “what’s the big deal with National Insurance? It’s just an extra layer of income tax on employees/employers (and hence the second worst tax after VAT).”

    Call it what you will, it’s still taxation on earnings and therefore it’s not unreasonable to expect more back if you’ve contributed more.

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  • mark wadsworth says:

    Mr G “Call it what you will, it’s still taxation on earnings and therefore it’s not unreasonable to expect more back if you’ve contributed more.”

    Well duh, what’s the point in making people pay more in tax in order to pay them back with a higher pension later? Surely it’s better to let people keep more of their own earnings and let them provide for themselves?

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  • That’s it in a nutshell MW!

    I’ve not been arguing the case for or against tax or pensions but highlighting the unfairness of paying a tax (NI) for 44 years only for someone to get the same for 30 years payments.

    I agree 110% that it’s better to let people keep more of their earnings and provide for themselves.

    Have a good weekend.

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  • crash bandicoot says:

    mr g, I’d be surprised if my comment could be construed as racist. I just made a statement, not a judgement.

    As an aside I saw on the local news last year that there was a poor take-up of council services after several leaflet campaigns in the New Parks area of Leicester (white working class/long-term unemployed area). It turned out that the average reading age is seven years old there. This is one of the reasons that there is someone to fill in the benefit forms at the DSS office.

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  • The average reading age in that area of Leicester is a damning indictment of the education system.

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