Having been born in 1983, I am a part of Ed Howker’s ‘jilted generation’. I think it is quite reasonable for him to argue that governments of all parties have made choices which do not reflect our interests, or those of future generations.
They have increased public spending, which will reduce medium term growth and diminish our future earnings; they have borrowed eye-watering amounts of money which we will have to pay back; they have taken far too long to undertake vital reforms like putting in place a reasonable schedule of increases in the pension age. More young people think that the moon landings were faked than think that the Government will be able to provide the same level of benefits available today when they retire.
Does Ed think our parents couldn’t have made similar complaints?
In the 1970s, Britain had experienced decades of relative economic decline. Large parts of British industry were hopelessly uncompetitive. It was the era of the three day week and politicians of all parties had found the country almost ungovernable.
We need to keep our situation today in some perspective. The economy was hardly in great shape last year, when I got married, but circumstances in 2013 were far more promising than they were in 1977 when my parents got married. We need to realise just how revolutionary improvements in living standards have been, even in developed economies and even in our lifetimes.
Dubious statistics about median household earnings have led too many people to the clearly erroneous conclusion that progress in living standards has stalled for a generation. Even some who should know better like Tim Harford – the ‘Undercover Economist’ at the Financial Times – who has written recently about how he believes living standards have stagnated in the developed world.
All the statistics below are for the UK and – where possible – compare 1983 to the latest year for which data is available. There are a whole host of ways in which your life is probably better than it would have been thirty years ago:
Again, all of those statistics describe progress right here in the United Kingdom and all those improvements in living standards have taken place within my lifetime and affect much more than 1 per cent of the income distribution. If you think that real earnings haven’t increased, how exactly have people been able to afford all those nice things?
And the raw increase in consumption probably understates our real progress as it misses that there is a greater variety of goods available to us thanks to an increasingly diverse global market place, which we also value. Research by the New York Fed in 2005 found that the ‘value to [US] consumers of global variety growth in the 1972-2001 period was roughly $260 billion.’
Of course, the reason why it is hard to measure living standards (or even more woolly concepts like ‘well-being’) is that we then have what is called an index number problem: how should we weigh up all that progress against those things that are harder now, like affording a home in London?
You need to answer that question for yourself. If some demon came to you in the night and offered this trade, would you take it?
You can have a cheap flat, but in return you will have to give up your mobile phone, your computer and your Internet connection. No Facebook for you. You might not have a car or be able to travel abroad. Kiss that holiday in sunny Florida goodbye. And there will be a significantly higher chance that you will be seriously hurt in an industrial accident, die young, or see your child die young.
I am confident that I would refuse such an offer. Britain is a better place for the hard work of the countless people who have made their contribution – large or small – to human progress over the last thirty years. We are lucky to be children of the Thatcherite revolution and have grown up in a country with a functioning market economy open to the world.
There are plenty of challenges left. Britain’s tax code is in desperate need of reform, to give just one example, and our democracy is fraying around the edges. We should reject economic policy too obsessed with performance in the next quarter at the expense of prosperity over the next quarter century. But we need to see our task for what it is: a golden opportunity to build on the progress made by our parents; to build a still better world.