If house prices are rising by 12 per cent per year yet wages are only rising by about a quarter of that rate, who is winning? Who gains and who loses from this disparity between house prices and wages?
In Ireland, the growing gap between house prices and wages drives wealth inequality and its byproduct, generational inequality.
Property is wealth in Ireland. Land and property constitute 85 per cent of the wealth of the top 5 per cent in Ireland and the top 5 per cent here own 37 per cent of the wealth of the entire country.
Increasingly, the old are the winners in the Irish wealth divide. One of the most dramatic societal developments in the past two generations has been the “greying of wealth”.
Not long ago, old people in Ireland were poor. Today, the old are the richest group in the country by a long stretch and getting richer.
Such increasing concentration of wealth in the over 70s has huge implications for equality, opportunity, and meritocracy in the years ahead.
Inherited wealth is the least meritocratic wealth in the world but in Ireland it’s still the fastest way to get rich. Inheritance is also the least equitable way of redistributing wealth in a society. It leads to the amplification of inequality and a concentration of opportunity in the hands of the merely lucky rather than the hard-working and talented.
Here lies the implicit contradiction at the heart of most market societies; all of us – and I write as a father – strive to do the best for our children, agonising about choices and road maps for their future. Part of this is a natural parental tendency to accumulate wealth, not necessarily as an end in itself, but in order to pass it on to your children so they have the best chance.
However, this individual effort becomes a societal dilemma because, in economics, what is good for the individual is not always good for the collective. So if you do very well and pass this advantage on to your children, it’s great for your children but not great for everyone else. This is the wealth conundrum at the core of market democracies.
Inheritance tax
If young workers are being left behind, and wealth is passing upwards to the old via rising house prices, it’s only a matter of time before the young vote for more equality, more redistribution, and, maybe in in the years to come, significant increases in inheritance tax.
In Ireland today, the oldest cohort of the population owns a third of the wealth, even though they don’t work and constitute only a fifth of the population.
In contrast, Ireland’s 34 to 45-year-olds, who make up a quarter the population, own less than 13 per cent of the wealth.
This is not normal. It implies that the single most significant attribute for wealth creation is patience, not energy.
If wealth inequality continues the way it is going, a wealth tax or hike in inheritance tax is the obvious conclusion. Ireland, however, is not ready for this move; even the most left-wing parties refuse to support a property tax. As the older people in society exercise their vote more than the younger people, policies will reflect their preferences and biases. This may not always be the case. Trends in Ireland tend to broadly mirror those across the Atlantic in the US, with a lag of a generation, and since the 1980s we have seen huge changes in wealth distribution in America.
In the US in 1983, workers between the ages of 45 and 65 held most of the wealth. The over-70s held a much smaller proportion of national wealth. Today, the over-70s have become by far the richest people in the US. The average wealth per over-70s household is now $270,000. So in the past 30 years the old in America have become very rich, while the rest have fallen behind. If we look to Ireland, a similar trend can be seen:
What happened in America was the presidency of Ronald Reagan. Since Reagan, America has followed policies that have increased the return to assets and reduced the return to labour. Wages in the US have moved sideways, while American assets – stocks, bonds and property – have all risen vigorously. Tax and interest rate policy have largely driven these moves. Add to this globalisation, which has led to American corporations moving jobs abroad, which has had the twin effects of undermining employment in the US and keeping American wages down.
Wealth accumulation
With respect to the Irish case, the focus of wealth accumulation here is almost exclusively property.
In the past decade alone, the policy of zero interest rates has driven up asset prices at a much faster rate than wages. Therefore those who depend on income from assets such as dividends and rents have become much richer. In contrast, those who depend on wages for their incomes – young workers – have fallen behind.
Even if wages are rising, the ratio of wages to house prices is falling. As a result, the young can be falling behind even if they think they are moving ahead. In economics, everything is relative.
Don’t get me wrong: older people are entitled to a comfortable old age. In fact, it is a mark of a civilised society.
As the clock stops for no man, we all have a selfish interest in making sure that older generations are provided for, but has the pendulum swung too far?
As Irish property prices continue to rise relentlessly, those who are sitting on property get richer, and those on the wrong side of that market get poorer. The implications of this generational shift are profound and have enormous consequences for policy and democracy.
On his visit to the US, our youthful Taoiseach has projected an image of a young country, but the reality of Ireland is a country where the old people hold most of the cards, and hold them tightly.
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Old people will die. Someone is going to inherit all that property. Your allocation will depend on how many children your parents had as much as on their wealth. In countries where the pill appeared earlier than it did here, two or three children inherit their parents’ assets. It’ll be forty years before the small families since the nineties work through the system here.
“America has followed policies that have increased the return to assets and reduced the return to labour. Wages in the US have moved sideways, while American assets – stocks, bonds and property – have all risen vigorously” Read hyperinflation. Explaination; Hyperinflation occurs when money is created to cover spending in budget deficit situations like the us. In this case access to Newly created money in the form of mortgages is limited to the asset rich who buy more property with increasingly worthless currency to hedge against the inlaton. The prices are rising in asset terms but really what’s happening is… Read more »
Sorry, David, normally I would agree with most of what you stated in your articles down through the years, but it in this particular instance I completely disagree with what you stated. I am 65 going on 66 and my wife is 64 going on 65 and when my wife and I were a whole lot younger, (back in the 70’s) we were a lot poorer than we are now, that, being down to low wages and high prices and high taxes, which just seems to follow the same pattern over the last 45 years. We managed to get by,… Read more »
With low interest rates house prices will double ovef the next 10 years. How will tht change the ratios?
“it’s only a matter of time before the young vote for more equality…” ARE OLDER PEOPLE REALLY AT FAULT DAVID? => OR JUST LUCKY ENOUGH TO HAVE A HOUSE -> THE RENT SEEKERS ARE DRIVING UP THE PRICE OF HOUSES -> AND THAT IS OLD PEOPLES FAULT? => WHO DECIDED TO TURN HOUSES INTO “the only show in town” ? . . THE SOLUTION? -> TAX OLD PEOPLE BECAUSE OF THE RENT SEEKERS -> MAKE EVERYONE POORER => BUT NEVER ADDRESS WHY HOUSE PRICES ARE RISING . . -> HOW ABOUT TAXING PROPERTY SPECULATION? => THAT WOULD BRING UP SOME… Read more »
What’s the chances of a property market crash in the near future in Ireland lads?
“Ireland, however, is not ready for this move; even the most left-wing parties refuse to support a property tax.”
Isn’t there a property tax already in Ireland?
Hyperinflation occurs when people have no confidence in government
The author has mooted something like this before here, talking about Argentina, mainly I think. It would be good to see across generational coming together, but I can´t quite see how it would work off hand on a number of levels. For example how would you match people on both sides of an intergenerational divide, find common ground and build trust? How much of this equity would be liquid? How much is tied up in property? Just thinking out loud but I think it would need the holders of the money to come together and form a society or company… Read more »
That’s two radically different answers lads.
100% vs. 0%.
Always worth remembering that the old were once the young. Implicit in that is that today’s young will be tomorrow’s old. Inheritance tax is a tax on the living not the once old dead. Let’s fix the problems and not use them as an excuse to levy another tax. As an aside. I went into JC Penney’s in Nashville about a week ago. Imagine both my surprise and delight when on offering cash to pay for my purchases the “associate” enquired if I would like a 15% reduction for paying in proffered cash. I’ll leave you all to figure out… Read more »
Very useful handle again on David’s political, & cultural, & “economics”, loyalties. What he says up until the following short paragraph is correct ; “Not long ago, old people in Ireland were poor. Today, the old are the richest group in the country by a long stretch and getting richer.” From then on, David commits non-sequiturs vis-a-vis : 1_ True Economics as facilitated here regularly by Grzegorz, & Tony Brogan in particular 2_ some of his own points 3_ Facts other than True Economics Facts gleaned by : Deduction & / or Induction Yet, he makes valid points too. And,… Read more »
Everyone is getting poorer. it is that the young have gone from zero to negative while the older may think they are wealthier but can find no return on fixed income investment. They too are poorer when income is the factor rather than inflated asset value which is about to shrink again anyway. Paul Craig Roberts published a must-read essay on the slow death of the U.S. economy: As for the full employment claimed by US government reporting agencies, how does full employment coexist with this reported fact from the Dallas Morning News: 100k Applications For 1000 jobs. Toyota Motor… Read more »
http://www.wallstreetwindow.com/2018/03/much-longer-can-get-away-charles-hugh-smith-03-20-2018/ Although money supply has doubled since 2008 so has debt. Inflation of the money supply has slipped to financial assets. stocks , bonds and housing. little to investment, productivity and wages. He Is a reasoned argument on how long can we get away with it. “”Alas, fakery isn’t actually a solution to fiscal/financial crisis.. This chart of “debt securities and loans”–i.e. total debt in the U.S. economy–is also a chart of the creation and distribution of new money, as the issuance of new debt is the mechanism in our financial system for creating (or “emitting” in economic jargon) new… Read more »
Thanks Tony, very good info, much better than… ah no, I won’t say anything!
I agree with David on the focus towards property to the exclusion of almost every other asset class especially in the Anglophone world. Property does not of itself create a more efficient economy but it is a productive asset for wealth accumulation if used efficiently. The focus on property made the Irish economy extremely fragile and produced our black swan moment in 2007.
Not long ago Mike Heather an Irish businessman of the year died. He was a lovely man who battled for years against a terrible illness. Go well Mike.
@adam byrne.
One for you Adam;
https://techcrunch.com/2018/03/14/sierra-leone-just-ran-the-first-blockchain-based-election/
Historically the intellectuals of the left have had great difficulty in identifying with the culture of the common man and it has been said that as Historically the intellectuals of the left have had great difficulty in identifying with the culture of the common man and it has been said that as a a result they are alienated from society itself. The political ideas formulated by them over the last 100 years have been seen as their hostile reaction to mass education which they regarded with fear, since they believed it to empower the degraded and despised lower orders whose… Read more »
Noel Coward recognised what was happening as early as 1962: “We are now beset by the ‘clever ones’, all the cheap, frightened people. The young men who are angry and mediocre, the playwrights who can see nothing but defeat and who have no pride, no knowledge of the past, no reverence for our lovely heritage, nothing but a sick kowtowing to fear of death. I despise those of the new generation, who see no quality in our great past and who spit, with phony, left-wing disdain on all that we, as a race, have contributed to the living world. Perhaps… Read more »
I find it is great to have a sensauma:
Have yer ever been to Longford? have yer?
http://sluggerotoole.com/2012/05/30/have-you-ever-been-to-longford/
yer mother.
Scottish independence video John Oliver
http://sluggerotoole.com/2014/09/17/john-oliver-what-the-hell-is-going-on-in-scotland/
Mel Gibson – nothing screams Scottish freedom like a millionaire Australian anti-Semite on horse-back!
Does Ireland really want to turn itself into England:
The country which it loves to hate
And always tries to imitate
Ireland is better than that.
The Mass Observation project circa 1937-1950 which was conceived by Charles Madge, Humphrey Jennings and Tom Harrisson is widely recognised as an immensely valuable resource available to historians. ”Mass Observation sought to bridge the gap between how the media represented public opinion and what ordinary people actually felt and thought.” And the Internet is this writ large: it is an anarchic, libertarian, un-controlled feral beast but for the first time future historians will have a massive archive to mine: with engines and analytical devices the nature of which we can only guess. And everything is of value: the abuse, the… Read more »
What is truly sad is there is no more: joel mervis “the passing show” J B Morton “ beachcomber” brian o’nolan “crushkeen lawn” aka Brian Ó Nuallain aka Flann O’Brien aka Myles na gCopaleen aka Myles na Gopaleen aka Brother Barnabas aka George Knowall. “I saw that my witticism was unperceived and quietly replaced it in the treasury of my mind.” “Descartes spent far too much time in bed subject to the persistent hallucination that he was thinking. You are not free from a similar disorder.” “The majority of the members of the Irish parliament are professional politicians, in the… Read more »
A Dublin home that cost £ 2k in 1950,14k in 1978 on average sells for €550 k today. The first two prices were five times mean annual net wages.The last figure is fourteen times the average salary. Live with parents, work unpaid is the mantra of many employers. Minimum wage legislation is ignored. ??
https://www.zerohedge.com/news/2018-03-21/central-bank-bubbles-bursting-it-will-be-ugly
bubbles bursting will blow interest rates higher despite more QE than ever. A devalued currency will command higher interest rates over the longer term contracts while the daily RATE WILL BE AFFECTED AND KEPT LOW BY THE CENTRAL BANKERS
The Old of Irish State VERSUS The Young of Irish State Whom is prospering from getting handle on Geo-Politics ? //////////////////////////////////////////////////////////////////////// Brendon O’Connell- Iran is False Opposition March 20, 2018 CAPTION TO PHOTO MONTAGE ; Iranian President [Hassan] “Rouhani is a paid for Rothschild stooge. Bought and paid for.” PREFACE ; “Iran has in its Constitution as a revolutionary Shia Islamic republic, that it’s main aim is to spread the revolution. It’s right there front and center. It has a giant pyramid as a parliament building and more Masonic symbolism per square foot than any other country in the region.… Read more »
Re David’s assertion that the young are poorer than the old (Wealth is cumulative so what’s all the fuss about?)
This may well be the case but the old (when they were the young) were a lot poorer than the young of today.
Exhibit A.
Sometime in the late 1990s/early noughties Bridezilla was born
Bridezilla survived the crash and indeed flourished.
A Bridezilla index would be a very informative index, it would tell a lot about young people’s priorities and the old aren’t one of them.
Russia gets richer by saving, just as most do after being broke in their youth just like today’s youth!!
https://www.kp.ru/putevoditel/lichnye-finansy/zolotoj-zapas-rossii/
(Use a translate option)
FBI instigated and encouraged this attack
http://video.foxnews.com/v/5755931291001/?#sp=show-clips
From ur’s truly mise d’ainm Truthist who is rendered “homeless + roofless” in Irish State by the Irish State, I as a seer tell ewes Sheeple not to be deceived by the mantra buzz-word “Equality” ;
And, this word hinging David’s argument.
Equality in Bernie Sanders terms
EQUALS
Equality in Hillary Clinton terms
EQUALS
Equality in Donald Trump terms
EQUALS
Equality in Not-my-Taoiseach Varadakar terms
EQUALS
Equality in Me-hole Martin terms
EQUALS
Equality in New Sinn Fein terms
EQUALS
Bulk of populace being EQUALLY POOR
And, putting that Equality in perspective, here is a good graphic ;
“Hello, Hello, Hello
What have we here ?
Well, if it isn’t but our 2 lovely leaders who are effectively over-turning Brexit ;”
I CONFESS TO NOT READING THE CONTENTS OF THE LINK ;
WHY CONVERT THE ALREADY CONVERTED ?
I ALREADY KNOW THAT WE ARE ULTIMATELY CONTROLLED BY THE SHEKELS [ VIRTUAL SHEKELS EVEN ]
Henry Makow
?@HenryMakow
HEADING ;
Banking System is Key to Understanding Our Servitude
Money is a sophisticated confidence game.
https://www.henrymakow.com/2018/03/banking-system-servitude.html …
@Truthist
CORRECT
MONEY = DEBT = CONTROL
-> THE MORE YOU SAVE THE MORE THE NATIONAL DEBT CAN NEVER BE PAID OFF
.
.
AND THE only THING LEFT IS YOUR PRIVACY
-> THIS WILL BE THE LAST DOMINO TO FALL
=> BEFORE THE SYSTEM IS COMPLETE
.
.
AND THEY ARE WORKING ON THIS
-> WITH THE USEFUL IDIOTS HELP
=> DO YOU BELIEVE THEY WOULD EVER LET YOU GO FREE?!
https://www.youtube.com/watch?v=JTFsw60nlco
APOLOGIES TO ALL READERS FOR I NOT SPOTTING THIS PRIOR Here is another video from personal & professional friend of Hugo Salinas Price ; Sheikh Imran Hosein Sheikh Imran Hosein is a very famous & important economist & genuine intellectual [ Expert on Eschatology inter alia ] from the Caribbean ; He for sure can confirm who exactly were the foreign Slave Trading Pirates seizing the inhabitants of Ireland’s coasts by 1_ purchase from our conquerors or 2_ sheer kidnap And, these slave merchants sure would be anti-Japhethian p Ref. Japheth ] & anti-Hamite [ Ref. Ham ] & “selectively”… Read more »
As informed in a previous post of mine with link,;
Intel Corporation-now-formally-primarily-inextricably-linked-with-Israel have developed a Computer Processing Unit [ CPU ] that gives rise to Quantum Computer ;
–
NOW, ANY OF ALL CRYPTO CURRENCY’s CODE CAN BE BROKEN IN SOME 2 MINUTES
–
THUS, … WARNING !
–
STAY AWAY FROM BITCOIN et al
–
–
But, Block-Chain has great future outside of Crypto-Currency.
The Old are getting … OLDER incl. President Donald Trump And, I do not envisage Donald Trump being PHYSICALLY well enough to be in presidential office for next term. ///////////////////////////////////////////////////////// Trump’s presidential persona based on Alex Jones By Timothy Fitzpatrick March 22, 2018 Anno Domini The _ _ _-masonic establishment felt enough success with their controlled opposition character Alex Jones that they went and modelled a presidential puppet after him. That must be quite the honour for the Zionist-created Likudnik cartoon character Alex Jones, who couldn’t contain his glee when Trump was elected President of the United States of America… Read more »
World Governance for Old & Young is NOW an “Open” Conspiracy
Although, Mr. Dumb [ Christ-mocking Jerk ] & Mr. Dumber [ never contributes a useful post ] would beg rich to make u poorer of this FACT.
https://www.worldgovernmentsummit.org/annual-gathering/2018/speakers
OLD & YOUNG IN YEMEN, & SYRIA & IRAQ & LIBYA BOTH GROW POORER, & WORSE, ACCORDING AS “The Dreadful Few” CONTINUE TO TARGET THEM TRUMP AT HIS RETAIL BEST 21 Mar 2018 Trump asks Saudi crown prince to purchase more weapons Trump brags about his good relations with the Saudi crown prince, pointing to growing arms sales between the countries. He was at his retail best, trying to sell arms and ammunitions to the kingdom. Trump displays props to showcase the breadth of Saudi purchases of US military hardware, ranging from ships to missile defence to planes to fighting… Read more »
“The real menace of our Republic is the invisible government which like a giant octopus sprawls its slimy legs over our cities, states and nation. At the head is a small group of banking houses… This little coterie…run our government for their own selfish ends. It operates under cover of a self-created screen…seizes…our executive officers…legislative bodies…schools…courts…newspapers and every agency created for the public protection.” … John Francis Hylan, Mayor of New York City from 1918 to 1925
David and his friends bought their houses 25 yrs ago at four times the national average income. Houses were always no more than 4 times average income up till 1996. House in Galway was 60,000 with 15000 wages. Today the only new houses being built in outer Dublin, Cork, Galway and Limerick are 340,000e . 10 times the median income and 9 times the national average income. Cant generalise and blame older house owners for obscene transfers to bankers and public service providers. More tax for the system might not guarantee fair opportunity for the next generation. Economists need to… Read more »
Transfers Irish bailed out pillar banks charge 1710e per month for 300,000e mortgage. 213,000e interest( OR MORE ???) over term of mortgage. This mortgage will rise whenever the pillar bank says so. The cost of these financial contracts in Ireland are vague and unclear. The financial contracts are bias in favour of the stronger party to the contracts. The EU and Irish legal experts look away. Eu banks charge 1235e per month fixed for 25yrs . The interest is not vague or unclear. The interest will cost 70,600e over term of mortgage. As a parent , my children have to… Read more »
What our “youthful / full of youth” Not-my-Taoiseach Varadkar has to be wary of from other Politicians
https://twitter.com/HenryMakow/status/977339285434023937;
Open “Full-Scale” WW 3 coming soon with Zio-Trump’s appointment of Chicken-Hawk Zio War-Monger Mr. John Bolton as National Security Advisor ;
But, not as fast were we at sufferance of :
[ discreetly Zio AND ] Globalist [ Communist ]-Bernie Sanders
or
[ discreetly Zio AND ] Globalist [ Communist ]-Hillary Clinton
https://twitter.com/HenryMakow/status/976964553920712704
No Place for Young People _ _ _ the Occidental Globalist World
–
Will Not-my-Taoiseach Varadkar protect all the young as David intimates but versus an even more pernicious front ?
So much for the Educationist in this appalling report whom I suspect also has that synonymous big fat arse which at this stage clearly seems to be opulent symbol of educationalists’ arrogant status in the Occident [ incl. dear old Ireladn ]
https://fellowshipoftheminds.com/2018/03/23/michigan-kindergartener-sodomized-by-4-classmates/
The Strange Case of Mr. Dumb [ Christ-mocking Jerk ] & Mr. Dumber [ NEVER a useful Contributer ]
A Tale of Pride, Collaboration, Sabotage, Censorship, & patient onlooking Banksters’ Delight
With targeted nations wailing the Acronym ;
B.B.R.O.Y.G.B.I.G.W.
Bad Banksters Rape Our Young Governments But Ireland Gives Willingly
@ Goldbug
Reckon that there must be Irish links also in the following ;
The Octopus would be remiss not to so do.
Roy Cohn – The CIA Pedophile Ring Leader – An Evil Mechanism of Political Control
https://www.youtube.com/watch?v=6yRVhOCw3LY
HEADING ;
Clinton Foundation Open Records Tax Return. 6% went to charity.
Hillary kept 94%.
Added by Boris Badenov on March 23, 2018
http://12160.info/photo/clinton-foundation-open-records-tax-return-6-went-to-charity-hill?context=user
The richer elders initiates the younger riches-seeking men into this secret society with secrets ; “From the horse’s mouth” no less. HEADING ; Freemason Royal Ritual BLURB ; On Halloween 2017, the Freemasons celebrated 300 years of Royal influence in London. The Masons sang “God save the Queen, let her reign over us.” in unison. Prince Edward – Duke of Kent, the grandson of King George V and Queen Mary, is their Grand Master, who said he spoke with 136 other Grand Masters. _ _ _ _ _ _ _ _ _ VITALLY IMPORTANT + DIRECTLY RELEVANT PART TO ANY… Read more »