September 14, 2003

Devils with little sympathy

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Listening to the endless eulogies to the Rolling Stones this week, just days after two other fiftysomethings – Pat Kenny and Eamon Dunphy – locked horns in Irish TV’s equivalent of a mud wrestling competition, I couldn’t help remembering a chat with Tony Benn a few years back.

Leaning back in his voluminous study, pipe in one hand, tape recorder in the other, Benn, now 78, fixed his gaze on me and pronounced: “Young man, the old and the young have one thing in common: they are both bullied by the middle aged”.

And never a truer word. He summarised perfectly one of the central dilemmas of western society. What happens in a democracy when one age group holds all the power and most of the wealth?

Demographics is an interesting context in which to look at the battle for Irish society’s spoils rather than the traditional parameters of rich and poor, men and women, capitalists and workers, right versus left, Fianna Fail against Fine Gael, republican versus unionist or Irish versus British.

The real dividing ground in Ireland is between the post-war `baby boomers’ – the Jagger generation – and the rest of us. Let me just make it clear that we are not talking about some pre-planned conspiracy by the Jagger generation; it is in fact the end of a process that happens to have culminated in them having it all. As some of these people include those who were student radicals, they tend not to realise that they are now `le pouvoir’.

It is, of course, natural that the fifties generation will be the ones in power, but because of demographics here,they are much less representative of the general population than they would be, for instance, in Britain where they constitute 27 per cent of the population or over 30 per cent as in France and Germany.

The Jagger generation, born between 1945 and 1959, hold almost all the power in Ireland. In law, in business, in the media and in politics, this tiny cohort of our population controls almost all the levers of power.

Statistically, this generation constitutes about 11 per cent of the population, yet controls possibly 90 per cent of the power. It is their preferences that are reflected in our laws, editorials, chat-shows, property pages and pension funds.

In most western countries, the Jagger generation constitutes a bulge in the population. In Ireland, the opposite is the case. Our demographics are more like those of Latin Americathan Europe. The Irish baby boom oc-curred in the 1970s, peaking (perhaps not surprisingly) straight after the Pope’s visit in 1979. Let’s call them the `Pope’s children’.

The average age is 24, but the generation spans those born in the five years before and after 1979, ie those in their 20s. Generally, they are in lower wage jobs and renting accommodation in an expensive country, while constantly being told that their drinking and dancing habits are both antisocial and degenerate.They are the future, yet they are treated like a threat.

In comparison, the Jagger generation constitutes a tiny fraction of the population as compared to their French and German counterparts the so-called 68ers, the student rioters of 1968. Our laws reflect this minority group’s prejudices, as do our taxes. Much of the present PRSA pensions scare is being driven by them, while the housing market is sewn up by them.

Theoretically, in a democracy there are meant to be electoral checks and balances that militate against excessive political power being exercised by the rich, but these are not working.

Because the Jagger generation exercises its vote and the Pope’s children don’t, the electoral power of the fiftysomethings is greatly amplified, exaggerating further their grip on political power.

So our electoral democracy,with its four-year cycle, reinforces the dominance of this group over the rest. In fact, any issue that unites the Jagger generation (such as a concern about pensions) needs only modest support from other groups to become `the democratic will’.

(While this effect is not designed by the Jagger generation, maybe one of the reasons twentysomethings don’t vote is because they don’t have a stake in the society.)

The past tenyears has seen an enormous transfer of wealth from the young to the Jagger generation via the instrument of the housing market and land prices in general. The Jaggers bought theirhouseslargely in the 1970s and 1980s and they have profited enormously from the subsequent rise in property prices.The losers have been the Pope’s children who can’t afford to buy and must rent at exorbitant prices.

Thus, while the Jaggers have seen their stake in society greatly increase, the Pope’s children remain firmly outside the gate.This transfer of wealth is unprecedented in peacetime. Historically, these financial spoils have been reserved for invading armies and the like,but not in Ireland where it has just been a matter luck.

We live in a society where the young work to excess to make the middleaged rich via the mechanism of the housing market. Every 1 per cent rise in the price of houses is equivalent to a 1 per cent tax hike for the young and a similar tax cut for the middle aged.

Because the Jaggers are going through years where both their earning power and asset accumulation is at a maximum, they might be more naturally disposed to lower taxes on wealth and lower government spending than other members of society who are not at that stage or have passed it.

Also, because of the massive windfall gain from housing wealth, and the fact that this wealth can be turned into cash by innovative products from the banks, they are all now quite well-off and liquid.Their own lack of need for government help sometimes blinds them to the plight of others, both the young and the elderly.

Yet as they begin to eye old age and retirement, they become neurotic about pensions.Thus,we get near hysteria about providing for old age and younger workers who are already taxed heavily both directly and by stealth, and pay exorbitant rents and insurance are asked to fork out money on a pension, which at this stage in their lives they do not need.

Indeed, for the young, the opportunity cost of saving rather than speculating today might be extremely high.

But who gains from well-funded pension funds?

The middle aged pension fund managers who take fees and those who are coming up to retirement age in the next 15 years because as long as the youngsters behind them are coughing up, there’ll be loads of cash in the pot for the Jaggers.

This is another massive and unnecessary transfer from the young to the 50s groovers. In fact, the pension fund industry is the Irish Steel for the middle aged – a protected, subsidised tax-driven industry, mollycoddled by fiftysomething politicians and financed by the young.

In the area of the law, McDowell, a member of the Jagger generation, has proposed a series of laws against clubs to stop people dancing after a certain hour.Why? Because he’s never been to a dance club and this won’t affect him. He is closing down bars early.

Why? Because maybe he doesn’t want to go out late, so it won’t affect him or his friends. He paints a picture of the streets pregnant with aggression, yet only a tiny minority of people out on Dublin’s streets at 4 am ever see any trouble at all.

All these laws are made by the Jagger generation, designed to appeal to the Jagger generation when it goes to the polls.

Over the coming years, this demographic divide will become more apparent, reinforced by politics and economics. Expect a variety of laws to be enacted reflecting the prejudices and concerns of people approaching retirement age as they continue to squeeze cash out of the Pope’s children.

“Sympathy for the Devil”, how are you?