An Oxford professor and famed historian has stirred the fires of an intergenerational war by claiming the dice are loaded in favour of baby boomers.
Speaking in Knight Frank’s The Wealth Report 2018, historian at Oxford and Stanford Professor Niall Ferguson said that the battle between the generations was “the central problem of our time”.
“In 2001, I published a book called The Cash Nexus, and in it I predicted that the politics of the future would be about generational conflict, not class conflict,” Prof Ferguson said.
“Well, we’re here now. But most of us don’t really have the vocabulary to adapt, because we’re still used to thinking in terms of class, or percentiles: the 1 per cent against everybody else. That’s all anachronistic. The real issue now is, who pays? Is it going to be granddad, dad or the kid?
“This is an extraordinarily difficult question in political economy, because it’s about generational imbalances. Right now, the dice are loaded in favour of the baby-boomers, people like me who were born in the two decades after the end of the second world war, and they’re loaded against newborns, kids and the unborn.
“This is a striking pathology of modern times, this breach of contract between the generations. It’s very hard to fix because the unborn and kids don’t get to vote and the elderly now tend to stick around long after retirement age, and they vote in rather large numbers.”
Prof Ferguson explains that the best way to avoid problems was to try and iron out the inequities before they became too pronounced.
“The solution is clearly to try to strike a balance between the interests of the generations, but that must involve some elements of increased taxation, and some elements of welfare reform,” he explains. “Those are two difficult things.”
Professor Niall Ferguson is the latest in a long line of commentators keen to talk up the possibility of a looming intergenerational war.
These discussions always fall along the same lines. Whoever makes the claim is happy to lump all baby boomers into the equation together, as though all people over the age of 50 are all the same.
This is simply not true. The YourLifeChoices Retirement Affordability Index™ breaks down retirees into six different tribes to offer better insight to the retirement experience. These six tribes, defined by household (couple or single), home ownership (own home or renting) and primary source of income (private or Age Pension) offer a really helpful guide when discussing retirees.
The most recent YourLifeChoices survey on retirement income and financial literacy has so far gathered nearly 3000 responses, and of those nearly 40 per cent claimed the Age Pension was their largest source of income.
Prof Ferguson’s claims that the dice are stacked in favour of baby boomers simply don’t add up.
Most Baby Boomers have not benefitted from decades of superannuation that will ultimately benefit Gen X and Gen Y. Most are entirely underfunded for the long years in retirement.
The YourLifeChoices research also shows that those on an Age Pension who are renters (at least 10 per cent of retirees) are doing it tough. They are spending about a third of their income on rising rental costs and cutting back on health services and social activities to live within their limited means.
Those on a pension living in their own homes are barely covering costs, but are able to afford the occasional meal out. This does not paint a picture of retirees living large at the expense of younger generations.
The divide – as it has always been – is between the haves and the have nots.
Labor’s $59 billion tax plan, which we reported on yesterday at least attempts to address this imbalance between the haves and the have nots.
The policy aims to target those wealthy Australians who own shares, roughly 200,000 of the wealthiest retirees, rather than trying the more simplistic approach of cracking down on the Age Pension.
It would be great if more of the policy discussion could look at addressing the real divide, rather than beating up a fake intergenerational war.