The Financial Times Calls Out Generation Greed
Apparently some of the same issues are present in Europe as in the United States, but across the Atlantic someone has been willing to call them out. According to the Financial Times, commenting on the young taking to the streets from Spain to New York, “politicians have…largely failed to address the issue of intergenerational equity.” While the young protesters are criticized for demanding the redistribution of income “in reality, many policy choices over past decades have themselves been redistributive – in favour of the baby-boomer generation at the expense of their children and especially towards the privileged top end of that generation.”
In places like Greece, says the FT, “the system has privileged insiders while saddling the rest of the population with enormous debts and the prospect of sovereign default.” And as a result “rising public debt is forcing cuts to the public services upon which the less well-off disproportionately depend, and squeezing the pension payments younger workers can expect to receive when they ultimately retire.” I guess that means the existing retired and “near retired” are being exempted from the cutbacks there, as they are here.
With the developed world having collectively consumed and gone into hock, there will be austerity. “While people generally understand that living standards may not rise at the pre-recession rate and could even fall, they are dismayed at the failure of political leaders to ensure that the burden is shared more fairly.” A large share of this unfairness is the result of the ability of the wealthy to use the government to avoid a reduction in their unearned wealth. “When the Institute of International Finance, the main industry body, reports that banks are giving out more guaranteed bonuses to newly-hired employees than they were before the crisis, it is no wonder people occupy the public space in protest.”
But it isn’t just the rich. “The parties of the left have been particularly disappointing. For all their high-minded talk about social justice, they have struggled to articulate how to deliver more equitable outcomes in times of austerity.” That is because they have their own set of winners whose interest to protect, generally associated with the unions. In the U.S., public employee unions cut deals for one retroactive pension deal after another in the bubbles, and now demand to keep all those winnings and shift the burden to public service recipients and future hires. They control state and local governments the way the executive class controls the federal government.
Over in Europe, such privileges for those who cut earlier deals at the expense of future generations are society-wide, not just confined to the public sector. “In continental Europe, a two-tier labour market too often obliges younger workers to suffer job insecurity, while preserving for older workers a significant degree of protection.” In the State of New York, of course, there are five Tiers for pensions. Those in the private sector and outside the executive class who end up paying for those with the best deals might as well be described as Tier 000.
“Where the protesters have a point is the way in which governments have meted out favourable treatment to certain insider groups. Those with the best connections to political elites have been largely spared their fair share of the pain.” Some of those who are trying to co-opt occupy Wall Street don’t have the interests of younger generations at heart. They just one more resources transferred from other insider groups to themselves. That’s what they mean when they say “tax the rich.” But what they aren’t prepared to say, because of the consequences, is that those riches were not earned, and shouldn’t be there to be taxed to begin with. We’ll see who gets stuck with the sacrifices if Wall Street pay and bonuses fall back to something reasonable, reducing tax revenues for the City and State of New York.
Why is it that in the U.S. "the parties of the left have been particularly disappointing" and "have struggled to articulate how to deliver more equitable outcomes in times of austerity?" I don't know what they mean by "the left." Here in the U.S., the progressive era petered out some time ago and government has returned to being what it has generally been, a way for powerful insider to extract benefits from the rest. And our Vampire State politicians have had, as their standard operating procedure, handing out goodies to insiders and deferring the costs to the rest and pretending they don’t exist. Handing out sacrifices requires a set of principles about what is fair. These pols don’t have principles, they have business relationships with backers, business relationships that would have to be broken – big time – for any fairness to occur.
I called out the real principles when I ran against the state legislature some years ago. Under capitalism, you get what you earn, at least in theory. Those who believe that people need an incentive to work and innovate can agree with that. Under socialism, you get what you need, at least in theory. Those who believe that we are all part of one human family can agree with that. But over time, when you have the same group of people in power, both capitalism and socialism degenerate into feudalism, under which the privileged expect to continue to get what they have been getting, and perhaps a little more, whether they need it or not, deserve it or not. For those who have real needs, and who produce real earnings, it's just tough luck. The feudalism of unearned privilege explains much about the state of the State of New York, where all past deals are set in stone.
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