Billy Bunker picked up his corporate hospitality tickets for the Rolling Stones’ Bigger Bang Tour concert at Slane. He didn’t go the last time, 25 years ago, but now, courtesy of www.corporate.ie, he got a weekend hospitality ticket for the Stones and brought clients. This was the Ryder Cup with music. It was a day out for the gilded generation, the people who run the country. We are ruled by an evergreen, middle-aged generation, who, like their idol Mick Jagger, are coining it.
The Jagger Generation were at Slane in their thousands on 18 August, air-guitaring along with Keith to ‘Sympathy for the Devil’, while checking their Blackberries. Like Jagger, they led the revolution, railed against
the system and threatened to overthrow the power, but today they are the power.
The Jagger Generation is not a bad generation. They are Ireland’s “Accidental Millionaires” finding themselves on the right side of the property boom. They have been enriched beyond their wildest dreams. They are reasonably good citizens with a weakness for tax-relief car parks, pension scare-mongering, the Late Late and digitally re-mastered Van Morrison CDs. The Jaggers were born between 1945 and 1960 when the country was in trouble. Close to half a million people left Ireland between 1945 and 1960. Those who stayed found themselves in a denuded country, on the cusp of social change.
Most of our enlightened laws have been made by and for the tolerant Jaggers.
The Jaggers supported the EEC, they fought for the separation of Church and State and kept the place afloat in the late 1970s and early 1980s.
They were Ireland’s first hippies and Ireland’s revolutionary generation. They made Carnsore our Woodstock, drove Citroen 2 CVs with ‘Atomic Power, Nein Danke’ stickers, picketed the British Embassy, marched at Wood Quay, took condom trains and manned the 1970s’ barricades. Those who weren’t so public about their politics, privately wrestled with their own conscience and went on anti-tax marches. Together, the Jaggers dragged Ireland, screaming and kicking, into the
modern age.
Now they are in power, the Jaggers have abandoned the idealism that defined them and have replaced it with pragmatism. And that means holding on to what they have.
Many vote Green but take more polluting short-break flights than anyone else. They speak the language of Labour, yet have holiday homes in Connemara. They support the Rossport Five, yet invest their pension funds in American multinationals. They argue for better public hospitals, yet are fully paid up VHI Plan-E members, en route to the Beacon Clinic. They want more motorways, but vote for lower taxes. They were the first generation to benefit from free education, yet send their kids to private fee-paying schools. They rail publicly against the price of houses for first-time buyers but are actually the largest bunch of investors in the
country, cannibalising the first-time buyers.
Because they only make up 14% of the population, the Jaggers’ stake in society is hugely disproportionate and their wealth has been bolstered by the housing market, the very asset that is an anvil around the neck of the
commuting generation, the Jugglers.
The Generation Game
In the late 1990s, as the housing boom took off, the Jagger generation began to pull away in wealth terms from the younger ones. They have become Ireland’s Accidental Millionaires. Every time house prices rose, the Jaggers, who owned houses, got wealthier; the younger ones — the Jugglers- who didn’t, became poorer.
The Juggler Generation – those in their early 20s to late 30s – have been caught on the wrong side of the property boom and have paid 14 times their annual salary for starter homes which are now falling in value. They account for close to 44% of the population, yet find themselves locked out of the house party.
There is close to €500 billion of equity in the Irish housing market, the lion’s share of which is held by the Jaggers. Looking at the demographic profile of bank lending figures, the majority of the €161 billion of debt is held by those under 40. The demographic divide is democratically explosive and deeply unfair.
Of course it is likely that the wealth of today’s middle-aged Jaggers will be passed on to their children in time. But those who expected inheritance at a productive stage in their lives have been caught out by innovations in health care. Look at poor old Prince Charles across the water. The poor lad will be ancient by the time he gets the crown. He is trapped by his mother’s longevity. Prince Charles’ dilemma will be suffered by Ireland’s young prospective heirs and heiresses because their parents are living longer than any generation ever. And as the Jaggers were the last generation of Irish people to have children in their early 20s, there is every likelihood that their dauphins will be in their 60s when they get their mits on the lolly.
In the years ahead, the political battleground in Ireland will not be between Left and Right, Catholic and Protestant, urban and rural Ireland, but it will be between the asset-rich, well-off Jagger Generation and the rest, particularly the younger, cash-strapped, heavily indebted Juggler Generation about 20 years behind them, who keep the whole show on the road.
The Botox Nation
When seen through the prism of demography, in terms of housing wealth alone, if the Jaggers — Ireland’s Accidental Millionaires – were the luckiest Irish ever, the unluckiest were those born between 1970 and 1980.
Contrary to much of the media reportage, not surprisingly penned by Jagger Generation editors and columnists, the younger generation is not some feckless bunch of hedonists who can’t do a good day’s work. In fact, they are the first-time buyers, who have splashed out for the most expensive commuter houses in Europe, just as the market peaked.
The Jugglers are products of the 1970s’ baby boom and are the first generation to go to university in large numbers. Today, they are the fuel that drives the economy forward. They commute, live in expensive shoe-boxes and have children out in the Irish baby-belt. The Jugglers are keeping all the balls in the air: child-care, work, family and trying desperately to maintain appearances.
A kind of social contract is operating which works as a conveyor belt. As long as it keeps moving up, the Jugglers know they are going in the right direction. The locomotive for the conveyor belt is the housing market. Given their provisional outlook, the Jugglers are prepared to put up with poor infrastructure, long commutes and expensive crèche fees if their house prices and wealth are improving. Once that stops, all bets are off and
the status quo which saw Fianna Fáil through the 2007 election will change profoundly.
In Ireland, in the latter stage of the housing mania from 2004 to 2006, hundreds of thousands of people were ‘making’ more money on the rising value of their houses than they were taking home in their annual salaries. This created a class of drone millionaires whose wealth was rising as they were sitting on their bums doing nothing.
We have become the Botox Nation. This boom was fuelled by enormous personal borrowing. All this credit has the same effect on the economy as Botox has on a Jagger Generation woman. Botox makes her feel and look younger, but underneath the wrinkles and lines are still there, ready to reveal themselves. Similarly, all the borrowing has made us feel that we are rich and helped us maintain a flashy lifestyle, but underneath the signs of economic weakness are ubiquitous.
Now that the financial Botox is wearing off as the housing boom turns to bust, the huge gulf between the Jaggers and the Jugglers will be exposed.
History tells us that asset-price booms–like the great Irish housing boom–do not make societies rich in the aggregate. Booms simply redistribute wealth from one group in the society to another.
In the context of our history, the return to land today and the fundamental inequality to which it has led, is more dramatic now than at the height of the Land League’s campaigns in the latter half of the 19th century. We have succeeded in replacing one system dominated by foreign landlords, with another dominated by local landlords. The worker bees continue to feed the drones. After nearly a century of independence, that’s quite an achievement!
I can see the youth of Ireland using their vote in the near future and using it big time.
They might have no money buit they will have a big influence being a majority in a democratic society.
Now all we need is a political party to represent them,this party will in return for votes tax the Jagger generation property millionaires to the hilt and so redistribute the wealth back to the youth.
Hopefully by then they will have by then the wisdom and experience to use this wealth wisely.
Those born between 1970 and 1980 have it worst? I don’t agree. Many Jugglers have bought the houses, many in the late 90’s and earlier 00’s. They have done quite nicely, benefiting from the property price growth and had the opportunity to benefit greatly from the IT bubble pre 2000 as well as the SSIAs. Also from that period 1970 – 1980, we have the Jumpers (I am one – 1973). They didn’t buy the house. They either couldn’t afford it, or in many cases decided that the value proposition was wrong and chose instead to rent. They are now… Read more »
There is a grain of truth in this theory, but only a grain. I think it’s an interesting take, but no more than that. I think David you are putting more weight on this framework of analysis than it can bear. For example “in the years ahead, the political battleground in Ireland will not be between Left and Right, Catholic and Protestant, urban and rural Ireland”. But in the republic the Catholic versus Protestant issue hasn’t been central for a very very long time. And the urban rural issue while not key is re-appearing in a Dublin versus the west… Read more »
Watched the show last night. I moved back to Ireland from the US in 2000 and then David was saying ‘houses can’t keep going up’ but what I realise what you meant to say was that they ‘shouldn’t go up’. I agreed with much David had to say about boom / bust cycle. New houses built in the past 5 years are so badly built that you can hear somebody texting in the next room. Box rooms ! you have to demonstrate that a single bed will squeeze into a box room. Totally overvalued in comparison to houses built before… Read more »
I think it would be worth it to examine how much the tax free Catholic Church Limited is costing us. In none of the programmes was this underlyhing question asked. In the future the shifting conflict on this island will not be between Catholic and Protestant but between the people and the Vatican. In Britain as in other countries less and less students are taking science. Is it possible by overhauling our education system so that our children are taught how to think and not what to think we could carve out a niche for ourselves? (It is understandable to… Read more »
Henry,
Most countries give tax exempt status to religious organisations and charities because of the social good arising from their works.
You sound angry about something.
While this programme like your previous efforts was very interesting and informative it still seems there is an elephant in the room. Why is it that neither you nor any economist makes any attempt to quantify the economic impact of the Catholic Church Limited on our financial health? How much less tax would the average person pay if this foreign organisation were made to pay the same tax as everyone else? I tried posting this question on the RTE web chat but they did not allow it through (surprise, surprise).
Hi David, I watched your programme last night and read some of your web chat today. A lot of what you say is true, there is an ‘accidental’ amount of wealth that has been distributed from those that had property/land and were able to sell it and those that have had to buy it. However, I think the categories, whilst amusing and helping in some way to make people understand, are over-simplified. There are lots of people in the Jagger age group that wont have done exactly as you describe, as well as the Juggler. And, there are more age… Read more »
David,
you have spoken about wealth being passed from the younger to the older generations as being an anomaly in the natural state of affairs. One effective way to curtail this is to starting taxing the ownership of property according to its value while reducing the level of tax taken via PAYE. That way the older generation are incentivized to trade down thus increasing the availability of Dublin city 4/5-bedroom houses needed by young families. Property taxes are levelled in various forms in most other western countries. Why not in Ireland?
Property taxation is one fundamental technique for mobilising capital and generating economic activity, this works quite well in the US and limits property speculation. The main problem is that Ireland is an open economy and there is no real way to stop the money leaving the country. The Labour Party introduced property taxation in 80s/90s, the tax never earned the title “incentive” and it was mainly described as anti-family.
http://www.shayconway.blogspot.com
I’ve just finished reading your latest book ‘ The Generation Game ‘. Whoa!!! How thought provoking, how insightful, oh my god, how bleak! I thank god i haven’t bought a house yet. Although i found your thoeries very interesting, i tend to disagree with you about the solutions to Ireland’s up coming economic problems. your soutions lie with economic pragmitism where i think you should have a more holistic view. You dismiss cultural diversity and unity and seem to have more of a pluralistic view. You mention the correlation between homosexuality and thriving economies and don’t seem to see the… Read more »
Siobhan said, on September 18th, 2007 at 10:39 am Henry, Most countries give tax exempt status to religious organisations and charities because of the social good arising from their works. You sound angry about something. Siobhan You sound deluded about something: So your attitude to this economic black hole is “monkey see, monkey do”. The CCL’s tax free position does not in any way derive from the common illusion that it is an organisation involved in “good works” (sic). The fact is there are the PAYE workers contributing a disproportionate amount into the system while unfairly carrying groups of freeloaders.… Read more »
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All very interesting but my take is that you’re all missing the point: future decades will be dominated by the twin issues of global warming – which will cause rising sea levels and population displacement on a massive scale – and peak oil – which will cause radical changes in every aspect of our economy. These forces won’t affect just our grandchildren – they are happening now.