Gerontocracy

As usual, there was some very interesting stuff in the Institute for Fiscal Studies review of the Autumn Statement. This chart by Andrew Hood caught my eye.

screen-shot-2016-12-01-at-17-49-13

The over-60s escaped the post-recession income stagnation. On average, they have done rather well since 2007. It’s a similar story with wealth, as Andy Haldane pointed out in June.

screen-shot-2016-09-27-at-16-43-53

For many of those over the state pension age, the recession was something they witnessed second hand, either through the media or by talking to younger relatives.

What does the IFS think will happen over the next few years? Well with pay stagnation, benefit cuts and inflation, things are looking worse than they were in March. The IFS reckons that, in real terms, average earnings won’t get back to pre-recession level before the end of the decade. State pensions, though, will continue to rise.

screen-shot-2016-12-01-at-18-33-47

The upshot of all this is, as the Resolution Foundation says, a serious downgrade to the forecast for household incomes. The difference between the March and November forecasts (the blue and red lines on this chart) shows the impact of the economic slowdown.  A third of households will find themselves worse off than they are now.

screen-shot-2016-12-01-at-18-39-26

As Conor D’Arcy says, the last time we saw a pay squeeze like this was in the 1810s.

The likely impact of Brexit, then, will be more of the same. Stagnant or falling incomes for those in work with relative protection for those on pensions. Five years from now, the charts showing income and wealth by age will probably look very similar.

This graph by Oxford demographer Maja Založnik displays, for each age group, the percentage of the vote and the turnout in the EU referendum. Remain voters are in yellow, Leave voters in blue, registered voters who didn’t vote in light grey and unregistered voters in dark grey.

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It shows clearly how big a role the over-65s played in swinging the vote to leave. She points out that, had the vote been weighted by remaining life expectancy, the result would have gone the other way, as the votes of those with longer to live would have counted for more.

Many of those who voted Leave won’t have to live with the long-term consequences of Britain’s exit from the EU. Thanks to the relative insulation of pensions and pensioner benefits from the economic fallout, they won’t feel many of the short-term consequences either.

As John Harris remarked recently, in British politics, older politicians and voters are now calling the shots:

In both main parties, the former dominance of a clique of self-styled “modernisers” has been avenged, and politics is about a new emphasis on age, experience and supposedly traditional values.

In contrast to the excitable 40-somethings of the recent past, Theresa May and Jeremy Corbyn are 60 and 67 respectively. Besides leaving the EU, her flagship policy is the return of grammar schools; his, as far as I can tell, is the renationalisation of the railways. There may be occasional signs of interest in things more relevant to the 21st century (even if they have yet to cohere into a convincing vision, witness some of the recent pronouncements by the shadow chancellor John McDonnell). But the mainstream too often seems to be carved up between two conservative parties, led by people who are neither intellectually curious nor shaped by the great technological convulsions that have defined the past 25 years.

The electorate is growing older, and politics is clearly being reoriented accordingly.

On the day of the Autumn Statement there was a pro-Brexit demonstration. The chap in the middle here asks, “Who really runs this country?” If the income and wealth stats are anything to go by, the answer to that is pretty clear.

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14 Responses to Gerontocracy

  1. John says:

    As a state pensioner, I believe there are a number of factors your article does not take on board.
    According to an article in the Autumn 2016 edition of “The Message” – published by the National Pensioners’ Convention – ‘A You Gov poll has been widely circulated on social media showing the age breakdown of referendum voters. The results show that 75% of those under 25 voted to Remain, whilst the majority of those over 50 voted to leave. However, since then a poll by Com Res has found that more over 75s voted to Remain than those between 65-74.
    As a state pensioner, I voted to Remain but was unsurprised by the Leave outcome.
    I have no children of my own but I do have younger relatives in Britain and Ireland.
    I assisted one nephew by paying his course fees for a PGCE course so he could take up employment in teaching. I also gave him the money to clear GBP 18,000 worth of debts and more recently gave him a further GBP 2,300 to get his central heating system fixed.
    I have also paid the year’s fees for my great niece to attend a HE entrance course at a college of the University of London. I have also assisted her financially to gain a flat of her own.
    I have given substantial amounts of money to a nephew-in-law and a niece-in-law in Ireland.
    All in all, I have probably provided something like GBP 80,000 or more to younger relatives.
    The funds have mainly come about through me selling my house and downsizing since.
    I did not plan on gaining such funds but I am using them for the benefit of younger people.
    As I have said to them “You can have it now – while I am alive – or after I am dead.”
    One other point that most commenters seem to forget: we state pensioners paid for our pensions.
    Not only did we pay for ours but also for earlier generations who had never paid-in for theirs.
    While we may seem to be the most fortunate pensioner group in history, bear in mind that funding cuts to local government have resulted in cuts of GBP 5 billion to social care since 2010.
    These cuts were not our choice but the choice of central government, while they simultaneously made tax cuts for wealthy individuals and corporations amounting to GBP 7.5 billion.
    Do please stop falling for the government’s “divide and rule” strategy, whereby they try to set the old and young against each other. This is a truly divisive government who will stop at nothing.
    Instead of trying to drag down the elderly, why not try raising up the young?

    • Why, whenever anyone points out that there is a bias towards the elderly in a lot of policy, do anonymous 55+ year olds come out of the woodwork to drop the pearls of “not all boomers!”

      • John says:

        To set the record straight and to ensure a degree of truth and balance is included in any debate.
        Throwing averages around does not always convey a correct impression.
        Just because we choose to help younger people and relatives, do you find that objectionable?

  2. “The over-60s escaped the post-recession income stagnation. On average, they have done rather well since 2007.”

    Key words “On average” – you think that means they all “have done rather well”?

    It is because we have rich people from the time of Thatcher’s ‘greed is good’ joining them – all the speculators, directors and fat-cats.

    In actual fact – inequality has worsened for the over-60s.

    Look and you will find that the poorest 60+ are just as poor – try be objective.

    BTW: I already explained how government and ONS lie about inequality improving.

  3. Have people honestly lost the ability to think objectively?

    Further to my previous post:

    Why is one older person dying every seven minutes during the winter?
    Over the last four winters, according to the latest official figures, nearly 120,000 people in England and Wales have died of cold weather, or factors associated with cold weather such as a virulent strain of influenza. But campaigners argue that these excess winter deaths, defined as the difference between the number of deaths that occur each winter (from December to March) and the average number of deaths during the preceding four months (August to November) and the subsequent four months (April to July), have more to do with poverty than freezing temperatures.

    https://www.theguardian.com/society/2016/jan/20/older-person-dying-winter-fuel-poverty

  4. lbc says:

    we need to clear that generation

    • David says:

      Appalling remark . Replace the word “generation” with a reference to colour , ethnicity or religion and surely we have an actionable suggestion .
      Disappointed but unsurprised that it’s not been removed , Rik .

  5. rogerh says:

    So, all the fault of the old fogies. Hardly, if they so wanted the politicians could (and probably will) manage down the expectations and income of the old. Anyway, in about 20 years, a mere four parliaments, most of the current crop will be dead and their assets distributed. Depressingly the new crop will largely be on defined contribution pensions or no pensions at all. So the current uptrend will not take long to come plummeting down.

    More to the point is why we have not got productive work for the young to do. This is the really embarrassing and awkward question and probably relates to the global economy and the declining value of Jack and Jill Average everywhere. Much muttering about ‘better education’ but to what purpose – so the best exam passers can grab the few remaining good jobs and the rest can go Uber? Not much of a strategy, perhaps the notion of mass education has reached the point of diminishing returns.

    • John says:

      There is an alternative. TINA is not only unfaithful but also untrue.
      Over the next 20 years, Britain could gradually introduce a maximum 32 hours working week [that’s about half a working week] and a sufficient minimum guaranteed income for all to live on, while central government promotes increased technological investment to achieve the much higher levels of productivity needed to afford such policies. This would double – roughly – the work force, while permitting all individuals the time and space to enhance their capabilities and creative interests, which will redound to the benefit of all in a truly united society.

      • John says:

        Sorry – my weekly hours figure above is incorrect. It should be 24 hours, i.e. 3 days at 7 hours actually worked (allowing for additional 15 minutes + 30 minutes + 15 minutes’ breaks) and 1 day at 3.5 hours plus 30 minutes handing-over time to the next worker.

  6. Pingback: Best of the Web: 16-12-05 nr 1571 | Best of the Web

  7. Blissex says:

    «Many of those who voted Leave won’t have to live with the long-term consequences of Britain’s exit from the EU. Thanks to the relative insulation of pensions and pensioner benefits from the economic fallout, they won’t feel many of the short-term consequences either.»

    Excellent apposite quote from another blogger,. who was listening to a conversation between a young woman and her father:

    «Friend: How did you vote then, Dad?
    Dad: I voted Out.
    Friend: Dad! Why did you do that? The economy will crash! It’ll cause chaos!
    Dad: That won’t bother me hen, I’m retired.
    Friend: But it’ll affect me! What about me?
    Dad: (Long silence).»

  8. JohnM says:

    He will start moaning when his pension no longer pays enough to afford the things he used to buy, but cannot afford when their price has risen (considerably)
    Oh well…
    I doubt the death-rate among the elderly (poor) will drop any time soon, especially with electricity prices rising as the cheaper-fuelled generating capacity closes…
    Have a look…consider that a year ago coal provided over 25% of capacity.
    Now CCGT (gas) provides the the larger proportion, with nuclear running at full capacity.

  9. JohnM says:

    Real-time electricity grid provision:
    http://www.gridwatch.templar.co.uk/

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