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The grey terror that shuffles amongst us

February 24th, 2011 Posted in Intergenerational Justice by

First they came for the squirrels now it’s granny’s free bus pass… Or that is the hope of the Institute of Economic Affairs… in respect of the whether the baby boomer generation most responsible for the national debt, should fairly share the responsibility for paying it off.

The economics of the IEA case are quite sensible; broadly state pension reform, and removing a series of universal benefits and age-related tax exemptions. Over £15bn per year could be saved. More if we include public sector pension reform. Where poverty is an issue benefits should be simple and targeted.

The politics of the case are what Yes Minister used to call “courageous”. The median age of those who vote is over 50. To persuade grandad not to borrow money from his grandchildren, is not an easy platform on which to win an election. 

The last comprehensive review then deliberately protected benefits and services for the elderly (NHS, linking state pensions to wages) whilst reducing them for the  young (tuition fees, child benefit,  national insurance). Most youthful protests against that were based around wanting to get on the derailed gravy train rather than sharing the load of carrying the current passengers or asking them to walk.  

It’s not obvious then what trigger events or political incentives are going to change to encourage politicians to take intergenerational justice seriously. Even the Liberal Democrats, who do relatively poorly amongst the elderly are wedded to the stitch-up.

Meanwhile the rather modest reforms suggested by the IEA have provoked a stream of abuse including a death threat. Underestimate the grey terror that shuffles amongst us at your peril…

One Response to “The grey terror that shuffles amongst us”

  1. Ed Joyce Says:

    Andy Mayer points to some issues in carrying out the plans when he states

    The politics of the case are what Yes Minister used to call “courageous”. The median age of those who vote is over 50. To persuade grandad not to borrow money from his grandchildren, is not an easy platform on which to win an election.

    The basic issue is that older workers need to be kept in the workforce to raise the productive capability of the country. Those staying in the workforce voluntarily might be willing to forgo pensions and other benefits.

    The problem is that young people often want old people removed from the workforce to create jobs. In international trade the impact of Smoot-Hawley ensured that all politicians understand the benefits of free markets. Young people need to be educated in an economics 101 in a similar way so that they recognise that old people staying in work will help them because it will reduce the tax burden. This will be the starting point.

    This report might have the effect of tinkering at the edges but a wholesale change will need the support of the over 65s. This report will simply lead to reistance from old people.

    Perhaps we could suggest keeping old people in the workforce AND cutting benefits to the elderly thus producing the most unpopular policy combination ever ?!

    I don’t pretend to have a full answers but I believe that we need to look at how we got to this point first rather than tinker with the result. Georgist policies such as replacing transfer payments to some with a payment to all (based on oil revenues) might be a better starting point politically, and would have similar effects to a removal of some of these benefits.

    I can’t see libertarians being willing to commit political hara kiri on this issue ?

    Ed Joyce


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