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What does a fair distribution of economic resources look like? It is a question that will dog the Conservative Party Conference this week as questions over inheritance tax, VAT on school fees and the triple-lock on state pensions return to British politics, bringing with them the attendant economic resentments of class and age. Yet such debates are inevitable: the British economy is not growing like it used to and the grim spectre of an ageing society looms on the horizon.
It is a marked difference to the optimism of classical economics. Most of us are used to living in a society with a strong belief in material progress, with a sense that we can collectively advance as a society. This belief allowed us to assume that the shared pie that is the national economy is always growing and so, if we work together to grow it ever larger, our slice will grow with it. Not all societies are like this, however. Most throughout human history, especially peasant or tribal societies, have no illusions of material progress and so tend to be structured around zero-sum thinking.
The American anthropologist George M. Foster called this the “principle of the limited good”. In a society where the pie never grows, the only way to increase your share is to decrease the share of another person. Societies that subscribe to the principle of the limited good tend to be static, have high levels of material and social equality, and be strongly resistant to social change. They also tend to be highly susceptible to envy, suspicion and rather aggressive interpersonal politics. Clearly this describes both the small insular village and the communist economies of yesteryear. But it is also becoming an increasingly good approximation of contemporary Britain.
A recent study from Harvard examines the principle of the limited good in granular detail and it suggests that the zero-sum thinking associated with it is becoming commonplace across modern capitalist economies, seeping into our collective psychology. As the authors themselves make clear, this is not a political mindset per se — both Democrats and Republicans can tend in this direction — although overall it is more common among those who categorise themselves as “strong Democrat” or Left-wing. Interestingly, one of the most zero-sum thinking groups the authors found were Democrats who voted for Donald Trump.
This type of thinking does not generate typical Left-Right opinions either, with constituents of both parties favouring both redistributive policies and immigration restriction. Zero-sum thinking is above all else a mindset, a way that people frame the world. If you think that someone else’s slice of the pie comes at the expense of yours then you will favour both fewer people to take slices and policies that give you more in the first place. But though this study shows how this thinking manifests, it fails to answer the question of why it does. The authors seem to want to impose a Left-liberal framing on the data, seeking to prove, for example, that zero-sum thinking is associated with having family that were slaves or slavers. The Confederate flag gets a look-in too, as the authors argue that people with ancestors in the Confederate South have higher rates of this attitude.
These findings arise from a flaw in their methodology. The authors use a questionnaire to ask people about their family backgrounds and then base their findings on this. They find, for example, that “among Black respondents, those who have ancestors who were enslaved have a more zero-sum worldview”. It seems far more likely that people who have this worldview will be more likely to view their own past as a competitive struggle than those who do not. Ditto for those who wave the rebel flag. This is an obvious point, and it feels like it was lost on the authors because they wanted to impose their own worldview onto the findings.
Their two most interesting findings, however, are that young people tend to be more zero-sum in their thinking than older people and that their zero-sum thinking is increasing over time. In fact, the trend is accelerating as young people go on to replace previous generations, shifting society at large in this direction. And this raises an extremely interesting question that the authors do not explore: demographic change, arguably the greatest economic division of the modern West. The authors think primarily in terms of income groups and groups that may have been oppressed in other ways, either now or in the past. Yet it is obvious to the neutral reader that, given their results, the most obvious arena for conflict is between the young and the old.
Our societies are ageing rapidly due to low birth rates. The median age in the United States has risen from 28 in 1970 to 38.9 today. In Britain it has risen from 33.2 to 40.7 in the same period. As a society ages, more old people emerge relative to young people. Since older people tend not to work, this means that the remaining young people must work to feed and clothe both themselves and the retirees. This is the most bitter zero-sum economic relationship in any society, and it is the one that is the most obvious and visible. It is also the one that is most often discussed politically. Rarely a year goes by when the newspapers are not filled with talk of a pension crisis and the need for reform and yet this is rarely tied back to the bigger picture: a society with low birth rates that is rapidly ageing.
Fertility rates in both Britain and the United States are now far below replacement. This means that the ageing of the population will accelerate as time goes by, a vicious cycle which in turn means that the economic relationship between the young and the old will become increasingly antagonistic. We have seen that the young tend to be more zero-sum in their thinking and that this group is becoming more so as time goes on. Filling the gap with immigration, which is only a stopgap, will become more difficult as zero-sum thinking makes the society less and less accepting of mass migration – this is already happening amid sluggish economic growth. The confluence of these demographic trajectories appears to be putting us on a path to a society dominated by the “principle of the limited good”.
The dynamics of an ageing society will greatly favour this sort of thinking. Consider the case of precious assets, such as housing. Savings accumulate throughout the life cycle, meaning that older people tend to have more than young people. This also means that older people own more assets than younger people as the savings are typically parked in assets. But as the pool of older people grows, so does the need for assets. Eventually stock and bond markets become too small, and the greying savers need new places to park their savings. One option is property which can then be rented out to earn a yield.
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SubscribeFilling the gap with immigration, which is only a stopgap, will become more difficult as zero-sum thinking makes the society less and less accepting of mass migration
Immigration adds another “zero-sum” axis, that of the immigrants vs. the indigenous population. But while Pilkington assumes this axis will be tilted towards the indigenous, it may very well be tilted against them: just as the young may resent, sometimes intensely, their hard-earned dollars going to support what they regard as the parasitic elderly, so too may immigrants come to resent, at times likewise intensely, their hard-earned dollars going to support what they regard as the parasitic indigenous. So, by all means: let’s continue to assume the solution to an ageing white population is to import a youthful non-white population, because I’m certain absolutely no problems will arise from that.
Here in the US, most private sector old people don’t get pensions. We save for our retirement and thus are “parasitic” to no one. I’m 65, husband is 67, both of us are still working full-time and will likely never retire (most artists like us work right up to their last breath). The parasites are federal employees paid by the taxpayer, given health premium benefit packages, bonuses and perks, and they retire young to full pensions while going into another government job to scoop up more. It’s called double-dipping and it’s common in the parasite, er, public sector.
The answer to the conundrum the author sets out is a return to traditional families pooling their assets. If you think of all assets as belonging to the family, it is hard to conceive of an intergenerational rift.
I just requires a change from the modern, atomised mind-set.
If your grandparents live round the corner they can help you when your own kids are young and in turn you can help them when they become infirm.
In the past the argument might have been that you need to move away from your home town to get a job, that isn’t really the case anymore.
It may be over the medium term the zero sum nature of growth does push us this way MM, but it’d take some time and the question may be – do we have that time?
Fatuous – most ‘growth’ nowadays consists of doing more with less.
For that there needs to be decent local jobs and affordable local housing. Unfortunately we’re seeing employment becoming ever more concentrated in our cities (especially London) whilst making no attempt at creating affordable housing near these places of work
On the jobs front, I see the exact opposite BB. Remote working since Covid has led to half the country working from home which has in turn led to an exodus of people from London. On housing, this is where immigration controls need to come in – too much demand always means inflated prices.
A few common sense policies and this problem could be addressed. I am very much in favour of subsidising mortgage payments (or providing council houses) for young families, especially targeted at those with family ties to the area.
Helping young families is very good idea but subsidising mortgages pushes up/props up house prices, if you make this subsidy available to home buyers. we need to be clear this is not in their interests. Activity will recover when house prices adjust to the new conditions. sometimes (and I know this is an archaic idea) we must accept how markets work and hold our nerve as the stand off between buyers and sellers resolves (as it is is doing). Where we can help young families is to “encourage” the banks to slow the transmission of rate rises on existing mortgages, as the Canadians are doing. this is achieved by re-aging the mortgage. it is self correcting because, in the conditions in which you need to do this, wage growth will more than compensate and bring down debt /income ratios far faster than the expectation when the mortgages were first written. this matters far more for the financial health of borrowers and banks than the exact contractual end date. in this sense the squeeze on young families is both disproportionate and utterly needless. squeezing young families when their income has started to grow faster and their disposable income is set to recover even more quickly (because of leverage effects) is like engineering a gaol break the day before you are going to be paroled. it is to kill the very thing that must happen if we are to trade our way out of our debts. PS. I am retired banks analyst!
Good point Patrick. I was not aware of the Canadians re-aging existing mortgages. I will look into it. Thanks!
will send you a link shortly. kind regards Patrick
https://www.reuters.com/breakingviews/uk-could-borrow-leaf-canadas-mortgage-book-2023-07-07/
Ta!
Agree completely with you on this. Geographic distribution of opportunity has created all manner of unevenness in society.
Splintering of families has a knock on effect of reducing access to child care (remembering my childhood of simple things like school holiday care shared out among the family).
The overheating of economies in cities vs the collapse in rural (but especially coastal towns). On my rare visits to London, I often wonder why there isn’t an exchange of my Northern to Southern pounds. Or I could double or even triple my salary in London, but look at a minimum of a five fold increase in mortgage.
Similarly, house prices in this part of the country are fine, there’s just so few jobs (particularly those for the higher skilled/graduates). The result of the jobmarket is a kind of internal brain drain.
It’s not necessarily that the nation has a lack or jobs or housing (I’m not arguing this can’t be improved) but their distribution is extremely poor. I do not see this changing though, as the funding model is based on a return of investment – spending £10B on a Greater London infrastructure project will give higher returns over time than the same spent on Manchester, which in turn would be far superior than if it was spent in Northumberland (or even Cornwall, as the divide is really South East and everywhere else).
Not so long ago, I had the opportunity of transferring to the South East with a good but not enormous pay rise, vs a four to five fold increase in mortgage. It really wasn’t worth it.
My post seems to have been blinking in and out of existence.
It’s not just families who can benefit from co-operation. The modern left took a terrible wrong turn when intellectuals convinced themselves that the Russian revolution was the birth of Utopia and the Labour and Co-operative Party quietly abandoned mutualism in favour of ‘democratic centralism’ (ie: authoritarian statism).
Mutualism may be our only hope.
It certainly can save the kids a lot of money if you live closeby. As retired grandparents we childmind the grand children at no cost, so the parents can both work.
The main issue with scrapping inheritance taxes is that in a few generations you’ll end up back in the days of the landed gentry. For an increasing number of youngsters the high house prices means they’re reliant on inheritance for a house deposit.
However for those with poor parents/grandparents or those from big families where the inheritance is split many ways then what they get may not be sufficient, so instead they’re stuck renting into retirement. Having then accrued no capital as a result of never being able to buy a home, their children then inherit nothing and so again can’t buy a home and get poorer in relation to those whose wealth simply keeps growing and getting passed down the generations.
Too much of this and you’ll end up with serious societal unrest as a result of huge inequality and those in the lower classes having no way of improving their lot
Part of me wonders if that will be the case. Another part though also wonders about an possible housing surplus as and when the Boomer generation starts dying off. For us Millennials, that will come too late for us to benefit, but it might give generations like Alpha and perhaps Bravo (assuming that’s what the follow up one is called), a chance to benefit.
Alternatively, future governments may decide net immigration levels of 750k+ per year are great and will wipeout any potential silver lining there.
Unfortunately I think they’ll just keep the Ponzi scheme going by constantly bringing in an ever greater number of new arrivals, each new cohort becoming slightly poorer than the last. The fact the UK’s birth rate has been below replacement level for 50 years, yet in that time the population has increased from around 55 million to over 67 million today implies no government has any interest in solving the issue.
If it helps, even the Sub-Saharan African countries have dropping fertility rates so eventually even that once seemingly unlimited supply of people will dry up. Everywhere else is below the replacement rate.
In the 70s, people talked about a forthcoming housing surplus once the wartime generation died off. That didn’t happen (and they lived a lot longer than expected, too).
The birth rate was still at replacement levels then, so that would never have happened. I believe last year, there were circa 900K people aged 50 in the UK yet only around 600K births. This is now baked into the system. Depopulation is a bigger threat than climate change, not just in the UK but across most of the world.
Many countries do not have inheritance tax, including Australia, and this phenomenon does not occur.
You have no evidence for your assertion.
The super rich don’t pay inheritance tax and land is often inheritance tax free. Only middle classes pay inheritance tax or wealthy people who die young or fail to plan.
Australia is a much richer country, with higher wages, stronger unions and (outside the main areas of Sydney and Melbourne) still affordable housing, with well paid jobs spread much more evenly throughout the country. They’re also much more stringent when it comes to immigration so as not to put too much downward pressure on wages so it’s still possible to get ahead.
However in New Zealand first time buyers until recent tax changes had become a record low proportion of those buying houses, and homeownership rates are at record low levels despite house building being at its highest levels since the 70’s
While real wages did fall 9% from Q1 2022 to Q1 2023, measured from the start of the pandemic/date we left the EU, they have in fact grown.
For comparison, this is real wages growth (wage growth minus inflation) for western European countries Q4 2019 to Q4 2022 (figures from EuroNews):
UK: +1.9%
France: +1.5%
Portugal: +1.3%
Switzerland: -2.2%
Norway: -3.2%
Germany: -3.2%
Spain: -4%
Finland: -5%
Denmark: -5.7%
Belgium: -6.8%
Sweden: -7%
Netherlands: -7.4%
Italy: -7.5%
Commentators seem to forget that we had a massive spike in wage growth between 2020 and 2022 and wages haven’t stopped growing.
It’s the uneven distribution MM, which is why many do not ‘feel’ what you convey, esp the younger.
Sure gains are never evenly distributed. But my point is really that economists tell stories by the timeframe they select. If you look at 2022 only, inflation-adjusted incomes were down but if you look at the last three years they are up.
Same with the oft repeated statement that taxes are at an all time high. But when you look at an individual’s affairs (tax paid minus benefits received), you see that energy subsidies and Covid furlough payments means that for most tax payers have paid lower tax over the last three years than the three before them.
I suspect “the younger” feel as they do because that’s what social media and MSM tell them…
They like choosing start and end dates to match their narratives.
“the greying savers need new places to park their savings”. The Bank of Mum and Dad has no trouble in disposing of the savings of this grey saver.
Zero sum thinking is a prerequisite of net zero policy. Net zero demands there is no further growth in material prosperity in the West because it is simply impossible to achieve net zero with rising material consumption.
Take one example: driving. It is government policy to make this more expensive than it needs to be all in the name of net zero. Legislation has made it possible to force the purchase of 3 tonne EVs, to levy parking fees based on CO2 classifications, to charge tolls for simply driving in your neighbourhood, to permanently block highways. This all makes the “driving pie” smaller, meaning it very much is a fight for resources where your income and where you live now determine whether you get a slice at all.
Another example: energy. There is no plan to significantly expand energy production in the UK. Electricity production is almost stagnant in the face of a huge rise in demand from EVs. The electricity pie is not getting bigger. Marginal pricing, made possible by “smart” meters will control how the pie is divided.
The net zero technocrats are hoping the hidden hand of marginal pricing will avoid the traditional political struggle for resources. There’ll be no one to blame, or so they think.
I don’t think the EV future will ever arrive. Sunak has rolled back the end date for the production of new ICEs. So have the Germans and the French. Trump is campaigning against the Democrat’s plans for EV mandates. My hunch is that there will never be any legal compulsion to manufacturers to phase out ICEs. And without it, because EVs are inferior to ICEs, their production will never reach the numbers needed to displace petrol and diesel.
Ditto renewables. As we saw in the recent UK auction, without unsustainable subsidies, most forms of renewable production are not viable. Unless that changes, they will never displace fossil fuels.
In short, decarbonisation will only happen at the rate that technological development allows governments to do so without losing votes.
My hunch is that there will never be any legal compulsion to manufacturers to phase out ICEs.
https://www.whitehouse.gov/briefing-room/statements-releases/2023/04/17/fact-sheet-biden-harris-administration-announces-new-private-and-public-sector-investments-for-affordable-electric-vehicles/
It doesn’t take legal compunction to ruin an industry. The weight that can be brought to bear by the administration is massive.
That is true but obviously there is a scale from no government involvement to legal compulsion. It is the latter that I think will never happen.
Trump has picked EVs and the Biden 50% mandate as one of his targets. I have seen him make two stump speeches on the subject including one at the AWU striking workers rally. I think it is a pretty effective campaigning message.
Ha ha, that old canard. In fact, fossil fuels and nuclear get more govt loot than renewables: https://www.theguardian.com/environment/2023/mar/09/fossil-fuels-more-support-uk-than-renewables-since-2015
Do you have the link to the original report? I cannot find it.
Something in the House of Commons Library (research for the Lib Dems)? Anyway I found an OECD stat file with full details; but no total of all categories. So downloaded XL and added summed each column; and for 2015-2021 the total subsidies, tax breaks, rebates etc are £13.2bn, £10.9bn, £11.2bn, £11.4bn, £11.4bn, £9.4bn, £10.5bn. (total £78bn) https://stats.oecd.org/Index.aspx?DataSetCode=FFS_GBR
(I haven’t checked this in detail but I think it’s the gist.)
Looking for details on the renewables subsidies… but it’s worth noting that government includes waste incineration and (notably) Drax as ‘renewables’; Drax being notorious for consuming non-renewable US forests: a trainload every two hours.
The (then, March 2020, Johnson) government said it doesn’t give subsidies to fossil fuels (!!): https://petition.parliament.uk/archived/petitions/263313
Agree that EVs are not the future – ultimately. But neither are ICEs – where I live driving is a nightmare, not because of government edicts but because there are too many cars. Not sure what the answer is. But I have to say I have sympathy with many of the young who find cars a complete turn off. I fantasize how wonderful my town would be without the main thoroughfare choc-a-block with often stationary cars and their frustrated drivers.
I have a family member who works in transport planning. All their projections predict gridlock on our local roads within the next ten years. We need mass transit but no one is willing to pay for it.
I don’t wish to contradict your family member, but in the last 5 years BVM (billion vehicle miles per annum) has fallen. 333bvm in 2017 to 324bvm in 2022. In 2006 it was 310bvm, so barely any increase in 16 years. In that time, distribution has changed and peak time traffic has fallen significantly. Transport planners have been projecting complete gridlock in the next decade for decades yet congestion is unchanged over nearly 2 decades and their projections for BVM have been utterly wrong. There is no evidence of any surge in BVM that will create gridlock in the next decade. Transport planners forecasting the need for more transport planning… hmmm.
We absolutely need some level of immigration in the west. The issue has been mangled because we basically have open borders. Europe and the US are being flooded with refugees, who are breaking the social safety net. Controlled, regulated immigration should benefit everyone.
Your point is obvious, but any endorsement of limited immigration will get down. ticks here.
Define “limited immigration”.
In the British context, 100k net immigration has been most commonly stated as the goal as it would put annual population growth in line with the 1973-2003 level. From 2003 we have averaged 400k per year.
We were promised a return to 100k limit in 2015 and 2017 Tory manifestos. (It was also implied in 2019 as “lower immigration”.
Whatever the number crunchers say is good for the economy.
Again, how many.
I don’t know. You’re being silly.
No I’m not, ever heard the law of diminishing returns?
That’s like sword fighting with a young child, if you move the sword they keep hitting it and forget what the ultimate goal is, to strike the other person.
Immigration is not the only way to increase your population, yes it’s the simplest and quickest approach. You then need to ask, then what, once you believe you have the answer, you ask, then what again.
Our politicians and most certainly the so say experts, never go deeper and ask, then what.
Not from me. We absolutely need immigrants. Good ones.
How about policy changes that make home ownership and family formation a reasonable prospect, instead of going the Roman way of importing a slave class? You write as if “immigration” is a matter for discussion rather than something which has already happened and will make people a despised minority in their own homeland.
I didn’t say this at all. I specifically said open borders have been a disaster.
40% on money that’s already been taxed has always felt too high to me, even though I don’t stand to be hit by it.
No party is talking plans plans for economic growth and it makes me think they don’t have one. All I hear is taxation talk. When money is tight first job is stop wasting it which Sunak and Kemi Badenoch are making sensible noises about recently. The second part I’m waiting for is the plan for stimulating private enterprise en mass. I don’t want to hear anything else about borrowing money for taxpayer funded projects for a decade, thanks.
On your first point SB – the 40% is a tax on those who didn’t earn it and thus have paid no tax on that windfall. Plus it’s no different than when we use our already taxed income to buy goods and then pay VAT too.
Stimulating private enterprise – problematic at the moment as they’d have to borrow more to do so, (i.e unfunded tax cuts). Regulation reductions wouldn’t necessarily help if just generate further blockages to export to Countries with those regs. Withdrawing from the World’s largest Single Market when we want to stimulate growth also not looking the greatest decision.
Essentially we’ve got ourselves ‘stuck’, hence the zero sum debates.
The U.K. still trades effectively with the countries in the (diminishing) EU Single Market. The barriers that the EU put up are also diminishing.
I voted a very confident remain but I’m sick to the back teeth of hearing people tell me Brexit ruined the economy. If we were markedly worse off than the EU I’d accept it but we aren’t. In fact the most frequent complaint I hear about Brexit is from wealthy retirees complaining it complicates their access to second homes in the south of France which I couldn’t care less about. Poor you. Proper education, training and employment for as many citizens as possible should be front and centre in politics now and I’m not hearing it.
In fact our economy has grown more quickly than the French and German economies since we left the EU.
The money was taxed at the point of earnings, so it’s already been taxed.
There’s a continuing theme in these comments that the only way anyone has ever made money in the UK is through the housing market – Do we really believe nobody in the UK saves a penny in their lifetimes?
I never have. No pension either
Someone else earned it and exercised their freedom of choice to give it to whomever they choose… only that freedom is limited because the big state helps itself to 40% of it. We only have freedom to choose where 60% of our post-taxed income goes. It is purr greed from the state and it’s why people go to such lengths to avoid it. If the rate was 20%, it’s still egregious, but maybe fewer people would avoid it and the state would get more.
Tax cuts are not unfunded. Spending is unfunded.
MAID will dramatically expand in coming years and views on euthanasia will soften as “bed blocking” elders are an increasing problem.
Good point, though I had to look that acronym up. Medical Assistance In Dying, for anyone else who didn’t recognise it.
Aka culling: https://ayenaw.com/2023/05/09/the-new-death-culture/
I thought this was an excellent article, even if I don’t agree with it all. It actually presents the stark realities facing western countries very clearly. My criticism is that the author describes the zero-sum mindset and assumes it must always occur in certain economic conditions – those of low growth.
Even though this isn’t a black and white issue, I can’t see how western countries can regain the high growth rates which he believes are necessary to escape the zero sum mindset. (Hope I have read him right here) Whether you think low growth is good or bad it is going to be a reality in the near and medium term. And in any case, I’m not sure a couple of extra points on GDP will significantly alter the realities of endemic intergenerational unfairness – for example.
So perhaps we need to learn to live with a low economic growth society and change our attitude to it. Certainly those who are against immigration, should be happy with a low growth society since it is the only way immigration can be curbed. If populations aren’t prepared to have babies then immigration is a necessary fuel for a high growth economy. (BTW there is vicious circle here because the young are less likely to have children if they can only rent, and landlords prefer childless couples)
Perhaps I’m idealistic but I would like to think we can move to a mindset which is not endlessly acquisitive and a society where aspiration doesn’t always mean an aspiration to accumulate more money.
That seems to me the only way off the treadmill. The aim should surely be for everyone to have the basics (a secure place to live and and an income that takes you out of poverty) before some get the extras. So this does mean some redistribution between generations and social classes. Once you have the basics then more families are likely to have children. It is surely possible for a society to be at peace with itself without endless high economic growth.
Maybe I’m idealistic in believing we could have had controlled growth with general rising prosperity (and birth rates) if it hadn’t been for mass (generally low skill) immigration and ridiculously low interest rates. This simply led to the already wealthy accumulating even more assets, which has brought us to where we are now. An aging low wage, low skill, lop sided economy that politicians will find almost impossible to correct.
Think it’s a tad more complicated than you describe. If you believe in a so called ‘free market’ economy immigration is inevitable. UK firms notoriously prefer to bring in labour, whether skilled or unskilled, from abroad, than train/employ home grown talent. Unless you are going to impose regulations on this then it is their free choice. As someone who has been involved in training for years, I know the privatisation and low funding of training has been a disaster for skills in this country.
It was New Labour that decided to increase immigration from c50k pa to 300k pa during their tenure so it’s not surprising that companies decided not to train people or pay them a decent wage.
Yes I agree – that was a bad decision. But more importantly they didn’t try to undo the damage that the Thatcher governments had done to training. The free market zealots argued that it was not the states job to actually train people, which of course is nonsense. (Look at Germany)There is so much fuss about universities but hardly any mention of training which traditionally took place in FE colleges. Those colleges are on their knees.
Good point
But up to the end of the 1980s, British industry had many large British companies that invested heavily in training apprentices and graduates. I was a sponsored student in engineering and benefited hugely from this (the British companies of that time weren’t all that great, but the training was).
I’d argue that industry and business has dropped the ball on training far more than government. And that industry can do parts of that training far better than educational institutions.
Perhaps the structure and nature of work has simply changed so much that the older model no longer works. There’s been so much technological change. And skills need updating far more often these days – you need to keep constantly updating.
I’d be delighted if I could discern any sign of the Conservative Government doing any thinking, zero sum or otherwise.
I fear for democracy as the demographic decline really starts to kick in. Democracy is like a form of sublimated warfare. All sides call their banners but instead of fighting, those with the lesser number acquiesce and accept the victory of the larger side and the new government.
This has worked well in an era of unprecedented economic growth making each generation wealthier than the last. It mitigated the cost of being on the losing side but what happens when this growth stops, as it virtually has now, and we are reduced to a zero sum game described in the article?
In a demographic decline, there is a sustained gray majority, as each generation is smaller than the last. If economic hardship raises the stakes, will the young look at the ranks opposing them, compromised of those older and less physically strong than they are, and wonder if their interests are better served no longer sublimating conflict through democracy?
We should remember that economic resources (wealth) are not distributed but earned.
Earned by you or me and then confiscated to be redistributed in a stunningly inefficient manner
“they misunderstand the problem, thinking that the solution is to build more housing”
My first instinct is that if you build enough houses, the problem *will* be solved; demand is only so great, so if supply skyrockets, prices must fall.
But wealth inequality may be so great now that all new houses/flats could be scooped up by landlords. Whenever demand is high enough that a house is worth building at all, we may find someone other than an owner-occupier swooping in to buy it. Or they may get involved at the earliest stages (build-to-rent) so ordinary people don’t even have a chance to bid.
It won’t be your average retiree who will do this. Oldies may be sitting on a lot of wealth, but (as noted) most of it is locked up in property already. Most of them don’t have spare millions to buy up or build flats to rent.
Rather, it’s banks and corporations that seem set to become our feudal overlords.
It’s always puzzled me that banks lend people money to buy houses, rather than just buying the houses directly and renting them. Well, we now see Lloyds moving into the rental business (via Citra Living), and John Lewis and Boots are apparently at it too.
Unlike individual landlords, who may get caught out by economic downturns that cause non-payment of rent (squatting), large banks and corporations can lobby the government to redistribute just enough wealth for the tenants to keep paying. Maybe CBDC UBI will come with exactly these kinds of strings attached (£1000 for rent; £400 for food; £400 for energy; £100 for transport).
Some amount of entrepreneurial activity will still be allowed, because there has to be someone to squeeze, but rent seekers will prosper.
IHT has nothing to do with demographics. I worked, I earned, I paid tax, I saved. So did my life partner. Being somewhat cautious, I may have overdone the saving bit. What I have I own. I do not have temporary use of it courtesy of the state. I cannot complain about the imposition when it happens, because I will be dead. My children will be penalised for my modest success and through life frugality. IHT is a bad tax, but not quite as bad as the lunatic tax on mobility aka Stamp Duty.
“Since older people tend not to work, this means that the remaining young people must work to feed and clothe both themselves and the retirees.”
That isn’t necessarily proving true for this generation. In fact, more often than not it’s the boomers who are supporting their progeny, to a much greater extent than the boomers’ own parents ever needed to support them. Far from relying on my daughters to feed and clothe me, my daughters and their families are in houses they couldn’t have afforded to buy without my financial help. I’m happy to supply the help–it’s no burden to me, and a good investment in the happiness and welfare of people I love; but it’s annoying to keep reading what villains boomers must be, simply for having aged out of the workforce the same way their younger critics in turn inevitably will. Most of the boomers I know had to work decades for ‘asset rich’ status and achieved it relatively late in life; they shouldn’t have to apologize for it.
It’s worth keeping in mind that the contrast between ‘younger’ and ‘older’ doesn’t describe an ontological difference, just a temporal one, so there’s something artificial about speaking of an economic or any other kind of division between people’s younger and older selves. It makes no sense to privilege the interests of one’s younger self over one’s older self, or vice-versa, when in the end they’re the interests of the same individual. As for comparing generations, every generation is obliged to deal with its own challenges and play the hand history has dealt it; and nothing will ever change that.
[Edited to add:]
P.S. By the way, financial investment is never a zero-sum game. Without doubt, Bill Gates’ or Elon Musk’s investments return more to them in a day than mine do to me in a year, but I’ve never begrudged them their dividends. Not a dollar of their earnings comes from me: my own investment portfolio still pays me exactly what I’m entitled to receive, year after year, and that’s all I care about. Every other investor is in the same boat: expand your portfolio to match mine–or Musk’s–and you’ll get equivalent returns. More investors doesn’t mean more people competing for the same-sized investment return pie; on the contrary, it means a growing economy.
We are still letting the generation grow old who built our modern economies, and that includes immigrant grandparents too.
The young should wait their turn and aspire to work and reside abroad other than in overpopulated countries such as the UK, France and Germany.
“Most economic fallacies derive from the tendency to assume that there is a fixed pie, that one party can gain only at the expense of another.” – Milton Friedman
Now that we know the economy is not zero-sum, we can then ask why people, particularly the young and those on the left (as the author suggests), believe that it is zero-sum. For that we only need go back one generation before Friedman:
“If socialists understood economics they wouldn’t be socialists.” – Freidrich Hayek
Simples.
Anyone who uses the term “unfunded tax cuts” exposes themselves as someone who does not understand economics, for it is based on the fallacious belief that tax rates and tax takes always move in the same direction. Because the economy is not zero-sum, a tax cut can lead to economic growth and a larger pie for everyone and, subsequently, higher tax takes.
It’s politics itself that encourages the suspicion (sometimes true) that other people (or groups) are somehow getting a free ride at your expense. As true for the right as for the left.
That and also the obsession with “fairness” (or “equity” these days) which centres thinking on relative rather than absolute standards. And enourages zero-sum thinking.
How does politics encourage this? Politics is just an abstract word to describe how we make collective decisions. I don’t follow how it encourages zero-sum thinking.
The trouble with your analysis and PNs is that economies operate within societies, and societies need some level of cohesion, they have cultures and norms, and so on. Therefore relative standards are without doubt what matter. In fact absolute standards are pretty meaningless. For example, you don’t need the internet to survive, so having an internet connection is only desirable relative to modern society. If you were a Kalahari bushman you could happily live without the internet. But you try and live any kind of normal life in this society without the internet. You wouldn’t die but you’d certainly struggle – in one sense you wouldn’t be part of the society – which is what happens to some old people. It’s your deeply individualist assumptions that lead you down that path. Societies aren’t just groups of individuals who happen to occupy the same patch of land and just have ‘economic’ interactions with each other.
“The trouble with your analysis and PNs is that economies operate within societies, and societies need some level of cohesion, they have cultures and norms, and so on.”
I do not see any relationship between my “analysis” and your comment. Yours is a non-sequitur and neither comment contradicts the other.
“It’s your deeply individualist assumptions that lead you down that path.”
I haven’t made any assumptions.
My comment was specifically about the economy not being a zero-sum phenomenon. That is all. If you want to talk about societies, fine, but don’t make a strawman out of my comment.
Separately, society is made up of individuals, families, small communities around schools, churches, pubs, sports teams etc. There is no need for a confiscatory and collectivist big state in order for there to be a society. Human societies have been around for tens of thousands of years in all manners of political systems.
“If you think that someone else’s slice of the pie comes at the expense of yours then you will favour both fewer people to take slices and policies that give you more in the first place.”
As a child of the terrorist community in NI, growing up, I always felt avoiding arrest was an achievement of sorts lol. My safety valve was globalisation. Our business trades globally. Our home UK and Ireland markets are not that significant to us. Of course, global trading is on the way out, as the angry and protectionist nationalists reassume centre stage everywhere.
We’ve been talking about this since the birth rate plummeted. So just about 60 years now. I’m pretty sure governments around the world were hoping for a pandemic reset. But it wasn’t big enough, course in Canada we now allow maid. Big government types will be happy how successful that has been. But, not nearly enough. Unfortunately they are just going to have to tell people who are living longer to work longer. Maybe it’s just that simple.
Did you perceive how we view our young as ‘assets’? ‘Pilkington highlights between those with children, who produce the people needed to look after them in their old age; and those without children, who must rely on everyone else.’ Having children in order to look after us in our old age! Is that really an ethically moral reason for having children? Especially when we are introducing them into an overspent environment. Shouldn’t we be thoroughly ashamed of ourselves? We are exceeding the carrying capacity of the planet by 300%. Learn more about how we might improve our moral perspective with Ubuntu philosophy from this little animation https://poemsforparliament.uk
“Having children in order to look after us in our old age! Is that really an ethically moral reason for having children?”
Yes it is.
All the problems you bring up, about supposed over population, are obviously problems which are self fixing.